Australia’s research system has long been broken. But do we have the will to fix it?

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To understand the shape of Australia’s research system and the type of discovery it supports, it is instructive to look at the research it neglects.

In a nondescript office park in Melbourne’s northern suburbs, Cortical Labs developed a world-first biological computer, weaving human neurons with silicon.

But without private funding, the research required to get the development off the ground might never have happened.

“We would never have got a [government] grant to do the research we did,” chief scientific officer Brett Kagan tells me. “Research in Australia is incredibly conservative. Funding goes to small conservative iterations that fit within the status quo.”

Kagan’s experiences are not unique. The government-wide review of Australia’s research and development system released earlier this week is scathing of a system that has become bloated, inefficient, and incentivised to look like a world-class knowledge engine while struggling to produce useful knowledge that changes our lives.

How else to explain the bewildering fact that we produce 4.4 per cent of the world’s best research papers, yet operate an economy reliant on digging up rocks, that is one of the world’s least-complex.

The report labels our research and development system “an underperforming system that is the result of often trifling, incremental improvements, risk-aversion and band-aid solutions”. Yikes.

Zoom in to a university laboratory, and you will find scientists as extraordinary as any nation. The more you zoom back, the more insane the system they toil within becomes.

Our scientists must spend a huge chunk of their working year writing applications for government funding, the vast majority of which will be unsuccessful. The rest of the time is spent trying to write as many papers as possible, so as to seem productive by the inane metrics of science – rather than focussing on actually discovering new things. No wonder science is getting less innovative.

Our universities claim to focus on world-class research. But this is not the full truth. They are focused on research that pushes them up global university rankings so they can attract more fee-paying international students to fund more research and further push up the rankings.

Former chief scientist Dr Cathy Foley, now president of the Australian Academy of Technological Sciences and Engineering, labels the system “bizarre”.

Consider Queensland-based Genesis Algae Innovation, who export animal algae supplements that claim to cut methane emissions and boost growth. They have a large research program in China, after local universities said it would take years and huge financial investment to set up.

“It’s good for us, but terrible for Australia,” says founder Colin McGregor. “A lot of universities appear to have changed their focus from research to being a churn factory for students.”

Then you have the federal government, which is so fearful of being accused of picking winners it funnels research funding into a Kafkaesque bureaucracy that splits the river of taxpayer funding into a delta of innumerable tiny streams. There are more than 150 separate pots of government R&D funding, plus hundreds more from the states.

“It does not need to be like that,” says Foley. “The problem is, research is horizontal across all government departments, and so therefore every government department wants to control its own budget.”

The system takes enormous man-hours to navigate and is so complex many companies have to employ external consultants, who take more than 10 per cent of the grant as a success fee.

“It’s quite difficult to justify exploring those opportunities,” says Kagan. “Most startups die doing it” (Cortical has received $315,000 in funding across two innovation support government grants).

Solutions

The report lays out a vision for a wholesale change.

At the top of this proposed new system is a National Innovation Council that would oversee six pillars of research focus. Most government research funding should be consolidated and poured into those priority areas, the report says.

Universities should also be given the ability to specialise. Current laws require them to do high-quality research in half the areas they teach; scrap this, the report says, and let them pick just a few areas to focus on.

The theory here is simple: take a few big swings. Less bureaucracy, more Manhattan Projects.

This idea pushes against the long-dominant economic theory of simply allowing the market to innovate, but the review cites an influential 2023 modelling paper suggesting picking winners does beat the market – but only in the long-term because you have to accept that in many cases you’ll pick a loser.

Will anything change?

While much can be achieved without increasing funding, much more can be achieved if the government does find extra dollars.

Minister for Science Tim Ayres seemed at cross-messages on Tuesday, talking about a blueprint for “decadal reform” on one hand while also saying he would wait for a “public discussion” about the report, particularly from researchers and industry, before deciding what parts he wants to implement. Are the 471 public submissions to the review not enough?

Anyone who has played along for long enough can tell you that declining science funding is a feature of the system, not a bug.

In the 1980s, Australia placed a premium on innovation and reaped the rewards in above-average productivity growth (the special economic sauce that makes us all richer). By 2008, a government review noted the beginning of a drop in both research spending and productivity growth.

That trend was never arrested. Every year since then we have fallen further behind other countries’ research spend, just as we’ve almost halved our future economic growth projections. This is not a coincidence.

Arresting that decline is expensive, but not terribly so. To reach the average spend of our competitor-nations, the government need spend only an extra $1.8 billion a year (by way of comparison, fuel subsidies cost the budget about $10 billion a year).

Can Ayres find that extra funding, as inflation spikes and the government looks for budget savings?

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