Origins of the education revolution

There are shortcomings in the PC report, naturally enough. It does not always follow through on its own logic. It returns to the disciplinary silos in its discussions of extra pay for school teachers in maths and science subjects. Still, it represents a huge change in thinking - and the report acknowledges this was only achieved by strong interventions from HASS lobbyists.

The other important strand of the PC report is the practical measures it recommends. It calls for public research funding to be made more efficient - for example, arguing that there should be more direct funding of universities, rather than growing the competitive grants system. I like this in principle, although some are worried that it may entrench the funding advantages enjoyed by Australia’s research-intensive universities.

The PC report suggests that the new Research Quality Framework have no safety limits on the amount of money unsuccessful universities might lose during implementation. This impeccably rational suggestion demonstrates all the milk of human kindness that economists are famous for; it is unlikely to be adopted.

The PC report has surprised some by calling for a redirection of public funding away from research commercialisation, towards the sorts of public good research that industry is unlikely to support. This is quite different from the government orthodoxy; it cuts across the lines of the BCA and ACCI; but it is a natural consequence of the rationale the report has adopted. The ALP’s Kim Carr has long been a supporter of this line, and was quick to echo it in that party’s recently released “New Directions” policy statement on innovation.

In a similar vein, the PC report calls for reductions to the tax concessions for firms engaging in research and development activity. Canberra believes the tax write-offs have been heavily abused for decades; the PC report takes this anxiety further, arguing for their near-elimination. Additionally, most concessions would be restricted to small businesses only.

This last recommendation touches on a particularly vexed element of public support for research and innovation in Australia. The argument to retain small business concessions reminds us that small business contributes very little to Australia’s R&D system. This is in a context of rapid growth in the services sector worldwide, especially in small and medium enterprises, suggesting a growing need for Australian businesses to innovate in this sector. It is important to look for positive measures that will encourage activity and investment.

One recent overseas development has been the Netherlands’ experiment with an “innovation vouchers” scheme. Through it, a small business can apply for funding, which can only be spent on contracting services from an accredited research and development provider - for example, a university research team.

The first pilot of the scheme allocated 100 vouchers, worth €7,500 each. It has reported an 80 per cent success rate (where success means completing an innovative project that would not have happened without the subsidy), and a 10 per cent wastage rate (where no project was completed). A similar scheme in Australia, if it actively incorporated HASS R&D, could be put to a very wide range of uses.

This reminds us of the policy truism that, once the change in thinking has been made, there are many practical measures a country can use to pursue its new strategy. The PC report’s new way of thinking can now flow through into the terms of reference for public inquiries, into greater disciplinary breadth in the memberships of policy and funding committees, into new policy and funding frameworks, and into new opportunities for Australia’s innovators, researchers, and teachers to put their abilities to work.