OPINION: At the heart of innovation lies something less glamorous than the commercialisation of IP, but of much greater, long term impact: collaboration. Genuine day to day interaction, exchange of ideas and problem solving between academia and industry. There is considerable evidence internationally that this sort of collaboration drives knowledge exchange and innovation, and that innovation, in turn, drives economic growth.

If we really want to secure Australian prosperity into the future we need take a long, hard look at why the country has long been floundering at the bottom of the OECD league table for university–industry interaction. First, we should note that the OECD measure is imperfect. It does not take into account much of what Australian universities routinely do to foster collaboration with industries, such as student internships, consultancies, professional education and student start-ups. Second, we must acknowledge that we are far from realising our collaborative potential, largely because there are so few incentives in place to help businesses engage with universities, which is where most of Australia’s research takes place. The very grant scheme designed to do just that, the Australian Research Council Linkage Program, has been progressively cut back. We spend some $2.9 billion a year on research and development tax concessions for the private sector, but the number of ‘innovation active’ businesses remains low, as is the percentage of Australian businesses undertaking R&D.

To get greater impact from our R&D dollars we need to spend them more strategically. Fortunately, research into various innovation ‘levers’ provides compelling, and useful, evidence of what works best. In the United Kingdom, where we have both spent much of our careers, university engagement with industry has been significantly increased using funding incentives. A relatively small Knowledge Exchange fund (£150 million per year), has leveraged and promoted substantial university–industry engagement and collaboration boosting income for the sector from around £1.5 billion in 2003 to over £2.6 billion in 2012. This translates to more than £6 generated for every £1 of Knowledge Exchange funding. 

Under the scheme funding is based on performance: how much revenue did each university generate from a wide range of industry engagement in the previous year. A study of research-industry collaboration in the UK shows that, of all the streams of funding from industry into universities, the revenue from commercialising IP is in fact the smallest. Intellectual property including shares generated just 2% of knowledge exchange revenue while contract research, collaborative research, continuing professional education and consultancy generated 34%, 23%, 20% and 11% of revenue respectively. 

While additional funding provides an obvious incentive, the introduction of collaboration ‘metrics’ has, in itself, been an important driver of greater collaboration. The very process of measuring university–industry engagement has elevated its importance, so much so that it is now embedded within the strategic goals of many UK universities. As Australia’s universities have similar structures, policy objectives and cultures, this approach would work equally well here.

Australian universities are actually much more advanced than is generally recognised in understanding the myriad of ways that university–business partnerships can drive innovation and economic growth. At UNSW, as just one example, our new 10-year strategy identifies knowledge exchange and commercialisation as a key priority. Our mission is to put our world-class research to use, working in partnership with business, industry, policy-makers and other stakeholders. Commercialisation of knowledge and technology is, of course of great importance. But it is only part of the story.

What really drives outcomes is high-quality partnerships between academia and industry. Initiatives like our researchers working with Cochlear to improve their next generation hearing implants; our student interns helping Arrium make more environmentally friendly steel; our medical scientists working with Metrobiotech to reduce infertility caused by chemotherapy; our Engineering Faculty working with Ramsey Stewart Industrial Design on GPS and Wi-Fi systems to help the vision impaired; and our researchers collaborating with Sydney Water to develop the next generation of water management models and tools.

These are not major IP deals, but they are economically important collaborations. They are examples of the many thousands of interactions between Australian universities and industry. Individually they may not be blockbusters, but they do add up to a massive contribution to Australia’s competitiveness and productivity. Australian university research made a $160 billion contribution to GDP last year, according to a report UNSW recently commissioned from Deloitte Access Economics, much of which does not register on various OECD league tables.

The government must make it easier for companies to engage with us, and vice versa. Introducing ‘innovation vouchers’ for companies would encourage them to utilise university expertise. Support for internships would help us place many more of our brightest students into companies, bringing benefits for both. Reforming the R&D Tax Incentive scheme could encourage companies to partner with universities and introduce funding that rewards researchers for engaging with industry. NSW is now arguably the easiest place in the world for companies to access university IP, thanks in part to UNSW’s Easy Access IP scheme.

Although commercialisation is undoubtedly important, as Australia responds to the Prime Minister's innovation challenge our plea is to keep our eye on the broader picture and the long term. Lasting relationships between universities and industry are mutually beneficial. They improve our capabilities and, so, our prospects of achieving major commercialisation success. We know this because our business partners tell us. Our multinational corporation partners agree, as do our hundreds of SMEs partners and our thousands of UNSW student entrepreneurs. We need all these partners working together well. Above all, we need stable, considered government policy and support for Australian innovation to thrive.

Professor Ian Jacobs is President and Vice-Chancellor of UNSW and Dr Kevin Cullen is CEO of UNSW Innovations, the University’s technology transfer and innovation office.

An edited version of this opinion piece was first published in the Australian Financial Review.