RDCs delivering the goods, for the past 20 years and the next 20 years - Dennis Mutton

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  • Between $1.2 and $1.9 billion is invested on rural R&D each year, according to ABARES figures The recently released Rural R&D Council’s Draft National Strategic Rural R&D Investment Plan estimates the spend to be even more – around $2.9 billion per year. This is a broader definition of investment in this area and includes around $1.1 billion in agricultural, fisheries and forestry, $1 billion expanded along the value chain and a further $0.8 billion in areas related to rural Whatever figure you put on it, this money is invested by a range of stakeholders, including the RDCs, CSIRO, universities, Commonwealth and state governments and the private sector To add to the complexity of the system, there is a wide range of providers that include not only the universities and CSIRO but also the CRCs And then we have the vitally important stakeholders that make up the extension component of RD&E. Without these stakeholder, there is a risk that the R&D will not be adopted so they form an essential component of the RD&E system
  • There is a wide body of literature that demonstrates that RD&E is a key driver of innovation and productivity in the rural sector In fact, RD&E has been the major factor in maintaining Australia’s strong productivity growth over the past 20 years But there are clear signs that this productivity growth is declining While the drought over the past decade has been a fact, a major contributor has been the long term slow down in investment in rural RD&E Since the mid 1970s, little real growth has occurred in public RD&E expenditure Given the time lags of more than 35 years in realising the benefits of R&D, it is likely that the decline in investment over the past few decades is now having a significant effect on productivity growth and is likely to do so for decades to come Therefore it is critical that investment in RD&E continues and indeed, is increased
  • So how do the RDCs contribute to Australia’s RD&E system and to productivity growth and the wealth of the nation? The 15 RDCs invest across a whole range of industries, from wool to red meat, to eggs, to grapes, sugar and fish – and a whole range of industries in between This investment is not just within the farm gate but also to supply chain and manufacturing Importantly, the RDC investments promote and underpin Australia’s competitiveness and profitability, benefitting farmers and industry more broadly The wellbeing of all Australians is assured with the production and supply of clean, healthy food and fibre The RDC investments also contribute to the public good of Australia, thought investments in sustainability, biosecurity and the natural resource base
  • And the secret behind the successful RDC investments is the RDC model itself This is a unique model that provides true partnership and co-investment between industry and government Around $460 million is invested directly through this model in RD&E across the nation There is no other model in the world that is so successful in bringing together the needs and aspirations of industry with the goals and priorities of government – in fact, this model is the envy of the world It has been operating successfully for over 20 years now and even the Productivity Commission, in it’s recent report, has acknowledged that it is fundamentally sound….but more to that later
  • The benefits of RDC investments are very high In order to measure these returns, the CRRDC has led the collective measurement of the impact of RDC investments to demonstrate the returns for both levy payers and government. This ongoing program of independent evaluation of the collective investment by the 15 RDCs is the largest and broadest of this type of analysis of rural R&D in Australia The first year of results in 2008 showed that over a 25 year timeframe, for every $1.00 invested, there was an average return of $11.00 In 2009 the results showed that for every $1 invested, $10 is returned, largely consistent with the results from 2008 In 2010 the results show a $7 return for every $1 invested over 25 years The evaluation process also demonstrates the significant leveraging the RDCs can achieve from their investments Last year, the projects evaluated cost $896 million, including an RDC contribution of $270 million. The 2010 net present value of total benefits was $4 billion. This clearly demonstrates not only the value of R&D investments through the RDCs, but also the opportunities that can be achieved from leveraging
  • The RDCs make a significant investment in sustainable production, including in climate variability In fact, in 2008–09, this amounted around 30% of all RD&E investment – over $133 million These projects include the Managing Climate Variability program, where the research outcomes and activities will equip farmers and managers of natural resources with information to help adapt to the increasing climate variability in Australia. Climate Kelpie offers farmers easy access to region-specific tools and information about the weather and climate. And the Climate Champion program facilitates the spreading of new knowledge and adoption of new practices through interaction with respected peers More detail on these and other RDC investments can be found in the RDC brochure in your satchels
  • So – that has been what has been happening over the past 20 years – what about the next 20 years? Well a crucial factor in how RD&E investments will look in the future will depend, in part, on the outcomes of the current Productivity Commission Inquiry into the RDCs The PC was asked, at the end of 2009, to examine the efficiency and effectiveness of the RDCs After a process of public submissions, the PC released their draft report in September last year, followed by a second round of submissions and public hearings The PC was due to provide their final report to the Government yesterday – 15 th of February. While we don’t know what is in the final report, we anticipate a response from Government and the release of the final report sometime after May
  • As I mentioned earlier, the PC did acknowledge that there was no better model than the RDC model But then they went on to recommend a 50% cut to the Commonwealth’s contributions to RDC funding This does not make sense – why would you say the RDC model is strong and sound on the one hand and then recommend cuts to funding the model on the other? In our submission to the PC, we made a strong case that any cuts to funding will have an adverse impact on productivity growth and more broadly, to the community wellbeing, particularly in rural and regional areas And we weren’t the only ones. Submissions to the PC were unanimous in their view that if there are any cuts to the public funding of RD&E, this will have a severe adverse impact on Australia’s economy And the proposed cut to funding is also inconsistent with other related reports, including the Rural R&D Council’s Investment Plan and the PMSEIC Expert Working Group reports on Food Security and Energy-Water-Carbon
  • The PC also recommended the establishment of a new RDC to undertake public good R&D Once again, our submission did not support this proposal We consider the creation of a new RDC administratively inefficient –the PC was supposed to consider the efficiency and effectiveness of the RDCs and instead they recommend an inefficient solution More importantly, an RDC that is purely set up for public good will not have the links with industry – that vital factor that ensures that the RD&E investment is targeted and adopted The PC acknowledged that the strength of the RDC model was the strong links with industry – and yet they recommend a new RDC that does not have this link We believe that the government objectives of achieving R&D investments in pubic good can be achieved within the current system Virtually all RDC projects have a component of public benefit to them – in fact, it is virtually impossible to separate the public and private benefits in RD&E projects
  • So, where to from here? We will need to see how the Government responds to the PC report and also the Rural R&D Council’s investment plan. There are also a number of other related process, such as the Prime Minister’s Science, Engineering and Innovation Council expert working group reports on food security and energy-water-carbon intersections But that doesn’t mean we will sit on the sidelines and wait The RDCs are committed to building effective R&D capacity and capability We are fully committed to cross-sectoral collaborative investments and continue to look for opportunities to co-invest and collaborate We do see the Primary Industries Standing Committee RD&E Framework as being the most appropriate process for pursuing national sectoral and cross-sectoral strategies that are clearly focussed on government objectives The RDCs, along with CSIRO, the universities, the Commonwealth and the states and territories governments are all signed up to this Framework and we see this as the best way to achieve national outcomes
  • We are also seeking to continuously improve our internal processes and procedures We are examining ways in which we can make our data collection and reporting more robust and how we can better coordinate information and funding across the RDCs We are also expanding our evaluation system so that we can undertake an analysis of the environmental and social impacts of RDC investments And we are examining ways in which the RDCs can continue to deliver RD&E outcomes that are both efficient and effective The CRRDC is providing the leadership and the mechanism to pursue these continuous improvement objectives
  • In conclusion, Australia depends on investment in RD&E to remain a successful and vibrant economy, with it being a strong and key underpinner to economic and social development Investment in RD&E will underpin our productivity growth, innovation and contribution to global food security It is absolutely crucial that investment in RD&E is maintained Whatever may be the outcome of the PC and related processes, everyone acknowledges that the RDC partnership funding model is strong and fundamentally sound – it is argued as being best practice in the world So let’s focus on ways we can build on this already strong model to increase investment in rural RD&E Thank you
  • RDCs delivering the goods, for the past 20 years and the next 20 years - Dennis Mutton

    1. 1. The RDCs delivering the goods, for the past twenty years and the next twenty years Dennis Mutton Chair Council of Rural Research and Development Corporations CCRSPI Conference February 2010
    2. 2. Australia’s Rural RD&E environment <ul><ul><li>Between $1.2 - $1.9 billion pa spent on rural RD&E </li></ul></ul><ul><ul><li>Complex web of stakeholders </li></ul></ul><ul><ul><li>Funders: Government and levy payers (through RDCs), state government, CSIRO, private industry </li></ul></ul><ul><ul><li>Providers: Universities, CSIRO, CRCs, private providers </li></ul></ul><ul><ul><li>‘ Extenders’: Consultants, extension officers, farmers, community </li></ul></ul>
    3. 3. Funding of RD&E in Australia <ul><li>RD&E is a key driver of innovation </li></ul><ul><li>In real terms, there has been a decline in RD&E funding </li></ul><ul><li>Slow down in agricultural productivity growth is partly due to the decreased public investment in RD&E </li></ul>
    4. 4. Rural Research and Development Corporations <ul><li>15 RDCs servicing many different rural sectors </li></ul><ul><li>RDC investments underpin Australia’s: </li></ul><ul><ul><li>competitiveness </li></ul></ul><ul><ul><li>profitability </li></ul></ul><ul><ul><li>sustainability and </li></ul></ul><ul><ul><li>natural resource base </li></ul></ul>
    5. 5. RDC model <ul><li>The RDC model is a unique model of co-investment between industry and Government </li></ul><ul><li>Operating successfully for over 20 years and is responsible for around $460 million pa of direct investment in RD&E </li></ul><ul><li>Ensures industry stakeholders can shape R&D investment against Government priorities </li></ul>
    6. 6. Benefits of RDC investments <ul><li>RDC investments deliver high returns for both industry and the community </li></ul><ul><li>RDCs are committed to evaluating the impact of R&D investments </li></ul><ul><li>Collective RDC evaluation process shows return on investment of around $10 for every $1 invested over a 25 year timeframe </li></ul>
    7. 7. Climate Change <ul><li>……… in addition to CCRSPI, RDCS are involved in projects including: </li></ul><ul><li>Managing Climate Variability </li></ul><ul><li>Climate Kelpie </li></ul><ul><li>Climate Champion Program </li></ul><ul><li>……… in 2008-09 over $133 million was spent by the RDCs on sustainable production including climate variability </li></ul>
    8. 8. Productivity Commission Inquiry <ul><li>PC Inquiry to examine efficiency and effectiveness of RDCs </li></ul><ul><li>Draft Report released September 2010 </li></ul><ul><li>PC will provide final report to Government by 15 th February 2011 </li></ul><ul><li>Anticipated Government will provide a response later this year </li></ul>
    9. 9. Draft Report – Key Issues <ul><li>The RDC model has many strengths and no other model is as sound </li></ul><ul><li>Proposed 50% cut to funding </li></ul><ul><ul><li>inconsistent with the finding that the RDC model is the best </li></ul></ul><ul><ul><li>will have an adverse impact on productivity growth </li></ul></ul><ul><ul><li>Also inconsistent with other related reports </li></ul></ul>
    10. 10. Draft Report – Key Issues <ul><li>Proposal to establish a new RDC to undertake public good R&D </li></ul><ul><ul><li>creating a new RDC is administratively inefficient </li></ul></ul><ul><ul><li>will not have the links with industry essential for adoption of R&D </li></ul></ul><ul><ul><li>same objectives can be achieved within the existing RDC infrastructure </li></ul></ul>
    11. 11. Where to from here? <ul><li>Commitment to strategic, cross-sectoral collaborative investments is necessary </li></ul><ul><li>PISC RD&E Framework provides this </li></ul><ul><ul><li>cross-sectoral </li></ul></ul><ul><ul><li>cross-jurisdictional </li></ul></ul><ul><ul><li>cross-portfolio </li></ul></ul><ul><li>RDCs and the CRRDC fully committed to this process </li></ul>
    12. 12. Where to from here? <ul><li>More robust data collection and reporting is required </li></ul><ul><li>Better information and coordinated funding across RDCs </li></ul><ul><li>Improving and expanding the current evaluation process </li></ul><ul><li>Continuing to seek improved efficiency and effectiveness in RDC investments </li></ul><ul><li>……… ..CRRDC will continue to drive this </li></ul>
    13. 13. Conclusion <ul><li>RD&E is vitally important to the continued success and growth of the Australian and international agricultural industry </li></ul><ul><li>It is crucial that investment in RD&E is at least maintained to ensure: </li></ul><ul><ul><li>Productivity growth </li></ul></ul><ul><ul><li>Innovation </li></ul></ul><ul><ul><li>Global food security </li></ul></ul>

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