4 Reforming competitive programmes

4.1 The Australian Research Council together with the National Health and Medical Research Council are the main funding bodies in Australia for basic research. The role of the National Health and Medical Research Council is dealt with elsewhere. The Australian Research Council allocates funds within its charter to the country's most capable researchers through a competitive process of peer review.

4.2 The open and competitive nature of the research funding programmes together with reliance on peer review provide an important mechanism for assuring the quality, international benchmarking and reputation of Australian research.

4.3 To strengthen Australia's capacity to support high quality research, the Government believes that reforms to the Australian Research Council programme structure, assessment processes and organisational structure are needed to improve:

• effectiveness in achieving national goals and responsiveness to new directions in research in a rapidly changing scientific, economic and social environment;
• efficiency of the funding process; and
• greater transparency and accountability.

Improving effectiveness

4.4 The Government believes that investigator-initiated proposals and the associated processes of peer review are essential elements of the national research effort. The effectiveness of funding processes will depend on the capacity of the Australian Research Council to be flexibly organised and responsive to innovation and excellence in research proposals. To achieve this, the concept and practice of peer review needs to be enhanced.

Enhancing peer review

4.5 Enhancing peer review involves:

• improving the capacity to identify and fund excellent investigator-initiated research which falls outside traditional discipline boundaries or which is proposed by investigators with a limited track record;
• providing a greater role for users in shaping funding decisions; and
• improving the capacity of the peer review process to discriminate between high quality proposals.

4.6 Increasingly, the important and interesting scientific questions are not disciplinary ones but problem-based ones which demand cross-disciplinary research solutions. In addition, many ground-breaking discoveries often occur at the interstices of disciplines.

4.7 One of the limitations of the peer review process as it currently operates is its inherent conservative tendency arising from its disciplinary focus and emphasis on the track record of investigators. Whilst this is understandable given past patterns of research, a preference for known performers and research within existing boundaries may limit opportunities for the funding of innovative and breakthrough types of research, particularly by emerging researchers.

4.8 The peer review process needs to be flexible enough to rigorously and fairly evaluate the quality of proposals involving novel, innovative research directions and cross-disciplinary work. It also needs to protect the interests of early career researchers and others who, although lacking an extensive track record, appear to have the potential to contribute to breakthrough discoveries.

4.9 The National Science Foundation in the United States deals with these issues, in part, through the operation of its system of programme managers—typically scientists engaged by the National Science Foundation, either as visiting fellows or permanent staff. The programme manager plays a valuable role in identifying, monitoring and responding to key research developments and issues, especially of a cross-disciplinary kind. While it is not proposed to replicate the National Science Foundation model in the Australian context, given the wide differences in national circumstances and needs, this aspect of the National Science Foundation arrangements has potential to be adapted to Australian circumstances.

4.10 The engagement by the Australian Research Council of several visiting researchers, with experience in research management, as full-time programme managers working with a part-time expert advisory committee, would provide the Australian Research Council with greater flexibility and capacity to respond to emerging disciplinary and cross-disciplinary developments and innovative approaches to research.

Increasing the role of users in defining the research agenda

4.11 The most effective way of determining the quality of research proposals is through review by experts in the relevant field(s) of research. The Government believes that the strengths of the peer review process must be retained, while taking account of the observations in 4.6_4.7.

4.12 While acknowledging that the benefits of basic research are long-term or may be unknown, users of research are also able to assist in identifying the

potential relevance and contribution of research. Users already influence the research agendas of institutions, individual researchers and research teams in many ways. Contract research and research involving collaboration with private firms and public sector organisations is by its very nature user-oriented. Such activity may have flow-on effects by stimulating investigator-initiated activity and raising fundamental research questions. As universities undertake more user-funded research, user impact on the direction of research will necessarily grow.

4.13 The Government believes that a user perspective on the merit of proposals in terms of future benefits to society will provide an important adjunct to the more traditional processes of peer review. The Government accepts that decisions regarding the provision of publicly funded grants should continue to be based on the excellence of proposals. At the same time, the involvement of users would help both in discriminating between proposals and also in achieving the public acceptance of outcomes.

4.14 The Government proposes that the peer review process be expanded through the inclusion of users in a broad discipline area on the committees of general discipline experts. In addition to including users at this level in the Australian Research Council structure, the Government believes that there is a need to broaden the membership of the Council itself to reflect a diversity of knowledge producers and users in universities, industry, public agencies and the community. Further detail on the Australian Research Council's governance and organisational structure is discussed in Chapter 8.

Improved discrimination between high quality research proposals

4.15 The overall high quality of research proposals received by the Australian Research Council requires a fair and sensitive discrimination process. Determining which proposals should be funded requires fine judgement at the margin, as choices must often be made between many proposals of similar quality. To improve the Australian Research Council's capacity to make these funding judgements, each committee will be assisted by discipline-specific readers, including international experts, who will provide, electronically, ranked assessments of proposals in that area of research. The increased use of international experts will further enhance the reputation of Australian research as being at the forefront of international practice.

Improving efficiency

Fewer, more flexible programmes

4.16 At the national level it has been estimated that, including those administered by the Australian Research Council and National Health and Medical Research Council, there are over 40 competitive research granting programmes relevant to universities including Cooperative Research Centres, Special Research Centres, rural industry R&D funds, industrial research collaborative grants and others. The Australian Research Council itself administers some nine competitive funding programmes, which range from the Large Grants programme, with an annual budget of approximately $100 million, to the Special Research Initiatives programme with a budget of approximately $250 000.

4.17 Provided there is little overlap of purpose between agencies, the existence of a plurality of research funding agencies has much to recommend it. Diversity in funding sources should lead to greater diversity in the research undertaken by universities.

4.18 At the level of the research funding agency, however, it is less clear that there are benefits in having a large number of programmes, several with small budgets and highly specific objectives. In the case of the Australian Research Council, there is a strong argument for reducing the number of programmes, and for their rationalisation into a set of larger, more coherent, better integrated and more flexible programme streams.

4.19 The current arrangements place a heavy burden on institutions, researchers and the assessors engaged in the peer review process. Over time they have led to high indirect administrative costs (primarily opportunity costs) relative to the size of the grants awarded.

4.20 More broadly, the balance struck between the funding of different forms of research activity is something which should appropriately emerge as a consequence of the development and evolution of Australian research. The Australian Research Council should possess the flexibility to support excellence in whatever form it occurs.

4.21 To provide the level of flexibility needed to support investigator-led research in a rapidly changing environment, the Government proposes that the current array of competitive programmes referred to the Australian Research Council should be rolled into a single flexible programme with broad strategic objectives.

4.22 This programme would provide grants to individuals, teams and institutions based on an open national competitive process. It will subsume all those application-based programmes currently referred to the Australian Research Council with the exception of the Small Grants Scheme.

4.23 The flexibility afforded by this broad programme structure should also enable the Australian Research Council to introduce more than one application and funding round per year, which in turn will improve the opportunities for universities to respond to new research developments in a rapidly changing environment.

Use of technology

4.24 The introduction of the early stages of an electronic platform for receiving and assessing applications for grants has assisted significantly in recent years in the management of the annual granting process. The extension of this platform to all aspects of the application, assessment and reporting process is a high priority and will be made simpler through the introduction of a more generic programme structure. It will also enable more than one application and funding round per year.

Improving transparency and accountability

4.25 Under the current `dual' arrangements, funding for research is a shared responsibility of granting agencies and institutions. Competitive grants allocated by the Australian Research Council (and other funding bodies such as the National Health and Medical Research Council) do not (and are not intended to) cover the full costs of research projects. Funding for infrastructure on-costs, some investigator salaries and other associated costs are funded through other mechanisms.

4.26 A large component of infrastructure on-costs is funded through the Research Infrastructure Block Grant (RIBG) Programme. RIBG funds are currently allocated on the basis of an index of success in gaining national competitive grants over the previous two years. Some investigator salary costs are met by institutions from operating grant or other sources. Basic infrastructure such as libraries, computer networks and capital infrastructure may be funded from the Research Quantum, the capital roll-in components of operating grants or general operating grant funds.

4.27 There are both benefits and risks associated with these arrangements. On the one hand, such arrangements recognise that much of the infrastructure which supports research and teaching is shared.

4.28 On the other hand, failure to identify the full costs of research and ensure the accountability of the funding partners (granting agencies, universities and others) for their respective inputs has potential negative impacts. Institutions may fail to support grant-funded activities to the level necessary to ensure that they have the maximum chance of achieving successful outcomes, preferring to utilise what are discretionary funds to meet their own (legitimate) priorities. Granting bodies may increase their demands on institutions—e.g. to commit institutional funds as a condition of receiving certain types of grant funding—in an effort to make available funds go further by seeking growing levels of institutional commitment.

4.29 A more transparent set of arrangements involving explicit identification and agreement over inputs would go a considerable way to addressing these issues. One important means of achieving greater transparency would be for granting bodies to require identification of the full costs of proposals for which funding is sought, together with an attribution of these costs to the respective funding sources. Whilst accepting this may be difficult to achieve in practice, greater awareness of the costs of research activities would reduce the likelihood that the parties will under-fund research proposals.

4.30 In relation to the infrastructure funding provided through the RIBG Programme, the allocation of such funds as part of the project grant would significantly increase the transparency of arrangements through a more obvious and direct relationship than is currently the case between infrastructure funding and actual grants received. It would also provide an incentive for granting bodies to focus on the total funding available in allocating funds.

4.31 The Government proposes that the RIBG Programme be abolished and that funds associated with the programme be allocated to the relevant Commonwealth granting agencies in proportion to their share of total national competitive grant funding. Granting agencies should be expected to include an infrastructure overhead component in competitive grants.

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