Stuart Henry (Hasluck, Liberal Party) Share this | Hansard source

The Australian Research Council Amendment Bill 2006 amends the Australian Research Council Act 2001 to implement changes to the ARC’s governance arrangements in response to the government’s endorsement of the recommendations of the Review of the Corporate Governance of Statutory Authorities and Office Holders. The issue of governance is a perennial challenge but has gained prominence in recent years. The importance of good governance in the private sector, especially in publicly listed companies, is hard to overstate, but I would argue that good governance is even more important in government itself. Here in government we have a fundamental responsibility to the Australian community that we will not only use their taxes wisely but always work to secure the future of our nation. This is what governments are supposed to do. This is most fundamentally what separates businesses from government. What businesses do could be in the nation’s interest, but it is our job to protect that interest, now and in the future.

This is why in November 2002 the Howard government appointed Mr John Uhrig AC to conduct a review of corporate governance of Australian government statutory authorities and office holders. The Uhrig review was designed to identify any ways governance could be improved without compromising the statutory duties involved. The Australian Research Council Amendment Bill 2006 is an example of the government acting to implement the insights and recommendations of this review. In this case it involves modifying the legislation covering the operation of the ARC, arguably one of the most important statutory bodies for Australia’s future success and prosperity. The Uhrig review was charged with identifying opportunities for positive reform. It specifically allowed for the development of a template of governance principles with the potential to be applied broadly across government.

I will make some points on the outstanding contribution of the ARC to date and why I think that opportunities to further improve the operation of the ARC are so important. But first I think it is worth noting several of the key points made by the Uhrig review. The report is clearly founded on the view that government is responsible for carrying out its taxation, regulatory and service provision roles in a way that meets four key criteria: efficiency, effectiveness, objectivity and transparency. Governance of statutory bodies is obviously crucial to this.

While there is no universally agreed definition of good governance, the report did identify three key elements which must be clear and well executed: (1) understanding of what constitutes success, recognising that this will be different for each statutory body but that it should include statements of purpose and performance expectations; (2) organising the entity for success—this includes appropriate structures and definitions of roles as well as clear arrangements for the delegation, control and use of power; and (3) ensuring success, which involves accountability, transparency and evaluation.

In creating the template principles for Commonwealth statutory bodies, the review considered evidence on good governance from a wide range of public and private sector entities. It found a number of valuable opportunities for improving the effectiveness of governance practices within Australia’s statutory bodies. These are outlined in the report, but what concerns us most here today is the guideline for which statutory bodies would work best with a board. The Uhrig review found that operation with a board is best suited to bodies with a predominantly commercial focus to their activities but that bodies whose major activities were non-commercial would be best suited to an ‘executive management’ template in which the CEO reports directly to the minister responsible. The government requested that ministers assess governance arrangements against these templates, as they serve to assist as a reference point in the establishment of effective governance arrangements.

The Uhrig governance principles also fully inform the policy document, ‘Governance arrangements for Australian government bodies’, released by the Department of Finance and Administration in August 2005. The aim of this document is to promote consistency in the governance arrangements of Australian government bodies, while reinforcing the principles set out in the Uhrig review, in line with the department’s ongoing role of promoting better practice governance of Australian government bodies generally.

This brings me back to the ARC, which clearly fits the latter category. Although successive boards of the ARC have served the nation well and provided excellent stewardship and leadership in their roles, this government agrees with the finding of the Uhrig review that this is one of the agencies that will be able to work more efficiently under an executive management model. The ARC is not an organisation that the Howard government would change lightly. In fact, this government has been visionary in its commitment to supporting research, especially the fundamental, frontier-of-knowledge type of research made possible through the ARC. This is all part of the government’s 10-year commitment to science and innovation, which was made with the release two years ago of Backing Australia’s Ability: Building Our Future through Science and Innovation. Last year, for example, over $380 million was awarded to nearly 1,400 research projects in the new Commonwealth grants program alone.

As well as providing for governance improvements, this bill also increases overall appropriation for the ARC by more than $570 million. The ARC is of vital long-term importance to Australia, and anything that improves its flexibility, responsiveness and effectiveness is a valuable opportunity to invest in our future. In fact, a 2003 report by the Allen Consulting Group found that, in terms of impact on gross domestic product alone, the ARC delivered a social benefit rate of return of 39 per cent and that, taking into account less easily measurable benefits such as health, cultural and environmental outcomes, the social rate of return to the Australian community was more likely to be 50 per cent. This is an outstanding result, even better than the excellent rates of return achieved by Australia’s other publicly funded research programs. I am not a scientist but, from what I understand, this rate of return is indicative of the extraordinary value offered by fundamental, innovative research programs, especially when they are within the context of a well-managed and well-prioritised national funding program such as the ARC, with its parallel emphases on discovery and linkage.

This bill allows for the retirement of the ARC board to prevent confusion of responsibilities between the board and the CEO. Under this new legislation the CEO will report directly to the minister but will still be supported and guided by the ARC’s College of Experts, a 70-plus strong panel from across the nation, which has long been providing the front-line intellectual and professional advice on research management and priorities that an agency such as this relies on. This bill does not change those arrangements. In fact, it streamlines them without affecting the independence of the ARC itself, which this government achieved through the Knowledge and Innovation reforms introduced in 2001. In keeping with this government’s approach to this, the minister’s role regarding application assessments remains unchanged.

This bill allows for the minister to create an advisory committee with a strongly strategic role. In essence, the CEO will therefore get advice from the College of Experts on matters of grant applications and from the advisory committee on matters of strategic direction. This is a much more transparent system both in terms of clarity of role for the dedicated and highly qualified people who give their time to serve in this way and in terms of openness and accountability for grant applicants and the public in general.

The range of grants awarded in my own state of Western Australia last year is a wonderful illustration of the diversity of research this government is supporting through the ARC. Just one of the examples from Murdoch University is looking at the sugar based metabolism of Australia’s honeyeaters. These unique Australian species offer knowledge not just on our unique environment but also on how we can develop better treatments for metabolic conditions in humans. Curtin University of Technology was awarded grants for research into ceramics, geology, hydrodynamics, science education, cultural linguistics, corporate performance and computer modelling, while the Western Australian Museum is receiving funds to explore the relationship between climate change and extinctions. The University of Western Australia also has an impressive list of funded projects including tissue engineering, human vision, brain growth and learning ability in children, biometrics, cancer treatments, immune system genetics, how to prevent antisocial behaviour in disadvantaged young people, fisheries management, oceanography, super gravity and development of a new laser clock. The fact that these are examples only from last year’s grants list, and only from WA, illustrates powerfully what a diverse, vibrant and exciting sector the research community is in Australia.

The Australian government’s support for science and innovation, as reported in the 2005-06 science and innovation budget tables, was a record $5.53 billion in 2005-06. In 2006-07 the Australian government will provide $560.6 million in support for the ARC. Australia ranks 7th amongst OECD countries in terms of world science and engineering articles per million population. At 757 articles per million population, this is more than 1½ times the OECD average of 484. Australia ranks in the top half of OECD countries for prominence of cited science and engineering literature in most areas of research. This includes 15th in clinical medicine, 15th in biomedical research, 12th in chemistry, 12th in earth and space science and 14th in engineering and technology. Australia ranks 11th among OECD countries in terms of share of world scientific publications for 2000-04, with 2.89 per cent.

The ARC is exactly the sort of agency that should be a statutory body. The long-term focus and emphasis on diversity are where government excels and plays a crucial enabling role in making sure Australia’s research achieves excellence and remains globally competitive so that it can continue to deliver benefits to the community for generations to come. This bill of amendments ensures even better governance and therefore even better outcomes from our nation’s most exciting research endeavours. I commend the bill to the House.

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