[Aqualist] Budget 2009/10 - FASTS assessment

[Simon Haberle]

*General Comments from Federation of Australian Scientific and 
Technological Societies (FASTS)

*Against expectations, the budget provided significant new investment in 
science, higher education, research and innovation.

In 2009/10 commonwealth expenditure on innovation, science and research 
will be $8.6b, a 25% increase on 2008/9 budget – the single largest 
annual increase since science and innovation records began in the late 
1970s.

The budget provides $5.7b for new programs over four years across the 
higher education and innovation sectors in response to the Bradley 
Review of Australian Higher Education and the Cutler Review of the 
National Innovation System. $3.1b of this is in Kim Carr’s DIISR portfolio.

The Government has also released a formal paper in response to the 
Cutler and Bradley reviews called /Powering Ideas ( 
http://www.innovation.gov.au/innovationreview/Pages/home.aspx)/. This 
paper indicates commitments for various reforms such as activity based 
costing for evaluating full costs of research, which have been 
implemented in this budget, but also sketches commitments to future 
reforms such as the introduction of compacts between Universities and 
Government that are not implemented in this budget cycle.

Our main focus here is on DIISR and Education announcements but there 
were other announcements of interest to members in other portfolios 
including:

    * cutting of Land and Water
    * reduction in rural industries R&D Corp
    * extending NICTA beyond 2010
    * Increase funding to BoM for infrastructure
    * Increase Antarctica research
    * Major health infrastructure funding including for medical research
      facilities and institutions
    * $4.5b clean energy initiative including $2b in carbon capture and
      storage; $1.6b in solar technologies and $465m for Renewables
      Australia (most of these are existing or redirected programs
      although there is $100m for renewables Australia)


The key budget items are:

*Higher Education
*

    * A new quality and regulatory agency (that subsumes AQUA)
    * Revised indexation arrangements for university grants ($577m
      additional over 3 years)
    * a more demand-driven university system
    * extra 50,000 new students to commence a degree by 2013
    * major infrastructure commitments
    * focus on equity funding for low SES including a 2% rising to 4%
      loading for teaching
    * major changes to student income support mechanisms


*Research
*

    * $512m to increase funding for the indirect costs of research:
      initially Research Infrastructure Block Grant (RIBG) up to 25
      cents then to 50 cents in the dollar by 2014. Access to the higher
      levels will be conditional on undertaking activity based costing
      and other criteria.
    * A new Joint Research Engagement Program that replaces the current
      Institutional Grants Scheme to support research collaboration
      between universities, industry and other end-users. Success in
      competitive grants will not be an indicator for competitive
      resource allocation.
    * $52m for collaborative research programs – a new scheme for 6 year
      networks based in non-research intensive regional unis in areas
      they have identified as strategic research strengths to build
      collaboration with other institutions.
    * Modest increase to postgraduate stipends
    * indexation of research block grants


*Science
*A program called “super science initiative” with $1.1billion for 
science initiatives ($901m in infrastructure)in

    * space science and astronomy
    * marine and climate science, and
    * future industries (eg nano and bio technologies)


Space science $160.5m – new National Centre for SKA science in Perth; 
additional funding for the Australian Anglo telescope; $40m for space 
research and skills and $8.4m for a new space policy unit in DIISR

Marine and Climate $387.7m - Including Replacement vessel for Southern 
Surveyor; new tropical marine infrastructure at AIMS; distributed 
infrastructure for terrestrial ecosystems, groundwater depletion etc

Future Industries $504m - includes $71m for Monash EMBL facility, 
nuclear science facilities at ANSTO, New Enabling Technologies Strategy

In addition, there will be 100 Super science fellowships ($27.2m) for 
3-year postdocs in these three science areas (50 commencing in 2010 and 
50 in 2011) worth up to $72,500pa.

The 2009 round of Science linkages has been cut and I expect that means 
the end of this troubled program.

*Public Sector Agencies
*CSIRO, ANSTO, AIMS and BoM all received infrastructure funding 
including over $150m for CSIRO comprising $120m for a replacement vessel 
and $30m for Atlas of Living Australia; $55m for AIMS; $62m for ANSTO to 
provide additional neutron beam instruments for OPAL. There were no 
cuts. The agencies will also be partners in, or have access to, a lot of 
the other infrastructure investments.

*ARC
*ARC received funding to develop ERA, which means it does not have to be 
funded out of existing ARC programs. It also received additional funds 
for specific programs such as extension of NICTA and the super science 
fellowships.

*NHMRC
*No cuts or new programs. There are major new health infrastructure 
grants some of which will have direct benefits for researchers and 
universities (eg Monash and ANU)

*Innovation
*The key innovation initiative is an R&D tax credit with two levels of 
assistance:

    * a 45% refundable credit for companies with turnover of less than
      $20 million (equivalent to a 150% tax concession); and
    * a 40% non-refundable credit for companies with turnover of more
      than $20 million and for companies with foreign-owned intellectual
      property arrangements that conduct R&D in Australia. equivalent to
      a 133% tax concession.


The new R&D tax credits take effect for income years commencing after 1 
July 2010. Of particular note is the change to an R&D tax credit system 
means that the rate of support will be decoupled from any future changes 
to the corporate tax rate.

The arrangements for turnover <$20m is a significant increase, as the 
current refundable offset has a group turnover limit of $5 million, and 
aggregate R&D expenditure capped at $1 million. For the R&D tax credit 
the turnover limit has been increased to $20 million, and the cap 
abolished. As a transitional measure, for the 2009/10 income year, the 
Aggregate R&D Expenditure cap will be lifted to $2 million to provide 
more support and flexibility for organisations that currently do not 
qualify.

Where group turnover is over $20 million, companies will be eligible for 
a 40% non-refundable credit, equivalent to a 133% tax concession, again 
one-third higher than the current basic rate of support. Further, 
companies conducting R&D in Australia where intellectual property rights 
are held offshore (as for the current international premium R&D 
concession) will also able to access this credit.

Both the current 175% premium and international premium will be 
abolished in line with the introduction of the new credit system, and 
the 2009/10 income year will be the last for claims under those programs.

It is important to note that there is no successor program to Commercial 
Ready, in particular R&D Start Grants. That suggests that the Government 
has withdrawn from the usual mix of grants and tax support to tax 
support only. Start up firms typically used R&D Start grants to leverage 
State Government and private venture capital so it remains to be seen 
what long term impacts the new policy environment will have on 
development/commercilisation pathways.

*Infrastructure
*Injection of almost $3 billion into tertiary education and innovation 
Infrastructure through the Education Investment Fund (EIF).

The Government has approved 31 projects received through Round 2 of the 
EIF worth $934 million 12 for VET; 11 are for higher education teaching 
and learning facilities and 8 for research infrastructure.

The Government has also announced an allocation of $500 million for 
Round 3, and a special $650 million Sustainability Round of the 
Education Investment Fund.

The funding will be open to VET and higher education and research 
institutions and will support projects that feature sustainable design, 
energy efficiency and build capability for climate change related research.

$1.1 billion will also be provided for the Super Science Initiative. Of 
this, $901 million will come from the EIF for the capital components.

Applications for Round 3 of the EIF will open later this year and 
successful projects will be announced in early 2010.

Successful Round 2 EIF grants are:

Higher Education Teaching and Learning

· Gateway @ COFA at the University of New South Wales, Paddington - $48m
· Leadership in Advanced Surgical Education at Macquarie University, 
North Ryde - $16.638 m
· National Life Sciences Hub (NaLSH): An Integrated Science Hub in Food 
Security, Plant and Animal Health for Inland Australia at Charles Sturt 
University, Wagga Wagga - $34m
· La Trobe University Rural Health School at La Trobe University, 
Bendigo - $59.6m
· Science and Engineering Precinct at University of Ballarat, Mount 
Helen - $39.97m
· Transforming Graduate Learning Spaces - A New Delivery Model for 
Professional Education in Australia at the University of Melbourne, 
Parkville - $16.278m
· Advanced Engineering Building at the University of Queensland, St 
Lucia - $50m
· Science and Technology Precinct at Queensland University of 
Technology, Gardens Point - $75m
· Engineering Pavilion at Curtin University of Technology, Bentley - $20.5m
· Establishment of the Australian Centre for Indigenous Knowledge and 
Education at Charles Darwin University, Casuarina - $30.65m
· Stage 2 of the ANU Science Transformation: The Chemical Sciences Hub 
at the Australian National University, Acton - $90m


Research
· Australian Institute for Innovation Materials (AIIM) - Processing and 
Devices at University of Wollongong, Innovation Campus, Fairy Meadow - 
$43.8m
· Building the Sydney Institute of Marine Science into a World Class 
Marine Research Facility in support of Australia's National Research 
Priorities at Sydney Institute of Marine Science, Chowder Bay - $19.5m
· Centre of Climate Change and Energy Research at University of Western 
Sydney, Richmond - $40.0m
· National Centre for Synchrotron Science: Outreach and Research Support 
Facilities at Australian Synchrotron, Clayton - $36.78 million
· The Centre for Neural Engineering at the University of Melbourne, 
Parkville - $17.515 million
· The La Trobe Institute for Molecular Sciences at La Trobe University, 
Bundoora - $64.1 million
· Smart State Medical Research Centre at the Queensland Institute of 
Medical Research, Hurston - $55.0 million
· Institute for Marine and Antarctic Studies at University of Tasmania, 
Hobart - $45.0 million