Barriers to collaboration between universities and industry
4.1
The Australian Industry Group, (Ai Group) a peak industry association in Australia which represents the interests of more than 60,000 businesses, stated that:
There is a relatively low level of industry – university collaboration and Australia has the lowest level of business to research collaboration among comparator countries and ranks last in the OECD for industry – university collaboration on innovation. Some 60 per cent of all researchers in Australia are based in universities and a further 10 per cent in research agencies. This means unusually, only 30 per cent of Australian researchers are based in industry compared with 80 per cent in the United States, 70 per cent in Japan and 64 per cent in Switzerland.
4.2
Figure 4.1 graphically represents Australia’s low level of industry – university collaboration.
4.3
A number of other witnesses who provided evidence to the Committee, suggested that barriers to university-industry collaboration in Australia include:
misalignment between the objectives of academics seeking to publish research in peer reviewed journals and industry seeking to develop new products and efficiencies;
lack of mobility between industry and universities for professionals and researchers;
misalignment between the long research timeframes of universities and the shorter time frames required by industry competing in the global economy;
relatively few government incentives for business to collaborate with public sector researchers compared to other nations;
Australian universities are not as good at maintaining links with their alumni as North American and European universities;
relatively few multinational companies are based in Australia and the majority of multinationals’ significant research activities take place in their country of origin;
difficulties around negotiating the legal parameters of collaboration, such as intellectual property and insurance; and
industry perception that collaboration with universities is challenging and expensive.
Expanding connections between Small and Medium Enterprises (SMEs) & the VET sector
4.4
The opportunities for collaboration between Small and Medium Enterprises (SMEs) and the VET sector in Australia are significant. SMEs dominate the Australian economy and, as mentioned in Chapter 2, the majority of STEM skills are developed in the VET sector.
4.5
The challenge for the VET sector is to build effective relationships with SMEs in applied research. Better relationships lead to:
industry access to students who are capable of bringing innovative thinking to them, but ultimately to a group of better trained people; and
real world experience for VET students.
4.6
There is a key role for the VET sector to engage its students and its alumni in developing this interface with industry. The conversation must be two way: what can TAFEs offer by way of applied research and innovation and what do SMEs need?
4.7
The Victorian TAFE Association told the Committee that:
TAFEs are well positioned to play a vital role as it has well established relationships with industry: businesses, TAFEs. Students and business can derive important benefits from projects that create innovative solutions to contemporary issues. Crucial returns on investments for this type of research will be realised more directly in the economy, sooner.
4.8
Professor Courvisanos of Federation University told the Committee that:
In Quebec the vocational colleges are extremely well connected and engaged with small to medium enterprises (SMEs) in both Canada and the USA. This commercial engagement, initiated by the enterprises approaching the colleges, results in the college students operating with state-of-the-art equipment (often supported by funding from these firms) in which they address practical and technical concerns that the SMEs have, but have no R&D department to conduct this work. This makes students develop employment ready skills for when they graduate.
4.9
TAFE Queensland referred to its Centre for Applied Research and Innovation—TAFE Queensland RedSpace—which integrates the applied skills and expertise of the TAFE to offer business support and enhanced opportunities for student projects:
RedSpace will identify, support and amplify the work of educators, experts and students as they continue to tackle complex problems of industry and community partners that are not currently on the radar of the more established research bodies. RedSpace will work with TQ staff to support workforce capability building and enhance student learning outcomes through the cultivation of commercial skills as they engage in projects with employers. Student participation in applied research is core to developing critical future workforce skills such as design thinking, resilience, commerce and ethics.
4.10
TAFE Queensland pointed out that:
The Australian Government currently provides, $1.6 billion per annum for university research via the Australian Research Council ($800 million) and National Health and Medical Research Fund ($850 million). It is difficult for TQ to access these funds however, and tends to compete for them via collaboration with a university.
Consequently, this funding is highly targeted at the higher education sector and is therefore missing opportunities that are offered by the VET sector, similar to those identified in the SAIT [Southern Alberta Institute of Technology] case study.
4.11
The Chamber of Commerce and Industry Western Australia agreed with the above but suggested that an alternative option is the creation of a fund to support innovation in small to medium enterprises modelled on Denmark’s Danish Growth Fund.
Box 4.1: Danish Growth Fund
The Danish Growth Fund is a state investment fund that contributes to the creation of new companies by providing capital and expertise. Since 1992, The Danish Growth Fund has together with private investors co-financed growth in more than 6,000 Danish companies with a total commitment of more than DKK 17 billion (AUD 3.4 billion). The Danish Growth Fund invests equity and provides loans and guarantees for small as well as medium-sized enterprises in collaboration with private partners and Danish financial institutions.
4.12
In considering what funding is required TAFE Queensland recommended:
…funding of $50 million over four years be made available to the VET sector, through a competitive process. This funding would enable the VET sector to emulate work being done by SAIT and promptly develop curricula to match skills required by industry, similar to the TAACCCT [Trade Adjustment Assistance Community College and Career Training] program. Funding would also enable incubation opportunities, such as future foundation and employability skills and citizen makerspaces.
4.13
The Trade Adjustment Assistance Community College and Career Training program is described in Box 4.2 below.
Box 4.2: Trade Adjustment Assistance Community College and Career Training
In 2008, lowered trade barriers allowed mass imports of cheaper manufactured goods to the United States, followed by the Global Financial Crisis – these two hits to the economy led to company closures and mass unemployment. At the same time, rapid growth innovative STEM businesses were manufacturing offshore because they could not find staff with the skills they needed locally. The displaced workers were typically from manufacturing factories with low level job skills and minimal workplace readiness. The skills they held were in traditional roles that had been replaced by automation or in industries that had collapsed.
The United States government responded by funding US$2bn across Community Colleges nationwide to rapidly create and offer STEM courses and to retrain the displaced workforce and get them back into work quickly. Its aim was to prepare displaced low-wage workers for middle-class jobs. Courses were tailored to local employers who were hiring staff, including in partnership with rapid growth, high potential SME employers and major employers who were innovating. The financial hardship of students necessitated new innovative pedagogies including: compressed delivery and accelerated learning strategies to reduce the time to complete a course; technology-enhanced training to learn from home and minimise travel costs; mobile labs and 3D printing of materials; stackable credentialling for course agility to student choices; active outreach services to ‘at-risk’ students; zero cost resources; and new ways to measure program success. The government encouraged programs that involved collaboration and sharing between colleges to develop the course foundations – to enable colleges to spend more time tailoring their courses to local employer needs.
As a result the U.S. now has a mass STEM trained workforce and a sturdy skills infrastructure underpinning economic recovery and capacity growth. The government continues to build on the success of this program with funding to 2019.
4.14
One way in which these funds could be distributed to SMEs is via a voucher system. This system has the potential to change the current culture in Australia where SMEs tend not to approach the VET sector for assistance. The key would be to create a system where SMEs would be obliged to work with the VET sector before gaining the benefit of the funds the vouchers can be accessed.
4.15
TAFE Queensland emphasised that the Canadian ARIS system recognises the role that the VET sector plays in the ‘innovation ecosystem’ by—among other initiatives—providing $15,000 to $50,000 vouchers to small technology businesses and stated that it aspires:
…to replicate to some extent the ARIS model, in collaboration with international peers. However, ARIS is financially supported by the Canadian Government and industry partners and while TQ has established long-term industry partners, it lacks the seed funding to operate on the scale of SAIT.
4.16
The ARIS System is described in Box 4.3 below.
4.17
A voucher, for example for $50,000 worth of research, could as part of Australian Government assistance to the SMEs sector, be held by the Australian Government Department of Industry. An interested SME would have to approach a VET sector participant and work out a way in which the funds could be used with the institution to provide or apply appropriate research in order to help the SME in its business.
4.18
In Australia such a voucher system is already in use with universities. AMSI told the Committee of their ‘considerable success with various State Government voucher schemes for SMEs’ which:
…provide an attractive incentive for SMEs to participate in the program and thus form the partnership with universities. AMSI Intern has placed a total of 40 research internship projects with SMEs through the Australian Government’s Enterprise Connect scheme and the voucher program administered by the Victorian Government’s Department of State Development, Business and Innovation.
Box 4.3: SAIT Polytechnic (Alberta, Canada - http://www.sait.ca/)
SAIT Polytechnic offers career programs and part-time courses in technology, trades and business. SAIT separately offers Applied Research and Innovation Services (ARIS). SAIT President and CEO Dr David Ross, says "collaboration and partnerships are cornerstones of applied research at SAIT." As an innovation gateway for SMEs, large companies and a wide variety of non-profit and government-based organisations, SAIT Polytechnic opens up a world of innovation to its partners: innovation in applied research and development around new technologies and leading edge processes; and innovation in local and global employee training.
ARIS delivers operations and support services to industry and internal partners including:
Advice on intellectual property and patenting;
Rapid prototype design/fabrication;
New product testing; and,
ARIS has key partnerships with 12 businesses and four research divisions with major onsite facilities:
Environmental Technologies;
Sports and Wellness Engineering Technologies;
the RFID Application Development Lab; and,
Green Building Technologies.
4.19
As discussed, expanding connections between SMEs and the VET sector brings benefits to both parties. In addition, as shown by the US TAACCCT, forging such partnerships can have a positive impact on the local community particularly communities that have either a predominance of low wage workers or, indeed, a workforce that has been displaced through large scale unemployment.
Expanding connections between SMEs and universities
4.20
The challenge is for universities to develop efficient connections with SMEs to assist them to innovate and develop beyond the start-up stage. Professor Attila Brungs, Vice-Chancellor, UTS told the Committee that Australian universities have not yet ‘cracked’ the SME market and passionately argued for how important this would be for Australia:
…no-one has really cracked the SME and start-up market. If we could crack that, that would be so transformational for the country. I literally cannot express how much that would impact the prosperity of all Australians if we cracked that. We can look around the world for other models for how you do industry-university collaboration. Most of the big models that we are looking at have much larger industry sectors. We do not.
4.21
UTS referred to its student placements within SMEs and the benefit of these placements to the firm. It gave the example of a very capable UTS student with cutting-edge knowledge of data analytics. The firm used the student’s knowledge to change its logistics system.
4.22
The broader result that flows from the above example is three-fold:
The university has ‘proven’ the benefits to industry of its curriculum;
industry has implemented a change that should increase its profitability; and
the student has gained industry experience increasing their chance of gaining employment.
4.23
UTS acknowledged that placing a student within an SME is a more resource intensive use of time compared with the large and regular intakes of interns from corporations such as Deloittes and BHP.
4.24
Many UTS doctoral students are placed within SMEs to give students experience in how they might use their skills within a workplace. It told the Committee that while the University currently pays the company to employ the student, a tax deduction for the difference between a PhD and an undergraduate would be an effective mechanism. It argued that this type of incentive would pique the interest of a wider range of firms in the skills that a PhD student could offer.
I put a PhD in a company that does some app. It has nothing to do with research but that PhD is trained to be a creative innovative thinker and makes a huge amount of difference to that company. At the moment, the company would not have employed them unless we paid them to do so. This is where the government can bring incentives. If you provide a tax incentive, a company can take a PhD student and get the tax right off for the difference in salary between a PhD and an undergraduate. The company will then take the risk and employ the PhD.
Very quickly you then have a scale model where people say, 'Actually I am not a hard-core research company but, this PhD is leading changes in management practices, leading changes in what innovation and product lines—all sorts of things that PhDs are trained to do.
4.25
Dr Hannah Hartig of the Australian Mathematical Sciences Institute, explained that her organisation:
…act as a broker for 30 universities across Australia, but we have a special relationship with eight universities—six in Victoria and two in New South Wales. Our job is with a team of business development staff who go out—predominantly to SMEs, but we work with big business and government agencies as well—and talk to them about the challenges that they are facing and the problems that they have not been able to overcome with the resources that they have.
Then we help them to translate that into a research problem and go and track down the academic and student.
4.26
Deakin University noted that the Geelong Manufacturing Council had an initiative funded by the state government where an engineer could go between the university and the SMEs in the region. It noted that while this initiative was ‘quite good in terms of actually understanding what the SMEs needed’, in many cases the university was not able to offer the short-term, small projects that SMEs wanted. Deakin University told the Committee that the mismatch in timelines was often a stumbling block to SME–university collaboration.
4.27
Commenting on the Australian Government’s Innovation Connections program Deakin University commented that it:
…pretty much subsidises the cost of the researcher or the PhD student coming into the business to do some specific project work and is intermediated by people who know how to translate between business requirements and research definition.
4.28
The evidence above shows that expanding connections between universities and SMEs is often a matter of overcoming cultural misunderstanding, such as mismatched timelines, and misunderstandings such as those between business requirements and research.
4.29
Queensland University of Technology is considering making leave without pay available to academics who want to start a spin-off company based on their research. Accommodating these activities will support academics to develop a better understanding of industry culture, timeframes and issues.
4.30
In considering how to improve the current approach the NSW Business Chamber have suggested that SME capability development workshops could:
…help SMEs to break down the barriers to participation by addressing resource constraints and lack of absorptive capacity. These workshops will help build the capacity of motivated SMEs to understand what the right problems are to solve, how research organisations can help to solve their problems, and how to identify viable markets for their products and services.
4.31
The NSW Business Chamber also noted that:
There are a number of current examples of SME capability building workshops that are currently in practice that have helped to increase participation of SME organisations in collaborative innovation, including The Exeter University building innovation management capability in SMEs workshops, FutureSME capability development programme and Singapore Governments SME capability workshops.
4.32
Pfizer observed that the Australian Government has already committed to implementing a National Research Compendium, an online platform to connect business to commercially relevant research and potential research partners. It submitted that this should be implemented as a matter of priority.
4.33
In a busy business and research environment it is often difficult for SMEs and universities to take the time to work together to overcome often simple misunderstandings that prevent connection. This is where programs such as the Australian Government’s Innovation Connections program can be so important.
Work integrated learning opportunities
4.34
A recurrent theme in submissions and the hearings was the need for higher education students to benefit from more opportunities for relevant work experience. This issue was raised in the context of graduate prerequisites for qualifications in both the VET and university sectors.
4.35
Universities Australia (UA) told the Committee that its aspiration is to rapidly increase the number of students having work integrated learning (WIL) placements.
4.36
The Office of the Chief Scientist’s submission puts forward a framework developed for institutions to create work integrated learning structure and incentives:
It is a self-assessment tool that universities can road-test, with a view to including a corresponding indicator in the datasets published by the Quality Indicators for Learning and Teaching (QILT). This would enable students, employers and funding bodies to gauge a university’s commitment to graduate employment outcomes.
4.37
The framework is outlined below in figure 4.2.
4.38
The frame work shows that WIL is much more than placing a student in a workplace. It must be a coordinated effort that staff engage in and incorporate into their curriculums.
4.39
Some universities have recognised the benefits of working with business to give their students appropriate work experience. For example Universities Australia is ‘working very closely’ with Australian Chamber of Confederated Industries, the Business Council of Australia and the Australian Industry Group on ‘scaling up’ internships and a national work integrated strategy.
4.40
UA recognised industry concerns with work integrated learning relating to insurance, and whether industry would have to pay for the placement. Some universities, such as UTS, have sought to allay these concerns by saying that it will take the risk and responsibility for workers compensation, insurance and other matters.
4.41
UA told the Committee that it is setting up a website with these partners to help employers understand how work integrated learning can easily be facilitated. The Committee heard that the aim is to get ten case studies of employers with successful placements, to show employers the type of opportunities available and seek out students to participate.
4.42
UA also noted that universities themselves need to value work integrated learning experiences, and that this value should be reflected in how they grade students.
4.43
Textor Technologies, a company that develops and makes higher value textiles, emphasised that an industry placement is a real commitment for the firm which will want value for money. The benefits of a placement accrue not just to the company and the student but also the student’s supervisor.
4.44
The Australian Mathematical Sciences Institute illustrated the difference between the level of integration of business courses with engineering as opposed to science, which is often seen as lagging in this area:
…universities, historically, look at the difference between a science degree and an engineering degree, for example. They are both in the STEM area. Engineering degrees have typically provided students with significant project work, with work placements, with a whole bunch of things. Students have been taught some business courses. Many engineers do MBAs in their transition to management. You then look at science degrees, which have traditionally done none of those things.
For many years I tried to put in place courses in university maths degrees where students would have a significant portfolio of project work to show employers, because at the moment—and it has been true for the last 50 years—the best that most maths students can take to an employer are their marked assignments, and that is a miserable situation. They have not had business placements in any of these things.
4.45
This shows that, in some subject areas/industries such as engineering, a culture of WIL has been embedded in the course curriculum. As more and more employers look beyond the course component of a potential employee to the experience they have in applying theory to practical situations course structures, such as those in engineering outlined above, will become more valuable and prevalent.
4.46
The Committee also considered the issue of how long an industry placement would need to be. Optus noted that it has:
…partnerships with universities to do research that is more around having the students come in over summer and do their six weeks to three months. They take a lot of nurturing and support. It is not just bring them in there and drop them off like a day care centre. You do need dedicated resources to do that. We do this because, quite frankly, it is a public value. Where they can do work for the business that is just an added value.
4.47
The Australian Council of Deans of Health Sciences, speaking about placements in industry, noted that it takes time for a student placement to provide value to industry:
…quite often it is not the lack of desire by the educational institutions to get them; it is a lack of desire by the industry supervisors to take them on, because they do not get a lot of value out of them. They spend the first week understanding who is who and where the toilets are and how to make a cup of tea. Really, you start getting the value when a student is there for a long period of time.
So, again, in the health area, there is some research coming out of the University of Sydney that says after six weeks students start to increase the productivity of the health system that they are supporting. Before that, it is debatable.
Committee comment
4.48
Addressing the impediments to having greater work integrated learning opportunities will require a multi-faceted approach.
4.49
Universities will need to continue to work to better acknowledge industry participation and translation of research as valuable contributions on the part of academics, and to ensure academics are able to be embedded in workplaces. They will also have to get better at maintaining links with alumni and leveraging those links not just for philanthropy but also for work-integrated-learning opportunities for current students.
4.50
Work also needs to be done to promote the long and short term benefits of collaboration, and to respond to perceptions of cost.
4.51
As to the latter, one option would be to provide some financial support to firms, particularly SMEs that do not have the benefit of large human resources, corporate and payroll teams, to seek to defray their costs in taking on students for the purposes of placements. This could potentially occur through a subsidy being paid to the business, at a capped amount per student.
4.52
There is also work to be done in brokering opportunities, connecting students with firms, facilitating student-initiated opportunities, and ensuring the placements’ quality, safety and fitness-for-purpose. The Committee is aware that some universities already fulfil this role to a significant extent.
4.53
To this end the Committee recommends that the Department of Employment investigate options for a national work integrated learning framework which includes reporting requirements.
4.54
The Committee recommends that the Department of Employment investigate options for a national work integrated learning framework which includes reporting requirements.
4.55
The Committee is also persuaded by evidence, given by TAFE Queensland, that VET providers have difficulty accessing funding such as that provided via the Australian Research Council and National Health and Medical Research Fund unless they partner with a university. The Committee therefore recommends that the Australian Government consider the merit of adopting elements of Canada’s Applied Research and Innovation Services model with a view to strengthening connections between vocational education and training providers and small- and medium-sized enterprises via a $50 million fund over four years which is specifically targeted at the VET sector.
4.56
The Committee recommends that the Australian Government consider the merit of adopting elements of Canada’s Applied Research and Innovation Services model with a view to strengthening connections between vocational education and training providers and small- and medium-sized enterprises via a $50 million fund over four years which is specifically targeted at funding collaborations between the VET sector and business.
4.57
The Committee recommends that the Australian Government include industry representatives on all panels which award funding for scientific research.
4.58
The Committee recommends that the Australian Research Council and the National Health and Medical Research Council develop a cost neutral mechanism where industry collaboration and commercialisation are incentivised.
4.59
The Committee recommends that the Australian Government implement the National Research Compendium.
4.60
The Committee recommends universities allow academics to take unpaid leave to pursue the commercialisation of their research.