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Australia and the UK have long exchanged higher education policies. They have followed each other in establishing polytechnics, abolishing the binary divide, adopting national research assessments and introducing income-contingent student loans.

The same is now happening with impact. The Australian Research Council is piloting an of university research¡¯s engagement with and impact on users, planned for full introduction in 2018. But although it is modelled on the UK¡¯s research excellence framework, it will include , as well as qualitative evaluations of narrative statements.

This move has arisen out of the government¡¯s of December 2015. Australian research analysts and leaders have the country¡¯s indifferent performance in innovation. Recently, most political attention has been on the low level of Australian industry¡¯s collaboration with higher education and research institutions, which the government¡¯s for 2016 ranked as the lowest of 27 members of the Organisation for Economic Cooperation and Development.

Neither universities, businesses nor governments have previously responded well to this issue. Universities have insisted that innovation policy and funding be concentrated on them, based on the reductive if not flawed argument that innovation is a pipeline whose head is universities¡¯ basic research. Businesses have defended stoutly their untargeted tax incentives for research and development. And governments have pressured universities to do increasing amounts of applied research while leaving unaddressed businesses¡¯ lack of capacity to absorb it, and their low level of collaboration even with direct sources of innovation, such as suppliers and customers.

The current Australian conservative government cut universities¡¯ research allocations significantly in its 2015 budget. It then reversed about half of that in?its innovation statement, but it has not restored its substantial funding cut to the Commonwealth Scientific and Industrial Research Organisation (CSIRO), the country¡¯s premier government research body.

Another concern is the government¡¯s adoption of the recommendations of the 2015 of university research policy and funding arrangements, which changed substantially the formulas for allocating block research grants to universities. The formulas used to take into account publications, research income, performance in the national university research assessment and research student enrolments and completions. These are replaced by an exclusive reliance on completions and research income.

The arts, humanities and much of the social sciences do not apply for external funding as much as other disciplines; when they do, the amounts they seek are mostly relatively small. Further, commercial grants to the arts, humanities and social sciences are not eligible for the R&D tax incentive, making commercial research funding even harder for these disciplines to attract. The shift from publications to a bigger reliance on external research funding will reduce the block grant funding that universities attract for research in the arts, humanities and the social sciences, encouraging universities to wind down research in these fields.

The R&D tax incentive accounts for 30 per cent of the Australian government¡¯s total investment in research and development, and is its biggest single research investment. Relative to gross domestic product, it is the third highest such incentive in the OECD, and Australia has, correspondingly, the second lowest percentage of direct government funding for business R&D. The government is still consulting on its R&D tax incentive review, which reported in September 2016, and it is likely to announce its decision in its 2017-18 budget on 9 May. Reportedly the big fight is whether to accept the review¡¯s recommendation to cap cash refunds at A$2 million (?1.2 million) per annum, and a likely outcome is a cap but at a higher level, probably phased in over several years.

The result of successive Australian governments¡¯ emphasis on commercialising university research is a big shift from basic research, which has fallen from 64 per cent of all university research in 1962 to in 2014. Over the same period, there has been a in applied research and experimental development from 34 per cent to 57 per cent of all university research effort, according to the Australian Bureau of Statistics.

Less than a quarter of Australian university research is now pure, reducing the country¡¯s contribution to the world¡¯s advancement of knowledge and, potentially, restricting its capacity to keep up with developments elsewhere.

is adjunct professor of education at , Australia, and at the .