In September 2014 Mr David Miles AM was appointed by the Federal Government to conduct a review of the Cooperative Research Centres (CRC) Programme. The Review has now been released and all 18 of his recommendations have been accepted by the Government and will now be implemented. A copy of the Review can be found here.

WHAT IS A CRC?

Established 25 years ago, the CRC Programme is a grant scheme designed to promote scientific research and collaboration between the private sector and public research bodies. There are currently 35 active CRCs.

CRCs are intended to address challenges faced by industry that require medium to long term collaboration between the private sector and researchers. Typically, CRCs involve private sector companies collaborating with universities to innovate in a particular area over a 10-15 year period.

RECOMMENDATIONS FROM THE MILES REVIEW

The Miles Review recommends that CRC Programme should be retained, but should be realigned to put industry “front and centre”. Under Miles’ recommendations, CRCs will deliver targeted outcomes for the private sector through industry-led research.

Some of the major recommendations from the Miles Review are outlined below.

1. Putting industry ‘front and centre’

The Miles Review envisages the CRC Programme as “an industry led scheme that enables industry to identify and champion collaborative applied research projects”.

In order to ensure that CRCs are closely aligned with industry goals, the Miles Review also recommends several structural changes to the CRC format. CRC funding will be limited to a maximum of ten years to ensure they are focussed on “solving a problem, rather than establishing an organisation”.

The CRC application process will be overhauled and applicants will be required to submit a business proposal that includes:

  • clear, tangible, industry-focussed objectives;
  • a statement of research commercialisation potential;
  • an explanation of how the CRC research outcomes will lead to economic growth (including intellectual property outputs such as patents); and
  • a plan for active involvement by industry in the proposed management, governance and administration of the CRC.

The Review also recommends that participants should also have reached agreement on intellectual property rights between the CRC participants at the time of their application for funding and that they should be required to develop an IP management strategy alongside the funding agreement.

2. Introduction of the new ‘CRC-P’ model

The Miles Review recommends a new model for CRCs, ‘Cooperative Research Centre – Projects’ (CRC-P), that will run alongside the existing CRC model.

CRC-Ps will run over a shorter lifespan (3 years maximum), on a smaller budget ($3 million maximum), with more specific industry goals and simpler governance and administration requirements. This new format will encourage the involvement of small and medium enterprises which may not have the resources to invest in expensive, long-term research.

3. Focus on growth sectors

The recent Federal Government Industry Innovation and Competitive Agenda recognised five “growth sectors” where Australia should focus its research and development efforts: Food and Agribusiness; Mining Equipment, Technology and Services; Medical Technologies and Pharmaceuticals; Advanced Manufacturing; and Oil, Gas and Energy. See our previous article on the growth sectors here.

The Miles Review recommends that CRCs should focus on these growth sectors, and funding should be prioritised for CRCs contributing to these sectors. However, the report makes it clear that CRCs in other research areas will not be excluded from funding.

The Miles Review also recommends that the ‘public good’ funding stream should be discontinued. The public good funding stream provided funds to CRCs that delivered a ‘broader benefit to the community and society as a whole’ and was usually given to social or environmental research CRCs.

4. Improving Efficiency

The Miles Review recommends several measures to improve the efficiency of CRCs. For example, the review recommends mandating that all CRCs (but not CRC-Ps) be incorporated as companies limited by guarantee, in order to save time which is often spent considering structural arrangements when a new CRC is established.

CRCs will also be subject to regular reviews against their industry focussed goals and funding agreements, and any CRCs that fail to meet their objectives will not be allowed to continue for the full period of their funding agreement. This review procedure will also apply to all existing CRCs; only CRCs that are on track to meet their stated goals will be permitted to continue operating with CRC Programme funding.

IMPACT OF THE MILES REVIEW

The Miles Review recognises that “[t]he CRC Programme continues to be extremely important in encouraging and facilitating industry-led collaboration between industry and research”. However, a new, more targeted focus is required.

The proposed 2015/2016 Federal budget plans to cut $26.8 million of CRC funding (over four years). After the recommendations of the Miles Review have been implemented, it is expected that industry will play a larger role in the direction and management of CRCs. This may spur greater industry financial contributions to the research sector that could help to bridge the gap in government funding.

The Miles Review also presents a new opportunity for industry (including SMEs) to invest in short-term R&D through the CRC-P model. If this model becomes popular, it may see universities engaging with industry in more short-term research projects.

According to statistics from the Organisation for Economic Co-operation and Development (OECD) cited in the Miles Review, Australia has one of the lowest global rates of collaboration between industry and research institutions. The Miles Review’s recommendations align the goals of industry and research institutions, and create a paradigm for CRCs where industry and research bodies can work together in a mutually beneficial relationship.

The recommendations contained in the Miles Review give industry the opportunity to play a lead role in the establishment and management of CRCs. It is hoped that the implementation of these recommendations will stimulate significant engagement and investment by industry in research projects with clear commercialisation potential.