Knowledge and Innovation: A policy statement on research and research training

3.         Performance-based funding

Performance-based block funding was proposed in the discussion paper to support institutional research and research training and received widespread support. The Government believes that this approach will best recognise and reward those institutions that provide high-quality research training environments and support excellent and diverse research activities.

Two new performance-based funding schemes will be introduced: an institutional grants scheme providing block funds for general research and research training infrastructure, and a scheme providing grants to institutions for research training scholarships.

The Government believes that institutions need the flexibility and autonomy to manage their own research activities and set their own priorities, and that this can best be provided through block grants. The Institutional Grants Scheme (IGS) will support the general fabric of institutions’ research and research training activities, and assist institutions in responding flexibly to their environment in accordance with their own strategic judgements. The new scheme will absorb the funding previously allocated for the Research Quantum and the Small Grants Scheme.

Funding under the IGS will be allocated on the basis of a formula that takes account of each institution’s success in attracting research students, in attracting research income from a diversity of sources, and in the quality and output of its research publications. The measures of research income and publications for each institution will be averaged over a two-year period to moderate the impact of variability between years.

The weights assigned to each element of the formula will be set at 60 per cent for research income, 30 per cent for research student numbers and 10 per cent for research output, in the form of a revised measure of publications and publication equivalents. The elements of the formula and their weights will be reviewed periodically, in consultation with the sector, on the basis of evaluations of their impact.

Research income

Research income reflects the capacity of an institution to undertake research. By including research income in the formula, recognition is given to the fact that institutions incur additional costs in undertaking research beyond the specific costs of research projects. Under the current arrangements, income from the ARC and other national competitive grants attract a ‘double weighting’ in the funding formulae. This feature provides institutions with a strong incentive to seek research income from competitive grants rather than other sources, such as industry.

The Government considers that the single best mechanism to encourage institutions to be more outwardly focused in their research—in regional, national and international terms—and more effective and active participants in the national innovation system, is to weight equally research income from all sources. While some individuals have suggested that this approach may devalue fundamental research, the Government believes that funding levels for fundamental research are better able to be preserved through the Government’s decision to provide guidance to the ARC on the balance between fundamental and more applied research.

For the purposes of the allocative formula, the following OECD definition will be used for research:

Research and experimental development comprises creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications.

The current three categories for reporting research income will be retained, viz. ‘National Competitive Research Grants’, ‘Other Public Sector Competitive and Non-competitive Research Funding’, and ‘Industry and Other Funding for Research’. The existing guidelines relating to those categories are retained. There will be no adjustments to include research–related activities leading to innovation, as this proposal in the discussion paper was not supported.

Donations and bequests dedicated for research will be included in sources of income.

Research student numbers

The inclusion of research student numbers in the formula recognises the general costs of sustaining quality research training environments beyond the specific tuition costs involved in student supervision. The formula will be sensitive to the size and composition of the research student body of an institution, weighted to reflect cost differentials associated with broad fields of research.

Quality of research output

The formula will also reward institutions on the basis of their quality of research outputs through the inclusion of an amended publications measure put forward by the Australian Vice-Chancellors’ Committee. The new measure will ensure that those in the arts, humanities and social science fields will receive equal recognition as those areas that can more readily attract research income from external sources.

A research output index will be developed for inclusion in the formula. This will include quality publications (refereed journal articles, books, book chapters and refereed conference papers), refereed designs, patents, and exhibited original works. The composition of the output index will be reviewed periodically in consultation with sector.

Previous experience with research publications measures and associated audits of these has demonstrated the need to include a diversity of outputs while avoiding undue proliferation, and to verify their quality using academic rather than accounting criteria. The Government recognises both the importance of assuring quality in measures of research output and the complexity of such a task. A valid and reliable approach requires transparency and the exercise of informed judgement. The responsibility for verifying the quality of research outputs is best given to the academic community itself. Participating institutions will be asked to agree on the standards and criteria to be applied and to arrange appropriate verification processes.

The research outputs of each institution will be published annually as an appendix to its Research and Research Training Management Plan.

Eligibility

All institutions undertaking research and research training, including Bond University and the University of Notre Dame Australia, will be eligible to receive block funding from the IGS on the condition that they furnish an acceptable Research and Research Training Management Plan and are listed on the register of bodies for the Australian Qualifications Framework.

Research training represents one of the most significant areas of national investment in research, and the provision of research training is an important distinguishing feature of universities. Research students are a major resource, underpinning much of the leading edge research conducted around the world, providing on-going renewal of the research and academic workforces and aiding in the transmission of knowledge and skills within and between the research and wider communities as a result of interpersonal networks.

The discussion paper identified some persistent concerns identified by students, research institutions and employers regarding the quality and breadth of research training including:

• research programmes that are too narrow, too specialised and too theoretical leading to graduates whose communication, interpersonal, and leadership skills require further development;

• a research training environment associated with poor supervision, inadequate levels of departmental support and limited access to quality infrastructure;

• a mismatch between the research priorities of the institution and the interests of students;

• limited opportunities for students to gain experience in appropriate research environments, which tends to promulgate a cultural gap between academic researchers and staff in industry; and

• high attrition rates and slow rates of completion for research students.

The discussion paper noted that much of the responsibility for reform of postgraduate training rests with institutions, particularly in relation to the design, relevance and quality of research training programmes.

The Government has decided that funding for research training will be allocated to higher education institutions through HECS-exempt scholarships on a performance basis. Institutions will allocate the scholarships to students undertaking PhDs or Research Masters courses. In recognition of the important contribution of research students to the national research and innovation system, students occupying a Commonwealth-funded place will not incur fees or be liable for HECS. The new arrangements will provide incentives to enhance the quality of research training provision in Australia, to improve the responsiveness of institutions to the needs of their students, to ensure the relevance of research degree programmes to labour market requirements and to improve the efficiency and effectiveness of research training.

As a further step in nurturing the development of the next generation of Australian researchers, the Government is committed to the expansion of opportunities at the postdoctoral level. The Government will seek advice from the ARC on the most effective mechanisms for achieving this.

Eligibility

The Government will allocate funds for research scholarships to institutions that are accredited and quality assured. Institutions will determine their student admissions and the internal allocation of research scholarships. Scholarships will be available for students who enrol in accredited courses of study leading towards a research higher degree. Such courses will include a minimum of two-thirds of their assessable content by research and the assessment processes will involve qualified examiners external to the institution.

Students admitted to doctoral programmes may occupy a scholarship for a maximum of four years of full-time equivalent study. For Masters students, the maximum period will be for two years full-time equivalent study. The time limit has received broad support from within the sector and recognises that the public require a reasonable return on their investment in research training, through the timely completion of our research students. Once students complete or withdraw from their studies, those places will be available for reallocation to institutions through a performance based funding formula. This will enable new students to take up research opportunities.

The number and composition of scholarships allocated to an institution will be determined with reference to the amount of funding allocated through the performance-based formula, the institution’s plans (as of 1998) for research training places in 2000 and its plan for focusing its research and research training effort. Over time, this will enable institutions to vary their research training profile and offer research scholarships available on a field of study basis, in response to shifts in their strategic focus, research capacity and levels of student demand.

The value of research scholarships will reflect the relative costs of research supervision across broad fields of study. A review of the relative costs of teaching across fields and levels of study has been commissioned and the outcomes of the review will inform the relative value of research places from 2001.

The total number of research scholarships to be supported under the new policy framework attracted considerable comment during the consultation period. This issue has arisen because of a ‘gap’ between the number of Commonwealth-funded research places (approximately 25 000) and the number of HECS-exempt research scholarships (21 500). Institutions have grown their research places above the number of scholarships they have been able to win. They have been able to attract additional postgraduate students by diverting funds from undergraduate places and offering research places on a HECS-liable basis, with the HECS costs absorbed by either the institution or the student.

Under the new framework, all Commonwealth-funded research places will be HECS-exempt. At the outset, the Government will maintain the current level of funding for total student places for each institution and, within that level, negotiate the number of research places with each institution. Institutions will be expected to meet that part of the cost of offering any ‘gap’ research places on a HECS-exempt basis to all students they retain so that all students enrolled in 2000 and previous years can complete their courses on a HECS-exempt basis.  All Commonwealth funded commencing students from 2001 will be offered HECS-exempt scholarships.

Performance-based allocative formula

In accordance with the views expressed during the consultation process, the Government has agreed that the formula for allocating funding for research scholarships should comprise three elements: numbers of all research students completing their degree; research capacity; and research output. The consultation process revealed general support for adopting research income as the most appropriate measure of research capacity and a modified publications index for research outputs. The definitions of these elements will be the same as those for the formula in the Institutional Grants Scheme.

The weights for each element will be set at 50 per cent for completions, 40 per cent for research income and 10 per cent for publications. All measures will be the average of each institution’s performance for the preceding two years.

The formula will be applied twice a year to adjust funding levels in response to the number of research students at an institution. This will mean that the maximum time any institution may need to support a research student without a scholarship would be 6 months.

The Government has decided to retain the current Research Infrastructure Block Grants (RIBG) Scheme as a second block grant scheme, to fund research infrastructure. RIBG funding will remain allocated through performance-based block grants, rather than through individual research projects as suggested in the discussion paper. This approach will ensure that universities have the flexibility and capacity to manage their infrastructure requirements at the institutional level across all disciplines.

While the Government has agreed that research income from all sources should be equally weighted in the case of the IGS, it has decided to retain income from national competitive grants as the basis for allocating funds under the RIBG, recognising the significance of winning nationally competitive grants.

The Institute of Advanced Studies (IAS) of The Australian National University (ANU) has produced excellent research outcomes over a long period of time under a block-funding regime which is unique in the Australian setting. With the exception of Australian Postgraduate Awards and the Research Infrastructure Equipment and Facilities Programme, the IAS does not currently have access to other research funding programmes, and research input from the IAS is not counted for the purposes of the allocative formulae which drives the Research Quantum. These restrictions limit access by research students to an excellent research-training environment, while the isolation of the IAS researchers from the competitive system increasingly operates to the detriment of the research sector as a whole.

After consultation with the ANU, the Government and the ANU have agreed that the IAS should have access to both the new competitive and formula driven research and research training schemes, in exchange for making a portion of the IAS block grant contestable. This will ensure that postgraduate research students will have full access to the excellent research and research-training environment at the IAS. It will also enable researchers at the IAS to collaborate more fully with the national innovation system and sustain long-term basic research.

In order to enable the IAS to gain access to the new research schemes, the ANU will contribute approximately 20 per cent of the IAS block grant for research, according to an agreed formula, to the ARC’s National Competitive Grants Programme and to the Institutional Grant Scheme. In order to enable the higher education research system as a whole to adjust to the entry of the IAS the Government will phase in these arrangements over a four-year period.