Lifting the impact of universities to strengthen Australia’s future

Acknowledgements

I am delighted to join you all today — here at our second oldest university, one of our great research institutions, and my alma mater.

This is my first major speech on higher education since becoming Education Minister just before Christmas last year. I want to use it to discuss my top priority in the portfolio, and an issue that the Prime Minister has made a top priority for this Government.

This speech is about our universities and the world-class research they produce. Where I want to begin, however, is with the Australian economy.

The COVID pandemic hit our economy like a storm last year. As the Treasurer says, we were staring into the abyss of double-digit drops in economic growth. Thanks to decisive action by the Government and the public’s incredible commitment to defeating the virus, we weathered both the health crisis and that economic storm better than most countries. Less than a year later – a year on from the most significant shock since the Great Depression – the momentum of our economic comeback continues to strengthen. Jobs data shows that week after week, more Australians are returning to work.

The question now is, how do we claim new ground on the other side of this pandemic, setting a higher trajectory for this country’s economic growth?

How do we grow new businesses and industries which create the wealth of the future and help support the funding of critical services such as the NDIS and aged care, which will require more expenditure over time?

How do we make our economy more diverse, to produce more opportunities for Australians and bolster our national resilience to unexpected economic shocks?

How do we lift our multifactor productivity, an engine of economic growth?

Moreover, in a post-pandemic world, can we make further inroads into some of the big societal challenges such as the decline in school education standards, persistent Indigenous disadvantage, and the transition to a low-carbon economy.

These are big challenges for our country and with big challenges, the best minds are required.

This is where our universities come in. Many of the greatest minds in our country reside in our large research institutions - 80,000 research staff in total.

We have an opportunity to lift the impact of our university researchers.
Twenty years ago, universities spent $2.8b on research and 23,000 publications were produced.
Today the corresponding figures are $12.2b and over 100,000 publications.

Our research output increased over 400 percent in the last twenty years, but has the impact of our universities?

We want and need our universities to play a bigger role. To not just produce brilliant pure research, but to work more with businesses and governments to translate this research into breakthrough products, new businesses and ideas to grow our economy and strengthen our society.

We want academics to become entrepreneurs, taking their ideas from the lab to the market. We want them to be properly rewarded for their breakthroughs and their engagement with business. We are prepared to change IP laws if that is necessary. We know that more innovation activity will lift our nation’s productivity.

We want universities to help us build our sovereign capabilities. We are seeing how important this can be – with CSL Seqirus producing the AstraZeneca vaccine right here in this city. We will need our universities for the great national project of developing more of these capabilities - not just in medicine, but in security, manufacturing and energy.

And we want our universities to be our partners in policy making. We need our best minds to help us solve our biggest challenges. We need more academics to bring their expertise, rigour and creativity to our national priorities.

I believe this is an ambition that many in the tertiary sector and across the community share.

And now is the time to make this change, not just because our economy and security needs it, but because university business models have been severely disrupted by COVID.

Border closures and lockdowns have created uncertainty and some financial challenges for the sector. This Government has helped cushion the blow - including through our record funding of more than $20b in 2021, an increase of more than $2b over 2020.

These disruptions have highlighted that university business models can and need to become more resilient, sustainable and optimised for our national interest.

For more than a decade, the focus on international rankings has led to a relentless drive for international students to fund the larger research volumes that are required to drive up the rankings.

To be clear, we want and need international students in Australia. They have been great for our society, our economy, our diplomacy, and thousands have stayed and become outstanding citizens.

But COVID presents us with an opportunity to reassess the impact our universities can have, and to refocus on the main purpose of public universities: to educate Australians and produce knowledge that contributes to our country and humanity.

To realise the ambition I have articulated, the place we are starting is the translation and commercialisation of university research. This process – research moving from an idea to a proof of concept and through to prototyping, testing and release – is a powerful vehicle for increasing the impact of universities in our country.

It can create products, companies and jobs, strengthen nascent industries and lift long-run productivity. It can be a game-changer for our economic comeback.

Last year we announced $5.8m to begin to develop new solutions to raise our level of research commercialisation. We assembled a Taskforce of some of the most impressive minds in the country to provide advice. Jeff Connolly, the CEO of Siemens is chairing the Taskforce and is assisted by Deborah Terry, Alan Finkel, Michelle Simmons, Laura Tyler, Dig Howitt, Andrew Stevens, Paul Wellings, Shemara Wikramanayake and Cathy Foley.

Today, I am putting out the call to businesses, academics and the community, to work with us on these challenges. I am launching the Taskforce’s Consultation Paper to hear your big ideas on how we meet this challenge. The paper asks some broad questions, but also seeks feedback on some early ideas as to what a new scheme could look like.

We begin this process of designing a new commercialisation model with a keen awareness that it is an area where we have significant room for growth.

Consider some of the data.

On the first step in the commercialisation process —invention disclosure — survey data shows Australian public research organisations made an average of about 20 invention disclosures in 2016, roughly the same as in 2004 despite the more than fourfold increase in research output.

Moreover, Australia’s average rate of 20 invention disclosures compares to more than 40 in Canada, more than 60 in Israel, and over 120 in the US.

When you look at start-up companies founded per dollar of research expenditure, a similar story emerges. For every $1 billion in research expenditure, Australia produced 3 start-ups while Canada, the US and the UK produced more than twice as many.

We do not have enough collaboration between business and higher education on innovation projects.

Too often, our research does not make it through to translation and commercialisation – it falls into the ‘valley of death’ between academia and industry, between theory and real-world application.

I am not suggesting here that no research commercialisation occurs. There are outstanding examples across Australia, particularly in the health and medical area where entire ecosystems have been built around Melbourne and Monash in particular. The University of Queensland has been a commercialisation leader. CSIRO has had extraordinary success. Individual institutions have delivered some impressive results.

Many great programs have been introduced, much good work at an institutional level has been done.

But as the data shows, overall, we can do better.

We all share responsibility for this - governments, business and universities - because collectively we have not created the right incentives for a step change to occur.

Can we alter this situation? I am optimistic that working together, we absolutely can. There are four reasons for my optimism.

First, we have an incredible foundation of world class research in Australia. Our nation is home to thousands of exceptional academics and researchers - professors who are known and respected around the world and emerging experts whose work is on the cutting edge of human knowledge.

In the past year alone, Australian scientists have led breakthroughs that could create an early diagnostic test for Alzheimer’s disease, improve the reliability of quantum computers, and increase detection of improvised threats using drone technology.

In quality of research, we punch above our weight. We should feel great national pride in the contributions our university researchers have made to the world’s knowledge.

Second, we have some architecture already in place that has built relationships and expertise over time. Consider the CRCs, the Medical Research Future Fund, the Defence Science and Technology Group.

Third, business leaders tell me that they want to do more – and would if the rewards are there and people are incentivised to participate. If we are going to succeed, we will need industry to take risks on new ideas, increase collaboration with researchers and applying cutting-edge science to the development of new products and services.

But finally, and most importantly, I am optimistic because other countries show that it can be done if the settings are right.

Consider at least a few of the programs introduced around the world - some of which create incentives for businesses to reach across the “valley of death” and others which create incentives for universities to reach across. But they have all managed to narrow the gap of the valley - to make the time period between the primary research phase and the commercialisation phase shorter.

In the United States, for example, the Small Business Innovation Research Program comes at the problem of commercialisation from the industry-side, incentivising businesses to reach out across the valley of death and engage with cutting-edge research, pulling high-potential ideas and proofs of concept into the commercial sphere. Germany has taken a similar approach, targeting funding to research that allows its leading manufacturing firms to systematically and continuously apply cutting-edge knowledge to stay ahead of global competitors.

The US model has been remarkably successful. It has resulted in over 70,000 issued patents and supported the launch of almost 700 public companies over the past 30 years. A 2017 review found that the majority of participating businesses claim a patent and commercialise through the program.

Engagement with academia is critical to its success. More than 60 per cent of firms under this program had an academic founder.

The UK’s Catapult model and Japan’s Moonshot program have approached the challenge of commercialisation from the other direction. They specify areas of national priority, and fund collaborative research aimed to developing new products and solving significant policy issues.

Japan has announced the first Moonshot investments will target ultra-early disease prediction and substantial advancement of AI technologies.

I’ll point to one final model: Israel. It is perhaps the most dynamic, innovative economy in the world. The Israeli success story is less about government schemes than it is about the approach and culture of businesses and universities in the countries. Israeli firms lead the OECD in expenditure on R&D, and in return, they attract more venture capital investment per-capita than any other country.

Israeli universities have played a central role in this success. Entrepreneurship is at the core of many Israeli universities, and the Hebrew University of Jerusalem is a leading example. The university has earned more than A$20bn in commercialisation revenue. For academics, patents are counted alongside publications for the purposes of promotion.

The Chairman of the Israel Tech Transfer Network, Benjamin Soffer, is clear in his message of Israeli universities and indeed all: ‘Universities are reinventing themselves as microenvironments for innovation and entrepreneurship. A university that can’t demonstrate its impact on industry and the marketplace will become less relevant in the future’.

These examples show that it can be done! They prove we can go into this process with great energy and optimism. We need to study these different models in great detail to learn why they have had success.

Equally we need to be humble enough to learn from our achievements and failures in the past when pursuing similar objectives. And we need to learn why we have had such tremendous success in the medical and health fields.

We are not starting from scratch here. We already have some impressive architecture in place, as I have indicated. The Government has also changed many of its funding incentives to encourage commercialisation. For example, we adjusted the calculation for the Research Block Grant in 2014 to emphasise industry collaboration in research. The Linkage stream in the ARC Competitive Grants Program promotes collaboration between researchers and key stakeholders, including businesses.

The challenge is that much of this architecture needs to scale up if we want to achieve the success of the US or Israel. We need to think bigger.

As we develop this architecture further, we will ensure it is directed towards national priorities. We need to focus our efforts, and our best minds, more relentlessly on our biggest challenges as a nation – whether that is new products and services that build sovereign capability, or greater economic diversity and productivity, or solutions to our most persistent social issues. We need to unite around common missions that will deliver real benefits for Australians.

If we get this right, it will create significant economic and social impact for our nation. It can strengthen a more sustainable source of revenue for the universities. And the increased engagement between industry and universities can have broader benefits for teaching and learning. Industry involvement in university courses can improve the focus on teaching jobrelevant skills for students. In turn, greater collaboration in degree teaching builds relationships and creates opportunities for commercialisation – it is a virtuous cycle.

What are our immediate next steps?

We now need you to give us your ideas on what a new commercialisation model can look like. What are the key features that will support universities and businesses to increase our rate of commercialisation? How can we strategically direct our investment to de-risk universities and businesses reaching across the valley of death, and drive a higher return on public funding?

What I do know is that government alone cannot solve this. The valley of death will only be overcome with joint effort and shared investment. That requires change by universities, businesses and government. But we are up for the task.

And - importantly - I am willing to work with any university that wants to get ahead of the game.

To those university chancellors and vice-chancellors here today - I’m now talking directly to you. If you choose a bold and ambitious vision for your university, if you set an aspiration to be the Stanford or Hebrew University of Australia, you will have a committed partner in this Government.

And let me be clear: the direction I am setting today – which builds on the direction set by the PM over the past year – is not a minor or temporary part of our Government’s approach. It is at the very core of our higher education policy – how we will engage with universities, and how we will fund universities.

While the research commercialisation agenda is our initial focus, I concurrently want to continue our thinking on how universities can make a greater impact on our largest social challenges which don’t necessarily have a commercial outcome. As one Vice-Chancellor told me last week, this inevitably requires cross disciplinary teams and won’t necessarily lead to publication in top global journals. But it is critical for Australia, and there are many academics who want to be engaged in public policy problem-solving.

The initial focus though is the research commercialisation.

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I want to conclude with a classic Australian success story, which involves a professor at this very University. It’s a story that encapsulates what we want to achieve in this space.

In the 1970s, Dr Graeme Clarke led a team that invented the multi-channel cochlear ear implant to enable people to hear again. Fast forward 50 years, and Cochlear Australia is now a company with over one billion in annual revenue, employing more than 4,000 people and investing around $185 million each year in further research and development. More than 450,000 people worldwide have been provided with Cochlear implantable devices since 1982, helping people of all ages to hear and be heard.

Commercialisation is not just an opportunity to generate greater economic returns, it also increases the reach and societal impact of world-class research. Half a million people around the world can hear not just because the cochlear ear implant was invented, but because it was commercialised – produced at scale and available in markets around the world.

Cochlear is a great Australian success story, and we need more like it. I’m here because I believe our universities working with businesses can produce the breakthroughs to produce the next wave of Cochlear-scale companies – Cohlears not just in health, but in space, manufacturing, computing, AI, resources, and other priority areas.

We have an incredibly exciting opportunity this year to take one of our nation’s key assets, our world-class science and research,and use it to power our nation’s economic comeback. To raise productivity, increase economic diversity, and create good jobs for Australians, and set a new growth trajectory for this country.

I look forward to hearing from you and working with you over the coming months.