Education Investment Fund (EIF)

Sustainable Research Excellence (SRE) in Australia

One of the key 2009 budget announcements was the Sustainable Research Excellence (SRE) initiative, providing $512m over four years to help address the serious structural shortfalls in funding the indirect costs of research. This program is in addition to the existing Research Infrastructure Block Grant (RIBG), which currently provides about 20 cents in the dollar for each dollar earned in National Competitive Grants Scheme. Ultimately, the aggregate of the two programs will provide on average 50 cents in the dollar by 2014.

The issues paper proposes a model to allocate funding using three components:

1. Sustainability - 20%, Incentive 13% and Excellence 67% to be allocated to eligible institutions based on RIBG formula (ie relative success of institutions in competitive grants)
2. The 80% balance requires universities to participate in Transparent Costing (TC) and Excellence In Research For Australia (ERA)
3. Thresholds 1 and 2 (of 2 above).

Threshold 1

To qualify for Threshold 1 (incentive 13%) institutions will need to participate in TC and ERA. It is proposed that funding for this tranche be allocated on the relative share of each institution for the first $2.5m or less of competitive grant income it receives.

TC will comprise two elements:

1. a set of allowable indirect costs, each of which is associated with a defined indirect cost category; and
2. a set of allowable cost drivers to attribute costs in each of these categories to different university activities (eg non-ACG research, ACG research, teaching). Allen Consulting have proposed various allowable indirect cost categories:

• Non-academic salaries and on-costs
• Maintaining physical university infrastructure
• Depreciation
• Finance, borrowing and insurance costs
• Other costs associated with research

Threshold 2

To qualify for Threshold 2 (Excellence 67%) institutions will need to participate in TC and ERA and meet performance thresholds based on ERA data or proxy measures.

Allocation of this tranche is more complicated and will involve individual negotiations with institutions to test and confirm costings and performance. Each institution's share will be based on competitive research income > $2.5m, agreed indirect costs and a performance factor. Until ERA is finalised it is proposed to use publications as a proxy for performance.

A key implication is the Government intends that institutions will receive differential funding for indirect costs based on the different costs associated with their profiles and missions. Thus while the intent is to provide an average 50 cents in the dollar some institutions may get higher if they have particularly expensive research costs and conversely some institutions may get less if they have a higher proportion of lower cost research activity (and/or they have poor performance).

Institutions can also choose not to participate in TC and ERA and just take the first 20%. This may be a cost-effective strategy in the first instance for those institutions only getting a handful of ARC grants, although it is clear that any institution that wants to be a serious research player will need to develop effective internal costing systems and participate in ERA.

The Department is undergoing a consultation process with submissions due by 31 August.

SRE discussion paper