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2012/13 Federal Budget & Economic Outlook

Duncan Jones
Executive Director Science Industry Australia

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Presentation Contents
Economic Overview 2012 Federal Budget Summary by portfolio Australian Market Statistics Summary Q & A........

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The only function of economic forecasting is to make astrology look respectable


John Kenneth Galbraith (1908 - 2006)

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Is the GFC really behind us...??


World GDP Growth
% change in calendar 6 5 4 years

Percentage

3 2 1 0
2010 2015

-1
1980 1985 1990 1995

-2

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2000

2005

...or are we in a double dip recession

share markets are the rst to react rate of decline >>>> rate of recovery the real economy is often 18 mos. behind Australia had almost the highest household debt to disposable income ratios in the world

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...or are we in a double dip recession


Perspective: Australias Federal govt. debt* will peak at 22% GDP c/f China @ 26%
PIIGS av. = 115% US = 103% UK = 82% Japan = 230% Canada = 85% Singapore = 101% WORLD av. = 79%

*Source: IMF, CIA & Eurostat


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Youre either in mining or in recession

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There are some ow on effects from the mining boom........

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and some areas of manufacturing are still growing...

Common features: industries are linked to Australias resources sector, or are higher up the value chain and more reliant on human capital

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2012-13 Federal Budget


Headline numbers:
Higher Education, science and research funding substantially preserved. Indexation of university funding preserved. Total (projected) spend on science & research - almost $9.0B ($9.4B) No New money for science & technology CSIRO trimmed $25m over 4 years
CSIRO expects to lose 116 jobs over the next year

ignores the commercial end of the research spectrum by terminating an innovation investment fund to stimulate venture capital. -4.5% (4.4%) YoY decrease over 2011-12

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2012-13 Federal Budget


Headline numbers:
$3 billion Building Australias Future Workforce skills package Reductions: Funding of VET National Program Support reduced by $34.4 million Workforce Innovation Program discontinued saving $26.3 million. Savings of $17.0 million over three years by ceasing to fund the National Career Development Strategy from 30 June 2012. $54 million spread across DIISRTE and DEEWR to take up the recommendations of the Chief Scientist (new SIA Patron)
increased funding for the Australian Research Council (ARC) $844 to $915M (8.4%) and very slightly trimmed the National Health and Medical Research Council (NHMRC)

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How does this stack up....??

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How does this stack up....??


The 09 Federal budget lifted total science spending (GOVERD) from a low of 0.57% to 0.73% of GDP The 12 Federal budget keeps spending at this new level....0.69% When added to State government expenditure GOVERD for 12/13 is 0.75% Australias Gross Expenditure on R&D (GERD) is estimated as being 2.39% for 2012/13 The top eight spenders in terms of percentage of GDP were
Israel (4.53%), Sweden (3.73%), Finland (3.45%) Japan (3.39%), South Korea (3.23%), Switzerland (2.9%), Iceland (2.78%) and United States (2.62%)

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Government receives $376.1B.....

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And is looking to spend $376.3B.......

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Federal government Agencies of interest to the science industry

Department of Innovation, Industry, Science, Research & Tertiary Education (DIISRTE)* Controls budgets for
CSIRO AIMS & ANSTO Australian Research Council (ARC) Cooperative Research Centres (CRCs) National Measurement Institute (NMI) Research Infrastructure Block Grants University block grants (all non-research monies)

* now three ministers running this dept: Greg Combet, Chris Evans and Brendan OConnor c/f one minister (Kim Carr) previously
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Federal government Agencies of interest to the science industry

Department of Health & Ageing (DoHA)


National Health & Medical Research Council (NHMRC) Medical & Clinical Research Institutes Therapeutic Goods Administration laboratories (TGA)

Department of Defence (DoD)


Defence, Science & Technology Organisation (DSTO)

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NHMRC
No changes in the forward estimates In 2012-123 NHMRCs grants budget is $760.5m ($746m - 1.94% growth - less than CPI) 2012 funding round opened Dec. 11 Expect >5,000 grant applications (2011-4,933) Make same total number of awards as 2011 1,299 25.5% success rate (increase from 23%) Announced October, 2012

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Fact Book 2011-out now


GRANT ADMINISTERING INSTITUTION 2010 $95.5m $87.0m $66.7m $61.6m $54.1m $43.2m $34.9m $33.6m $26.9m $18.4m $17.6m $15.1m $14.5m $14.3m $10.4m

Group of Eight Unis. dominate NHMRC research funding outcomes: 2011 62.5%

University of Melbourne University of Sydney Monash University University of Queensland University of New South Wales University of Adelaide Walter and Eliza Hall Institute University of Western Australia Queensland Institute of Medical Research Baker IDI Heart and Diabetes Institute Murdoch Childrens Research Institute Garvan Institute of Medical Research Australian National University University of Newcastle Menzies School of Health Research

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ARC
2012-13 budget is $915.3 ($844.7 - 11.25%) No change to the forward estimates The two main grant types of interest to SIA members are: Discovery & Linkage Discovery grant applications open in Jan, close March and are announced in October 2011: 3,544 applied, 778 granted = 22% success Linkage grant applications open in March, close May and are announced in October 2011: 418 applied, 121 granted = 36% success Overall success rate 22.6% Average level of funding = 57%
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Higher Education Sector


Each year, Australian Universities receive funding under the following from the Commonwealth for research (DIISRTE):
International Postgraduate Research Scholarship Scheme ($21.5m 3.7%) Joint Research Engagement Program ($345.3m 3.7%) Research Infrastructure Block Grants (RIBG) ($233.1 3.7%) Research Training Scheme ($656.1m 3.7%) Sustainable Research Excellence in Universities ($218.6m 24.4%) The Australian Postgraduate Awards ($248.4m 11.9%)

Total DIISRTE spending in Higher Edu. Research $1,723m ($1,596m +7.4%)

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CSIRO
Headline the morning after the budget: AUSTRALIAN GOVERNMENTS
RECORD $3 BILLION SUPPORT FOR THE CSIRO

The reality: previously announced funding for 2012/13 was actually cut $25m Govt. funding: $737M ($725M -0.7%) Non-govt. funding*: $591m ($585m) the Government has committed $3B to CSIRO through a new Quadrennial Funding Agreement to operate from 2011 to 2015 Overall - $1.269B 12/13 up to $1.512B in 15/16 or 19%
* Income from IP, consultative services etc.
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Cooperative Research Centres


CRC program has been losing support for a number of years Overall CRCs represent less than 2% of Federal funding on innovation Annual CRC application round is extremely competitive Many have stated its not worth the effort! Last year 30 applications (new & renewals) - 4 granted $154m ($166m -4%)

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Overall

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Australian Science Market


Three major groups (% dom. revenue)
importers & distributors manufacturers & exporters technical service providers

Aust. market roughly 2% of world Aust. economy = 1.7% of world R&D spend is 10X manufacturing industrys average 2004 - 2012 CAGR is 8% - all sectors average Business Barometer: June 07 to Dec. 11 - CAGR = 12.0% Large tertiary educated workforce; 50% Largest industrial employer of SET graduates

Source: ABS, IBISWorld, SIA, DIISR, DoHA, DEEWR, Treasury

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Summary
Total spend on science & research up $126m (1.3%) A lot of funding increments designed only to cover CPI CSIRO budget at, CRC program down some more The ARC has received an increment in funding whilst NHMRC funding is at. McKeon Medical Research funding review underway Synchrotrons back in the funding ecosystem

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University research has done well: $656 million for the Research Training Scheme $233 million for Research Infrastructure Block Grants $345 million for Joint Research Engagement $219 million for Sustainable Research Excellence $248 million for Australian Postgraduate Awards $22 million for International Postgraduate Research Scholarships the budget has nothing of major signicance for small business and absolutely nothing specically for the exporter
the high dollar, the GFC, high interest rates, high labour costs and continued high trade facilitation costs

Summary

Budget completely lacks inspiration for our technologically advanced future


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???
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