AAS-Conferences and lectures-02.05.02

I extend a warm welcome to Fellows and to our special guests who have come to honour the new Fellows who are to be admitted to the Academy. Yesterday we had the great pleasure of hearing about their work, at the New Fellows' Seminar. This morning is also an opportunity to recognise the awardees of the Academy's prestigious science prizes, and to learn a little more about their scientific research. Over the past forty-eight years, the values of the Academy have remained constant. They are to recognise outstanding achievements in the intellectual endeavour known as science.

In accordance with tradition, I shall begin this morning's events with an address, an opportunity to comment on the nation's achievements and directions in science, both in research and in education.

Most of the people in this room are either researchers, or know researchers very well. As such, they may well have reflected, from time to time, on the motivations of researchers. While what motivates a human being to do any particular thing is generally a complex of factors, it is certainly true that for a great many researchers, the sense of inner joy that flows from being part of the discovery process is very real, especially for those who have been lucky enough to have had 'aha' experiences in their research careers. Good inner feelings, however, are not enough to make the world go around. Aside from those researchers who are employed by private sector companies or public sector laboratories to improve the bottom line for their shareholders or the outcomes for the taxpayer, researchers in universities are also part of an economic equation.

The mass expansion of higher education has brought with it a mass expansion of university staffs, and sizeable calls on the Federal Government's budget. This means that the whole research process, including that occurring in universities, necessarily must be responsive to the wishes of the Federal Government to secure improvement for the citizens of Australia, in their environment, in their health, in the quality and number of jobs open to them, and in the national wealth.

It was therefore largely for these reasons, and no doubt also with some admiration for the scholars of this country, that the Federal Government announced some fifteen months ago the Backing Australia's Ability program. Companies, especially small to medium enterprises, received a significant impetus to perform more industrial research and development, something the country desperately needs and this Academy strongly argued for. The principal mechanism for supporting investigator-driven research in universities – the Australian Research Council – also received a significant impulse.

This is not before time. The Federal Government's earlier confidence-destroying action of lowering the tax concession for industrial R&D from 150 per cent to 125 per cent threatened to move Australia's performance in this area to the bottom of the OECD league table, from a not very prominent position to begin with. The recent START grant hiccup does not help. When one looks at the growth in trade enjoyed by OECD countries, especially in high-tech trade, it is quite evident that Australia has missed out on many of the benefits, benefits which in other countries have translated themselves into more jobs, more general wealth, and improvements in national productivity. While, on the one hand, we should be happy that a series of economic reforms from governments of both political persuasions have helped give Australia many years of outstanding growth, the fact remains that it could have been better if we had emulated other countries in creating and exporting products and services which have high brainpower content. Let us hope that we are seeing the first signs of a change in actual performance, following some change of opinion on the side of our elected representatives.

Backing Australia's Ability foreshadowed the application of priorities in expending some of the funds. The mechanisms for implementing this policy were first placed on the table early this year, and undoubtedly in a rush. The Fellows in this room know that the Academy has been forthright in simultaneously arguing the need for priorities, and arguing the need for proper processes to decide and implement them. Any priorities must persist for some time, deserve some ramping up and tapering off, will generally involve a whole of government approach, will involve specific modes of implementation that depend on the particular priority, and will be informed by a wide consultation process. It's an obvious point, but it should be said: if that wide consultation process asks for everything to be a priority, in effect nothing is being suggested as a priority. That cannot happen.

The Government appears committed to introducing a sound process for priority setting, and indeed has linked closely to the Academy to drive this process forward.

The other great science and technology policy change area to which we are looking forward concerns the universities. The criticism of the way the former Department of Education, Training and Youth Affairs administered the university system has been growing. Initially, most of this criticism came from the university sector, and the department often used to deflect the criticism, not by addressing its cognitive content, but by brushing it aside on the grounds that it was self-interested pleading. However, the chorus of critics has been growing. In recent times it has included many other federal government agencies apart from DETYA; the Business Council of Australia, Rupert Murdoch, and the governor of the Reserve Bank. The general thrust of these criticisms has been that the existing policies do not adequately reflect the importance of creating quality human capital. While sounding primarily like an economic argument, I think it's important to reflect on the fact that quality human capital isn't just there to fulfil an economic purpose. Quality human capital is human capital – people – who are less likely to be bedevilled by times of long unemployment; who can raise children more intelligently; who have fewer self-induced health problems; who have the potential to handle retirement more gracefully; and who generally help build a more cohesive society.

We can only applaud the way the new minister and indeed the senior Department of Education, Science and Training staff have encouraged the opening of a serious debate. What then might we be looking for in the forthcoming review of universities? I'd like to set out a number of aspects of this review which, to me, call for attention.

The so-called 'unified national system', describing the set of Australia's universities, has conferred a number of great benefits on the country. There has been a huge expansion of university education. That process led to a uniformisation of treatment of universities, and thus – to an extent – of standards of the universities. The weak universities in general got better, and this is a good thing. But some of the best universities got dragged down, and that is a bad thing. Now, with the whiff of change in the air, universities are trying to stake out their positions. The weak ones are terrified that they could lose, and the strong ones are jockeying to position themselves in case there are only one or two major accolades to be bestowed by the Government. I would hope that the result of any changes will not make matters worse for some universities, but rather produce some improvements where they are necessary.

A significant issue the minister has raised is whether or not Australia deserves one or two world-class outstanding universities. The classic defence of a vice-chancellor who does not see his or her university as being one of those one or two, is to say it is more important to support outstanding groups than outstanding universities. It is important to support outstanding groups, and we must never move away from that position. But an outstanding university is something more again, and something more worthwhile. It is an icon institution that inspires other institutions and the people in them to strive harder. When we think of the pinnacles of academic excellence elsewhere in the world, we don't just think of outstanding groups, but we do think of UC Berkeley, Cambridge, Tokyo University and the Swiss Federal Institute of Technology. Their outstanding people generally are made even more outstanding by their environments, and I have never heard anyone say that it has been a public policy mistake to have created such institutions.

If we are to have outstanding universities, or even maintain outstanding groups across the university sector, it will be crucial to be able to hire outstanding people from abroad. Australia is too small to be able to confine the search for talent to its citizens. But then we have a problem. We have universities which are funded with the underlying implicit assumption that it is satisfactory to pay professors a salary of $100,000 or thereabouts. The Government making this assumption has also said, in establishing the Federation Fellowships, that to hire the best people from abroad, you need to pay them $225,000 per annum. There is a policy incoherence here which needs to be addressed if we are to retain outstanding groups, let alone have two universities in the world's top fifty.

One of the topics that is necessarily going to be discussed in considering the future of universities is the issue of deregulation. If deregulation means breaking the government's monopsonistic stranglehold on the price they pay the universities for training a student, that is one thing, and a great thing. Deregulation meaning that the government can still dictate the price that it pays, but that the universities are permitted to seek further fees from students, is another, and lesser, thing. This form of deregulation is indeed postulated as one of the solutions to the present problem. It could be. But there are a number caveats which it is important to flag. Can educational services be delivered with equity in this situation? If we are to have students responding as in a market, how is that market to be properly informed? I doubt that many would consider that students are that well informed today. And what do we do about a university which has a locational monopoly? And finally, it would be a travesty if deregulation was used as a device to allow governments to slide out from their responsibility to provide adequate base funding, with, it is important to add, adequate indexation.

And this remark highlights two crucial questions that any enquiry must address, and the questions need to be clearly separated. The first unites and the second divides the universities. Should there be more funds for universities, and how much? And how should a set level of funds be distributed? We all sense that many outstanding researchers, indeed many Academy Fellows, have less time and support resources than ever before to devote to their research. It's a fair conclusion that in many cases they are not receiving enough funding – their talents are going to waste, and the taxpayer would be better off if they were better supported. Should Peter be robbed to pay Paul: or should Peter be left alone, and the taxpayer pay more to Paul than has been the case till now?

And now I come to my last few observations on this matter.

Once upon a time in Australia, we had special bodies between the government and the universities, bodies with a very good knowledge of the sector because they were informed by part-time membership of their councils, and they were bodies which had decision-making power over the budgets for universities. Some time ago, that decision-making power was moved into the normal government structure. More recently, all the advisory mechanisms were swept away. Further, the number of people within the government structure oversighting the university sector shrank. The result has been a collapse of expertise, and this needs to be reversed.

It has also led to the use of a formulaic approach to funding which Lord Robert May, one of our Fellows, former Chief Scientist to both John Major and Tony Blair, and currently President of the Royal Society, described as, and I quote him, 'daft'. As you know, if University A produces two PhDs who go to MIT and Oxford as postdocs, and University B produces four who get jobs as taxi drivers, University A receives half the money that University B receives. And if University A has a professor who wins a Nobel prize and writes two papers, and University B has a professor who writes four papers, even four papers in a journal with very low impact factor, University A again gets half the money. It may sound very simple for universities to feed a bunch of numbers into a government computer, and have that computer print the cheque for the minister to sign; it may mean that the salaries expended on directly supervising the university sector are at a record low in real terms. But it does not mean that the expenditure on the university sector is the wiser for it, or the country is better off. We must ensure that in the future, whether or not the university sector is to be run from a single government department rather than at least in part being returned to the States, that government department is not allowed to metaphorically stuff its fingers in its ears, and to use mechanistic formulae for funding which produce counterproductive behaviour in the universities.

Fellows of the Academy are blessed with a formidable array of talents. Many of them accept the challenge to put themselves at the disposal of their colleagues and fellow citizens. There is a particular challenge in front of us all at the moment, and that is to produce a set of outcomes in the forthcoming debate on universities which will not disenfranchise the less talented, the less politically astute, the less vocal and so on. Rather, we must be seeking the right outcome for all of Australia. But the right outcome does include a system that recognises, sustains and indeed rewards individual and institutional excellence, to a significantly greater degree than we have seen in recent years.

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