ASSA at Research Funding Public Hearing

ASSA at Research Funding Public Hearing


Professor Bruce Chapman AM FASSA

ASSA witnesses advocate for the social sciences at Parliament House public hearing on Australia’s research funding

August 20, 2018

________________

On 29 June this year, ASSA made a submission to a Government Inquiry on the efficiency, effectiveness and coherency of Australian Government funding for research.

This submission can be found here.

In this submission, ASSA argued:

 

Social science research is a wise investment. It adds value not only to cultural life in the familiar ways, but it is also financially prudent, repaying its investment at rates comfortably exceeding hurdle rates. Relative to the economic return which investment in the social sciences yield, it is underfunded. The rate of return on research overall is 25%, while the Department of Finance has a hurdle rate of 7%.

This gap is further exaggerated for social sciences by system biases that particularly limit social science research. This loss is embedded within the metrics analysing the impact of social science research: these metrics have an inbuilt tendency to underestimate the impact and engagement of social science, yet they are the predominant mechanism for distribution of Commonwealth competitive grant research funding. Even if this were not so, and the inaccurate metrics currently under use were accepted as accurate, social science research investment would still be underfunded.

This submission draws attention to several initiatives that could enhance research productivity, and to specific suggestions that could help redress the adverse positioning of social science research. None of these would require large outlays—all could be implemented immediately:

1. Institution of income-contingent loans for conducting university research including beneficial social science research in particular
2. Investment of Education Investment Fund in social science research and social science research infrastructure
3. Enhancement of research impact and engagement metrics to reduce system biases against social science research

 

The Standing Committee on Employment, Education and Training held a public hearing in Canberra on 20 August 2018 to discuss and develop points from this submission.

Professor Bruce Chapman AM and Dylan Clements represented ASSA at this public hearing. Bruce Chapman argued:

 

If we said ‘just double the linkage grants and that will help us in our business relationships, and with patents and commercial engagement with the university sector’, I don’t think that would be particularly compelling. Even if you can make the case, budget constraints are very powerful things. Our way to address this is a concept called a contingent debt. The first contingent loan or debt was the HECS system. There are striking examples today where contingent loans could be used to take pressure off budgets.

Here is a different way of thinking about debt—let me just describe it very simply: with profit- or revenue-contingent debt, you can satisfy the political need to help people in the short term, but put the funding in a system which gets repaid—not all of it, it’s a government decision about how much: it could be half, it could be three-quarters, it’s a policy question—but only depending on future profits.

Take that basic concept and think about how it could be applied to research funding. Imagine you are taking business decisions: you might be the Business Council of Australia, you might be Telstra, you might be BHP. You’ve got a project that you really would like some academics to look at—completely curiosity driven, not politically motivated. You can’t get the resources from government, because governments are always parsimonious and it looks risky. All research can look risky. That’s what research is—we don’t know what we’re doing at the beginning except defining a question.

The idea would be that academics, by themselves but with partnership from business—either private companies or collections of businesses such as the Business Council—could come up with projects. Let’s imagine that you want to have a debate about what are the true implications of cutting company taxes for equity, wealth creation, profitability, and taxation. How do you try and work that out? You can go to the literature yourself. You can go to some tax economists and say: ‘What do you think?’. But there will be so many unanswered questions. The world changes all the time. So you might want to institute a three- or four-year partnership where you’ve got the best tax economists talking about getting the best people in from overseas, saying: ‘What is the most recent research? What do the data tell us about this? What are the alternative uses of the outlays? What does it mean for budget deficits? How would you finance it?’. These are really complicated things. You need conferences. You need workshops. You need peer reviewed analysis. And you need overseas visitors and overseas liaison to see what the best practices are, because they do change a lot.

A business financing that by themselves is very likely to be problematic. They’ve got to find the money. So you take a bunch of financial resources for a defined project, vetted and appraised by groups like the ARC, with business. Business is prepared to put in a certain amount of money. How is it financed in the short run? Through government. But it’s not as a grant. It’s as a contingent debt. It’s designed very simply to make sure that some part of the outlays are returned to the public sector. You don’t want to make it too specific, because the idea of saying, ‘We’re doing this research project and we can then look at the value added for our company’—you won’t know what the value added is. Sometimes it won’t be for a very long time. The time lags are very complicated. To part-finance it, the government says: ‘We’re going to collect a bit of it back. We’ll do it in the most simple possible way—one or two percentage points on profits’. What that means is that there are no default issues and there are no risk issues, because these are consumption-smoothing or, in business terms, revenue-smoothing devices. I’ve brought along copies of the paper that Professor Withers and I wrote, because I didn’t think there was enough detail about how it might work.

 

According to Dylan Clements:

 

Competitive grant funding is decided on the basis of perceived impact. We have long argued—and there is a vast literature about this—that these exhibit systematic biases against the humanities and social sciences. There are a few ways in which this happens. One of them is that indexing services—Web of Science and Scopus are the main ones which are used—don’t reliably pick up books and book chapters, while they’re very reliable at picking up journal articles. And humanities and social sciences tend to produce more of their main works in books and book chapters.

If you decided not to count books, the cost to the standard of scholarship in social sciences and humanities would be extremely high—the cost would be qualitative. It would change the character of the kind of research one can do. The analogy with blue-sky research, which has already been defended, is instructive: if we lost blue-sky research, we agree there would be some qualitative negative impact on the standard of scholarship. The same is true for books. Books represent the kind of sustained engagement which is native to social sciences and humanities. The social sciences will be much impoverished if structures creating imperatives against writing them are sustained and maintained.

 

The full Hansard transcript of the hearing can be found here.

Bruce Chapman also distributed an article on a possible research and development tax incentive schemewhich he coauthored with ASSA President, Glenn Withers.

___________________
Professor Bruce Chapman AM FASSA holds the Sir Roland Wilson Chair of Economics at ANU College of Business and Economics.
Dylan Clements is the Programs Manager at ASSA and a PhD student at the ANU School of Philosophy

Contact Information

Academy of the Social Sciences in Australia

    ABN: 59 957 839 703
  • Location: 26 Balmain Crescent, Acton, ACT 2601
  • Postal: GPO Box 1956, Canberra, ACT 2601
  • +61 .2 62491788
  • +61 .2 62474335
  • secretariat@assa.edu.au