The Australian Bureau of Statistics publishes biennially the Research and Experimental Development Performance of Australian Higher Education Organisations, (commonly referred to as HERD). There is always a two-year delay in reporting, so the latest data, released on 20 May 2020, is for activities in 2018. The compilation has been prepared on a consistent basis since 1992. It provides a valuable longitudinal reference of trends in higher education R&D expenditure activities.

A strong R&D performance again was reported for 2018, with expenditure increasing from $10.9bn in 2016 to $12.2bn in 2018 – a 12 per cent increase. This is a new record for universities.

Capital expenditure as a proportion of total R&D expenditure increased from 6.9 per cent in 2016 to 8.2 per cent in 2018. This increase is very evident from the many new buildings recently erected on Australian university campuses.

Australian competitive grants have continued to decline as a proportion of all R&D funds used, from 18.1 per cent in 2014 to 15.4 per cent in 2016 to 14.6 per cent in 2018. These figures vindicate the funding concerns of universities that have been frequently expressed in recent years. Grant allocation outcomes for 2020 would indicate that there has not been any improvement since 2018.

The proportion of General University Funds expended on R&D again increased from 55.8 per cent in 2016 to 56.1 per cent in 2018. A component of these funds is the cross-subsidy from coursework student fee income. It is unlikely that universities will be able to provide the same level of cross-subsidy in future years.

Over the past decade, since 2010, the balance of expenditure devoted to different types of R&D activities has changed. Experimental Development activities have increased by 107 per cent and Applied Research by 55 per cent, while Pure Basic increased by only 35 per cent and Strategic Basic by 31 per cent. Total R&D expenditure increased by 49%. This distribution trend is consistent with universities receiving a lower proportion of their R&D funds from Commonwealth Competitive Grants and more funding for targeted mission-oriented contract research.

As a consequence, for 2018 23  per cent of all R&D expenditure was for pure basic research, 18 per cent for strategic basic research, 48 per cent for applied research and 11 per cent for experimental development. New discoveries from pure and strategic basic research programmes underpin innovation and international competitiveness so necessary for Australia to promote emerging industries. The national interest will be adversely affected if the decline in basic research funding continues. Ideally, near 50 per cent of university research should be at the basic end of the research spectrum, rather than the present 41 per cent, because few other organisations conduct such research.

The highest proportion of national higher education R&D expenditure for 2018 was by NSW universities at 31 per cent, followed by Victoria at 28 per cent and Queensland at 16 per cent. Therefore, more than 75% of all university expenditure on R&D is in the eastern states.

Human resources devoted to R&D have increased by 18 per cent since 2010, compared with total R&D expenditure increasing by 49 per cent. Only small changes in the distribution of R&D human resources have occurred since 2010. The data reaffirms the central importance of research students to national R&D activities. They represented 56 per cent of the active personnel in 2018, with academic staff representing 30 per cent and other staff 14 per cent. This issue has been discussed previously CMM, April 7.

The next R&D data set, for 2020, will not be released by the ABS until 2022. We can expect significant changes due to the impact of the COVID-19 pandemic. The 2018 data will provide a valuable reference point to assess the gravity of the funding challenges currently being experienced by universities.

Professor Emeritus Frank P. Larkins

School of Chemistry, The University of Melbourne.

17 June 2020


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