A few gifts & a missed opportunity: A look at Australia’s budget update

Unlike in the years prior, Australia’s mid-year budget update this year came with a few happy surprises for higher education, with several goodies heralding an era of positive change for the sector.

Specifically, the Morrison Government announced funding for four projects with an eye on lifting collaboration between universities and business to drive job creation and spark new business opportunities and productivity gains.

The projects, according to a media release on the mid-year economic and fiscal outlook (MYEFO), include the following:

• AU$2 million to support the initial stages of a hydrogen hub to enable the creation of a hydrogen fuel cell and supply chain project at Deakin University’s Warrnambool campus
• AU$2 million to establish the Nowra Agri-business Innovation Hub to connect the regional agri-business sector with the latest technologies and research
• AU$2 million to retrain workers at South Australia’s ASC Shipbuilding with new digital skills to help meet the skills demanded by the country’s record investment in continuous naval shipbuilding.
• AU$3.6 million to trial a national one-year Diploma in Applied Technologies to boost the skills of workers in small to medium manufacturing businesses

Commenting, Education Minister Dan Tehan said the projects form part of the administration’s plan to encourage greater collaboration between higher education and business on research innovation and workforce preparation.

He noted that Australia’s world-leading universities were home to some of the best and the brightest minds on the planet. The government, he said, wants to better use that talent to lift productivity levels and grow the economy.

“Our government is investing in partnerships between universities, industry and government to drive the commercialisation of research,” he said.

“We are supporting universities to work with industry to ensure we have the capacity to turn our discoveries into something that has concrete benefits for Australians.”

The announcements offer a welcome respite for the sector after it was hit the last two Christmasses with major cuts, such as the abrupt termination of the demand-driven university funding system in 2017 and the shock AU$329 cut to research grants last year.

This time, the budget update included nearly AU$200 million in new spending for the sector, most of them already announced over the year.

Apart from allocations to lift university-business activity, key measures in the MYEFO that affect universities include an AU$15 million allocation for five extra regional study hubs; AU$30 million for a School of Mines at CQUniversity in Rockhampton; and AU$30 million for the Tasmania Defence Innovation and Design precinct at the University of Tasmania in Launceston.

In comments on the budget update, Universities Australia Chief Executive Catriona Jackson questioned the government’s failure to add a premium rate to the R&D tax incentive for businesses that collaborate with university.

She noted that this failure comes despite the government encouraging stronger ties between business and higher education.

“We think that was a missed opportunity and we’d encourage the government to take a fresh look at that in the new year,” she said.

Recent figures from the Australian Bureau of Statistics (ABS) show that R&D investments in Australia as a percentage to the economy have fallen to its lowest since pre-mining levels, dropping from 1.0 to 0.9 percent between the 2015-16 and 2017-18 periods.

Total investment in R&D has also fallen to its lowest in four decades relative to the size of the economy, going from 1.88 percent to 1.79 percent of GDP. Declining levels of productivity and innovation-boosting research have forced Australia to lag behind its peers in the developed world; the OECD average for R&D investment is 2.38 percent of GDP.

In the MYEFO, the AU$45 billion budget surplus the government had projected over the next four years was revised down to AU$24 billion, due to the “weak momentum in the global economy as well as domestic challenges such as the devastating effects of drought and bushfires”.

Jackson said in view of such challenging times ahead, investing in university education and research were vital to Australia retaining its competitive edge on the global stage.

“We need to keep our foot on the productivity level” with skilled graduates and research, said the head of the universities peak body.

“With the global economy facing strengthening headwinds, we need to accelerate into them by investing in our people and job-creating research breakthroughs,” she said in a release.

“In challenging economic times, people often seek to get back into education or training to better their chances of getting work.”

“Like successful businesses, as times get tougher, smart governments invest in the future of their people.”