News & Views item - October 2006

 

 

Insight Economics Report Finds $1 Spent on Cooperative Research Centres Earns Australia $2.16. (October 18, 2006)

    The Cooperate Research Centres program was established in 1990, toward the end of Bob Hawke's prime ministership "to improve the effectiveness of Australia's research and development effort".

So reads the opening of Insight Economics sixty-eight page report, Economic Impact Study of the CRC Programme, commissioned by the Federal Department of Education, Science and Training.

 

The analysis summarises its findings:

In total all stakeholders have committed $11.1 billion (cash and in-kind) to CRCs. This includes $2.7 billion from the CRC Programme, $2.9 billion from universities, $2.1 billion from industry, $1.3 billion from States, $1.2 billion from CSIRO and $0.8 billion from other sources. There are currently 57 CRCs operating across six sectors.

If the only effects on economic performance of the CRC Programme were simple expenditure effects, clearly the overall impact of the CRC Programme on economic wellbeing in Australia would be negative (due to the economic loss involved in collecting and then spending taxation revenues). However, expenditure on CRCs is quite unlike items of government expenditure such as pensions and unemployment benefits, which are transfer payments. Unlike transfer payments, expenditure on CRCs would be expected to lead to positive economic outcomes beyond simple expenditure effects. The knowledge developed in CRCs would be expected to generate improved productivity in existing industries, help the development of new industries, lead to improved environmental and health outcomes (that do have an economic value) and so on. Each of these impacts would act to boost GDP and in turn boost real consumption. In this way expenditure on CRCs generates effects that are in the nature of "investment" effects in addition to the simple expenditure effects on the economy that are associated with any form of government expenditure.

The report goes on to qualify its published findings:

While not all of the benefits that have been delivered through these channels by the CRC Programme are able to be discretely identified and quantified, within the time and information availability constraints that exist, in this study an attempt has been made to identify and quantify as many of these benefits from the Programme as possible. The inability to capture and measure all benefits means that the economic impact analysis conducted in this report must be viewed as a partial rather than complete accounting of the economic benefits of the CRC Programme.

In short Insight Economics, if anything, understates the CRCs' contribution to the nation's economy.

 

In today's media release DEST has this to say:

Minister Bishop said that the CRC Programme has played a key role in supporting the success of Australian industry in global markets.

“The value of the CRC Programme is well known by industry, however this study measures the benefits in a tangible and significant way.”

“The report shows the net benefits of the CRC Programme are at least twice the level calculated previously. The return to Gross Domestic Product (GDP) for each dollar invested in the CRC Programme is $2.16 a return of more that 2:1.”

“The 2006 study shows that as a result of the research, training and commercialisation activities of the CRCs, Australian GDP has been increased by nearly $2.7 billion.”

Cogent words of praise indeed. But isn't it interesting that when it comes to dealing with Australia's universities the majority of Julie Bishop's rhetoric is couched in terms of the economic burden it is placing on the nation's tax payers.

 

Perhaps we're missing something but there would seem to be a strong element of contradiction in the minister's approach.

 

Now why might that be?