Summary

​​Rural research, development and extension (RD&E) has been a significant contributor to making Australia’s agriculture, fisheries and forestry industries into what they are today—world-leading, productive and innovative industries.

The Australian rural sector includes a diverse range of industries, which largely comprise small family businesses. The incentive and capacity for individual small businesses to invest in RD&E is low, resulting in potential under-investment in RD&E in the rural sector. The government helps rural industries overcome this by providing rural producers with a means of investing collectively in RD&E to benefit their industry and wider community. This is done through the rural Research and Development Corporations (RDCs)—a partnership between government and industry in priority setting and funding.

The Australian Government encourages public investment in rural RD&E because it brings community benefits from having profitable, sustainable and competitive rural industries. Given that farmers manage around half of Australia’s land mass, a strong and efficient rural R&D system is important to help primary producers meet a range of future challenges including climate change, growing world food demand and rising input costs. Through activities such as the RDCs, Cooperative Research Centres, the CSIRO and universities, the Australian Government contributes approximately $715 million annually to rural RD&E.

The complexity of the rural RD&E system means that coordination and collaboration are important. The primary mechanism for collaboration and coordination in the system is the National Primary Industries Research, Development and Extension Framework (RD&E Framework), a partnership approach between the Australian, state and Northern Territory governments, the RDCs, the CSIRO, the university sector and industry. The Council of Rural RDCs and the Rural Industries RDC (RIRDC) also provide coordination and encourage collaboration between the RDCs.

The rural RD&E system has undergone two recent examinations; the reports of both were released in June 2011.

  • The Rural Research and Development Council produced a National Strategic Rural R&D Investment Plan, which outlines a rationale for balancing Australian Government investment in rural R&D, provides a picture of the current level of investment, and offers a vision for the rural R&D system.
  • The Productivity Commission reviewed the RDC model, and examined the rationale for government investment in RDCs and the overall effectiveness of the RDC model.

The government released the Preliminary Response to the Productivity Commission Report on the Rural Research and Development Corporations in June 2011. The preliminary response stated that the government would not adopt the commission’s recommendation to reduce the gross value of production cap on matching funding to the RDCs. The government’s matching contributions are a key pillar of the model, and there is a risk that reducing the government contributions would undermine the model’s strength and would potentially jeopardise the government–industry partnership that underpins the model. A reduction in government funding would lead to an overall reduction in the amount of R&D undertaken, which would have adverse effects on the performance of the rural sector.

The government remains committed to exploring improvements to the RDC model which will optimise outcomes for industry and the wider community. Following further consultation, the government developed this policy statement to set out the steps it will take to address the remaining key recommendations from the commission and the council.

Consistent with the commission and council’s acknowledgement of the strengths of the rural RD&E system, and with stakeholder support, the policy statement does not propose large-scale changes to the existing system. The actions outlined in this statement are intended to ensure the effectiveness of the RDC model and the wider rural RD&E system into the future, provide clarity to system participants on government priorities and expectations, and outline the government’s role in system oversight to ensure rural R&D results in optimal outcomes and provides a strong return on investment.

Section 2 of this statement includes a set of principles, as recommended by the Productivity Commission, that outline what is expected of RDCs as a condition of receiving government funding, and the responsibilities of government and industry as the other key participants. The section outlines changes designed to increase transparency and accountability in the RDC model. These include:

  • introduction of statutory funding agreements (SFAs) for statutory RDCs
  • reporting on performance of RDCs, and mechanisms to address underperformance
  • measures to increase levels of communication between government, RDCs and levy payers.

Section 3 acknowledges the complexity of the rural RD&E system and outlines steps to strengthen coordination of the national rural RD&E effort. It emphasises that a greater commitment to the National Primary Industries RD&E Framework (NPIRDEF 2012) is needed. In addition, the Australian Research Committee will examine the level of coordination of Australian Government investment in rural RD&E. The section outlines how the government will measure rural RD&E system performance, and clarify the Rural R&D Priorities to provide greater direction on the government’s expectations. This section also outlines measures to provide an increased focus on cross-sectoral research. The government believes this could be achieved within existing arrangements, and has therefore decided not to establish a new RDC (Rural Research Australia, as proposed by the Productivity Commission).

Section 4 recognises that rural RD&E is vital to the ongoing productivity and competitiveness of Australia’s rural industries, and the health and resilience of Australia’s rural and regional communities. It includes a number of initiatives to pursue greater productivity growth, such as:

  • mechanisms to encourage investment in rural R&D by the private sector, including overseas investors
  • processes and requirements to facilitate timely adoption of research results by end users
  • initiatives to help build the capacity of the rural research workforce.

A number of changes could be made to improve the efficiency and effectiveness of the RDC model and to ensure the system delivers value for money on RD&E investment. These changes are outlined in Section 5, and include:

  • requirements for RDCs to undertake project evaluations
  • improvements to the flexibility and accountability of selection processes for statutory RDC board members
  • allowing statutory RDCs to undertake marketing, where the industry requests this
  • removal of the requirement for ministerial approval of statutory RDCs’ annual operating plans
  • removal of product-specific maximum levy rates from legislation.

Section 6 summarises implementation arrangements for the changes in this policy statement, including legislative change and consultation. Specific responses to each of the commission’s and council’s recommendations are provided in the Appendix.