Super future for science funding?

Staff Association President Michael Borgas

Staff Association President Michael Borgas

Staff Association President Michael Borgas reports from the Science meets Superannuation forum and asks whether growing new revenue streams for science through superannuation represents a step in the right direction for science funding.

HELD in Melbourne recently, the Science meets Superannuation forum is the latest offering from Science and Technology Australia.

The inaugural event brought together key players from the superannuation sector, scientific research representatives, industry and innovation big thinkers, as well as Federal Ministers Chris Evans and Bill Shorten.

Australia lags behind other major economies when it comes to funding science. On the face of it, the national savings pool – our trillion dollar superannuation industry – seems a ready made solution to the challenge of creating new revenue streams.

At first glance, it seems like a good fit. Bill Shorten – responsible for superannuation at Cabinet level – neatly described the opportunity of the two industries working together as a prospective “grand bargain.”

However, the challenges are considerable. Mr Shorten admitted that “… the openness of superannuation to science (is) limited and science has not always been good at communicating its investment strengths.”

The problem is much bigger problem than that. It’s been a long time since we’ve had rain in the science funding desert.

As the new Science and Research Minister Chris Evans points out, when it comes to private sector investment, the figures here aren’t good.

Investment in university research by private companies is a paltry six per cent – lower than the US, Canada, Korea, China, Germany and the European Union as a whole.

Business spending on research and development is far worse than this – less than two per cent of revenue. And that’s taking into account the big money invested by resource companies chasing increased efficiencies in digging things up.

Despite coming off a low base, at least these two areas of investment are growing in real terms. Higher education research and business R&D budgets have grown annually by an average of 5.6 and 9 per cent, respectively.

As for publically funded scientific research, the drought continues. Despite claims of record investment, Government spending on science has not grown in real terms for almost a decade.

Scarcity of resources and the pressure to increase new revenue streams continues to fuel tension between applied and basic research, something we know only too well at CSIRO.

Encouraging a broader understanding and acceptance of research and innovations with investors is no bad thing, in and of itself.

Likewise, improved communication on the potential value of research to audiences that include potential investors, is broadly desirable.

However it remains to be seen if the trillions of dollars of Superannuation funds under management represent a genuine oasis in the science funding desert, or merely a mirage.

More information

Science and Technology Australia – media release

2 thoughts on “Super future for science funding?

  1. Scientific R&D is a high financial risk – most projects to not yield a financial return. I, and the general public, don’t want our retirement funds to be at high risk.

    Only occasionally is there a return on investment, and only rarely is there a major return.

    Further, superannuation companies have enough difficulty picking winners in the share and property markets. What skills do they have in picking winners in the scientific market?

    A far better approach would be what our south-east Asian competitor nations do: implement generous tax incentives to Australian businesses to perform R&D.

  2. It would clearly not be sensible or practical for superannuation managers to distribute research funds directly. They would have neither the skill nor the mechanisms to do this, and the risks in heavily investing in a small number of projects would be insuperable. Research as a general activity pays dividends, either directly or indirectly. But much of what we at CSIRO do for example is not captured by CSIRO but by individuals and, through improved productivity, employment, tax receipts, amenity etc, by society at large. (I note the recent CSIRO press release regarding irrigated wheat yields of 8 t / ha for example) Only the national government can put in place a mechanism to promote and manage research support from nationally significant entities like superannuation. I am not sure of the practicalities of this but, for example if the superannuation funds contributed to the pool of money available to national research agencies such as ARC, CSIRO, ANSTO, the various RDCs etc, they could be allowed tax benefits that are reclaimed by the members at retirement. (Limiting it to recognized agencies rather than allowing the growth of research brokers would reduce the likelihood of diversion and imaginative accounting, one would hope. Also, the research investment – tax cost equation would be much easier to establish). This would be both a selling point for the funds and a way of spreading the costs of research more evenly over time and space.

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