INVESTING IN SCIENCE, MEASURING THE OUTCOMES.

1. INVESTING IN SCIENCE, MEASURING THE OUTCOMES. Bruce Hobbs. Deputy Chief Executive, CSIRO. Investing in Science, Measuring the Outcomes. Academy of Science.

2. Market for Post-graduates Main Market for HR with Tertiary Qualifications • FUNDAMENTAL & • KNOWLEDGE • GENERATING • RESEARCH • HR Development • Infrastructure Devpt POST-GRADUATE EDUCATION UNDERGRADUATE/TERTIARY EDUCATION • Market for • New Science • Specialists • STRATEGIC MANAGEMENT • System Design and Optimisation • Coherence with National System • of Innovation • Resource Allocation HIGH-TECH VENTURES: Application of New/Specialist Knowledge CONTINUING EDUCATION: Professional & Life Skills NEW VENTURES: New application of Technology POST-TERTIARY DISCIPLINARY TRAINING: Practical Application of Theoretical Knowledge (LINK TO INDUSTRY) White Spaces CONTRACT RDI & CONSULTING: Application of Specialist Knowledge/ Facilities Main market for adult education & professional maintenance STANDARDS AND CERTIFICATION: Application of Specialist Knowledge/ Facilities (Quality & Productivity) Development & Economic growth Productive professionals for Industry Enabling Enterprises The Knowledge Infrastructure Investing in Science, Measuring the Outcomes. Academy of Science.

3. Many Governments are moving to define a “knowledge infrastructure”. • However, most Governments continue to regard their publicly funded R&D organisations as they would, say, a Department of Administration. • This means they regard the R&D organisation from a customer/provider viewpoint. • From such a viewpoint, they find it difficult to define or understand the benefits that the R&D organisation provides to Government as a customer. • Such difficulty arises because they cannot readily measure the effectiveness of the R&D organisation’s outputs. Investing in Science, Measuring the Outcomes. Academy of Science.

4. My message for today is simple: • To develop a world class knowledge infrastructure in Australia it is essential that both Governments and the R&D organisations view the funding process as an investment rather than a cost. Implementation of such a view carries responsibilities for both Governments and R&D organisations. • If the funding process is one of investment then Governments must have a way of being convinced of the magnitude of their return on investment and that their investment is being managed professionally. Investing in Science, Measuring the Outcomes. Academy of Science.

5. Thus the proposition for today is: • An essential feature of the knowledge infrastructure of a country is the investment of Government in publicly funded R&D organisations that undertake fundamental research and/or strategic research that is too risky for industry to undertake. • This investment culture implies a shift from a customer/provider, to an investment/performer, relationship. • This necessitates a move to some form of performance based contracts with quantitative measures of the returns to Government on their investment. Investing in Science, Measuring the Outcomes. Academy of Science.

6. For an investor to decide to make an investment, they must be convinced of: • The quality of management and of management processes (governance, financial systems, strategic planning processes employment practices, staff reward systems etc). • The track record of the organisation together with the balance between price, quality and quantity of its products (ie, what is the probability the investment will give value for money ?). • The likely return on investment measured in quantitative terms. Investing in Science, Measuring the Outcomes. Academy of Science.

7. A critique of the status quo with respect to the operation of research organisations: • Vague goals lead to perpetual programs achieving poor results. • We can rarely show what our R&D investments have produced, and we do not link information about performance to our decisions about funding. • Many R&D projects have ended up stepping beyond the legitimate purposes of government to compete with —or unnecessarily subsidize —commercial ventures. • Finally, many R&D projects directly benefit corporations that could fund their own R&D projects without federal assistance. Investing in Science, Measuring the Outcomes. Academy of Science.

8. Who said that ? • President George W. Bush in Executive Office of the President, Office of Management and Budget, “The President’s Management Agenda” Fiscal Year 2002. (Chapter 8 - Better R&D Investment Criteria) Investing in Science, Measuring the Outcomes. Academy of Science.

9. A widely recognised problem in specifying outcomes and outputs is to define quantifiable measures of effectiveness. The term effectiveness is used to mean the impact of Outputs upon specified Outcomes. Investing in Science, Measuring the Outcomes. Academy of Science.

10. The move, internationally, is away from vague, anecdotal statements of achievements, which amount to an attempt to demonstrate compliance with what are commonly equally vague policy statements made by Governments, to contracts with Governments based on Performance Indicators and Measures that ideally are quantitative in nature. Investing in Science, Measuring the Outcomes. Academy of Science.

11. Best Practice Effectiveness Measures The Science community needs to develop quantifiable measures ofthe effectiveness of Outcomes and Outputs that: ·        precisely reflect government’s objectives and priorities, ·        provide clear causal links between the R&D and the outcomesand outputs sought by government, ·       form the basis for assessing, over the coming decade, whether the public investment in R&D activities (including strategic research, collaborative research, contract services and consulting, commercialisation of IP and policy advice) has resulted in high impacts upon the economic, social and environmental wellbeing of Australia, Investing in Science, Measuring the Outcomes. Academy of Science.

12. Best Practice Effectiveness Measures (continued) The Science community needs to develop quantifiable measures of the effectiveness of Outcomes and Outputs that: • enable effective strategies to develop to enhance the capacity for priority driven research, • ·       enable the development of effective strategies to achieve a greatly enhanced private sector investment in R&D, • ·       enable the monitoring and evaluation of research to enable clear accountability and reporting and to provide a reference for further review of the R&D effort and infrastructure. Investing in Science, Measuring the Outcomes. Academy of Science.

13. Measures of Inputs and Outputs. Investing in Science, Measuring the Outcomes. Academy of Science.

14. RESEARCH EXPENDITURE – US UNIVERSITIES 1998-99 (US$000’s) 1st U Cal, then John Hopkins, MIT, U Michigan, U Washington US $ 000 CSIRO (5th) Melbourne (47th) Monash (88th) Sydney (57th) ANU (45th) Qld (64th) Tasmania (115th) UWA (74th) Investing in Science, Measuring the Outcomes. Academy of Science. RANKING WITHIN US

15. High Tech Enterprises,Wealth Creation, Jobs Commercialisation Patents Scientific Research Science, Patents & Economic Growth A strong foundation of high quality scientific research is necessary for prosperity arising from a knowledge infrastructure . Investing in Science, Measuring the Outcomes. Academy of Science.

16. The Importance of S&T Indicators • Every business day there are: • 5,000 new science papers published • 2,000 new patent documents issued • Patent revenue in the USA: • $3 billion in 1980 • $15 billion in 1990 • $100 billion in 1997 Investing in Science, Measuring the Outcomes. Academy of Science.

17. CSIRO is a strong performer by international standards On the basis of this data, the ISI described CSIRO as one of the "heavy hitters of science" who "published in quantity but also exerted outsized influence on the world's research community". Investing in Science, Measuring the Outcomes. Academy of Science.

18. Citation Awards to CSIRO Five CSIRO scientists were among the top 35 Australians honoured by the Institute for Scientific Information in 2001 for being the most frequently cited in the world’s scientific literature. Investing in Science, Measuring the Outcomes. Academy of Science.

19. SELECTED AUSTRALIAN INSTITUTIONS PLUS HARVARD AND STANFORD 1998/99 Investing in Science, Measuring the Outcomes. Academy of Science.

20. Strong and Growing Weak but Growing Computers Plastics Chemicals Biotechnology Pharmaceuticals Textiles Strong but Declining Weak and Declining Telecommunications Semiconductors & Electronics Misc Manufacturing Medical Equipment Agriculture Australia’s Patent Scorecard Investing in Science, Measuring the Outcomes. Academy of Science.

21. Patenting Trends in AustraliaOn basis of US registered patents Investing in Science, Measuring the Outcomes. Academy of Science.

22. Australian author institutions cited in 1988-97 US patents Investing in Science, Measuring the Outcomes. Academy of Science.

23. Royalty/Licence Income as % of Direct Appropriation Income in 2000-01 For comparison: Florida State …….. 43% Columbia ………… 32% Yale ……………… 12.9% Michigan State ….. 11.4% Stanford ………….. 6.6% CalTech ………….. 4.3% Univ of California .. 4% Harvard ………….. 2.5% MIT ……………….. 2.2% Texas A&M ……… 1.3% Investing in Science, Measuring the Outcomes. Academy of Science.

24. Measures of Outcomes-Effectiveness Measures. Investing in Science, Measuring the Outcomes. Academy of Science.

25. Investing in Science, Measuring the Outcomes. Academy of Science.

26. Evidence Based Effectiveness Measures. Death Rates by Major Causes, Australia, 1907-1998 Investing in Science, Measuring the Outcomes. Academy of Science.

27. Investing in Science, Measuring the Outcomes. Academy of Science.

28. Performance Information for Outcomes and Outputs • Effectiveness indicators based on how CSIRO contributes to the ‘triple bottom line’. • Output price, quantity and quality indicators drawn from our set of measures focused on strategic priorities. Investing in Science, Measuring the Outcomes. Academy of Science.

29. New Knowledge and collaborative R&D (Strategic Research) Research services, advice, specialised consulting and testing Licensing, patenting and spin-offs (Commercialisation) CSIRO Outputs provide products and services for stakeholders New/improved technology and management systems New/improvedintermediate and final products ‘Catalyst’ services and advice for policy and business New knowledge and skills that contribute to desired outcomes Innovative and competitiveindustries A knowledge- based society Healthy environments and lifestyles by delivering public and private benefits Lower (more competitive) production costs Improved quality of goods and services New products, services and businesses Reduced risk Skills developed (enhanced human capital) Improved human health, safety and wellbeing Informing policy (cost-effective public programs) Reduced pollution Improved environment health that span the triple bottom line Economic Social Environmental What does CSIRO do, and deliver? CSIRO’s Pathway to the Triple Bottom Line

30. Effectiveness Indicators • Lower / more competitive production costs • Improved quality goods and services • New products, services and businesses • Reduced risk (economic, social, environmental) • Development of skills (enhanced human capital) • Improved human health, safety and wellbeing • Informing policy (more cost-effective public programs) • Reduced pollution • Improved environmental health Investing in Science, Measuring the Outcomes. Academy of Science.

31. SCENARIO PLANNING TO 2025. Over the past two years CSIRO has embarked on a scenario planning exercise to identify the important challenges that face the economic, social and environmental development of the country out to 2025. Investing in Science, Measuring the Outcomes. Academy of Science.

32. Total Population of Australia - Projected millions 35 Total Fertility Rate (Births per Woman) 1.75 1.60 1.60 30 25 20 Net Immigration Per Annum 110,000 90,000 70,000 15 10 2021 1981 2001 2041 2061 2081 2101 Investing in Science, Measuring the Outcomes. Academy of Science.

33. New Generation Transport compression ratio Mechanical Mechanical Drivetrains Drivetrains direct injection variable valve timing gaseous fuels Emissions 4.33 Tonnes CO /yr 2 paradigm gap paradigm gap 2 Electromechanical Electromechanical CO Drivetrains Drivetrains hybrids hybrids fuel cells fuel cells 2040 1960 2000 2020 Investing in Science, Measuring the Outcomes. Academy of Science.

34. Distributed Generation Distributed Generation hydrogen hydrogen 1.0 natural gas engines, natural gas engines, solar solar - - enhanced fuels enhanced fuels ?turbines ?turbines waste heat gap waste heat gap Fuel Efficiency ? = 0.33 coal gasification coal gasification steam temperature steam temperature scale scale - - up up Centralised Centralised Generation Generation 2040 1960 2000 2020 Distributed Generation Investing in Science, Measuring the Outcomes. Academy of Science.

35. THE R&D PORTFOLIO IN CSIRO Strategic Priority DrivenResearch PRIORITY DRIVEN RESEARCH. FLAGSHIP PROJECTS. EMERGING SCIENCE AREAS. PriorityCuriosity Driven Research Important National Activity Paradigm Shift Investing in Science, Measuring the Outcomes. Academy of Science.

36. Australian liquids production by field Production 1970 2000 2009 Data from AGSO, 2000. 00/1141 BALANCE OF PAYMENT PROBLEMS DUE TO DEPLETION OF DOMESTIC LIQUID HYDROCARBONS 1% increase in imports equals $100 million pa in balance of payments. Australia is gas rich but liquid outlook is poor. Investing in Science, Measuring the Outcomes. Academy of Science.

37. Global Energy Supply - Shell Scenario Capital intensive developments have long lead times. What portfolio of energy sources should Australia adopt ? Source: Shell International Limited. Investing in Science, Measuring the Outcomes. Academy of Science.

38. Australian Greenhouse Emissions by Industry Sector Planting three times more trees offsets Australia’s transport problem. Investing in Science, Measuring the Outcomes. Academy of Science.

39. CO2 emissions (tonnes/kWh) 1.20 30.0 1.00 0.8 20.0 0.6 0.4 10.0 0.2 0 0 Generating costs (AUS¢/kWh) Wind Dist. Energy (FC,Turbines) Adv. BlackCoal (IGCCetc) Nuclear Biomass Combustion Gas, combinedcycle Photovoltaics Black Coal PF (+10% biomass) Solar Thermal Black Coal PF (+ sequestration) Hot Dry Rocks Black Coal PF Brown Coal PF GHG, Capital & Operating Costs for Generation Technologies

40. 2020 2050 2080 97/1091 16 Crop Yield Change Wheat yield: Australia Percentage change in average crop yields for climate change scenario. Effects of CO2 are taken into account. Crops modeled are: wheat, maize and rice. CSIRO / Jackson Institute, University College London / Goddard Institute for Space Studies / International Institute for Applied Systems Analysis

41. Gas to Liquids National Priority Investing in Science, Measuring the Outcomes. Academy of Science.

42. Hybrid Solar/Fossil Power CSIRO’s $7M facility to demonstrate the use of solar energy to boost the energy of natural gas and test the concept for zero CO2 production. Investing in Science, Measuring the Outcomes. Academy of Science.

43. Investing in Science, Measuring the Outcomes. Academy of Science.

44. Energy Management System Petrol Motor Fuel Cell Electric Motor Supercapacitor The Next Generation of Hybrid Car Investing in Science, Measuring the Outcomes. Academy of Science.

45. Geothermal Energy Potential Investing in Science, Measuring the Outcomes. Academy of Science.

46. FRESH WATER SUPPLIES AND SALINITY ISSUES. • Australia has plenty of water; the issue is quality. • Australia’s population will increase by about 25% over the next 20 years placing even greater pressures on water supplies. • Desalination is an important answer; titanium based alloys are needed for corrosion resistance. • Australia has very large reserves of titanium. Investing in Science, Measuring the Outcomes. Academy of Science.

47. + Zircon Zirconia NaOH SALT H2 HC1 SyntheticRutile + Ilmenite Cl2 + Ilmenite Pigment Investing in Science, Measuring the Outcomes. Academy of Science.

48. Thank You. In summary, CSIRO is working towards a set of effectiveness measures and targets that demonstrate the contribution of R&D to the triple bottom line and to an Australian knowledge infrastructure. • Lower / more competitive production costs • Improved quality goods and services • New products, services and businesses • Reduced risk (economic, social, environmental) • Development of skills (enhanced human capital) • Improved human health, safety and wellbeing • Informing policy (more cost-effective public programs) • Reduced pollution • Improved environmental health Investing in Science, Measuring the Outcomes. Academy of Science.