Speakers: Business Council of Australia Chief Executive Bran Black
Topics: Productivity growth, research and development, international students
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Bran Black, Chief Executive: Thank you very much, Luke, and thank you to UA for the invitation to be here this morning.
It’s a genuine pleasure to be in a room filled with people who shape Australia’s future every single day.
Besides my experience of studying at university – an experience I share with almost 70 per cent of Australians – universities have played a role in my life for many years.
My father was a Librarian’s Assistant at Sydney University’s Fisher Library for 44 years before his retirement in 2015 and as a child, I spent countless hours in the Fisher Stack reading Greek history and mythology waiting for my father to finish work, and being confused as to the meaning of the graffiti in the 5th floor gentlemen’s restroom.
Later in life, I had the opportunity to lead the NUW Alliance, working with initially three, then four, world-class universities in New South Wales.
And I then went on to enjoy working as Chief of Strategy at UNSW before working in government.
The reason I provide this background is to emphasise that I’ve seen first-hand how universities don’t just create knowledge, they transmit it, they challenge it, and they turn it into national capability.
To be clear, my view is that if Australia’s future is being made anywhere, it’s being made in and around institutions like yours.
And that is what I want to talk about this morning.
I’m proud to that the organisation I lead counts five universities amongst its membership.
The Business Council of Australia is comprised of the leaders of our country’s most impactful and consequential organisations, and comes together with the objective of driving policy reform that raises living standards for all Australians.
And so it makes sense that our membership includes some of the nation’s most important universities.
Seen in this light, universities are not – I repeat, not – simply semi-governmental public amenities, separate from business, from industry and from the economy.
They are dynamic catalysts of Australia’s economic growth …
They are inextricably linked to a healthy business environment …
They are core national prosperity infrastructure.
And at a time when Australia faces some of the biggest economic challenges in its modern history, we need them more than ever.
National challenges
Ladies and gentlemen, we are living through a period of extreme structural economic pressure.
Our productivity growth over the past decade was the worst in 60 years.
Indeed, productivity has grown by just 0.3 per cent a year over the past decade, well below our long-run average of 1.2 per cent.
And it’s no coincidence that the worst decade for productivity growth in 60 years was also the worst decade for incomes growth.
Ladies and gentlemen, it is abundantly clear that a big part of the solution to our present challenges is increasing investment in Australia.
And that’s why it should surprise no one that this imperative is such an important priority for the Federal Government, as evidenced by the nomenclature of a Future Made in Australia.
And here is the critical point I want to make today.
A Future Made in Australia will not be made in Canberra.
To a large degree, it will be made by the people in this room.
By universities working in partnership with business.
By researchers translating ideas into action.
By students bringing skills, energy and ambition into our workforce.
And by institutions that are confident enough to back themselves as engines of national growth.
Ladies and gentlemen, Australia’s universities are already making our future every day.
The question is: are we, as a nation, prepared to back them to do so more than ever?
In these remarks I want to focus on two areas where I believe there is enormous opportunity for our nation if we are only prepared to back our universities, and to back collaboration between our universities and the private sector, even more than we are today.
In saying this, I’m acutely aware that there are many, many ways in which our universities can deliver increased opportunity for Australia.
If for example, my earlier expressed view that universities are core national prosperity infrastructure is accepted, then their role as creators and disseminators of knowledge necessarily takes in the fundamental function of making the next generation of Australians workforce ready.
And, of course, the increased, and appropriate, focus on micro-credentials and life-long learning underlines the point that the teaching role of universities is by no means confined to the next generation.
However, in these remarks I’ll focus on research partnerships and international students, and I do so because they have both been the subject of so much recent discussion and, in many cases, politically charged debate.
Research partnerships
Turning first to research partnerships.
As many in this room would know, research can be a hard sell in Australia, or, indeed, anywhere.
It’s often abstract.
Its benefits are not always immediate.
And the return on investment can sit two or three steps away from the original funding decision.
But every advanced economy that succeeds in the long run understands the same truths.
You do not get sustained productivity growth without innovation.
You do not get innovation without quality research.
And you do not get quality research without sustained, competitive investment in partnerships between businesses and universities.
Australia produces world-class research. That’s not in question and, I hope, never will be.
What is in question is whether we are set up to compete for the next generation of global research investment, talent and partnerships.
And when you look at the scale of industry-university collaboration in many overseas jurisdictions, the contrast with Australia is stark.
Indeed, business expenditure on R&D in Australia represents just 0.9 of a per cent of GDP, against the OECD average of 1.87 per cent.
An example of what good looks like in practice is the United Kingdom’s Catapult program.
The Catapults are purpose-built, industry-facing innovation centres designed to sit between universities and the market.
They provide shared facilities, specialist expertise, testbeds and demonstrators, and they bring together industry, researchers and government around real commercial problems.
And the fiscal and economic dividends speak for themselves: for every £1 invested, Catapults boost British GDP by £5.50.
And if we here in Australia accept – as our Treasury does – that every $1 increase in our GDP returns approximately 25c in increased tax revenue to Commonwealth coffers, then the Catapult model shows that getting the structure of collaborative partnership between universities and businesses right, can be both fiscally and economically positive.
Similarly, Singapore offers tax incentives and government grants that make private R&D spend materially more attractive, including enhanced tax deductions of up to 400 per cent on qualifying R&D.
And many here would be familiar with the United States’ extraordinarily successful Defense Advanced Research Projects Agency, or DARPA, which supports groundbreaking programs with both civilian and military application, with an annual budget of more than US $4 billion.
In Australia, research partnerships between universities and industry are of course well-established, and this collaborative activity is ably assisted by the stellar efforts of the CSIRO, but they are not sufficiently supported with policy settings to drive the scale we need.
Indeed, I’m unfortunately aware of multiple companies that are increasingly taking their research and development spend overseas.
Now, that’s simply not good enough.
And that brings me to how we make the changes Australia desperately needs.
The Government’s commissioning of the Denholm Review was a welcome start, and its upcoming response affords us an opportunity to lift our competitiveness.
We must use it.
At a minimum, that means aiming to lift business investment in R&D as a percentage of GDP to at least 1.5 per cent by 2030.
That means adopting a definition of ‘research and development’ that’s consistent with our global peers.
That means standardising the Research and Development Tax Incentive rate and making it less complex to claim.
That means increasing the threshold for federal RDTI support to at least $250M or, ideally, abolishing it altogether.
And that means reducing the tax burden applicable to intellectual property generated in Australia and subsequently commercialised on our shores.
In short, it means recognising that commercialisation is not merely a useful by-product of discovery, but a core driver of how research delivers national value.
If we want a Future Made in Australia, we must use the Denholm Review as a catalyst for making Australia a first-choice destination for international research collaboration.
International students
Ladies and gentlemen, the second area I want to talk about today is international students.
Australia’s international education sector is one of the great success stories of our economy.
It’s our fourth largest export.
It supports more than 250,000 jobs.
And it contributes over fifty billion dollars annually to our GDP.
Those are extraordinary numbers.
And what’s more, international student revenue underpins our research and development endeavours, given federal government support accounts for only about 45 per cent of total university funding.
You would think, based on that contribution alone, that we would be doing everything possible to strengthen and grow this sector.
And yet, time and again, international students are treated as a problem to be managed, rather than an asset to be valued.
Indeed, we see arguments that focus almost exclusively on volume, divorced from context or evidence.
And what is striking is how selective that concern can be.
No one questions, for instance, the strategic direction of Oxford University, notwithstanding that 43 per cent of its students are international.
And yet here in Australia, both sides of politics have favoured significant caps on international student numbers.
I believe there is a strong basis for cracking down on dodgy international student providers, and the Government should be commended for doing so.
I also believe a key reason for why we have so many debates about international students in Australia is that we too often conflate international student numbers with arguments about student experience.
Those are – to be clear – separate conversations, and we should treat them as such.
If there’s a conversation to be had regarding student experience, we should welcome it.
But we should start that conversation from a place of wanting to sustainably increase our share of the global international student market.
And, unfortunately, it’s clear that we are not presently starting our conversations from this place.
Two of the most common criticisms levelled at international students, relating to housing and jobs, illustrate this point.
On housing, the evidence matters.
Universities Australia has found that housing vacancy rates are often higher around universities than they are in other metropolitan areas.
International students overwhelmingly live in share houses and dedicated student accommodation.
And it follows that a large portion of international student accommodation is not part of the general rental market at all.
The real housing problem in Australia is not, therefore, the presence of international students.
It’s our failure to build enough of the right type of homes, and to do so quickly enough.
And we should be honest about that.
And we must get on with the task of addressing the real issue, including by streamlining approval settings, standardising zoning arrangements and supporting the skills development we need to deliver more housing supply.
On jobs, the reality is even clearer.
Australia does not have the skills base to fill existing shortages, let alone future demand.
Indeed, one in three occupations in this country continues to report skills shortages.
Put simply, we cannot train our people fast enough to meet our needs.
And so attracting the best international students, and keeping those that help us reduce our skills gap once they graduate, is therefore part of the solution, not the problem.
Ladies and gentlemen, if we’re serious about economic growth, we need to defend and sustainably strengthen this sector.
Not apologise for it.
Not quietly constrain it.
But back it in, and back it in proudly.
Closing
Ladies and gentlemen, I want to end on this note.
Australia’s great reform moments have always been built on partnerships.
Between governments, unions and businesses.
Between institutions and individuals.
And between ambition and evidence.
Universities sit at the heart of that tradition.
Indeed, there is no Future Made in Australia without our universities.
And so if we get the settings right.
If we back research properly.
If we strengthen international education.
And if we reward collaboration, then Australia’s future will not simply be made here.
But it will be made here for stronger, more productive and more prosperous generations to come.
Thank you very much.
And I look forward to continuing this discussion on the panel.