Australia’s universities have come under pressure to reorient their business models around commercial returns from research rather than revenue from international students.

A federal government discussion paper, which seeks ideas on a new scheme to improve the commercialisation of university research, flags “substantial” funding to encourage translational research and develop ideas into “proof of concept” products ripe for industry investment.

The paper says universities may be pressed to put “skin in the game” by identifying research with the best commercial prospects, developing the most efficient “pathways” to monetise them and skewing career reward systems to commercial success instead of publication.

“While universities increasingly invest in research that has social and economic impact, they have weak incentives to commercialise research which has commercial potential,” the paper says. “Revenue from international students is influenced by global rankings, which in turn are linked with publication output.

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“An innovation culture has not been fostered within Australian universities, with performance management and rewards focused on quality of academic output and citations.”

In a speech at the University of Melbourne, education minister Alan Tudge said he wanted academics to become “entrepreneurs taking their ideas from the lab to the market” and was prepared to change intellectual property laws to that end.

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“Now is the time to make this change, not just because our economy and security needs it, but because university business models have been severely disrupted by Covid. I am willing to work with any university that wants to get ahead of the game,” he said.

The speech concluded with a reference to Cochlear Australia, which – along with the Gardasil cervical cancer vaccine and sleep disorder device manufacturer ResMed – is one of the few renowned Australian money-spinners to have emerged from university research.

Mr Tudge’s speech did not address a central concern for university administrators: how to maintain enough research to generate a steady supply of innovations for commercialisation. While the government allocated an extra A$1 billion (£560 million) of research funding in last year’s budget, it will not compensate for an estimated A$3 billion loss of revenue last year alone resulting from the pandemic.

Australian National University policy expert Andrew Norton said that while commercialisation of research was desirable, it was never likely to be a major source of revenue for either universities or the broad economy. While university accounts were “opaque” about commercialisation, revenue from royalties and licences had totalled just A$136 million in 2019, he said.

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Consultancy and contracts revenue of A$1.5 billion was “also a sign of engagement with the outside world”, but had supplied just 4 per cent of universities’ income.

Professor Norton said innovation was largely about new ways of doing things and “incremental improvements” on older technology as well as new inventions. “No matter how good Australian universities are, they will only produce a tiny percentage of global new-to-the world technologies,” he said.

“Australia’s prosperity depends much more on access to innovations across the world. In this, the graduates of Australian universities are likely to play a much larger role than researchers in the labs.”

Melbourne vice-chancellor Duncan Maskell welcomed the focus on research translation, saying the onus on universities “to deliver important benefits to real people” had been highlighted by the pandemic and challenges such as extreme weather. He also stressed the need for “investment in research, both basic and applied, in all the disciplines”.

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The Group of Eight said the government had “issued a challenge and an economic direction” for business, government and universities. “For our part, the Go8 is committed to it,” said chief executive Vicki Thomson.

john.ross@timeshighereducation.com