CSIRO: partnering for the future.

SUMMARY

CSIRO was established in 1949 to provide research for industry and government to enhance Australia's economic development and international competitiveness. Over a period of almost 60 years CSIRO has undergone a process of evolution and change. A substantial proportion of the Organisation's research revenue is now derived from external sources and there is a greater commitment to partnering and collaboration with other public research agencies, universities, industry and government. More recently, CSIRO has adopted a much greater strategic focus in nine key areas of research through the Flagships Program. The research programme focus of the collaboration through Cooperative Research Centres has given way to a more project-oriented approach through specific and targeted collaborations and joint ventures. These changes are re-stating the role and focus of CSIRO in Australia's national innovation system.

KEYWORDS

CSIRO; innovation; collaboration; partnering; joint ventures; Cooperative Research Centres; commercialisation

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CSIRO was established in 1949 to carry out scientific research that would assist Australian industry and encourage the application and use of the results of its own or any other scientific research. The application and use of research are intended, among other things, to increase the competitiveness and sustainability of Australian industry through both transformative and incremental research. CSIRO sees its success as dependent on delivering results with relevance and impact for Australia. This is, in turn, highly dependent on building and maintaining strong relationships with customers, industry partners, staff and other stakeholders (CSIRO, 2007a).

CSIRO identifies four product and service categories as its core activities: national research flagships; core research; science outreach (education and scientific publishing); and national research infrastructure (national facilities and collections). The National Flagships programme was initiated in 2003 with an initial commitment of $305m over seven years for the purpose of bringing focus and scale to research in areas that have been identified as representing some of Australia's most important and complex challenges and opportunities (CSIRO 2006). Flagships have become an important vehicle for partnership and collaboration and provide a platform for CSIRO to take a greater leadership role in Australia's innovation system.

The initial six Flagships were Water for a Healthy Country; Food Futures; Light Metals; Preventative Health; Wealth from Oceans; and Energy Transformed. Three new flagships are being added in 2007-08 with an additional commitment of $174m. The new flagships are Climate Adaptation; Minerals Downunder; and Niche Manufacturing.

CSIRO's core research activities, undertaken through CSIRO Divisions, collaborations, joint ventures and other entities, are directed towards delivery of new and improved technologies, management systems, intermediate and final products, catalyst services for business, advice relevant for policy development and new knowledge and skills. Science outreach covers science education programmes for school students and their teachers and the CSIRO Discovery Centre in Canberra. CSIRO also hosts three major national research facilities: the Australian Animal Health Laboratory; the Australia Telescope; and the Marine Research Vessel.

The 2007-08 CSIRO budget estimates that total revenue will be $1,031.4 billion in 2007-08 (compared to $972.9m in 2006-07), of which $664.5m (64.4 percent) will be sourced from government and $366.9m (35.6 percent) will be earned from other sources including co-investments, consulting and services provided to the private sector, governments, rural research and development corporations, Cooperative Research Centres, and overseas entities, as well as sale and/or licensing of intellectual property. This income reflects the results of CSIRO's commercialisation and business development activities, reported in more detail in the Annual Research Commercialisation Report (CSIRO 2003, 2004, 2005b) and more recently in the Annual Report (2006).

In 2007-08 CSIRO will allocate $330.4m to its research Flagships programme of which $249.1m (75 percent) is sourced from government. Funding for core research will total $616.5m, of which $356.5m (57.8 percent) comes from government and $260.0m (42.2 percent) will be funded from external sources. The other two product and service categories account for $85m or eight percent of CSIRO revenue.

The distribution of income between parliamentary appropriation and external income sources is shown in Figure 1.

[FIGURE 1 OMITTED]

The distribution of revenue points to the success of CSIRO in putting a case to government for ongoing and increased investment in its Flagships programme. Total Flagships reached $80m in 2003-04, increasing to $170m in 2005-06 and $249m in 2007-08. The data in Table 1 indicate that in 2007-08, the government will provide 75.4 percent of the funding for research Flagships, compared to 57.8 percent for core research. This means that CSIRO will fund 42.2 percent of its core research activities from external sources.

The combination of new government funding, redirected CSIRO funding and external revenue will take the total investment in the Flagships programme to close to $1.5 billion. According to CSIRO this makes the initiative one of the largest targeted scientific research programmes in Australia's history. This initiative, together with the increase in 'earned revenue', is changing the way CSIRO approaches its national interest obligations as well as the way it works with industry and government in its core research activities in the context of its role in the Australian innovation system.

The increased proportion of external revenue for core CSIRO research reflects a growing commitment to engaging with external clients through business development opportunities. This commercialisation activity, covering intellectual property licensing, research contracts and consultancy, sits alongside collaborative and joint venture relationships with industry and government through the Flagships programme and other vehicles. The remainder of this paper will comment on the scope and scale of these interactions with industry and external clients.

COMMERCIALISATION AND BUSINESS DEVELOPMENT ACTIVITIES

For 2005-06, the latest year for which data are available, CSIRO reported receiving $353m in external revenue (CSIRO, 2006). This represents an increase of more than a third over the $264m reported for 2000-01. The most significant revenue category is 'co-investment, consulting and services' which generated $272m in 2005-06--amounting to 77 percent of external revenue. Revenue from intellectual property licenses and royalties reached $37m in 2005-06, or approximately 10.5 percent of the total.

Within the 'co-investment, consulting and services category', the major sources of revenue are: the Australian private sector, (which contributed $67.6m in 2005-06); the Australian government ($96.5m); research and development corporations ($44.3m); Cooperative Research Centres ($35.2m); and overseas entities ($36.4m). In 2005-06 the top five client contract accounts accounted for 18 percent of total research and services revenue. CSIRO has been working towards eliminating the subsidization of its consulting services, which in June 2003 reached $3.9m. CSIRO reports that the subsidy is now close to zero.

The trend in revenue sources over the period 2000-01 to 2005-06 in each of the major categories is shown in Figure 2.

[FIGURE 2 OMITTED]

Intellectual property revenue, covering income from licence, option, and assignment (LOA) agreements, has increased significantly over the period 2000-01 to 2005-06. This is a reflection of a more focussed and committed effort by CSIRO towards management of its intellectual property portfolio. Licence income from intellectual property in cotton alone exceeded $10m in 2005-06. A profile of CSIRO's intellectual property portfolio is summarised in Table 1.

CSIRO technologies are made available to industry through a variety of licensing and equity arrangements. More than 160 companies are founded on CSIRO technology and many others utilise CSIRO technologies in their business. CSIRO currently holds an equity shareholding in more than 20 companies.

The increase in external revenue coincides with an emerging view that research users are in fact 'customers', or 'clients', for professionally provided research services. As such, users should pay for the value of those services calculated on the basis of the cost of time and materials used. CSIRO is developing a more commercial and business-like approach to the way it works in this area. It is having an impact on the culture of the organisation and is enhancing its contribution and its relevance in the Australian innovation system.

PARTNERING ACTIVITIES