IRU Response to the Panel’s Research and Development Tax Review

The Review Panel, chaired by Mr Bill Ferris AC (Innovation Australia), Dr Alan Finkel AO (Chief Scientist) and Mr John Fraser (Secretary to the Treasury) was asked to identify opportunities to improve the effectiveness and integrity of the programme, including how its focus could be sharpened to encourage additional R&D. The Panel’s overall assessment is that the programme “falls short of meeting its stated objectives of additionality and spillovers” and that the programme could be “better targeted”.

In general the Panel’s report is in line with the IRU recommendations (below) to improve the incentives for industry to work with publicly-funded research organisations and to simplify the administration of the tax incentive. As expected, the Panel does not make a specific recommendation to include research in social sciences, arts and humanities (currently excluded) in the list of eligible activities. The Panel comes to the conclusion that it is too soon after the programme’s introduction to change the definition of eligible activities and expenses under the law.

The Panel makes six key recommendations: 

  1. Retain the current definition of eligible activities and expenses under the law, but develop new guidance, including plain English summaries, case studies and public rulings, to give greater clarity to the scope of eligible activities and expenses (Section 4.1, p. 30).
  1. Introduce a collaboration premium of up to 20 percent for the non-refundable tax offset to provide additional support for the collaborative element of R&D expenditures undertaken with publicly-funded research organisations. The premium would also apply to the cost of employing new STEM PhD or equivalent graduates in their first three years of employment. If an R&D intensity threshold is introduced (see Recommendation 4), companies falling below the threshold should still be able to access both elements of the collaboration premium (Section 4.2, p.  35).This is line with the IRU’s recommendation for strengthening the incentive for Research and Development carried out through publicly-funded research bodies 
  1. Introduce a cap in the order of $2 million on the annual cash refund payable under the R&D Tax Incentive, with remaining offsets to be treated as a non-refundable tax offset carried forward for use against future taxable income (Section 4.3, p. 37).
  1. Introduce an intensity threshold in the order of 1 to 2 percent for recipients of the non-refundable component of the R&D Tax Incentive, such that only R&D expenditure in excess of the threshold attracts a benefit (Section 4.4, p. 39).
  1. If an R&D intensity threshold is introduced, increase the expenditure threshold to $200 million so that large R&D-intensive companies retain an incentive to increase R&D in Australia (Section 4.4, p. 41).
  1. That the Government investigate options for improving the administration of the R&D Tax Incentive (e.g. adopting a single application process; developing a single programme database; reviewing the two-agency delivery model; and streamlining compliance review and findings processes) and additional resourcing that may be required to implement such enhancements. To improve transparency, the Government should also publish the names of companies claiming the R&D Tax Incentive and the amounts of R&D expenditure claimed (Sections 5.1-5.5, p. 45).This is in line with the IRU’s recommendation for an efficient user-friendly application process.

Further information can be obtained here: https://www.business.gov.au/Assistance/Research-and-Development-Tax-Incentive/Review-of-the-RandD-Tax-Incentive

Read the full IRU response below.

VET Student Loans Bill 2016: Higher education implications

The decision to separate the VET loans away from higher education loans reduces the habitual confusion of VET specific issues into higher education debates.  For instance, a significant aspect to the Parliamentary Budget Office’s exaggerated assessment of the long term cost of the Higher Education Loans Program was the impact of the rapid escalation in VET FEE-HELP (see Three-problems: IRU comment on PBO).

The VET Student Loans Bill 2016 and the associated support bills set up a new loan scheme, with rules to contain bad practice among some providers under VET FEE-HELP.  In particular, there are prohibitions about using the loan to induce people into a course and arrangements to recover from providers a loan contrary to the intentions of the scheme.

For Innovative Research Universities (IRU), the interest in the Bills lies in the potential incentives for education providers that operate in both vocational and higher education and the potential for any of the rules introduced for vocational education to be carried over into higher education.

Provider incentives

The action to contain the operation of low quality providers seeking to use the current VET FEE-HELP arrangements to maximize profits while providing little or no training to enrolled students also has implications for the legitimate providers.

The cap on loan amounts and potentially on fees may encourage providers to consider whether a similar course adapted to secure accreditation as higher education qualification such as a diploma or advanced diploma would be a better option in the future.  The advantage would be that the provider could set a charge at the level they deem suitable for the course.  If accredited through the Tertiary Education Quality and Standards Agency (TEQSA) and then approved for access to FEE-HELP there may be some shifting of loans from one scheme to another.

Higher Education accreditation is a more complex and time consuming process than in VET hence we are not arguing there would be a major new avenue for exploitation.  However, the potential for the shift does need to be recognized.

Constraints on marketing

It is essential to prevent the abuses where some VET providers used VET FEE-HELP as a means to get individuals to sign up for courses they would not complete.  It is also important that in doing so legitimate encouragement of Australians to consider their education and training needs not be suppressed and that competitive marketing of the advantages of a provider not be prevented.

Universities seek to attract potential students to enroll.  It is a natural part of ensuring that every Australian considers their education needs to gain suitable education and training following school.  In doing so, universities provide information to potential students, promote the potential for university education in schools and other arenas and use third parties in doing so.

The provisions of the VET Student Loans Bill 2016 are carefully drafted to focus on preventing providers attract enrolments through use of the potential for a loan.  Assuming they come into effect, their impact on legitimate VET providers should be monitored and the implications for all good providers in either sector considered.  Our initial assessment is they appear targeted to the purpose with minimal impact on good marketing practice.

Preparing graduates well for the future

With predictions that up to 40% of jobs will change completely or no longer be in existence in the next 20 years, how are universities preparing graduates for the ‘new economy’?  Will graduates in WA be ready for the post mining boom economy?

That’s the question being asked by The Innovative Research Universities (IRU) meeting today and tomorrow (Thursday) at West Australian member, Murdoch University, to discuss how best to ensure we create ‘Globally Relevant Graduates’.

Jan Owen, CEO of the Foundation for Young Australians, tells us that the current generation of Australians will be the first to be less well off than their parents. Increased casualization of work, the need for multiple careers and periods of entrepreneurship are predicted elements of the future which graduates face.

In the 1980s Australia responded to the high level of youth unemployment by doubling completion of year 12, reaching 77% by 1992.

“It is now clear that a reasonable expectation for employment requires a higher education or vocational qualification following on from school.  In response IRU universities have expanded since 2009 to provide the opportunity to all capable and interested applicants” said Conor King, IRU Executive Director.

“We need to ensure now that we support all those students fulfil their potential and are ready for the changing world of work ahead.  This requires universities to integrate the disruptive technologies affecting all areas of work across the world.”

The IRU Forum features external speakers from business, start ups and community giving their perspective about what is needed from university for future graduates.

IRU leaders will then use these challenges to identify ways ahead to meet graduate needs.  This includes agreeing the priority areas to work together to improve outcomes led by the IRU Vice-Chancellors’ Fellow, Dr Jessica Vanderlelie, how to work better with businesses in the communities around IRU members, and the next generation of integrating work based learning into curriculum.

The Innovative Research Universities group is a policy group positioned at the constructive centre of higher education and research policy in Australia. Existing in outer urban areas of their states’ capitals and in major non capital cities IRU universities are committed to inclusive excellence in education for the communities they serve. Inclusive excellence is the IRU commitment to reach and serve local and global communities through an effective response for all who seek our services at the highest standards in teaching, learning and research.

IRU comprises Murdoch University, Flinders University, La Trobe University, Griffith University, James Cook University and Charles Darwin University.

IRU submission: 2016 National Research Infrastructure Roadmap

High quality and accessible Research Infrastructure: IRU submission to 2016 National Research Infrastructure Roadmap

To maximise its investment in Australia’s research system, the government needs to commit to long term investment in research infrastructure that is accessible to all researchers and potential end users.  The requirement for national access is usually interpreted as ensuring that researchers outside the main cities can access resources, but it equally means that a resource could be located anywhere capable of supporting it, with those in major city areas as able as anyone to access resources remotely.

Some resources have a natural home but most resources have no intrinsical locational logic.  These can be used to stimulate the whole Australian research system through a distributive intent, with resulting benefits for regions and potential reduction of pressure on major population centres.

IRU’s mapping of the spread of Australia’s currently-funded research infrastructure shows that almost 80% is located in cities and inner cities.

Geographical spread should be a key factor in determining the priorities in the 2016 National Research Infrastructure Roadmap.

Read the IRU’s submission to the 2016 National Research Infrastructure Roadmap. 

Read the Read the IRU’s analysis of the spread of currently-funded NCRIS projects.  

Access the IRU NCRIS mapping database. 

Improving equity in higher education participation – IRU response to HEPP evaluation

Without a constructive Government response to the evaluation, the next round of HEPPP cuts risks undermining a program critical for educating all students well. It is essential that the long-term program, sustains the incentive to enrol all suitable students regardless of background.

Hence a funding stream tied to enrolments of low SES students and other underrepresented groups remains a core need of an effective higher education funding system.

Based on the original proposal for HEPPP and redressing the history of its implementation the future scheme should involve:

  1. inclusion of a significant loading in the Commonwealth Grant Scheme (CGS) addressing student background, to reward enrolment of a diverse student population broadly matching that of Australia;
  2. maintenance of an effective HEPPP program targeting the development of interest in higher education among communities and individuals less likely to aspire to university and support for their educational development; and
  3. sensible reporting and acquittal arrangements that do not hamper the constructive delivery of student supports.

Read the full response below.

Structural Review of NHMRC’s Grant Program: IRU Submission

The restructure of Australia’s health and medical research grants must retain the focus on supporting optimal research leading to the best possible health and medical outcomes for all Australians .

The individual submissions of IRU member universities provide a detailed assessment of NHMRC’s proposed three models.  While raising a number of interesting options, our conclusion is that a better model is needed such as the Griffith model four that is structured to achieve the desired health outcomes rather than the desired outcomes for medical research careers.

IRU supports the approach of restricting the number of grants held by Chief Investigators but argues that this is not yet suitable for Indigenous health research and that it creates issues for researchers from enabling disciplines.

Read the IRU submission downloadable here.

Read the IRU members’ submissions here: Griffith University, (model 4), Flinders University, La Trobe University and CDU.

TEQSA’s proposed External Reporting program: IRU Submission

The IRU supports the intention of the Tertiary Education Quality and Standards Agency (TEQSA) to use its data sets to provide:

  • better information about its actions; and
  • evidence of broad trends about how higher education providers are achieving or not quality outcomes.

Done well, it will:

  • assist universities understand where they stand against other universities and providers, making any adjustments considered useful; and
  • provide an insight to TEQSA’s thinking and assumptions.

It is essential that the release of information by TEQSA is designed to improve understanding of quality strengths and potential weaknesses across providers while avoiding creating unfounded concerns or targeting any individual provider.  Issues with individual providers should be addresses through TEQSA’s formal regulatory activity in response to any concerns about achievement of standards by a provider.

The consultation paper proposes five kinds of information for release. Read the response in full attached.

Driving Innovation, Fairness and Excellence in Australian Higher Education

The experience of the past three years, 2013 to 2016, shows the great difficulty for implementing major changes to higher education funding and regulation as a single package.

The need for change is driven by the impact of making university an integrated part of the education system, accessible by any Australian with the aspiration for university study and the capacity to gain from it combined with expectations for change in how higher education is delivered over the coming decade.

The way ahead is to concentrate on achievable, useful changes where each can be considered and its impact assessed.  Changes should be directed at ensuring an effective Australian university system that meets the needs of all Australians for well-educated graduates and valuable research.

The Government’s fiscal challenge remains clear.  Expenditure on universities and students will be examined as much as other areas.  However, without the necessary resources from Government, students and business, universities will struggle to continue to deliver excellence in teaching and learning and research.  A major cut to funding is not a useful way ahead.

In contrast to many areas of Government expenditure, investment in education, including higher education, is about improving longer-term economic and social outcomes, with a return to Government revenue.

Recent graduate outcomes confirm that graduates remain better positioned than those without a degree while showing the impact of slow economic growth and sluggish employment opportunities.  Studies of graduates over the longer term confirm the advantage and suggest that the opportunities for each individual following a degree are better than if they had not undertaken it.

The IRU proposed seven actions consistent with three objectives to guide changes for the medium term.

Objectives

  • demand driven funding as the core funding mechanism for supporting all aspirants to gain the higher education that they need including where they opt for an initial ‘sub-bachelor’ degree;
  • base university revenue sufficient to maintain universities’ core capabilities to deliver student learning outcomes and research to meet future needs; and
  • a focus on allowing universities to opt in to changes with long term significance, testing out changes and encouraging incremental take up.

Actions

  1. A commitment to support each Australian achieve their potential with an initial expansion of sub-degree places, targeting regions of under attainment.
  2. Maintenance of an effective HEPP program with sufficient funding that it encourages universities to focus on enrolling students from all backgrounds and rewards those who do so best.
  3. Targeted support for universities with ‘outer metropolitan’ and ‘regional’ bases to support the effective Australia wide access to university education and research without propping up failing aspects of a university.
  4. Further exploration of mechanisms that encourage universities to develop some areas of high achievement, without constructing complex interventionist approval mechanisms.
  5. Extending and improving information about student and graduate outcomes.
  6. Reworking of the standard Commonwealth Grant Scheme (CGS) and student payments based on:
  • fewer, clearly distinct, funding bands driven by an assessment of the reasonable resource standards targeted at future requirements to deliver expected learning outcomes;
  • simplified student charges in which no student pays any more than the current highest charge;
  • a factor addressing student background, to reward enrolment of a diverse student population; and
  • consideration of an additional factor targeting student outcomes against university level targets tied to accessing higher levels of revenue from Government and student combined.
  1. Adjust HELP repayment arrangements in ways that speed up repayment but which do not affect the core elements of HECS-HELP.

Let’s focus on achievable, useful changes

Innovative Research Universities (IRU) congratulates the Liberal National Coalition on its return to government following the 2016 election.

IRU looks forward to continuing to work with Senator Simon Birmingham, whose reappointment will allow continuity in developing a revised Government approach to supporting an effective Australian university system that meets the needs of all Australians for well-educated graduates and valuable research.

We also welcome the newcomers to the Industry, Innovation and Science portfolio namely Minister Greg Hunt and Assistant Minister Craig Laundy as well as Senator Nigel Scullion who retains the Ministry for Indigenous Affairs.

The next three years will continue to be challenging.

The Government’s fiscal challenge remains clear.  Expenditure on universities and students will be examined as much as other areas.  However, without the necessary resources from Government, students and business, universities will struggle to continue to deliver excellence in teaching and learning and research.  A major cut to funding is not a useful way ahead.

We need to concentrate on achievable, useful changes that improve how universities operate, and step back from articulating major reform packages that cause much debate but little change.

For this to occur, all sides of the Parliament need to focus on constructive consideration of potential changes.

IRU supports focus on internships for researchers

Innovative Research Universities (IRU) supports the Coalition’s $31.2 million commitment in internships and post-school career advice for women and girls aiming to pursue a career in science, technology, engineering and maths (STEM).

The IRU has consistently called for the need to improve opportunities for researchers to work in industry and for career paths that move between industry and other settings.  Hence the focus on internships for female PhD researchers is commendable.  IRU equally supports the goal of improving gender equity in STEM, in line with the Science in Australia Gender Equity (SAGE) programme.

“Such initiatives have the potential to enhance much-needed links between industry and researchers.  We look forward to industry taking up the challenge to make this successful,” said Professor John Dewar, Chair of the IRU group.

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 For comment contact: IRU Marketing and Media Advisor, Jo Smith M: 03 9479 2134/0403 222 528