Introduction

The environment in which higher education institutions and industries interact in Australia has changed dramatically during the past decade. While links between the sectors have existed for some time, in the past they have tended to be intermittent and generally unsupported by wider institutional structures. Cooperation, involving activities such as research, training and consultancy services, has now become more frequent and more formalised as industries have found an increasing competitive advantage in relationships with universities. At the same time, higher education institutions have become generally more vocational in response to increasing demands for services and training, as well as in response to a more strongly competitive research funding environment.

The two sectors, previously very much independent, have now become more interactive and interdependent. Industry is now more than ever before a source of resources for research and teaching. For industry, universities are no longer simply a resource for carrying out basic research and producing well trained graduates; they are now often partners in research and development activities and on-going training programs for technical and administrative staff.

The modes and mechanisms through which cooperation between universities and industry occurs in Australia, however, need to be understood in the context of the local industry structure and the extensive reforms that have taken place in the Australian higher education system over the past decade.

The Australian Higher Education Sector

Australian higher education has been influenced primarily by models from the United States and Great Britain. This is in part because Australia's earlier universities were influenced strongly by British models, and also in part because many Australian academics have postgraduate qualifications from Britain and the United States. There are however, some notable differences. The student profile encompasses a much broader age range than in either the United States or Britain. The length of a generalist degree is a year shorter than in the United States and broader ranging than its British counterpart. Further, a larger number of diploma and graduate diploma courses are offered in Australian universities compared to their United States and British counterparts (Department of Employment, Education and Training 1993a).

Since 1987, there has been a substantial restructuring of Australian Higher Education. The binary system (colleges of advanced education and universities) which prevailed over a 23 year period from 1965 to 1988 was replaced in 1989 by a Unified National System (UNS). Now, almost all of the 45 previous 'teaching-only' colleges have been integrated with universities, and funded to carry out both teaching and research activities.

There are now forty publicly funded higher education institutions, four of which are not part of the Unified National System. In addition, there are also two private universities, although they are small, both in terms of research output and numbers of students (Department of Employment, Education and Training 1993a).

Most Australian universities were established under State or Territory legislation. The Australian National University and University of Canberra are established under Commonwealth legislation. The Federal Government, however, has accepted financial responsibility for the administration of the system. Although universities are accountable to both State and Commonwealth governments, they are considered to be largely autonomous bodies, responsible for managing their own resources and meeting self-established goals. Each university has a formal governing body, which is either the council, board of governors, or the senate. The membership of these bodies is drawn from industry, government and the community, as well as academics, graduates and students.

Teaching

There are around 490,000 equivalent full-time students in the Australian university system. Numbers vary between institutions from a maximum of nearly 31,000 EFTSU (Equivalent Full-Time Student Units) down to just under 3,000 EFTSU at the smallest institution (Department of Employment, Education, Training and Youth Affairs 1996a).

Growth in higher education during the 1980s is perhaps the most obvious feature of change during the past decade. A notable feature of the increase, however, is the disproportionate growth in some fields of study, shown in Table 1. Among the highest growth areas are fields associated with industry professions-business, nursing and engineering.

Between 1982 and 1992 annual student enrolments in business increased by 97 per cent; engineering enrolments by 68 per cent; and nursing enrolments increased twelve-fold, due to the transfer of nursing education from hospitals to universities. Humanities and the social sciences have also shown significant growth, while the physical, agricultural and medical sciences have grown at a more modest rate (see Table 1).

Table 1: Total Students by Broad Field of Study, 1982-1992

Source: Department of Employment, Education and Training, National Report on Australia's Higher Education, Table 3.7

While these figures illustrate the general growth in the system and structural changes such as the amalgamations of previous colleges of advanced education with universities, they also show that the most significant growth has been in areas where industry has a special interest in the nature of the courses being offered. These data reflect a more vocationally oriented university system and, as the case studies described in this study show, they also reflect a trend toward more structured cooperative relationships between universities and industry.

Research

Australian universities are major national performers of research and development as well as the primary source of trained researchers and specialised technical and professional personnel. About 27 per cent of all Australian research and development is carried out in universities and universities carry out nearly all the country's pure basic research. CSIRO and other government research agencies are significant performers of strategic basic and applied research in Australia. Many cooperative mechanisms encourage three way (university-industry-government laboratory) collaborations.

The Australian academic research environment is now more fiercely competitive in terms of access to government resources and increasingly dependent on funding from non-government sources. Australian universities remain, nevertheless, highly dependent on government funding. For example, of the total 1993 income of universities of $6,460.4 million, more than half was provided by direct Commonwealth grants (56%); 24.7 per cent was provided by the Higher Education Contribution Scheme and other fees and charges, 4.3 per cent was provided by State Governments; and 15 per cent came from donations and other sources, including industry (Department of Employment, Education and Training 1995c:4).

Table 2: Australia: Research and Development Expenditure by Sector of Performance and Type of Activity, 1992-93

	Per Cent GERD ($A6,309 million)
	Pure Basic Research %	Strategic Basic Research %	Applied Research %	Experimental Development %	Total %
Business	0.4	2.2	11.2	30.5	44.2
Government	1.0	7.0	13.8	5.8	27.6
Universities	10.7	6.4	8.2	1.6	26.9
Other	0.3	0.7	0.2	0.1	1.3
Total	12.3	16.3	33.3	38.0	100.0

Source: ABS 1995, Catalogue No. 8112.0

Government higher education research policy has placed great emphasis on making research more relevant to the nation's socio-economic needs, on directing funds to specific research areas, and on raising funds from business in order to support public sector research. As a result, funding has become highly competitive, and there is a greater emphasis on accountability. Decisions about where to direct funds and judgments about how effectively those resources have been used are now inescapable indicators of the new research environment.

Not only has the broad research environment become more complex and uncertain, but institutions have been compelled to deal with the changes more independently and productively. As a result, universities have adopted a more commercial approach to organising, planning and executing their research. Between 1981 and 1991, business sector funding for higher education research increased by 74 per cent, indicating a considerable growth in industry-university research links. Only about 4 per cent of university research funding in 1993 came directly from Australian industry (Department of Employment, Education and Training 1995c).

At the same time, government funding programs have become more focused on the promotion of industry-university collaborative research and are linked to formal university research strategies identified in annual institutional 'research management plans'. The emphasis has been on creating an academic system that has both concentrations of research strength but retains its diversity. One of the implications of pressures for concentration and diversity has been a growth in the numbers of university research centres. There are now some 900 research centres across the Australian higher education system (Hill and Turpin 1993). The majority of these bypass university funding by drawing on a whole range of industry and government contracts. Their structure is influenced by a range of interests, including scientific expectations, industry expectations, academic aspirations and commercial opportunities. These developments are not unique to Australia. In the United States similar structures have been described as the fastest growing academic units across the United States system (Lapidus et al. 1995). In Australia, as elsewhere, they reflect the developing multi-faceted nature of universities in the 1990s.

As well as providing a focus for concentration of research activities, the centres are a focus for the integration of different modes of industry and university cooperation. For example, many research centres are now a focus for postgraduate training, short course delivery for industry's training needs and a formalised structure for carrying out consulting work on behalf of industry. In at least two universities all PhD and all 'academic separately budgeted research' is concentrated in university research centres.

Research funding for universities in Australia comes from three broad sources: from government; from industry; and from the institutions themselves. Government funding includes research funding as part of the overall operating grants to institutions (general university funds-GUF) and funding that is provided directly and specifically for research (academically separately budgeted research-ASBR).

For the GUF there are two main sources of funding:

• a component of the general operating grant for universities; and
• research infrastructure support.

For ASBR there are a wide range of programs and potential funding agencies. Generally government funding in the ASBR category is provided through the following types of programs:

• competitive research grants;
• postgraduate research awards;
• research fellowship awards;
• research centre funding programs;
• collaborative grants; and
• commissioned research.

Research funding agencies include:

• the academic research councils-the Australian Research Council (ARC) and National Health and Medical Research Council (NHMRC);
• government 'missioned oriented' research granting schemes, such as for AIDS and 'greenhouse' research;
• government sponsored industry research and development councils in the agriculture, energy and resources sectors (see Appendix 7); and
• industry research associations and individual companies.

Table 3: Australian Academic Separately Budgeted Research by Field of Research and Source of Income, 1994

Source: Higher Education Financial and Publications Research Data, 1994

There are three points that should be made about Australian ASBR, shown in Table 3. Firstly, Australian ASBR is heavily concentrated in four main fields: medical and health, biological, general engineering and social science. Second, industry funding for academic research is concentrated predominantly in five broad fields of research: general engineering, chemical, medical, information and social sciences. Of all engineering sciences, nearly 40 per cent of expenditure is provided from non-government sources. Over 28 per cent of each of chemical, applied and medical sciences are funded by non-government sources.

A third important feature of the Australian system is that research activities are concentrated within a small number of institutions. For example, the top quartile of institutions accounts for 70 per cent of all research expenditure. The second quartile accounts for a further 20 per cent of research expenditure and the two lower quartiles account collectively for only 10 per cent of research expenditure. Research output patterns, in terms of publications, patents, etc., show a similar pattern across the different institutions in the system are but less concentrated. However, in spite of this concentration of research activities, recent studies show that some of the newer and smaller institutions are filling quite specialised research niches (National Board of Employment, Education and Training 1996b). Further, many of the newer and smaller institutions are proportionally more reliant on industry funding for their research activities. Consequently, many of this group of universities are developing complex alliances with other universities (often the larger and better funded institutions) and with local industrial enterprises. In other words, some of the newer institutions are more innovative and entrepreneurial in forging research and other links with industry.

Australian Industry

The Australian economy is comprised of a broad range of industrial sectors, from agriculture, mining and manufacturing to transport, tourism, communication and business services. Although the primary industries (agriculture and minerals) remain strong, over the past ten years the economy has been dominated by the manufacturing, wholesale, property/business industries and to a lesser extent, health and community services.

Other service industries, such as retail trade, communications, and finance and insurance have been steadily gaining prominence, in line with current trends throughout the western world. While in terms of contribution to GDP they are still far less significant than Australia's 'traditional' industrial sectors, estimates suggest that this gap will continue to close over the next decade.

Contribution to national GDP from the goods-producing industries has remained relatively stable over the past three years. Over a ten year period, however, there has been a relative decline. The two most significant contributions come from manufacturing, which in 1993-94 contributed 14.4 per cent to GDP, and wholesale trade, which in 1993-94 contributed 10.8 per cent to GDP. Finance and insurance, and property and business services have also increased their contribution to GDP steadily over this period. The mining sector, on the other hand, has experienced a continuing decline from the mid-1980s, when it contributed 6.6 per cent to GDP, to 3.8 per cent in 1993-94 (ABS 1996b:355-6).

The level of expenditure on research and development within the business sector in Australia has increased steadily from 1988-89, with a strong increase of 10 per cent in 1994-95 to just under $3.5 billion or 0.74 per cent of GDP (ABS 1996a). Over the decade to 1994-95, Australian business research and development almost doubled, as a proportion of GDP, and now comprises half of all Australian research and development investment. These investments are predominantly concentrated in the manufacturing sector. The majority of research and development expenditure was concentrated in the following industry categories-motor vehicles, paper products and printing and food and beverages.

Summary of the Australian University and Industrial Environment

Cooperative links between universities and industry are taking place in an environment where Australian universities have undergone considerable growth. They have become more accountable to government for both research and teaching activities but have also become more fiercely competitive for government funding. In addition, they have become more dependent on autonomous institutional efforts in terms of raising funds from non-government sources for both teaching and research activities. On the one hand, universities have responded by encouraging individual academic staff to engage in commercial activities and interact more directly with industry. However, at the same time, because government funding for institutions is based on their success in attracting funds and performance output, most institutions are endeavouring to create formal structures for managing their industrially-oriented activities.

The industrial environment is characterised by a business sector that although initially weak in research and development investments by OECD standards has shown very considerable growth. Over the past decade manufacturing, electronics and computing, professional instruments and pharmaceuticals and non-electrical machinery have all registered steady increases in research and development investment. This increase in investment corresponds with a steady increase in the employment of research scientists and engineers by industry (Department of Industry, Science and Technology 1996b).

Also over the last decade or so, a number of government programs and initiatives have been developed to encourage and support cooperation between universities and industry. Perhaps the most striking feature of the industry and academic environment has been the growth of formalised or structured arrangements to manage such cooperation. These structured arrangements are providing a focus for integrating different modes of cooperation:

• technical and scientific training;
• research; and
• consulting and services.

The following section discusses the nature and current status of these modes of cooperation, the different mechanisms through which cooperation takes place and the role of government in supporting them. Our investigation shows that cooperation between the sectors is growing strongly and that the mechanisms for cooperation are extremely diverse. Further, most cooperative activities rely on more than one support mechanism. Often, industry and university links are maintained through a complex network of activities, some informal and loose-knit, others quite formal, long-term and highly structured. At the same time, however, differences in modes of cooperation are becoming less distinct.

These trends have important implications for national strategies for science, technology and industrial development. They also carry implications for international collaboration in science, technology and socio-economic development.