RESEARCH PAPER SERIES, 2021–22   UPDATED 17 February 2022

University research funding: a quick guide

Dr Hazel Ferguson

Social Policy Section

Australian universities are required to undertake research, and offer Doctoral research degrees, as a condition of registration.¹

The Australian Government emphasises the importance of university research performance through assessments of quality and engagement and impact. A wide range of international rankings based largely on research performance, such as the Times Higher Education World University Rankings and QS World University Rankings, also confer academic prestige on highly ranked institutions.

Research performance is also often a basis for academic hiring and promotion, acting as an incentive (beyond inherent motivation) for individual researchers to maintain research activity.²

This quick guide explains how Australian universities resource research activities. Based on key Australian Government data, it sets out the major sources and distribution of university research funding.

1 Funding sources

Australian universities fund research activities from:

• the performance-based research block grants (RBGs) administered by the Department of Education, Skills and Employment (DESE), made up of the Research Training Program and the Research Support Program

• Australian nationally competitive grants, mainly from the National Health and Medical Research Council (NHMRC) and the Australian Research Council (ARC); but also from other national funding bodies, such as the Medical Research Future Fund (MRFF)

• Australian Government funding to support industry engagement, such DESE-administered programs for university-led collaborations, including Australia’s Economic Accelerator, and Department of Industry, Science, Energy and Resources (DISER)-administered programs for industry-led collaborations, including the Cooperative Research Centre (CRC) Program

• Australian Government research infrastructure funding programs, such as the DESE-administered National Collaborative Research Infrastructure Strategy, and the ARC-administered Linkage Infrastructure, Equipment and Facilities scheme

• other public sector research funding that is not awarded on a nationally competitive basis, for example, National Institute Program funding (administered by DESE) to support the Australian National University, and state and local government grants and direct contributions to research projects

• student fees—the contribution of student fees is currently unclear due to COVID-19-related declines in revenue from overseas student fees (which previously accounted for an estimated 27% of university research expenditure) and Job-ready Graduates Package changes to the Commonwealth Grant Scheme (10% of which was previously estimated to be spent on non-teaching functions, including research)

• income from research commissioned by industry and private not-for-profit organisations, such as charities and foundations

• other sources such as philanthropic donations, endowments, and crowd-funding.

2 Higher education research expenditure

The Australian Bureau of Statistics (ABS) release Research and Experimental Development, Higher Education Organisations, Australia publishes higher education expenditure on research and development (HERD). The latest issue, released on 20 May 2020, is based on survey data about research and development (R&D) performed by Australian higher education organisations during the 2018 calendar year.

Although the data does not provide program-level detail to match the funding sources outlined above, it does include information about higher education organisations’ R&D expenditure by source of funds, type of activity, and field of research.

Source of funds

The two main sources of funds for HERD in 2018 were general university funds ($6,823 million, or 56% of HERD) and Australian Government competitive grants ($1,700 million, or 14% of HERD). As shown in Table 1, these were also the two main sources identified in each survey since 2008.

Table 1: source of funds for higher education R&D expenditure, 2008–18 ($ million)

Source

2008

2010

2012

2014

2016

2018

General university funds

3,620.6

4,476.9

5,340.0

5,464.9

6,075.1

6,822.6

Australian competitive funds

1,204.8

1,355.6

1,624.7

1,832.1

1,672.8

1,774.1

Commonwealth schemes

1,142.9

1,290.9

1,568.0

1,745.7

1,592.0

1,700.5

Other schemes

61.9

64.7

56.7

86.3

80.8

73.7

Other Commonwealth government

1,001.3

1,233.6

1,448.4

1,614.6

1,610.1

1,891.2

State and local government

403.0

419.7

419.9

374.3

420.1

457.0

Business

338.2

336.3

398.2

426.0

476.0

521.9

Donations, bequests and foundations

95.9

140.1

124.0

192.8

250.8

300.5

Other Australian

41.0

19.0

23.8

0.1

0.3

0.1

Overseas

138.7

179.7

230.7

240.4

372.3

390.4

Total

6,843.5

8,160.9

9,609.7

10,145.1

10,877.5

12,157.8

Sources: Australian Bureau of Statistics (ABS), Research and Experimental Development, Higher Education Organisations, Australia (Canberra: ABS, 2020, Table 1); ABS, Research and Experimental Development, Higher Education Organisations, Australia, 2016 (Canberra: ABS, 2018, Table 1); ABS, Research and Experimental Development, Higher Education Organisations, Australia, 2014 (Canberra: ABS, 2016, Table 1).

Notes: Figures are not adjusted for inflation. Figures may not sum due to rounding.

Expenditure by type of activity

In 2018, HERD comprised support for the following activities (in order of greatest expenditure):

• 48.4% ($5,884 million) for applied research—‘original investigation undertaken in order to acquire new knowledge… directed primarily towards a specific, practical aim or objective’

• 22.8% ($2,769 million) for pure basic research—‘research carried out for the advancement of knowledge, without seeking long-term economic or social benefits or making any effort to apply the results to practical problems or to transfer the results to sectors responsible for their application’

• 17.8% ($2,167 million) for strategic basic research—‘experimental and theoretical work undertaken to acquire new knowledge directed into specified broad areas in the expectation of practical discoveries’

• 11.0% ($1,338 million) for experimental development—‘systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes’.³

Expenditure by field of research

Table 2 shows HERD by broad Field of Research (FoR), arranged in descending order, for 2018. Almost one third of expenditure was in the Medical and Health Sciences (30.6%), followed by Engineering (10.2%). All other FoRs received less than 10% of total expenditure.

Table 2: higher education expenditure on R&D, by Fields of Research, 2018 ($ million)

Field of Research

Expenditure

Percentage of total

Medical and Health Sciences

3,721.0

30.6

Engineering

1,245.1

10.2

Biological Sciences

960.1

7.9

Studies in Human Society

558.4

4.6

Agricultural and Veterinary Sciences

487.8

4.0

Commerce, Management, Tourism and Services

482.4

4.0

Information and Computing Sciences

472.4

3.9

Environmental Sciences

422.7

3.5

Education

392.6

3.2

Physical Sciences

392.5

3.2

Psychology and Cognitive Sciences

366.0

3.0

Chemical Sciences

358.6

2.9

Earth Sciences

300.8

2.5

Language, Communication and Culture

296.0

2.4

Economics

295.7

2.4

Technology

274.6

2.3

Built Environment and Design

250.1

2.1

Law and Legal Studies

231.8

1.9

Mathematical Sciences

225.6

1.9

History and Archaeology

178.3

1.5

Studies in Creative Arts and Writing

156.8

1.3

Philosophy and Religious Studies

87.5

0.7

Total

12,157.8

100

Source: ABS, Research and Experimental Development, Higher Education Organisations, Australia.

3 Australian Government funding for university research

The central feature of Australian Government funding for university research is a ‘dual funding system’, made up of:

• the DESE-administered RBGs to support the systemic costs of research including research student stipends and tuition fee offsets; and the indirect costs of competitive grants

• national competitive grants (predominantly through the ARC and NHMRC) for particular research programs, projects or fellowships as approved by the funding body based on academic peer review.

The House Standing Committee on Education, Employment and Training Inquiry into Funding Australia's Research (October 2018) found widespread support for this structure among universities—notwithstanding concerns about the efficiency of competitive grants application and administration processes, and what some described as a shortfall between RBG funding and the indirect costs of government-funded research.

Australian Government expenditure on university research

Information about Australian Government R&D expenditure over time is available from the Science, Research and Innovation (SRI) Budget Tables, published in the second half of each year by DISER. These detail all Australian Government R&D expenditure, including for university research.

Table 3 shows estimated expenses for key Australian Government programs that fund university research.

The ARC, NHMRC, and MRFF fund some research outside the higher education sector, meaning total funding to universities from these programs will be lower than shown in Table 3. The SRI Budget Tables include a breakdown of RBG, ARC and NHMRC funding for the higher education sector only, but this breakdown does not provide forward estimates and has not been used here.

Table 3: estimated expenses, key Australian Government programs funding higher education research, 2015–16 to 2024–25 ($ million)

Program

2015–16

2016–17

2017–18

2018–19

2019–20

2020–21

2021–22

(Budget)

2022–23

(est.)

2023–24

(est.)

2024–25

(est.)

RBG

1,829.9

1,777.9

1,943.2

1,921.1

1,938.4

2,973.3

1,999.8

2,025.9

2,059.3

2,093.3

ARC competitive grants

815.3

743.7

758.0

753.4

762.5

806.4

814.6

824.9

835.3

849.1

NHMRC competitive grants

825.5

840.5

853.1

846.2

901.4

891.3

869.5

892.5

920.8

936.5

MRFF grants

0.0

18.0

143.3

222.4

392.7

579.9

818.4

455.0

0.0

0.0

Sources: Parliamentary Library calculations and DISER, Science, Research and Innovation (SRI) Budget Tables, December 2021, R&D Table.

Distribution of research income from key Australian Government programs

Although all universities receive some Australian Government research funding, the majority goes to the research-intensive Group of Eight (Go8) institutions: the Australian National University, University of Adelaide, University of Melbourne, Monash University, University of Queensland, University of Sydney, University of New South Wales, and University of Western Australia.

According to calculations based on time series data from DESE, shown in Table 4, in 2020:

• the Go8 universities received 67.2% of cumulative funding from RBG, NHMRC, ARC, and MRFF grant income

• the Australian Technology Network (ATN), made up of the University of South Australia, RMIT University, the University of Technology Sydney, Curtin University, and Deakin University, received 8.8% of this income

• the Innovative Research Universities (IRU), made up of Charles Darwin University, Flinders University, Griffith University, James Cook University, La Trobe University, Murdoch University, and Western Sydney University, received 8.2% of this income

• the Regional Universities Network (RUN), made up of CQ University, Federation University, University of Southern Queensland, Southern Cross University, the University of New England, the University of the Sunshine Coast, and Charles Sturt University, received 2.0% of this income

• the remaining 15 universities (unaligned) collectively accounted for the remaining 13.8% of RBG, ARC, NHMRC and MRFF income for 2020.

For these calculations, University of Canberra (now IRU) and The University of Newcastle (now ATN) have been counted as unaligned, consistent with their affiliations in 2020. Avondale University, which became a university in 2021, is not included.

Because income data is reported by calendar year, it does not match financial year expenses information for Australian Government programs.

Table 4: RBG, ARC, NHMRC and MRFF research income by university affiliation, 2020 ($ million)

Affiliation

RBG

ARC

NHMRC

MRFF

Total

Percentage of total

ATN

185.1

76.5

43.1

14.9

319.7

8.8%

Go8

1,228.4

482.6

567.2

172.8

2,451.0

67.2%

IRU

184.2

48.3

55.0

11.0

298.6

8.2%

RUN

61.0

9.0

1.7

2.0

73.7

2.0%

Unaligned

296.9

120.3

62.2

22.8

502.2

13.8%

Total

1,955.7

736.8

729.2

223.5

3,645.2

100.0%

Source: Parliamentary Library calculations using DESE, Research Block Grants Allocations and Research Income Time Series, Last modified 17 December 2021.

Note: Totals may not sum due to rounding.

4 Further information

• DISER publishes the Australian Innovation System Monitor each year, covering the performance of Australia’s R&D investment, including international comparisons and reflections on policy directions and future challenges.

• The ARC publishes information about the outcomes of funding rounds in its Selection Outcome Report. A statistical breakdown for approved proposals in each recent scheme round is also available via the ARC Grants Search website.

• The NHMRC publishes outcomes of funding rounds data and research funding data.

• The MRFF publishes grant recipient reports.

• DESE compiles the Finance Publication covering annual financial performance, financial position and cash flows for universities, derived from institutions’ financial statements.

• The Organisation for Economic Co-operation and Development (OECD) Research and Development Statistics provide information about resources devoted to R&D for OECD member countries and seven non-member economies. The database includes gross domestic expenditure on R&D by sector and source of funds.

• The peak body for Australian universities is Universities Australia (UA). UA publishes a range of policy analysis and sector views, including information about university R&D. UA’s latest analysis of Australian Government funding for university research is included in its 2022–23 Pre-Budget Submission (pp. 18–23).

© Commonwealth of Australia

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Notes

[←1]

.    Higher Education Standards Framework (Threshold Standards) 2021, Part B1.3.6 and B1.3.16–19. Under the Threshold Standards, Australian higher education providers that are not registered as Australian universities are not required to conduct research.

[←2]

.    For example, see: ‘Procedure: Academic promotion’, Australian National University (ANU); ‘Academic Promotion – Procedures’, University of Sunshine Coast (USC), accessed 14 February 2022.

[←3]

.    As defined in ABS, ANZSRC - Australian and New Zealand Standard Research Classification, 2020 (Canberra: ABS, 2020).