Max Whitten was Professor of Genetics at the University of Melbourne, and Chief of CSIRO's Division of Entomology from 1981 - 1995. He is a Fellow of the Australian Academies of Science and Technological Sciences & Engineering.

A shortened version of this opinion piece was first published in the Australian Financial Review on March 1, 2004.

CSIRO, in part, accounts to its major shareholder, the community, through Senate Estimates hearings thrice yearly.  Hansard for the past seven Estimates hearings reveals that the research agency is floundering. In the hot seat is CSIRO’s CEO, Dr Geoff Garrett while his persistent inquisitor is Shadow Industry and Science Minister, Senator Kim Carr.

Some telling examples are found in the latest hearing (18 February).

For instance, Dr Garrett admitted awarding 15 contracts (of doubtful benefit to the national research effort), worth over $740,000, to Mr Ian Dean, a personal friend from South Africa.  CSIRO’s Board labeled the process as “flawed”, while Garrett provided a circular and unconvincing defence, which must have been painful for cash-strapped researchers in CSIRO to hear; and devastating for retrenched scientists.  Science Minister, Peter McGauran, who cannot afford a full-time Chief Scientist, might also wonder.  It was not surprising to learn later that senior advisers had recommended that the Dean consultancies be subject to open tender.

Garrett also acknowledged that CSIRO had borrowed $75m from the Commonwealth to assist the Australian Magnesium Corporation, only to “derecognize” the loan after the deal soured.  One wonders what role the $75m CSIRO loan played in catalysing further handouts worth $300m from the Commonwealth and Queensland Governments to AMC. Small investors and superannuation funds lost over $800m in the failed AMC venture.

Much was made of AMC’s involvement in CSIRO’s Light Metals Flagship launched by Prime Minister, John Howard last April. The only industry person to speak during the launch was Don Sharp, then CEO of AMC. Six weeks later AMC crumbled.

 Garrett revealed that CSIRO’s communication strategy is directed by a consultant, widely recognized as a top lobbyist for the tobacco industry. This might sit uncomfortably with CSIRO’s much publicised pHealth Flagship which promotes healthy living.

Garrett told Senator Carr how he had commissioned an outstanding CSIRO scientist to set up the new Agrifood Flagship, but then recruited someone with extensive patent experience (19 years with Syngenta), but no research leadership background, as its Director. Dr Garrett admitted the Flagship has yet to attract industry funding, contradicting his claims the Flagships are industry-driven.

In earlier hearings, Dr Garrett admitted scrapping CSIRO’s successful Parliamentary Briefings program, despite protestations from Government Senator Jeannie Ferris, herself a former CSIRO communicator. This incident is a classic example of biting the feeding hand. In the February 2002 hearing, Dr Garrett advised Senator Ferris that the program would continue, indeed be expanded. In June, he advised that the program was being reviewed, and, finally in November 2002, he told an astonished Senator Ferris that the Briefings, costing $20,000 pa, represented a poor investment - despite CSIRO’s appropriation budget of $639m pa.

In the June 2003 hearing Dr Garrett advised Senator Carr how he had sold CSIRO’s research vessel, the Franklin, for $1.3m after getting CSIRO Board approval on an anticipated sale price of $9m.  The deal was to provide funds for refurbishing an older fishing vessel, the Southern Surveyor. Senator Carr read into Hansard an embarrassing internal email revealing just how bad the deal was.

The many systemic problems identified in these Senate Estimates hearings have their genesis back in the1980s when the Hawke Government established a Board to run CSIRO, leaving the organisation with a weakened corporate governance framework and loose planning and reporting lines.

Part-time Directors on the Board are responsible for CSIRO’s performance, yet the Governor-General hires and fires the CEO (presumably on advice from the Minister). And while Directors, effectively ministerial appointments, are responsible for the preparation of budget estimates, they do not front Estimates Hearings but instead report to Parliament through Annual Reports.  In effect, the CSIRO Board is marginalised compared to Boards in the private sector.

Between 1981 and 1988, under the Hawke Government, and its first part-time Chairman, Neville Wran, CSIRO’s

capacity to conduct research, certainly for the agricultural sector, declined by 20%. Many of these cuts were hidden behind antediluvian bureaucratic devices such as the infamous “efficiency dividend”. A recurrent cut of 0.5% was applied each year in the delightful expectation that the organization would work more efficiently. With continued budget cuts by the Howard Government, coupled with diversion of funds within CSIRO to consultancies and commercial activities (around $50m pa), its capacity to do effective research has probably declined by 50% since 1980.

Labor Science Ministers, Barry Jones and Peter Cook were sympathetic to the declining fortunes of CSIRO, but they were no match for the economic rationalists in the Department of Finance.  The bureaucrats, and Finance Ministers from Peter Walsh onwards, have treated research expenditure merely as outlays, and not an investment.  Canberra has no evident interest in the national wealth created by CSIRO’s research, despite economic studies demonstrating excellent returns. 

Even more pronounced is the failure by Treasury, the Department of Finance and the current Chief Scientist to recognise the diverse ways that research creates wealth. And so, it is not surprising that the Howard Government has been reluctant to release recent studies, such as the Research Collaboration Report, chaired by Donald McGauchie, tipped to criticise Treasury’s over-emphasis on industry-driven research, and favouring block grants over competitive funding.

But back to history. Matters for CSIRO took a turn for the worse after the appointment of Charles Allen as CSIRO Chairman in 1996. Mr Allen, at term’s end, commissioned a secret “stakeholder” report of the Allen Consulting Group. This report, completed in September 2000, was given to newly recruited CEO, Geoff Garrett, during an induction tour in late 2000. It provided his mandate for change.

Garrett denied the existence of this report during Senate Estimate hearings in 2002, until he realized Senator Carr was reading from it! The Allen report contained untested gems such as “CSIRO is a highly respected public icon. There is, however, a view that this reputation is a legacy of achievements in the 1950s and 1960s”.

Charles Allen, who failed as CSIRO Chairman to ascertain the true situation, accepted the claim that CSIRO was living off its early reputation.  He endorsed the report’s recommendation that CSIRO needed a major overhaul, especially downgrading the Divisions, and diminishing the power of its Chiefs - termed “bishops” by the report’s author, David Charles, former Secretary, the Department of Industry.  Therein lay the rationale for Flagships.

Charles Allen decided that CSIRO required a “change merchant” who could increase its private income and reduce the need for government investment. Geoff Garrett, on the basis of his claimed achievements as President of CSIR in South Africa, promised these outcomes. Dr Garrett recently advised Senator Carr that he had abandoned his original “stretch targets” of 60% external funding. He even scored an own goal by requesting the Government temporarily abandon CSIRO’s three-year funding agreement. His requests for its restoration have so far failed!

Science Minister, Peter McGauran recently confirmed the “change merchant” descriptor for Dr Garrett during and ABC “Inside Business” program.  But an analysis of CSIR history would reveal that the “change merchant” was Brian Clark who preceded Garrett as President of CSIR. It might be noted that CSIR has a direct appropriation, around 1/10 of CSIRO’s; and it conducts defence, but not agricultural, research.  Despite similar names the organizations are very different creatures.

In order for CSIR to remain relevant to and survive the changing political landscape in South Africa when the African Congress Party replaced the apartheid National Party in government, Clark was forced to reinvent CSIR. The process used is described in his paper “Cultural change in a national research organization in times of extreme turbulence” (Development and Transfer of Industrial Technology. O.C.C. Lin, C.T. Shih and I.C. Yang (eds.). Elsevier Science B. V. 1994 ITRI).

Confident that he could emulate the ‘Clark’ changes in CSIRO, Garrett commissioned an officer in CSIRO Sustainable Ecosystems, just two months after he joined CSIRO, to gather material based on his term as CEO of CSIRO, for preparation of an international text book on how to implement institutional reform.  There is now an even stronger case that this book be completed, but its message would have to be very different.

This background provides some context for CSIRO’s media release of 12 Feb 2004 on a Stored Grain Research Agreement. Dr Garrett describes “the partnership between CSIRO Entomology and the Australian grain industry as one of the most productive associations with industry in the history of CSIRO.” 

“The recent independent benefit cost analysis estimated that CSIRO's partnership with the grain storage industry has returned benefits, since the 1970s to date, valued at over $759 million", he writes. 

The Australian Wheat Board went further, with Managing Director Andrew Lindberg saying “Investment partnership between CSIRO and the Australian grain industry has been a key force in maintaining our grain at the forefront of the market through the development of soundly based, cost-effective and safe technologies in handling and storage".

The economic study estimated total benefits from CSIRO Entomology research at $4.1billion to 2025. One long-standing problem solved, but previously not even recognized by the industry as an issue, “wheat moisture receival limit”, will yield with expected benefits of $461m over the next 25 years for wheat producers.

The same economic study put a return of $677m over 25 years on a second project - carbonyl sulphonate (COS) to replace the banned fumigant, methyl bromide. Half the benefits would be captured by the bulk grain handlers and half by the marketers of COS. One scientist, Dr Jim DesMarchellier, was behind both pieces of research, returning an estimated $1 billion by 2025.

Not a bad performance by one part of one of now 20 CSIRO Divisions pejoratively labeled “silos” in the Allen Report.  The successful grain research all happened between 1970 and 2000, ie after the “CSIRO legacy” era identified by Mr Allen, and before the arrival of Dr Garrett. It also demonstrates that research yielding substantial economic benefits is not necessarily industry-driven; nor does it have to entail IP and patents.

The same media release has CSIRO celebrating a new agreement with the grain storage industry worth $9.25m to CSIRO over five years.  That represents an outlay of $1.8m pa for a return to the industry of around $87m pa.  Were the CSIRO negotiators sleeping? Or does it simply acknowledge the substantial downstream benefits to the nation?

CSIRO scientists could proffer other examples of successful public good research that depend on public funds, either because industry has failed to invest, or because it cannot sufficiently capture the benefits. Regrettably, this government and CSIRO management have muzzled its scientists.

Dr Garrett and the Howard Government have placed their faith in the Flagship Program, which was supposed to be the vehicle for Garrett’s borrowed mantra of “Big Hairy Audacious Goals”. Instead, the six Flagships have proved to be an inwardly looking mechanism for structural reform, designed to curtail the power of the now 20 Divisions. Flagships represent an overlay on the Divisional system of management, leading to a hybrid management structure burdened with non-productive leaders, leaving too few poorly resourced scientists to do their job.

As Dr Garrett begins the fourth year of his five-year appointment, Senator Carr has served the community well by revealing the plight of CSIRO. What is needed now is a totally new rationale and adequate public funding to realize a fresh purpose for CSIRO - one that builds on its proud record, and is freed from the failed reforms of Dr Garrett, instigated by former Chairman, Charles Allen and endorsed by the current government.