The University of Queensland research institutes: working ... · Institute for Molecular Bioscience...

The University of Queensland research institutes: working together to advance Queensland and Australia

7 April 2011

Final report to The University of Queensland

The Allen Consulting Group ii

Allen Consulting Group Pty Ltd

ACN 007 061 930, ABN 52 007 061 930

Melbourne

Level 9, 60 Collins St Melbourne VIC 3000 Telephone: (61-3) 8650 6000 Facsimile: (61-3) 9654 6363

Sydney

Level 1, 50 Pitt St Sydney NSW 2000 Telephone: (61-2) 8272 5100 Facsimile: (61-2) 9247 2455

Canberra

Empire Chambers, Level 2, 1-13 University Ave Canberra ACT 2600 GPO Box 418, Canberra ACT 2601 Telephone: (61-2) 6204 6500 Facsimile: (61-2) 6230 0149

Online

Email: [email protected] Website: www.allenconsult.com.au

Suggested citation for this report: Allen Consulting Group 2011, The University of Queensland institutes: working together to advance Queensland and Australia, report to The University of Queensland, Sydney, April. Cover photo: Birra News, 2011.

Disclaimer: While the Allen Consulting Group endeavours to provide reliable analysis and believes the material it presents is accurate, it will not be liable for any claim by any party acting on such information. © Allen Consulting Group 2011

The Allen Consulting Group iii

Contents

Glossary v Executive summary vii

Four world-class institutes at UQ viii Benefits of the combined presence of the institutes at UQ x Four world-class institutes: large gains for the Queensland and Australian

economies xii Beyond economics: the broader benefits of the institutes xiii Conclusion xiv

Chapter 2 1 About this report 1

Chapter 3 3 Performance of the institutes 3

3.1 Four world-class institutes at The University of Queensland 3 3.2 Collective performance of the institutes 8 3.3 Examples of the institutes' contribution to UQ, Queensland and

Australia 16

Chapter 4 19 Benefits of the combined presence of the institutes 19

Chapter 5 27 Measuring the benefits: economic impact of the institutes 27

5.1 Why use a CGE model to evaluate the joint economic contribution of the institutes? 27

5.2 Overview of modelling approach 28 5.3 Combined economic impact 30

Chapter 6 37 Conclusions 37

Appendix A 39 The MMRF Model 39

A.1 The MMRF model 39 A.2 Introduction to the MMRF model 39 A.3 The database 39 A.4 Structure of the model 42 A.5 Government finances 45 A.6 MMRF dynamics 45 A.7 Closure assumptions of MMRF 47 A.8 Interpretation of MMRF simulations 47

The Allen Consulting Group iv

Appendix B 49 Detailed modelling report 49

B.1 Modelling of the economic value of the institutes 49 B.2 Exogenous shocks 53 B.3 Other assumptions 56 B.4 Effects 57

Appendix C 62 References 62

E C O N O M I C C O N T R I B U T I O N F R O M F O U R U Q I N S T I T U T E S

The Allen Consulting Group v

Glossary

ACG Allen Consulting Group

AIBN Australian Institute for Bioengineering and Nanotechnology

AMIRA Australian Mineral Industry Research Association

AMMRF Australian Microscopy and Microanalysis Research Facility

ARC Australian Research Council

AZPF Australian Zebrafish Phenomics Facility

BRC WH Bryan Mining and Geology Research Centre

CAI Centre for Advanced Imaging

CGE Computed General Equilibrium

CMLR Centre for Mined Land Rehabilitation

CoPS Centre of Public Policy (Monash University)

CSIRO Commonwealth Scientific and Industrial Research Organisation

CSRM Centre for Social Responsibility in Mining

CWiMI Centre for Water in the Minerals Industry

ERA Excellence in Research for Australia

FoR Field of Research

FTE Full time equivalent

GDP Gross Domestic Product

GSP Gross State Product

IMB Institute for Molecular Bioscience

JKMRC Julius Kruttschnitt Mineral Research Centre

JKTech The commercial arm of JKMRC

LISA Life Sciences Automation (facility)

MISHC Minerals Industry Safety and Health Centre

MMRF Monash Multi Regional Forecasting Model

NCRIS National Collaborative Research Infrastructure Strategy

NHMRC National Health and Medical Research Council

NPV Net present value


The Allen Consulting Group vi

PEF Protein Expression Facility

QBI Queensland Brain Institute

QFAB Queensland Facility for Advanced Bioinformatics

QNN Queensland NMR Network

R&D Research and Development

RBWH Royal Brisbane and Women’s Hospital

SMI Sustainable Minerals Institute

SROR Social Rate of Return

TASQ Transgenic Animal Services (Queensland)

TiO2 Titanium Dioxide


The Allen Consulting Group vii

Executive summary

Over the last decade, The University of Queensland (UQ) has established a fleet of world-class research institutes. The work of these institutes in terms of research, training and industry collaborations is intrinsic to UQ’s contribution to State, national and global economic and social prosperity.

Financial support provided by the Queensland Government has played a key role in the establishment of four of these institutes and in their ongoing success: the Institute for Molecular Bioscience (IMB), the Australian Institute for Bioengineering and Nanotechnology (AIBN), the Queensland Brain Institute (QBI) and the Sustainable Minerals Institute (SMI) (referred to as the institutes within this report).

Queensland Government funds have helped to provide quality research facilities and provided the core support needed to leverage financial support from other sources. This report focuses on the four institutes listed above to illustrate the long-term, far-reaching impact, both in economic terms and the more intangible benefits, of the Queensland Government’s support.

Through these institutes, The University of Queensland has developed well-defined, internationally recognised research strengths across a range of key research themes. Their employees are internationally acknowledged for their ability to secure external research income and for their high quality research publications. In addition, they provide world-class education in highly specialised fields.

Such high performance has substantially advanced the capability, credibility and international reputation of The University of Queensland. A University’s reputation is very important as it has tangible benefits in the attraction and retention of researchers and staff, the recruitment of high standard students and the employability of university graduates. Further, reputation is significant to panels in awarding competitive research grants or other donor support.

The work of the institutes directly with industry has also secured further benefits for Queensland and Australia. Productive relationships between the institutes and specific companies results in researchers working on some of the major challenges facing the minerals sector and bio sectors around the world, and the experience gained feeds back into work for Queensland and other Australian-based companies. This helps these companies to be world competitive, underpinning Australia’s current prosperity.

The existence of these institutes has also delivered economic benefits to the Queensland and Australian communities through the attraction of investment that in the absence of the institutes would not have been spent in Queensland.


The Allen Consulting Group viii

Against this background, the focus of this report is to assess the collective performance of the institutes across a number of key outcome areas, explore the benefits that the combined presence of the institutes has generated for the UQ and Queensland more generally and estimate the economic impacts that the combined investment attracted by the institutes has had on the Queensland and Australian economies. Notably, whilst this report acknowledges that through its numerous activities the institutes also deliver a number of indirect social and environmental outcomes (which are explored in more detailed in other reports1), the scope of this report is limited to estimating the economic benefits of the additional investment attracted by the four mentioned institutes.

Four world-class institutes at UQ

Queensland is fortunate to have these world-class research institutes at The University of Queensland. Each individual institute generates important benefits to Queensland and Australia through their individual outcomes, including:

• the scientific research outcomes of individual institutes generate economic impacts when the outputs of research projects are adopted by industry to develop new products and processes;

• the training provided by individual institutes supports higher levels of skills in Queensland and contributes to higher productivity in the economy;

• commercialisation outcomes provide commercial returns both to the institutes and the companies that commercialise the research; and

• the attraction of additional investment (that is, money that without the presence of the individual institutes, would not have been invested in Queensland) generates economic returns for the State and the Australian economy more generally.

A brief summary of each of the institutes’ core functions and achievements is provided below.

• The IMB was established in 2000 with the amalgamation of two existing centres at The University of Queensland – the Centre for Molecular and Cellular Biology and the Centre for Drug Design and Development. The IMB is a fully integrated systems biology institute with strong expertise in genomics, cell biology, developmental biology, structural biology and medicinal chemistry, and has Australia’s largest bioinformatics and genomics capacity. Examples of some core outcomes of the IMB include:

– a new class of antimicrobials to combat antibiotic resistant infection;

– improved cancer treatments made possible through sequencing the genetic profile of tumours; and

– new drugs to treat chronic pain.

1 See Allen Consulting Group 2010a, 2010b, 2010 c and 2011.


The Allen Consulting Group ix

• The AIBN was established in December 2002 with a key aim of developing commercially applicable innovations that provide benefit for human health, the environment, manufacturing and the information technology sector. As a key point of difference from many other research institutions, nationally and internationally, the AIBN has a strong technology focus. As such, the institute has developed, through both domestic and international industry-led collaborations, a number of technologies with commercial applications across a range of industries. Examples of some core outcomes of the AIBN include:

– advanced biotechnology and nanotechnology products;

– new ways of delivering drugs inside the human body; and

– sustainable, bio-delivered jet fuels.

• The QBI was established in 2003 as the third stage of a three-part, $200 million State Government initiative to develop a biosciences research precinct at The University of Queensland. The QBI is focused on discovering the fundamental mechanisms that regulate brain function. As well as contributing to the wider knowledge base and developing improvements in the way we learn, increased knowledge and understanding of brain function is essential in combating the growing incidence of mental health problems confronting Australia. Examples of some core outcomes of the QBI include:

– techniques to regenerate neuronal axons in the central nervous system to aid recovery after spinal cord injury;

– methods to replace neurons and therefore delay dementia; and

– new vision systems for unmanned aerial vehicles.

• Since inception in 2001, the SMI has been committed to providing knowledge-based, world leading solutions to the sustainability challenges of the global minerals industry. The SMI undertakes research that is relevant to Australian and international minerals industries and has expertise across a range of sustainable development issues. Further, the institute works closely with the minerals industry to implement principles of sustainable development. The SMI is comprised of six centres as discussed in Chapter 2 of this report. Key outcomes achieved by the SMI include:

– strategies to help mine operators to reduce water and energy use;

– providing leadership on the challenging issues around cumulative impacts of mining; and

– ways of better managing the social aspects of mining operations and mine closure.

Key performance indicators

The collective performance of the institutes over the period 2000-09 has been very impressive. Key points about the institutes’ performance across a range of key areas are provided below.


The Allen Consulting Group x

• The four institutes made very significant contributions to the high ratings in Nanotechnology, Industrial Biotechnology, Environmental Biotechnology, Materials Chemistry, Resource Engineering, Neuroscience, and Medicinal and Biomolecular Chemistry achieved by The University of Queensland in the Excellence in Research for Australia (ERA) 2010 (research quality assessment). The university was given the highest rating (outstanding performance well above world standard) in these Fields of Research.

• Over the period 2000-09, the institutes have secured more than $386 million in competitive income. As the institutes have grown over time, so too has the amount of competitive income attracted annually, increasing from $6.4 million in 2000 when the IMB was created to $83.8 million in 2009, an increase of 13 times.

• In terms of total income, the institutes have received around $913.5 million over the period 1999-09. A proportion of these funds was received as capital infrastructure funds towards the construction of the institutes’ buildings.

• Collectively, since the commencement of their operations, these four institutes have trained a total of 218 postgraduate research students. This number is expected to increase substantially as the cohort of students currently enrolled in these institutes complete their research degrees.

• The SMI has also tailored both credited and non-credited courses across a variety of sustainability areas. Over the period 2001 to 2009, the SMI ran 181 credited courses and 106 non-credited courses focused on technology transfer.

• The institutes have been active in promoting their research, producing over 3,400 publications in peer-reviewed journals over the period 2000-09.

• Between 2000 and 2009, the AIBN, the IMB, the SMI and the QBI established nineteen spin off companies and executed 349 licences. Licence income totalled close to $9 million and the total venture capital invested in spin off companies and revenue from sales of IP was over $68 million.

Benefits of the combined presence of the institutes at UQ

The coexistence of the four institutes that are the focus of this report is expected to be advantageous for the Queensland and national economies. The combined presence of these four institutes at UQ and the cooperation between them and between each of them with other parts of the University generates benefits to the Queensland and Australian economies that would not have been achieved, or would have been achieved only on a reduced scale, if all the institutes were not present and were not so successful. This is particularly true for the ‘bio-institutes’ (the IMB, the AIBN and the QBI). These benefits stem from factors such as:

• cost savings (for instance, from shared large-scale equipment, shared postgraduate research students and joint research proposals);

• synergies and opportunities from the co-location and collaboration of large numbers of high quality researchers;

• critical mass (which has effects on investment attraction, researchers’ retention and research continuity, amongst other);


The Allen Consulting Group xi

• increased visibility, interactions and collaboration; and

• cross pollination of ideas.

Most of these factors are intangible and difficult to quantify, but shape the performance of business, industries and regions in Queensland. Given difficulties in conceptualising and measuring such benefits, they have not been included in the economic modelling analysis. However, they are significant contributors to the performance of the institutes. Specific examples of these benefits include:

• the ability to submit joint applications for research grants and access research funding that would not be obtained by any one of the institutes acting on its own. Major current examples include ARC Discovery, ARC LIEF and NHMRC grants;

• the capacity to obtain larger and more expensive items of equipment due to their ability to share research equipment and facilities;

• close collaborations in the operational area of information technology support and services;

• the availability of world-class infrastructure at The University of Queensland, in turn, helps to attract high quality researchers to the University, who then attract funding to Queensland through grants and collaborations with other researchers and industry;

• the opportunity for interactions and collaboration between researchers in related bioscience fields. The cross-pollination of ideas that results from such activities drives exciting new research projects;

• the attraction of postgraduate research students and post-doctoral researchers to The University of Queensland because of the dynamic research atmosphere that the bio-institutes have created collectively and the potential to draw supervisors from different institutes. Research students and post-doctoral researchers bring skills and often funding with them, which is spent in Queensland;

• the presence of the four institutes in Brisbane makes the city more attractive as a location for biotechnology, nanotechnology and mining services companies. Their presence has also made Brisbane an attractive location for CSIRO. This strong and productive research presence attracts (and retains) Queensland-based venture capital funds and other investors. Further, these companies employ staff and buy supplies in Brisbane. They also fund research and employ University of Queensland graduates; and

• the possibility of shared approaches to marketing the University’s research and approaching potential donors is greater as a result of having the four institutes on campus.


The Allen Consulting Group xii

Four world-class institutes: large gains for the Queensland and Australian economies

In assessing the contribution of these four institutes to Queensland and Australia, the focus has been on estimating the economic impact of the investments made in the institutes to date. Not all of the investment made in the institutes has been included in the economic modelling, because some of this investment may well have occurred even in their absence. As such, only the investment assessed to be ‘additional’ (i.e. leveraged) was used in the economic modelling.

Collectively, the institutes have attracted $525.4 million in additional investment (2005-06 dollars). That is, funds that would not have been invested in Queensland in the absence of the institutes.

The impacts of this additional investment on key macroeconomic variables are summarised in the points below. All these impacts are reported in 2005-06 dollars.

• Investment in the institutes is driving significant benefits for the Queensland and Australian economies. Indeed, in real terms, it is estimated that the cumulative boost to GDP since the institutes’ creation (that is, over the period 1999-20292) due to the additional investment in the institutes is between $3.4 billion and $3.7 billion.

• The additional funds attracted to Queensland by the institutes are also expected to have a positive impact on the State economy. In real terms, the cumulative impact of the institutes on the Queensland economy is expected to be between $8.1 billion and $9.0 billion. This impact is larger than the impact on the Australian economy as a whole. This reflects the fact that the institutes are located in Queensland and thus have a bigger direct impact on this economy.3

• The expansion in the Queensland economy over the period 1999-2029 is substantially larger than the total funds invested in the institutes over the period 1999-2009. In real terms, the ratio of the cumulative sum of GSP to the total investment is in the range of 15.5 and 17.1. This implies that for every dollar invested in the institutes, collectively they return between $15.5 and $17.1 to the Queensland economy. 4

2 The funding period extends from 1999, when the first institute (the IMB) was established, to 2009 when the

latest data were available. The modelling period extends to 2029, 20 years after the final year of institute investment. A 20 year time frame is generally recognised as the standard in patent legislation.

3 Note that while the Australian economy expands as a result of the additional investment in the institutes, the

expansion is not as pronounced as in Queensland. The national impacts are smaller because the funds attracted by the institutes to Queensland divert some resources and economic activity from other states (that is, some states lose economic resources to Queensland). Since the national impact is the sum of all the states’ impacts, then the fact that there are some winners and some losers mean that the national average results will be lower, relative to Queensland’s. However, it is important to note that despite this, the national economy also experiences additional economic growth due to the institutes.

4 These ‘per dollar results’ are not directly comparable to the ‘per dollar results’ outlined in the individual

institute’s reports because this report presents the economic results in terms of real cumulative impacts, rather than on an NPV basis. For more details about this, refer to Chapter 4.


The Allen Consulting Group xiii

• As the institutes expand, the Queensland and Australian economies benefit in terms of increased employment and welfare that flows on to Queenslanders and Australians more generally. By 2029, employment in Queensland is projected to be higher by between 2,225 and 2,404 jobs as a result of the investment in the institutes.5

• The best single measure of the impact of the institutes on the Queensland community is consumption. Consumption is also expected to rise as a result of the institutes. In cumulative real terms, total consumption over the period 1999-2029 is expected to increase by between $4.5 billion and $5.0 billion. This increase in consumption reflects an increase in the wellbeing of Queensland residents.

• The additional funds attracted by the institutes are also expected to increase real investment in Queensland. The cumulative boost in Queensland’s investment in real terms over the period 1999 2029 is between $2.3 billion and $2.5 billion.

Beyond economics: the broader benefits of the institutes

The impact of the institutes’ work goes beyond the economic benefits outlined in the previous section. Indeed, the institutes also generate other important environmental, health or social benefits that are not quantified in this study. Some examples of these other benefits are discussed below.

• Relationships with industry — including companies presently located in Queensland, but others (some of them large multinationals) from outside the State. These relationships result in researchers working on some of the major challenges facing the minerals and bio sectors around the world, and the experience gained feeds back into work for Queensland and other Australian-based companies. This helps these companies to be world competitive, underpinning Australia’s current prosperity.

• Improved health outcomes in the population — ‘Brain disorders are underlying factors in many cases of absenteeism, presenteeism and under-participation in the work force, which impose significant costs on the Australian and Queensland economies’ (Deloitte 2007, p. 35). Research conducted by the bio-institutes is aimed at improving health outcomes and hence can reduce these costs.

• Increased productivity and workforce participation — ‘If research can lead to improved health outcomes, people who have been unable to work may be able to return to employment, or increase working hours. The impacts on the economy of increased participation rates and productivity as a result of better health are potentially very substantial’ (Deloitte 2007, p.19).

5 These employment results cannot be derived directly from the employment results outlined in the individual

institute’s reports (ACG 2005, 2010a, 2010b, 2010c, 2011). This mainly has to do with the way the IMB was evaluated in previous reports. The 2010 IMB report produced by ACG does not evaluate the economic impact of the institute since its inception; rather, it focuses on the period 2005-09. Furthermore, while ACG produced a report in 2005 evaluating the IMB over the period 1999-04, this report used different modelling assumptions to those used in the 2010 report. No separate modelling of the IMB since its inception (that is, for the period 1999-09) under the same modelling assumptions as the other institutes was undertaken for this study (the institutes were analysed as a composite).


The Allen Consulting Group xiv

• Capacity building — the institutes contribute significantly to research capacity building and the development of an innovation culture and capabilities for Queensland through postgraduate research training and early career researchers.

• Reduced human suffering — the burden of disease and disorders in terms of years lost to disability and years of lost life is immense. It is likely that research at the bio-institutes will result in improved health outcomes and a reduction in the incidence and prevalence of disease and disorders. Improvements in health outcomes will result in a reduction in the intangible costs associated with human suffering and reduced quality of life for individuals suffering from disease or disability, careers and the community in general.

• Environmental benefits — work conducted by the institutes has also resulted in improved environmental outcomes. For example, work at the SMI has resulted in better mine site water management and rehabilitation. Water is a scarce resource in many parts of Australia and is also often needed for mining operations. Managing water quality and quantity is therefore important to both the mining industry and to neighbouring populations. In addition, good mine site rehabilitation results in reduced environmental degradation and ensures that government is not left to carry these costs. In addition, the AIBN is contributing to the commercialisation of world-class renewable energy technology.

Conclusion

The results described above show that investment in the institutes is resulting in significant benefits to the Queensland and Australian economies and the community at large. These benefits go beyond direct economic impacts, with the institutes also providing significant social, environmental and health benefits to Queensland and Australia. Furthermore, the institutes have substantially advanced the profile and reputation of The University of Queensland.

Continued investments in these institutes would ensure that Queensland continues to maintain its leadership in research and enjoy the economic, social and environmental benefits associated with it.


The Allen Consulting Group 1

Chapter 2

About this report

During 2010 and 2011, the Allen Consulting Group undertook individual analyses of the economic contributions to Queensland and Australia from four world-class institutes at The University of Queensland (UQ), all of which have received State Government funding (referred to as the institutes within this report):

• the Institute for Molecular Bioscience (IMB);6

• the Australian Institute for Bioengineering and Nanotechnology (AIBN);7

• the Queensland Brain Institute (QBI);8 and

• the Sustainable Minerals Institute (SMI).9

This report examines the combined economic benefits generated by these four institutes. In particular, this analysis:

• assesses the collective performance of the institutes across a number of key outcome areas, such as:

– research outcomes;

– training and employment outcomes;

– research commercialisation outcomes;

– attraction of additional investment;

– knowledge transfer and industry links; and

– community engagement;

• explores the benefits that the combined presence of the institutes has generated for the UQ and Queensland more generally; and

• estimates the economic impacts that the combined investment attracted by the institutes has had on the Queensland and Australian economies.

6 Allen Consulting Group 2010a, Economic contribution of the Institute for Molecular Bioscience to Queensland

and Australia: Final report, Sydney, May. 7 Allen Consulting Group 2010b, Economic contribution of the Australian Institute for Bioengineering and

Nanotechnology to Queensland and Australia: Final report, Sydney, August. 8 Allen Consulting Group 2010c, Economic contribution of the Institute for the Queensland Brain Institute to

Queensland and Australia: Final report, Sydney, August. 9 Allen Consulting Group 2011, Economic contribution of the Sustainable Minerals Institute to Queensland and

Australia: Final report, Sydney, March.



Notably, whilst this report acknowledges that through their numerous activities the institutes also deliver a number of indirect social and environmental outcomes (which are explored in more detailed in the individual institute’s reports), the scope of this report is limited to estimating the economic benefits of the additional investment attracted by the institutes. It therefore does not quantify other important benefits that the institutes generate. For example, the intangible benefits associated with improved health, wellbeing and reduced environmental degradation or the benefits of working closely with industry in terms of reputation and company uptake in Australia.

The report is structured as follows:

• Chapter 3 provides a short description of each of the institutes and describes their performance to date across key outcome areas;

• Chapter 4 illustrates some of the benefits that the combined presence of the institutes has generated for Queensland;

• Chapter 5 provides estimates of the economic impacts that the investment attracted by the institutes has had on the Queensland and Australian economies;

• Appendix A provides details regarding the MMRF Model;

• Appendix B contains the detailed economic modelling report; and

• Appendix C contains the references used to prepare this report.



Chapter 3

Performance of the institutes

3.1 Four world-class institutes at The University of Queensland

As mentioned before, this report focuses on the performance and economic contribution of four institutes at UQ that received State Government funding:

• the Institute for Molecular Bioscience (IMB);

• the Australian Institute for Bioengineering and Nanotechnology (AIBN);

• the Queensland Brain Institute (QBI); and

• the Sustainable Minerals Institute (SMI).

Institute for Molecular Bioscience

The IMB was established in 2000 with the amalgamation of two existing centres at The University of Queensland – the Centre for Molecular and Cellular Biology and the Centre for Drug Design and Development. The IMB is a fully integrated systems biology institute with strong expertise in genomics, cell biology, developmental biology, structural biology and medicinal chemistry, and has Australia’s largest bioinformatics and genomics capacity.

A proportion (around 19 per cent in 2009) of the IMB’s budget comes from an operating grant provided by the Queensland Government. IMB is delivering outstanding outcomes for Queensland through:

• contributions to world knowledge at a level commensurate with other elite research institutes in Australia and abroad;

• attraction and retention of intellectual capital and technological expertise;

• training of postgraduate and postdoctoral scientists, by its active involvement in industry development (including the establishment of two biotechnology companies);

• attraction of financial resources and investments from national and international sources (over $420 million in total funds between 1999 to 2009); and

• strategic contributions to the development and perception of Queensland as a knowledge-based society and economy.

The IMB has significantly grown its annual competitive grant income from national and international sources. Over the period 1999 to 2009, Commonwealth competitive grants (including CRC Funding) secured by the IMB totalled around $145 million. Its success rate in National Health and Medical Research Council (NHMRC) and Australian Research Council (ARC) funding schemes is considerably higher than the national and Queensland average.

The IMB’s level of non-government sector funding is around four times the observed average of private sector funding for research conducted in Australian Universities. Some 66 per cent of IMB Principal Investigators currently support their own salaries with senior research fellowships (IMB 2010b).

Their (IMB) efforts in relation to discovering the causes of cancer, the treatment of cancer, and potentially the cure for cancer of course affects more and more Australians and more and more people around the world.

Anna Bligh Queensland Premier

IMB output. No.21



Since its creation, the IMB has published over 1,700 research papers, many in the top-rank international journals such as Science, Nature and Cell, and in the leading disciplinary journals in bioinformatics, genetics, developmental biology, structural biology and biological chemistry. Furthermore, over the period 1999-09, the IMB’s publications were on average cited around 2,300 times per year.

The IMB has established a vigorous postgraduate training program with 122 postgraduate students currently enrolled and more than 180 students who have completed their postgraduate training at the IMB since 1999. The research training activity of the IMB is significantly higher than that of other leading medical and biotechnology research institutes in Australia.

The IMB is a core partner in a number of national research centres including two major national research facilities (the Australian Genome Research Facility and the Australian Microscopy and Microanalysis Research Facility), the Australian Stem Cell Centre, the ARC Centre of Excellence in Biotechnology and Development, the ARC Centre of Excellence in Bioinformatics, and the Invasive Animals Cooperative Research Centre. The IMB has also developed joint research facilities, research scholarships, and research projects with CSIRO.

The IMB has developed strong linkages with industry through commercialisation activities, and has had a success rate of 90 per cent, well above the national average in the attraction of eight ARC Linkage grants between 2005 and 2009 (IMB 2010b). Through the activities of IMBcom (a company dedicated to the commercialisation of the IMB research outcomes) between 1999–09 fourteen new IMB start-up companies were added to the Queensland biotechnology sector. Since 2000, IMB companies have raised more than $70 million through private sector investment (IMB 2010b), and the IMB currently employs more than 300 staff (full time equivalent).

Australian Institute for Bioengineering and Nanotechnology

The AIBN was established in December 2002 with a key aim of developing commercially applicable innovations that provide benefit for human health, the environment, manufacturing and the information technology sectors.

The AIBN’s research programs focus on the emerging disciplines of nanotechnology and bioengineering. However, as a key point of difference from many other research institutions, nationally and internationally, the AIBN has a strong technology focus. As such, the institute has developed, through both domestic and international industry-led collaborations, a number of technologies with commercial applications across a range of industries.

The AIBN has been very successful in securing competitively allocated research funds. This is a good measure of the quality and quantity of research being undertaken at the AIBN. During the period 2003-09, the total income received by the AIBN was $174 million, of which competitive grants totalled $41.5 million. This income has grown strongly since 2003, reaching $12.4 million in 2009. Over the period 2003-09 the AIBN has also received $1.15 million in commercial income and over $1.6 million in international funding.

Focusing on outcomes that will benefit human health and the environment, AIBN scientists and engineers integrate the physical, chemical and biological sciences. They utilise some of Australia’s newest and best bio infrastructure to apply innovative ideas and techniques, and have the added advantage of access to high-quality equipment and people throughout UQ.

Professor Paul Greenfield AO Vice Chancellor

The University of Queensland AIBN annual report, 2008



The AIBN has also been very successful in attracting additional investment to Queensland. These additional funds have made a significant contribution to the Queensland and the Australian economies. While the AIBN does not currently receive an operating grant from the Queensland Government, there has been investment by the State Government in the AIBN (in the form of loans, Smart State money and others) totalling $35.4 million over the period 2003-09.

The AIBN has produced a substantial number of high quality research publications. During the period 2005-09, researchers at the AIBN produced an average of 160 publications per year (with a total of 800 publications over the period). Importantly, over 70 per cent of these publications were in top tier journals and all publications were peer-reviewed. Citations of research conducted by the AIBN group leaders exceed 25,000. This demonstrates the high calibre of the AIBN group leaders.

The number of postgraduate research students enrolled in the AIBN has dramatically increased from nine in 2005. Graduations from the AIBN are expected to increase substantially in the near future, as the larger cohort of student enrolled during the period 2006-09 complete their research degrees. The AIBN now employs over 150 staff (full time equivalent).

The AIBN adds value to Queensland through its extensive links and collaborations with industry. Since 2005, the AIBN has formed a total 523 industry alliances and undertaken 43 projects with industry with a total contract value of almost $2.5 million.

Over the period 2005-09, the AIBN has successfully established four spin-off companies that have attracted a total of $1.6 million in venture capital investment. It has executed ten intellectual property licences (two in 2007 and 2008 and six in 2009). The AIBN has made a total of 51 provisional patent applications and 29 PCT (complete) patent applications and generated a total of $2.5 million in commercial income.

Queensland Brain Institute

The QBI was established in 2003 at the UQ as the third stage of a three-part, $200-million State Government initiative to develop a biosciences research precinct at the University.

The QBI is focused on discovering the fundamental mechanisms that regulate brain function. As well as contributing to the wider knowledge base and developing improvements in the way we learn, increased knowledge and understanding of brain function is essential in combating the growing incidence of mental health problems confronting Australia.

In June 2008 the Queensland Government announced that it would contribute a total of $25 million to the operating costs of the QBI over 5 years (2008-12).

During the period 2003-09, the QBI’s total income was $204.5 million. This figure includes $63.5 million in capital funding for the construction of the QBI building. Non-capital funding totalled around $141 million in the same period.

The QBI has accomplished a remarkable body of work, won numerous prestigious awards and fellowships, and achieved high success rates in applying for external funding.


The University of Queensland QBI Annual Report, 2007-08



The QBI has been a strong performer in attracting research grants. During the period 2003-09, the QBI secured around $43.7 million in competitive income. Competitive income reached $12.4 million in 2009. The QBI’s combined ARC and NHMRC income has risen to $8.7 million in 2009. The QBI success rate in securing NHMRC and ARC competitive grants has been considerably higher than the national average each year over the period 2007-09. For instance, the QBI's success rate with NHMRC project grants over the period 2007-09 averaged 62.6 per cent, compared to the national average of 21.3 per cent for the same period.

Between 2003 and 2009, researchers at the QBI produced over 300-refereed scientific publications. The number of publications sharply increased in 2008 and 2009, with these two years accounting for two thirds of the total QBI publications. This coincides with the period in which the QBI has received support from the Queensland Government in the form of an operational grant.

When the performance of the QBI is benchmarked against other leading Australian neuroscience research institutes10, the QBI has scored the highest number of citations per publications produced over the period 2003-09.

The number of postgraduate research students enrolled in the QBI has grown to 60 in 2010. Since 2007, five students have graduated from the QBI and this number is expected to increase substantially in the coming years, as the larger cohort of students enrolled during the period 2007-09 complete their research degrees.

In 2009, the QBI had the highest number of PhD students per group leader amongst its peers with an average of two students per group leader. Staffing levels at the QBI have increased significantly over the period 2003-09. From 21 Full Time Equivalent (FTE) staff in 2003, the QBI now employs 136 FTE. Further, the number of group leaders at the QBI has grown from two in 2003 to 26 in 2009.

The QBI has successfully established one spin off company, which has attracted $2 million in venture capital investment. The QBI has also executed one intellectual property licence, made a total of 16 provisional patent applications and six PCT or international patent applications and has been granted nine patents.

Sustainable Minerals Institute

Since inception in 2001, the SMI has been committed to providing knowledge-based, world leading solutions to the sustainability challenges of the global minerals industry. The SMI has expertise across a range of sustainable development issues and has worked closely with the minerals industry to implement principles of sustainable development.

The SMI undertakes research that is relevant to Australian and international minerals industries, broadly grouped into three categories — basic research that is targeted at operational efficiency and process improvement in the sector; strategic research focused on long-term, step change projects that have the potential to significantly impact cost structures and improve resource utilisation; and research that involves direct engagement with senior industry executives to uncover the major challenges confronting the minerals industry. The SMI is comprised of six centres (see Box 3.1).

10

The QBI was benchmarked against the Brain and Mind Research Institute and the Florey Neuroscience Institute.

During 2007-2008, QBI expanded from a core group of fewer than 30 scientists to a research institute with more than 200 staff, many of whom have come from interstate or overseas to work in Queensland.

Professor Perry Bartlett FAA Director, Queensland Brain Institute

QBI Annual Report, 2007-08



Box 3.1

SMI CENTRES

The Julius Kruttschnitt Mineral Research Centre (JKMRC) has been operating since 1970 and is the largest research centre within the SMI. The centre was established with a goal to develop practical technical solutions for large-scale mining and minerals industry challenges. The principal focus of the centre has been the optimisation of mining and mineral processing operations. JKMRC has gained international recognition as an innovator in mining and mineral processing research and is regarded for the widespread use of its research outcomes by industry. This includes the application of research outcomes to create modelling tools, analysis tools and instrumentation, and designs for new equipment. The current scope of research extends from exploration geometallurgy to comminution and flotation. Research is focused on maximising the efficiency of resource extraction while minimising energy use, water use and environmental impact. The JKMRC also offers a range of technical testing services. In 2001, The University of Queensland mining resource research was consolidated under the WH Bryan Mining and Geology Research Centre (BRC). The BRC’s focus is to provide solutions to industry for complex, large scale mining challenges. BRC’s research covers: mine planning; integrated mineral extraction; mass mining; blasting; geometallurgy and geology. The BRC is financially independent with substantial links to industry including collaborative research projects with major mining companies. The BRC also offers industry consulting services. The Centre for Mined Land Rehabilitation (CMLR) has been operating since 1993 and is at the forefront of research, education and technical expertise with regard to mining environmental management. Research is undertaken in water management, constructed land forms, policy framework development and mine closure. The CMLR also manages information databases, including The Waratah Germination database (a compilation of germination and ecological information of tree and shrub species native to NSW) and the Coal rehabilitation database (containing reports and other literature of relevance to rehabilitation in the Queensland and NSW coal mining industries). The Minerals Industry Safety and Health Centre (MISHC) was established in 1998 in direct response to industry recognition for the need to improve health and safety processes in the mining industry. The MISHC is internationally recognised as the pre-eminent centre for minerals industry risk management. The MISHC undertakes research into the human factors that influence engineering, current legislative reforms, risk management trends in health and safety, best practice guidelines and inadequacies in safety practices in the mining industry. Established in 2001, the Centre for Social Responsibility in Mining (CSRM) is focused on the socio-economic and political challenges that confront companies, communities and governments when change is brought about by resource extraction. The CSRM has developed a unique team of anthropologists, sociologists, economists, natural resource specialists, political scientists, engineers and technical specialists that are committed to bridging the divide between technical/physical and social sciences. The CSRM has attracted funding from cooperative research centres, the ARC and industry research funds. The centre works with peak industry organisations, mining and exploration companies as well as non-industry mining stakeholders such as NGO’s and government. The Centre’s research addresses indigenous employment and enterprise development; community engagement and development; impact monitoring and assessment; human capital, management and governance; and responsible resource use and processing. The Centre for Water in the Minerals Industry (CWiMI) is a response by SMI to the increased demand for knowledge to support better water management in the minerals industry. Established in 2004, the CWiMI is designed to provide knowledge across three primary areas: environmental protection, business viability and sustainable development. The CWiMI has focused its work into two major themes: water use in minerals and commodity production and the broader issues associated with water access, operations and sustainable closure. The CWiMI works to assess water balances across all scales from individual mineral processes to whole regions within which mines (or a network of mines) are operating.

Source: Allen Consulting Group 2011.

The global mining industry has embraced the principles of sustainable development. The challenge is to understand and apply these principles. This is our opportunity.

SMI



Since its inception, the SMI’s income has totalled $153 million, of which $95.8 million were competitively allocated research funds. While the SMI does not receive an operating grant from the Queensland Government, it received a contribution of around $10 million from the State Government towards the cost of its building and has also received State Government grants for its research.

The SMI has produced a significant number of peer reviewed journal publications. Between 2001 and 2009, the SMI produced an average of 63 peer reviewed journal publications per year (with a total of 572 publications over the period). In addition, projects conducted with or for industry tend to result in reports to the industry sponsor that may not generate material that is suited to peer-reviewed publication.

These extensive links and collaborations with industry are a central way in which the SMI adds value to Queensland and Australia. The mineral industry has been a key driver of Australia’s national prosperity. Critical to its success has been the industry’s ability to adapt and overcome significant operational, environmental, social and labour market challenges. Further research is required for the industry to remain sustainable over the long term. The SMI and its integrated research centres have contributed and will continue to contribute significantly to such research.

Until 2008, postgraduate research students in SMI had been enrolled in faculties. Currently, there are 104 postgraduate research students enrolled in SMI.

In addition, the SMI contributes to the success of Australia’s Mining, Technology, Services and Equipment sector. The SMI provides skilled graduates to work in the sector, as well as research and testing, which the sector draws upon. The SMI can access government research funding not available to industry, keep abreast of international R&D and provide links to researchers in other countries.

The SMI also undertakes a number of activities to make its research and technologies accessible to the broader research community, such as organising seminars, courses, running conferences and producing publications with the intention of promoting their research. During the 2001-09 period, the SMI organised 15 conferences and 57 seminars, ran 181 credited and 106 non-credited courses focused on technology transfer and produced 97 publications to promote their research.

3.2 Collective performance of the institutes

Collectively, the performance of the four institutes has been strong. This section details key points regarding the collective performance of the institutes across a number of key outcome areas. In addition, specific achievements of individual institutes are highlighted.

Research income

Success in securing competitively allocated research funds can be used as a useful indicator of the quality and quantity of research being undertaken at the institutes. Collectively, the four institutes studied in this report have been strong performers in this area.



Since their creation, the institutes have secured more than $386 million in competitive income. As the institutes have grown over time, so too has the amount of competitive income attracted annually, increasing from $6.4 million in 2000 when the IMB was created to $83.8 million in 2009, an increase of 13 times (see Figure 3.1).

The institutes have been very successful in securing highly competitive research grants. Specifically, the AIBN, QBI and IMB have all enjoyed periods where their success rates in securing NHMRC grants have been above that of the national average.

Figure 3.1

INSTITUTES' COMPETITIVE INCOME, 2000-09, $M

Note: The IMB was established in 2000, the SMI in 2001, the AIBN in late 2002 and the QBI in 2003. Competitive income includes: Australian Mineral Industry Research Association grants, the Australian Coal Association Research Program grants, Cooperative Research Centre grants, Queensland government competitive innovation funds, Commonwealth Competitive grants, Other Australian competitive funds and other Queensland competitive funds. Source: IMB, QBI, AIBN and SMI data, 2010 & 2011.

Research quality

In 2010, the Australia Research Council undertook the Excellence in Research for Australia (ERA) initiative to assess research quality within Australia’s higher education institutions using a combination of indicators and expert review. The data collection was based on eight discipline clusters defined by Field of Research (FoR) codes that can be found in the Australian and New Zealand Standard Research Classification. At the two-digit level, these codes cover broad fields such as (11) Medical and Health Sciences. At the four-digit level, the codes describe narrower disciplines such as (1107) Immunology.

The ERA took into account indicators of:

• research quality measured by a combination of citation metrics, publication outlet quality, and (in some fields) peer review;

• research volume and activity;

• research and commercialisation income;



• research application; and

• recognition (or esteem).

Evaluation of the data submitted for ERA 2010 was undertaken by eight research evaluation committees comprising a total of 149 distinguished and internationally recognised researchers with relevant expertise from Australia and overseas.

The ERA rating scale used is summarised in Table 3.1 below.

Table 3.1

ERA RATING SCALE

Rating Descriptor

5 Outstanding performance well above world standard

4 Above world standard

3 World standard performance

2 Below world standard

1 Well below world standard

n/a Not assessed due to low volume

Source: ARC website (www.arc.gov.au/era/, accessed 31 March 2011).

The ERA results show that all four institutes discussed in this report contributed significantly to the University’s FoRs that were rated 5 including Nanotechnology (AIBN), Industrial Biotechnology (AIBN), Environmental Biotechnology (AIBN), Materials Chemistry (AIBN), Resource Engineering (SMI), Neuroscience (QBI), and Medicinal and Biomolecular Chemistry (IMB).

Furthermore, all four institutes contributed more than 80 per cent of their outputs to FoRs that were rated above or well above world standard. The contribution of each institute to these outcomes for the University is shown in Table 3.2.

Table 3.2

INSTITUTE CONTRIBUTIONS TO THE UNIVERSITY OF QUEENSLAND ERA RATINGS FOR FORS ABOVE AND WELL ABOVE WORLD STANDARD (RATINGS OF 4 &5)

Institute Contribution (%)

AIBN 81

IMB 86

QBI 84

SMI 89

Source: The University of Queensland.



This is an outstanding result for The University of Queensland and the four institutes and again illustrates the important contribution that these institutes make to the State’s strong research reputation.

Training

A skilled workforce can influence the long-term prospects of the Australian economy through increased productivity and economic growth. As such, to the extent that the existence of the four research institutes at UQ supports higher levels of scientific skills in Queensland, these institutes can contribute to higher productivity in the Queensland and Australian economies.

Collectively, since the commencement of their operations, these four institutes have trained a total of 218 postgraduate research students.11 This number is expected to increase substantially as the cohort of students currently enrolled in these institutes complete their research degrees. Recognising a need from the resources industry, the SMI has also tailored both credited and non-credited courses across a variety of sustainability areas. Over the period 2001 to 2009, the SMI ran 181 credited courses and 106 non-credited courses focused on technology transfer.

Publications

Another measure of a research institution contribution and recognition is the number of research publications produced. Collectively, the institutes have produced over 3,400 publications in peer-reviewed journals (see Figure 3.2). While not all of the UQ research institutes studied in this report have the production of peer-reviewed journal articles as the primary focus of its research12, the collective performance of the institutes in this area has been very solid.

Figure 3.2

INSTITUTES' PUBLICATIONS, 2000-09

Note: The IMB was established in 2000, the SMI in 2001, the AIBN in late 2002 and the QBI in 2003. Source: IMB, QBI, AIBN and SMI data, 2010 and 2011.

11

Excludes the SMI as data were not available; students were enrolled in faculties until 2008. 12

For instance, the SMI’s operational approach to its mission puts a greater focus on industry collaborations and projects, which tend to result in reports to industry that, while of value in documenting project outcomes, do not always generate material that is suited to peer-reviewed publication.

I could have chosen other universities in Australia or New Zealand, but UQ was definitely the best choice. The Professors and staff have been very supportive and I would totally encourage people from other countries to study here.

Claudia Martinez Student

The University of Queensland, 2011.

UQ attracted me because of the emphasis it places on scientific research and its world-class research centres, meaning I could be amongst the buzz at the centre of the scientific world. I was also excited due to the high standard of teaching at UQ, as judged by the many teaching awards won by UQ lecturers.

Ernest Tee Valedictorian for the Bachelor of

Science degree. The University of Queensland,

2011.



Research commercialisation

Increased commercialisation of ideas, or the licensing and creation of spin-off companies, is often a crucial marker on the performance of a research institution. Commercialisation emphasises practical technological innovation that is able to attract investor attention. In addition, the successful commercialisation of ideas is a reflection on effective institution management.

Table 3.3 presents key indicators of the QBI, the AIBN, the SMI and the IMB commercialisation performance during specific periods. As shown in this table, collectively between 2000 and 2009, the three institutes established 19 spin off companies and executed 349 licences. Licence income totalled close to $9 million and the total venture capital invested in spin off companies and revenue from sales of IP was over $68 million.

Table 3.3

INSTITUTES' COMERCIALISATION PERFORMANCE

Unit AIBN 2003-09

IMB 2000-09

QBI 2003-09

SMI 2000-09

Total

Spin off companies established No. 4 14 1 - 19

Licences executed No. 10 5 1 333 349

Licence income $ - 189,000 1,170 8,795,000 8,985,170

Provisional patents No. 51 45 16 - 112

PCT or international patent applications

No. 29 31 6 129 195

Granted patents No. 6 30 9 7 52

Venture capital investment in spin off companies

$ 1,635,000 59,079,000 2,000,000 5,666,987 a 68,380,987

a) This figure does not refer to venture capital investment in spin-off companies but to revenue from sales of IP ($8,037,000 in instalments over 5 years, with $5,666,987 received to date and $2,370,013 receivable in 2012). Note: The IMB was established in 2000, the SMI in 2001, the AIBN in late 2002 and the QBI in 2003. Source: IMB, QBI and AIBN data, 2010 and SMI data 2011.

The SMI has also actively contributed to advancing Australian industry through the commercialisation of its research outcomes. Specifically, JKTech Pty Ltd is the technology transfer company for the SMI. Its role is to ensure research at the SMI translates to real benefits for the domestic and international minerals industry.

JKTech’s staff has extensive experience in the minerals industry, offering a range of innovative solutions for the industry aimed at increasing productivity and metal recovery. JKTech has a range of specialist equipment available for testing of breakage and flotation characterisation parameters. The JKTech consulting team provides specialist consulting using JKTech software and equipment where appropriate. The methodologies that are used by JKTech have provided industry with significant improvements including reduced design risk, plant throughput increases, product recovery and grade increases, and substantial decreases in operating costs.

JKTech has contacts and an established presence in the mining industry in Australia and around the world and can provide feedback from the industry to the SMI as to their areas of focus,

Professor Chris Moran Director, Sustainable Minerals

Institute Mining Technology Australia, 2011



Through JKTech’s laboratory services, the advanced ore characterisation and testing techniques developed by researchers within the Centres of the SMI are available to the international minerals industry. To provide enhanced access to its products and services, JKTech has developed a worldwide network of market and product specific representatives and have turned over $90 million since 2004 on the basis of SMI intellectual property.

Employment

The institutes also contribute to the Queensland economy by generating employment opportunities. Staffing levels have greatly increased across the institutes since they started operations. In 2009, more than 600 staff (full-time equivalent) were employed across the three bio-institutes. Importantly, each of the institutes is also home to a number of internationally renowned experts. For example, Professor John Quackenbush, a world expert in using computational science to study disease, has joined UQ’s IMB from the Harvard School of Public Health.

In 2009 the AIBN, IMB and QBI housed 18, 32 and 26 research group leaders, respectively13. Group leaders form a pivotal part of the research process. Each group leader has responsibility for particular research programs and hence an increase in group leaders naturally corresponds with an increase in research capability. Furthermore, many of the institutes’ group leaders are internationally recognised for their research contributions.

Links with industry

Industry alliances and collaborations are an important facet of any successful institutes’ R&D activities. A combination of both business and research practitioners foster an increased scale of activities and an enhanced practical application of new innovations. Furthermore, costs can be reduced with industry partners. This allows research institutions to focus on basic research, with industry organisations being responsible for strategic or applied research.

For industry alliances to work, industry must perceive research institutions to have high degrees of innovative capability, flexibility and ambition. An institution’s increase in business partnerships and industry affiliations therefore inherently express the industry’s acknowledgement of these perceived characteristics within the research institution.

Each of these four institutes at UQ has forged important relationships with specific industry sectors. The SMI and AIBN have been particularly active in seeking industry alliances. Since 2005, the AIBN has formed a total of 523 industry alliances and has worked directly with industry on 43 projects, while the SMI had a total of 1,644 collaborations with industry during the 2001-09 period.

13

SMI uses a different model to that of the bio-institutes.

I chose to join the IMB because it is one of the world’s leading biomedical research institutes, and will give me the opportunity to work with some of the world’s leading scientists.

Professor Quackenbush The University of Queensland, 2011.

The institutes Innovation and Commercial Development team is structured to be responsive to numerous industry needs and receptive to the many and varied opportunities generated by AIBN researchers.

Dr Craig Belcher Innovation and commercial

development manager AIBN

AIBN Annual Report, 2008

UQ has forged a unique and highly successful working partnership with the mining industry over the past 50 years. It’s breadth and quality of minerals-related education and research is internationally renowned and without equal in Australia

Professor Don McKee Former Director of the SMI



Attraction of investment to Queensland

Attraction of funds is a useful indicator of a research institute’s performance as it reflects the perceived importance of its research programs and capability in conducting research in the targeted area. In light of this, the income attracted by the institutes is a useful indicator of their success. Additionally, investment in these research institutes generates economic benefits for other industries across Queensland and Australia.

Since their creation, the institutes have received around $953.5 million in total income. A proportion of these funds was received as capital infrastructure funds towards the construction of the institutes’ buildings. Approximately 41 per cent of this income (equivalent to around $386 million) was received as competitive income. 14

As shown in Figure 3.3, the institutes’ income has increased steadily over time, with income in 2009 totalling approximately $144 million.

Figure 3.3

TOTAL INCOME OF INSTITUTES, 1999-09

Note: Includes capital funding. The IMB was established in 2000, the SMI in 2001, the AIBN in late 2002 and the QBI in 2003. Source: IMB, QBI, AIBN and SMI data, 2010 & 2011.

The institutes have attracted their income from a diverse range of sources. A disaggregation of total funding for all institutes over the period 1999-09 by source of funding is presented in Figure 3.4.

14

Includes ACGR Commonwealth and non-Commonwealth schemes, CRC funds and other competitive grants.



Figure 3.4

FUNDING BY SOURCE, 1999-09

Source: IMB, SMI, QBI, and AIBN data, 2010 &2011.

As shown in Figure 3.4, the core component of the institutes’ income (around 39 per cent or $381 million) has been the support received from the Commonwealth government, which includes a number of competitive grant schemes. The Queensland government has also provided significant levels of funding over the period 1999-09, contributing 20 per cent (or around $189 million) of total income.

Support from industry (denoted in Figure 3.4 as ‘Other Australian’) in the form of commissioned projects, donations, industry research grants and commercial income has also been an important source of funding, contributing 15 per cent (or $142 million) over the period 1999-09.

Other funding sources over the period 1999-09 included The University of Queensland and international funds, contributing 17 per cent (or $160 million) and nine per cent (or $82.4 million) of total funds, respectively.

Interaction with Queensland State Government

The institutes have worked closely with the Queensland State Governments to deliver a range of benefits. In particular, the SMI has been active in this area. Researchers from the SMI provide advice to government through consultancy reports and research reports and are often invited to sit on expert advisory panels. Further, the SMI works directly with the State Government to build capacity, develop guidelines and facilitate the broad range of mineral industry stakeholders. Specific examples of the SMI’s work with the Queensland Government are provided in Box 3.2.



Box 3.2

SMI’S WORK WITH THE QUEENSLAND GOVERNMENT

Some examples of the SMI’s work with the Queensland government are outlined below. • Sustainable resource communities policy — a consultancy report provided to the Queensland Government on how

cumulative social impacts could be managed through ongoing Social Impact Management Plans. Specifically, the SMI team produced a publicly available briefing paper and worked collaboratively with a steering committee with representatives from: the Queensland Department of Employment, Economic Development and Innovation; the Queensland Department of Infrastructure and Planning; the Queensland Resources Council and the Local Government Association of Queensland.

• Healthy headwaters coal seam gas water feasibility study — an expert panel, chaired by Professor Moran of the SMI. The aim of this panel is to assess the groundwater impacts of coal seam gas water extraction within the Surat and southern Bowen Basins and to provide a better understanding of which aquifers are most vulnerable to, and at greatest risk of impacts from, coal seam gas water extraction. Associate Professor Dr Sue Vink of the SMI also sits on this high profile panel.

• Cumulative impacts good practice guide — guidelines developed by the SMI for the Australian Coal Association Research Program, the guide is a practical resource to assist Queensland Government and companies assess, manage and monitor the cumulative social, economic and environmental impacts of resource development at the local and regional scale. The Queensland Minister for Infrastructure and Planning launched the guide, attracting over 180 attendees from the resources sector, state and local government, and civil society.

• Social impact assessment forum — designed to build capacity within the Queensland State Government, in March 2010, the SMI co-sponsored and co-organised a forum to solicit feedback on the development of the Queensland Governments Draft Social Impact Management Plan Guidelines developed by the Queensland Department of Infrastructure and Planning. Being an independent research institute, the SMI was well placed to facilitate a range of stakeholders to consolidate feedback and provide quality advice to the Queensland Government.

Source: SMI, 2011.

3.3 Examples of the institutes' contribution to UQ, Queensland and Australia

This section provides examples of each of the institutes’ activities that generate benefits for Queensland. While it is difficult to quantify such benefits, their importance is readily evident.

QBI

The Centre for Advanced Imaging (CAI) was a strategic initiative developed through the QBI. Its establishment reflects the bourgeoning demand for improved imaging research capabilities, arising from the growth in biotechnology and biomedical research in Queensland. The CAI provides an integrated multidisciplinary and multimodal research framework for basic, translational and clinical research imaging. The CAI brings together the skills of a critical mass of researchers and state-of-the-art imaging instruments such as high field MRI scanners (3T, 4T and 7T), animal MRI scanners (4.1T, 9.4T and 16.4T), human and animal PET scanners, the world’s first combined MRI/PET system and dedicated research cyclotron and radiochemistry. No other centre in the world has this array of technology within one facility. It provides Queensland researchers and the biotechnology community with an unparalleled technological advantage for research discovery and translation.

Neuroscience discovery can be a slow process and it is inevitably an expensive one. As such, QBI researchers foster a number of collaborations and have built enviable partnerships with leading neuroscience research institutes across the globe.

Professor Perry Bartlett FAA

Director, Queensland Brain Institute QBI Annual Report, 2007-08.



SMI

The SMI has delivered a wide range of benefits for the mineral industry, Queensland and Australia. The longest running SMI project is the mineral and processing project that commenced in 1962. The mineral and processing project has been supported by the Australian Mineral Industry Research Association (AMIRA) and, for P9N, by an Australian Research Council (ARC) Linkage Grant (SMI, 2007). The P9 project is a world leader in collaborative mineral processing research. Its achievements have helped re-shape industry understanding of plant design and operation.

The major aim of the P9 project has been to help achieve ‘best practice’ in the design and operation of mineral processing plants. This is done principally through the development and demonstration of modelling and simulation techniques and measurement tools.

An ARC Linkage Grant of $1.74 million to cover fundamental research into flotation further leverages the industry sponsorship of the project. Government sources in South Africa and Canada have matched industry contribution from companies based in these countries.

Minerals processing companies operating in Queensland have benefited from efficiency gains and reduced costs as a result of this project.

AIBN

The AIBN was established with the specific aim of combining research excellence with an industry focus. Since inception the AIBN has been working successfully with industry to achieve this aim. Specific examples of industry collaboration and the benefits for Queensland and Australia are detailed below.

• Food for an ageing population – the AIBN has teamed up with food and ageing organisations to develop innovative applications that address pressing concerns on Australia’s ageing population. In collaboration with global nutrition, hygiene and personal care product company, Unilever, the AIBN designed and developed a microfluidic device that determines the properties of human saliva. The device enabled researchers to understand how saliva interacts with food and hence how it affects the taste and texture of what we eat. This will allow food scientists to better design foods with improved taste and health features. In addition, the microdevice developed will assist food manufacturers such as Unilever gather reliable data more quickly.

• Renewable energy industry — the AIBN has been successful in developing technologies that have practical application in the energy industry including through improvements in energy efficiency and decreased reliance on hazardous chemicals. For instance, the institute has created a breakthrough cost-effective solar cell that utilises the growth of Titanium Dioxide (TiO2) crystals in a highly reactive form. This opens up immense possibilities in the clean energy field, due to increases in reactivity and efficiency. The attractiveness of this and other emerging technologies developed by the AIBN has been evident, with several venture capitalists, including Uniseed and CleanTech Ventures, providing substantial financial support to their commercialisation.

AIBN is Australia’s only fully-integrated research institution where scientists and engineers collaborate to solve problems at the point where biotechnology and nanotechnology meet.

The University of Queensland, 2011

While satisfying overseas demand and attracting new income to Australia, AIBN scientists and engineers continue to serve local firms. In 2008 AIBN partnered with more than 30 businesses, whose products range from antibodies and metal oxides to homecare and personal products. The results include new processes and technologies that may reduce business costs and generate employment.


The University of Queensland AIBN Annual Report, 2007-08.



IMB

Over the last ten years IMB has built up an impressive array of world-class research support facilities, many of which are unique in Queensland. Importantly, as these facilities have developed over time, their focus has shifted from being purely internal, servicing only IMB’s needs, to providing critical research infrastructure to the broader Queensland research community.

Some facilities such as the Protein Expression Facility (PEF) and Transgenic Animal Services (Queensland) (TASQ) provide research services on a simple, not-for-profit cost basis while others such as the Queensland NMR Network (QNN), the Mass Spectrometry facility and the Queensland Facility for Advanced Bioinformatics (QFAB) are the result of partnerships and collaborations with other Queensland-based research groups, including the Queensland Institute for Medical Research, Queensland University of Technology, Griffith University, Central Queensland University, James Cook University and CSIRO.

Several facilities, including the Australian Microscopy and Microanalysis Research Facility (AMMRF), the Australian Zebrafish Phenomics Facility (AZPF), the Microarray Facility and the Life Sciences Automation facility (LISA) have been funded as part of the Commonwealth Government’s NCRIS program or other national research infrastructure support schemes and as such provide ‘local’ access to these facilities to other Queensland organisations.

In addition to providing research support to other Queensland universities and research institutes, IMB’s facilities also provide an opportunity for many of the State’s fledgling biotechnology companies to access this wide range of sophisticated technologies, which under other circumstances would be unavailable to them.



Chapter 4

Benefits of the combined presence of the institutes

Since commencing operations, together the institutes have substantially advanced the capability, credibility and international reputation of The University of Queensland. This has been reflected in a 2010 study where the University was ranked as above world standard in 21 research areas, more than any other Australian University (ARC, 2010). Further, in 2011 Science Magazine ranked The University of Queensland as among the top five best places in the world for post-doctoral work in life sciences, outside the United States of America (Luiggi, 2011).

University reputation is very important as it has tangible benefits in the attraction and retention of researchers and staff, the recruitment of high standard students and the employability of university graduates. Further, reputation is a significant consideration to panels awarding competitive research grants and to other donor support.

As discussed in Chapter 3, the institutes have contributed to the UQ reputation across a number of core performance areas. Through the institutes, the University has developed well-defined, internationally recognised research strengths across a range of key research themes. Their employees are internationally acknowledged for their ability to secure external research income and for their high quality research publications. In addition, they provide world-class education in highly specialised fields. Further, their work directly with industry and with government underpins important sectors of the economy and promotes the university as a prominent institution in the Queensland, Australian and international community.

The ability of the institutes to achieve these performance outcomes is heightened by the co-location of the institutes at the St. Lucia campus. The combined presence of these four institutes at UQ and the cooperation between them and between each of them with other parts of the University generates benefits to the Queensland and Australian communities that would not have been achieved, or would have been achieved only on a reduced scale, if all the institutes were not present and were not so successful. The result is that the benefits that these institutes bring to Queensland are greater than the sum of the benefits that each would have generated on its own.

Most of these factors are intangible and difficult to quantify, but shape the performance of business, industries and regions in Queensland. Given difficulties in conceptualising and measuring such benefits, they have not been included in the economic modelling analysis in the next chapter. However, they are significant contributors to the performance of the institutes. Specific examples of benefits are provided in the points below.

• Joint applications for research grants — the three biologically-oriented institutes have a mix of skills which enables them to present novel collaborative research projects to funding sources such as the Australian Research Council (ARC) and the National Health and Medical Research Council (NHMRC). This brings research funding to the University that would not be obtained by any one of the institutes acting on its own. Major current examples include ARC Discovery, ARC LIEF and NHMRC grants.

Credit for UQ's result goes to our researchers, who have demonstrated they can match the excellence of the world's best.

Professor Paul Greenfield Vice-Chancellor,

The University of Queensland



• Sharing of research equipment and facilities — the bio-institutes have some common needs for research equipment. This enables them to obtain larger and more expensive items of equipment than could be justified for a single institute and results in savings over the separate provision of such facilities. The University of Queensland and Queensland researchers have benefited in this regard in attracting facilities funded through the National Collaborative Research Infrastructure Strategy (NCRIS). Because of the presence of the bio-institutes, the cost of shared facilities such as animal houses and computing facilities at the University is amortised over a larger number of research users, leading to operational efficiencies. The AIBN and the QBI also benefit from very close collaborations in the operational area of information technology support and services.

• The availability of world-class infrastructure at The University of Queensland, in turn, helps to attract high quality researchers, who then attract funding to Queensland through grants and collaborations with other researchers and industry.

• Another benefit from having the bio-institutes at The University of Queensland is the opportunity for interactions and collaboration between researchers in related bioscience fields. The cross-pollination of ideas that results from such activities drives exciting new research projects.

• Postgraduate research students and post-doctoral researchers are attracted to The University of Queensland because of the dynamic research atmosphere that the bio-institutes have created collectively. Co-supervision of research students, where supervisors are drawn from two different institutes or from an institute and another part of the University, makes The University of Queensland more attractive to foreign students. For example, the externally funded PhD Scholarship in Neuroscience and Nanomaterials supports a PhD student undertaking a joint research project between the QBI and the AIBN. Several other students are currently co-supervised. The University of Queensland was recently ranked by a survey in The Scientist as among the best in the world for researchers. The institutes collectively contribute to this outcome. Research students and post-doctoral researchers bring skills and often bring funding with them, which is spent in Queensland.

• Biosafety, occupational health and safety and ethics committees and training at the University can draw on a wider range of inputs as a result of the presence of the three bio-institutes. Queensland can be assured that this enables better management of these issues on campus.

• The presence of the four institutes in Brisbane makes the city more attractive as a location for biotechnology, nanotechnology and mining services companies. Their presence has also made Brisbane an attractive location for CSIRO. This strong and productive research presence attracts (and retains) Queensland-based venture capital funds and other investors. Further, these companies employ staff and buy supplies in Brisbane. They also fund research and employ University of Queensland graduates.

It is exciting to observe how groups working in nervous systems as seemingly diverse as those of fruit flies and humans are integrating their approaches to discover common mechanisms underpinning learning and memory.

Professor Perry Bartlett FAA Director, QBI

QBI Annual Report, 2007-08.



• The ability of the bio-institutes to make joint appointments of staff and visiting fellows gives The University of Queensland the ability to attract a wider range of highly qualified researchers. These researchers, in turn, attract funding to Queensland from competitive grants schemes. Visiting fellows often bring funding with them, generating further benefits for the Queensland economy. The bio-institutes can jointly sponsor visits by high-profile foreign researchers.

• The possibility of shared approaches to marketing the University’s research and approaching potential donors is greater as a result of having the three bio-institutes on campus. Joint promotional events across the bio-institutes are commonplace – major activities include the Bio convention in the USA held annually, AusBiotech Careers Day, and the National Bio Convention. The bio-institutes prepare and share costs for promotional and marketing activities.

There are significant flow-on effects from all the benefits generated by the combined presence of the institutes described above, which lead to more jobs across the Queensland economy and a higher Queensland Gross State Product (GSP). These flow-on effects are greater than simply the sum of the flow-on benefits from the individual institutes because of their scale and collective impact.

Research collaboration

The bio-institutes are involved in significant cooperation with each other and with other parts of The University of Queensland. An examination of internally supported cooperation for the period from and including 2005 shows the bio-institutes are involved in 45 projects with funding levels of up to $378,000 per project. Much of this funding has supported early career or post-doctoral researchers. This demonstrates the University’s commitment to on-campus cooperation and also provides further evidence of benefits to the rest of the University from the presence of the bio-institutes.

Externally supported research cooperation between the bio-institutes and other parties is also very strong. In some cases, this cooperation involves an institute and one or more parts of the University. In other cases, the cooperation is with off-campus partners such as some of the hospitals in Brisbane. In the period from and including 2005, there have been more than 280 externally supported research cooperation projects involving one of the institutes and other parties. The presence of the bio-institutes has strengthened the University’s ability to attract funding for research collaboration and has resulted in benefits flowing to other Queensland researchers.

In addition to the cooperation described above, research cooperation between the bio-institutes themselves is particularly strong. Some 29 significant examples of externally funded joint research projects involving at least two of the institutes are listed in Table 4.1. This table shows only those projects with one or more funding years after or including 2005. However, it shows the extent of cooperation between the bio-institutes.



Table 4.1

INSTITUTE-INSTITUTE COLLABORATIONS FROM 2005

Project Program Years Project funding ($)

Institutes Other partners

Advanced molecular discovery and characterisation facility

ARC LIEF 2010 385,778 IMB, AIBN

Bio-based Functional Materials from Engineered Self-Assembling Peptides (BASE)

DIISR – ISL French-Australian Science and Technology Program

2005-08

361,511 IMB, AIBN Chemical Engineering

Development of a novel high yield cell-free protein expression system

ARC Linkage Projects

2010-12 579,000 IMB, AIBN

Molecular and Functional Characterisation of Cell Surface Microdomains

NHMRC Program Grant

2008-12 4,531,139 IMB, AIBN

Novel approaches for structural and functional analysis of the protein complex COG, a tether that controls intra-Golgi trafficking

ARC Discovery Projects

2009-11 540,000 IMB, AIBN

Queensland Sustainable Aviation Fuel Initiative

Qld Govt Smart State National and International Research Alliances Program

2010-13 2,365,000 IMB, AIBN Integrative Legume Research; Chemical Engineering

Small Angle Scattering Facility for the Materials and Biological Sciences

ARC LIEF 2006 300,000 IMB, AIBN Microscopy and Microanalysis; Chemistry and Molecular Biosciences; Advanced Imaging

Towards selective targeting of HDACs for anti-inflammatory applications

NHMRC Project Grant

2009-11 558,750 IMB, AIBN

Transplanted metanephroi as functional kidneys

NHMRC Project Grant

2008-10 295,500 IMB, AIBN

Identifying biomarkers for MND using flow cytometry.

Motor Neurone Disease Research Institute of Australia Inc

2009 38,500 QBI, AIBN Medicine – RBWH

Novel hybrid inorganic nanaparticles for effective siRNA delivery to neurons


2008-12 1,330,000 QBI, AIBN

Tailoring of layered double hydroxide nanoparticles for effective delivery of biologically active peptides and cDNAs


2005-07 499,254 QBI, AIBN

Identifying the pathways employed by growth hormone to regulate the proliferation of adult neural stem cells


2009-11 480,000 QBI, IMB





A Facility for High-Throughput, Functional Gene Discovery Using Arrayed Retroviral Expression Cloning

ARC Linkage Infrastructure, Equipment and Facilities

2006 824,610 QBI, IMB UQ Diamantina Institute; Immunology and Cancer Research

ACRF Brain Tumour Research Centre

Australian Cancer Research Foundation

2006 1,140,000 QBI, IMB Surgery – RBWH; Paediatrics and Child Health – RBWH; Medicine – RBWH

Advanced Cell Labelling and Imaging Facility


2006 342,857 QBI, IMB Pharmacy; Integrated Preclinical Drug Development; Biomedical Sciences

Alpha-Conotoxins: Selective Probes For Nicotinic Receptor Subtype Structure And Function


2007-09 784,404 QBI, IMB

Biomolecular discovery and analysis facility


2006 542,000 QBI, IMB Biomedical Sciences

Control of neurosecretion by Munc18

NHMRC Project Grant

2010-12 475,125 QBI, IMB Biomedical Sciences

Deciphering the molecular steps leading to the potentiation of neuronal exocytosis by arachidonic acid

NHMRC Project Grant

2005-07 269,250 QBI, IMB Chemistry and Molecular Biosciences; Biomedical Sciences

Developing novel selective glycine receptor potentiators as a means to control pain

NHMRC Project Grant

2010-12 533,997 QBI, IMB

Developmental Imaging Facility


2005 441,100 QBI, IMB Chemistry and Molecular Biosciences; Biomedical Sciences

High Speed Fluorescence Imaging coupled with Total Internal Reflection Microscopy and Fluorescence Recovery After Photobleaching System


2008 517,500 QBI, IMB Biomedical Sciences

Identifying eQTLs and endophenotyping known CNVs in a large Australian schizophrenia sample

NHMRC Project Grant

2010-12 876,750 QBI, IMB UQ Diamantina Institute; Southern – Psychiatry – Princess Alexandra Hospital; Centre for Medical Diagnostic Technologies in Queensland; Advanced Imaging

Nuclear Factor One genes regulate multiple aspects of cerebral cortex development

NHMRC Project Grant

2009-11 506,250 QBI, IMB





Vitamin D and risk of cancer and mortality in the Melbourne Collaborative Cohort Study (NHMRC Project administered by The Cancer Council Victoria)

Cancer Council Victoria

2010-12 322,339 QBI, IMB

Novel peptides for the treatment of pain

NHMRC Project Grant

2007-09 291,750 QBI, IMB

Dissecting pain pathways with conopeptides

NHMRC Project Grant

2005-09 7,161,055 QBI, IMB

The cellular origin of medulloblastoma

Queensland Cancer Fund

2007-08 171,600 QBI, IMB

Source: The University of Queensland.

Sharing of facilities

Some examples of sharing of facilities between the UQ bio-institutes are detailed in Table 4.2.

Table 4.2

EXAMPLES OF SHARING OF FACILITIES

Institutes Sharing

AIBN, QBI, IMB

QBI director Perry Bartlett, IMB director Brandon Wainwright and AIBN director Peter Gray share a common research interest in the area of stem cells. QBI, IMB and AIBN utilise shared capital equipment for their research within this field, for example QBI’s flow cytometry facility. The institutes have combined in this area to obtain significant research funding from the Australian Stem Cell Centre.

AIBN QBI Both QBI and AIBN are generators of large volumes of research data. This data must be safely stored in a form that is easily retrievable and the combination of resources across AIBN and QBI has allowed the institutes to implement a large scale and high performance data curation system which is now UQ’s largest data store, at about 150 terabytes (TB). This system is physically based across both institutes providing a robust and redundant architecture, thereby meeting incident response criteria for data management. This collaboration has both precluded the need for each institute to invest in similar equipment and also provided a vastly superior end product with an estimated cost saving of $700,000 across both organisations.

QBI IMB

AIBN As much of the equipment used by the institutes is extremely expensive and requires significant operational funding, where possible, and when mutually beneficial, the institutes collaborate. For example QBI is currently considering investing in new Mass Spectrometry equipment to add to the existing significant capacity and expertise in this technology within IMB. IMB on the other hand has invested in QBI’s Flow Cytometry facility to supply its requirements in this area. AIBN and QBI are also in discussions regarding other areas of collaboration such as combining investments in high performance cluster computing in order to deliver a final solution which is greater that the sum of the parts would have been. These types of collaboration aim to reap significant savings (of the order of hundreds of thousands of dollars) by combining resources where possible.



Institutes Sharing

IMB AIBN The Protein Expression Facility (PEF) is an initiative supported by both AIBN and IMB to assist research groups in UQ and from elsewhere in Queensland, as well as throughout Australia to express and purify their recombinant proteins of interest. PEF offers extensive experience in recombinant protein expression, with state-of-the-art facilities and a team of highly skilled professionals who posses a vast knowledge of the challenges associated with protein expression and purification. PEF specialises in the following areas: • Molecular Biology Services - including construct design, cloning gene of interest into expression vector,

site-directed mutagenesis and vector development; • Protein Expression Services - host systems such as bacterial, yeast, insect cell/baculovirus and transient

mammalian cell expression are available to achieve optimal expression for a variety of uses; • Downstream Processing Services - Protein purification using a range of chromatography techniques and

protein analysis; and • Training and Consultation Services - Provide training to staff and students interested in protein

expression and purification.

AIBN QBI AIBN and QBI share a helpdesk job logging system, which has processed over 20,000 IT support requests. The helpdesk ticketing system also supports AIBN and QBI infrastructure operations, as well as the UQ Biological Resources animal houses based in QBI and AIBN. IT staff meet weekly to discuss current support or development issues. This has resulted in a team which can quickly move between institutes should the need arise to cater for unforeseen demand. As a result, AIBN and QBI have a relatively low level of IT support staff per researcher, at 1 per 140 staff supported.

Source: AIBN, QBI and IMB data.

One area of particular relevance for the biological sciences is the provision of animal services. Box 4.1 illustrates some of the economies of scale that have been achieved by the bio-institutes in this area.

Box 4.1 BIO INSTITUTES ECONOMIES OF SCALE — ANIMAL SERVICES

Biomedical research attracts the majority of current grant funding at UQ and accounts for UQ’s increasing success as a research-intensive university. The QBI, IMB and AIBN through their shared biomedical research activities have created a number of economies of scale related to UQ animal services. As such, this has improved UQ’s ability to provide laboratory animal husbandry, breeding and genotyping services. Some of the economies of scale achieved by the bio institutes in this regard include: • economies of scale in operating laboratory animal facilities; • economies of scale and better efficiencies in the cost of breeding and caring for laboratory animals; • self sufficiency in animal supply; • better utilisation and consequently, better ethical use of animal resources; and • ability to provide a wider range of animal models and shared services that facilitate research using laboratory animals and

markedly improves the quality and quantity of research that can be undertaken at UQ. In addition to animal housing, the critical research mass the institutes provide enables the bio-institutes to provide a wide range of additional services than would otherwise be possible. For example: • greater diversity of animal species, models and GM lines; • behaviour testing facilities; • imaging facilities —ultra sound, bioluminescence/Fluorescence, PET/CT & MRI; • xenopus, zebra fish & marine aquaria; • polyclonal antibody production service; • advanced reproductive technologies i.e. cryopreservation, IVF, transgenic and gene knockout services; • dedicated animal importation service & AQIS standard quarantine facilities; • surgical suites; • GM viral injection suites; and • PC2 and PC3 animal facilities.

Source: AIBN, QBI and IMB.



Other cooperation

The AIBN, IMB and QBI deputy directors meet on a regular basis to discuss operational aspects of the institutes and the development of new technology and services and general interactions. In addition, finance managers and human resource managers from the bio-institutes meet on a regular basis to discuss relevant issues.

Other examples of cooperation include the Toshiya Yamada Memorial Lecture, a joint initiative of the IMB and QBI that aims to highlight the work of leading neuroscience researchers, and is a free public event. This lecture was named in honour of the late Dr Toshiya Yamada, a gifted neuroscientist and IMB researcher, who passed away in 2001. The inaugural lecture took place in 2005 and the lecture is usually held during Brain Awareness Week each year (March).

The IMB, AIBN and QBI share property and facilities (P&F) positions, which results in considerable benefit through maximised staff usage, and hence lower staffing costs across the bio-institutes. In addition, if an institute requires additional resources they are able to draw from the pool of staff available on site from another institute. P&F always try to make sure the staff who know the building best are located at that building but in the situation where some event requires additional support (such as a staff member being on leave, a significant building issue, etc) P&F staff are able to be moved quickly from one building to another to cater for the variations in demand. Notably, The University of Queensland contributes towards these general operating and maintenance expenses.



Chapter 5

Measuring the benefits: economic impact of the institutes

In assessing the contribution of the institutes to Queensland and Australia, the focus has been on estimating the economic impact of the investments made in each of the institutes to date.

The economy-wide contributions of the institutes to the Queensland and Australian economies were estimated using a Computable General Equilibrium (CGE) model of the Australian economy, the MMRF model.15 The approach analyses the contribution that all four institutes combined have made to Queensland and Australia through the attraction of additional productive investment into the State’s innovation system that would not have been invested without the presence of the individual institutes.

5.1 Why use a CGE model to evaluate the joint economic contribution of the institutes?

An ex-post impact evaluation of research investments requires an understanding of what would have happened in the absence of the program outputs that are attributed to the R&D funding under examination. This ‘without R&D’ scenario (the ‘counterfactual’) cannot, of course, be observed, so it must be inferred.

Establishing the ‘without R&D’ base case is fundamental to assess the extent to which the aims of a research institute are being achieved. A CGE model is capable of providing an accurate reflection of the world without policy intervention (that is, without the R&D institute being assessed, in this case, without the institutes). In that sense, it is a much more useful tool than a comparative cost-benefit analysis approach. Furthermore, a CGE model can estimate the impacts of research investments on key macroeconomic aggregates such as Gross Domestic Product (GDP), exports, imports, consumption and investment and can provide valid measures of changes in consumer welfare or living standards so that the institutes impacts can be correctly evaluated in terms of public interest.

The use of CGE models in policy and program analysis also imposes a discipline in which model structures can be easily compared and contrasted and model results can be interpreted using a well-understood and rigorously developed theoretical framework. In addition, the use of a CGE framework allows an assessment of both the direct and indirect impacts of the institutes. A CGE model is a high-level representation of the Australian economy that allows measuring the wider effects of changes in economic activity in key industries and regions. To the extent that economic activity is interlinked, a CGE model will capture any flow-on effects that arise from the institutes outcomes, including upstream and downstream impacts.

CGE models are widely used by government, industry and academics to evaluate the worth of policy actions, programs and projects. This means that CGE modelling results are well understood and accepted by a wide range of stakeholders.

15

For a detailed description of the MMRF model, see Appendix A.



5.2 Overview of modelling approach

This report analyses the contribution of the institutes stemming from the additional funds invested in them since their creation (that is, additional funds that in the absence of the institutes would not have been spent in Queensland). Therefore, the funding period extends from 1999, when the first institute (the IMB) was established, to 2009 when the latest data were available. The modelling period extends to 2029, 20 years after the final year of institute investment.16

Table 5.1 provides details of the total funds received by the institutes since their creation and Table 5.2 sets out the assessed additional investment associated with the institutes over the 1999 to 2009 period from four identified funding source categories. All figures in these tables are in current dollars. These figures show that the institutes have been very successful in attracting additional investment to Queensland. Indeed, it is estimated that the institutes have successfully attracted $523.2 million in additional investment to Queensland (that is, money that without the presence of the institutes would not have invested in Queensland).

Table 5.1

TOTAL INVESTMENT IN THE INSTITUTES 1999-09, $ MILLION, CURRENT DOLLARS

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Total

Qld Gvt Funding

15.0

5.5

2.9

6.5

14.9

20.6

13.0

25.3

27.1

30.8

27.0

188.7 a

Cwth Gvt Funding

15.0 9.1 15.2 14.4 22.6 26.2 34.6 63.4 53.0 60.2 67.4 366.0

Other Australian funding

- 3.5 9.1 9.2 10.6 10.1 13.9 14.3 22.9 22.8 25.5 142.0

International funds

10.0 0.5 1.9 3.3 15.6 3.8 12.7 18.7 4.3 5.7 6.0 82.4

UQ - - 0.9 1.6 8.1 21.6 46.6 23.1 26.4 12.8 18.3 159.4

Total 40.0 18.6 30.0 35.0 71.9 82.4 120.7 144.8 133.7 132.3 144.1 953.5

a) From this total, the IMB received $105.2 million since inception (this includes $15 million towards construction of its building and $82.5 million as a State operating grant); the AIBN received $35.4 million since inception (including $13.3 million towards construction of its building and $2 million for the BnDF received from the Queensland Government as loans repayable over 20 years, interest free); the QBI received $37.1 million since inception (this includes a $20 million contribution towards the cost of its building and a total of $13 million towards its operating costs) and; the SMI received $11.3 million since inception (this includes a contribution of around $10 million towards the cost of its building). Note: Totals may not add due to rounding. Source: AIBN, IMB, ABI and SMI data, 2010 & 2011.

16

A 20 year time frame is generally recognised as the standard in patent legislation.



Table 5.2

ADDITIONAL INVESTMENT ASSOCIATED WITH THE INSTITUTES 1999-09, $ MILLION, CURRENT DOLLARS

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Total

Queensland Government Funding a) 13.5 5.1 2.4 5.6 8.1 9.6 0.0 0.0 0.0 0.0 0.0 44.3

Commonwealth Government Funding 13.5 1.2 3.6 3.9 12.7 17.1 27.7 49.1 41.8 47.7 53.9 272.1

Other Australian funding 0.0 2.5 6.8 11.1 10.4 9.4 12.9 13.0 21.1 20.3 22.2 129.6

International funds 8.9 0.0 1.3 2.6 15.0 3.5 12.6 18.5 4.0 5.3 5.6 77.3

Total 35.8 8.7 14.0 23.3 46.2 39.6 53.2 80.5 66.9 73.2 81.7 523.2 a) The majority of the funds invested by the Queensland Government in the institutes would have been spent elsewhere in Queensland if it had not been invested in the institutes, so, from the state economy perspective, this is not additional investment because it would have occurred anyway. More information about what funds have been considered additional can be found in the individual institute’s reports. Note: Totals may not add due to rounding. Based on provided estimates of AIBN, IMB, QBI and SMI income. Source: AIBN, IMB, ABI and SMI data, 2010 &2011; Allen Consulting Group, 2011.

For modelling purposes, the additional investment funds associated with the institutes were converted into 2005-06 dollars (the MMRF is based on 2005-06 values). These figures are presented in Table 5.3.

Table 5.3

ADDITIONAL INVESTMENT ASSOCIATED WITH THE INSTITUTES 1999-09, $ MILLION, 2005-06 DOLLARS

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Total

Queensland Government Funding 16.6 6.0 2.7 6.2 8.7 10.0 0.0 0.0 0.0 0.0 0.0 50.2




Total 44.2 10.3 15.9 25.6 49.4 41.4 54.1 79.1 64.2 67.4 73.8 525.4 Note: Totals may not add due to rounding. Based on provided estimates of AIBN, IMB, QBI and SMI income. Source: AIBN, IMB, ABI and SMI data, 2010 & 2011.

Using the information in Table 5.3, the impact of the institutes on the Australian and Queensland economies was simulated through the application of two broad sets of shocks to the MMRF model. One set relates to the benefits associated with research activity and the other to its costs.

• Benefits — the benefits of the institutes’ research are simulated via productivity shocks on the Queensland industry sectors affected by the institutes’ research activities. These shocks are applied five years after the installation of the additional investment.

• Costs — the leveraged investment associated with the institutes is simulated in the years in which the investment occurs, as are the offsetting changes to Government expenditure and private sector investment across the rest of the Australian economy.



The sections below summarise the outcomes of the simulations conducted to assess the likely economic impact of the institutes’ additional investment. All the results from the economic analysis are in 2005-06 dollars. Additional details concerning the methodology applied to estimate these impacts are provided in Appendix B.

5.3 Combined economic impact

There are many ways in which the results of CGE economic analysis can be presented. In previous reports for the institutes, the Allen Consulting Group has presented the results of the economic modelling as Net Present Values (NPVs). There are many good reasons for doing this. However, given the multiple time periods in which the institutes were created and over which funds have been invested in each of the institutes and the different discount rates associated with some of the them17, presenting the results of the combined impacts of the institutes as NPVs is not considered appropriate. Therefore, in this report, the economic modelling results are presented as cumulative impacts in economic variables in real terms over the period 1999-2029. Importantly, while these are different indicators to NPVs, they are reporting essentially the same economic results.

When assessing the impacts of research investments or policy changes on the Australian and Queensland economies, there are a range of key macroeconomic variables that are commonly evaluated, these include:

• Gross Domestic Product (GDP) — GDP is a measure of Australia’s economic activity. GDP is the sum of consumption, government spending, investment and net exports. Therefore, changes in GDP largely reflect changes in these economic variables, particularly those of investment and consumption;

• Gross State Product (GSP) — GSP is a measure of a State’s economic output and essentially it is the sum of all value added by industries within the State and serves as a State equivalent of GDP;

• consumption — consumption is generally the largest component of GDP/GSP and measures private consumption expenditure. This variable is an indicator of living standards. An increase in private consumption indicates an increase in welfare of Australians;

• investment — investment is another component of GDP/GSP that measures demand by private firms and individuals for capital, including factories, machinery, computer software, etc. This variable is an indicator of the future productive capacity of the Australian/Queensland economy; and

• employment.

Figure 5.1 details the investment pathway of additional funds that have been attracted to the Queensland economy by the institutes. Investment increased substantially in 2003 with the addition of the QBI and the AIBN. The additional funds attracted by the institutes start to see returns flowing through the economy in year five after the investment is made (that is, the benefits start to accrue in 2003) and the returns from the additional or leveraged funds are expected to last for 20 years. As such, the benefits stemming from the funds received by the institutes over the period 1999-09 are expected to sustain until 2029.

17

More details about the discount rates used to calculate NPVs for each institute can be found in the individual institute’s reports.



Figure 5.1

ADDITIONAL INVESTMENT IN THE INSTITUTES 1999-2009 (2005-06 DOLLARS)

Source: IMB, AIBN, QBI and SMI data, 2010 & 2011.

The assessment of the institutes’ performance to date suggests that the additional funds they have collectively attracted over the period 1999-09 are making a significant contribution to the Queensland and Australian economies. When compared to the base case scenario where the institutes do not exist, Australia’s and Queensland’s output, consumption and investment are all higher (see Table 5.4).

Table 5.4

CUMULATIVE IMPACT OF THE ADDITIONAL FUNDS ATTRACTED TO QUEENSLAND BY THE INSTITUTES OVER THE PERIOD 1999-29 ($ MILLION, 2005-06 DOLLARS)

Area SROR 25% SROR 35%

Real gross value added Australia $3,387 $3,719

Queensland $8,157 $9,002

Real consumption Australia $3,129 $3,490

Queensland $4,482 $4,966

Real investment Australia $1,288 $1,420

Queensland $2,293 $2,531 Note: SROR stands for Social Rate of Return. More details about the use of SROR in the economic modelling are provided in Appendix B. Source: MMRF model simulation results.



Impacts of the combined presence of the institutes on economic activity

The institutes are expected to provide strong stimulus to the Australian economy. In real terms, the cumulative boost to GDP over the period 1999-2029 due to the additional investment in the institutes is expected to be between $3.4 billion and $3.7 billion, depending on the Social Rate of Return (SROR) (see Figure 5.2). 18 In the initial period of the modelling simulation (1999-2004), the impact of the institutes on the Australian economy is negative, relative to the base case where the institutes are assumed to not have been established. This negative effect occurs because it takes a few years for the benefits of the additional funds attracted by the institutes to be realised. Further, in a competitive economy, the funds invested in the institutes have been redirected from other productive industries that could have provided an immediate benefit to the economy.

After the initial ramp-up period, the impact of the institutes on the Australian economy becomes positive as the benefits of its projects and activities are translated into increased productive capacity. Specifically, the benefits of the institutes start to pick up from 2005 and remain positive until the end of the simulation period. These economic benefits are realised due to the flow on activity generated by the institutes’ existence.

Figure 5.2 IMPACT ON AUSTRALIAN GDP, ABSOLUTE DEVIATION FROM BASE CASE

Source: MMRF model simulation results.

18

More details about the use of SROR in the economic modelling are provided in Appendix B.



The additional funds attracted to Queensland by the institutes are also expected to have a positive impact on the State economy. In real terms, the cumulative boost to Queensland economic output (GSP) over the period 1999-2029 is expected to be between $8.1 billion and $9.0 billion, depending on the SROR (see Figure 5.3). Further, in 2029, Queensland’s GSP is expected to be between $516 million and $557 million higher than under the base case when the institutes had not been established. This impact on the Queensland economy is larger in cumulative terms than the impact on the Australian economy as a whole. This reflects the fact that the institutes are located in Queensland and thus have a bigger direct impact on this economy.19

Figure 5.3

IMPACT ON QUEENSLAND GSP, ABSOLUTE DEVIATION FROM BASE CASE

Source: MMRF Modelling Results.

The expected expansion in economic output brought about by the institutes is several times larger than the initial investment made in the institutes since their creation. Figure 5.4 shows the ratio of the additional funds attracted by the institutes compared to the total impact of the institutes on the Queensland and national economy over the period 1999-29. As shown in this figure, in real terms, the ratio of the cumulative boost to GDP to the sum of additional funds attracted by the institutes is estimated to be between 6.5 and 7.1. This means that for every additional dollar invested in the institutes, GDP is expected to increase by between $6.50 and $7.10, depending on the SROR. 20

19

Note that while the Australian economy expands as a result of the additional investment in the institutes, the expansion is not as pronounced as in Queensland. The national impacts are smaller because the funds attracted by the institutes to Queensland divert some resources and economic activity from other states (that, is, some states lose economic resources to Queensland). Since the national impact is the sum of all the states’ impacts, then the fact that here are some winners and some losers mean that the national average results will be lower, relative to Queensland’s. However, it is important to note that despite this, the national economy also experiences additional economic growth due to the institutes.

20 This ‘per dollar results’ are not directly comparable to the ‘per dollar results’ outlined in the individual

institute’s reports because, as mentioned before, this report presents the economic results in terms of real cumulative impacts, rather than on an NPV basis.



As mentioned earlier, as the institutes are located in Queensland, the impact on the Queensland economy is expected to be more pronounced than the impact on the Australian economy as a whole. Indeed, in real terms, the cumulative boost to GSP to the sum of the additional funds attracted by the institutes is estimated to be between 15.5 and 17.1. This implies that for every additional dollar invested in the institutes, Queensland’s economic output (GSP) is expected to increase by between $15.50 and $17.10, depending on the SROR.

Figure 5.4

ADDITIONAL FUNDING ATTRACTED BY THE INSTITUTES AND IMPACTS ON GDP AND GSP




Impacts of the combined presence of the institutes on wellbeing and investment

The best single measure of the impact of the combined presence of the institutes on the Australian community is consumption. Total consumption is expected to increase in real terms by between $4.5 billion and $5.0 billion, over the period 1999-2029. This increase in consumption reflects an increase in the wellbeing of Queensland residents (see Table 5.2).

Welfare can also be inferred by assessing the impact of the institutes on output per capita. The economic modelling results show that the welfare of Queenslanders is expected to rise as a result of the investment in the institutes. By 2029, GSP per capita is expected to increase from $47,058 in the base case, to $47,162 under a SROR of 25 per cent and to $47,171 under a SROR of 35 per cent (See Table 5.5).

Table 5.5

IMPACT ON QUEENSLAND GSP PER CAPITA ($, 2005-06 PRICES)

Year Base case SROR of 25% SROR of 35%

2010 $31,660 $31,701 $31,708

2015 $35,136 $35,221 $35,228

2020 $39,001 $39,094 $39,102

2025 $42,396 $42,495 $42,503

2029 $47,058 $47,162 $47,171

Note: per capita results are calculated based on each year’s population forecast (e.g. per capita results for 2029 are based on population projections for 2029).


The additional funds attracted by the institutes are also expected to increase real investment in Queensland. Additional investment in capital and other goods is triggered as a result of the flow-on activities catalysed by the institutes’ projects and activities — such that the amount of investment observed Australia-wide is larger than the investment in the institutes (that is, larger than the additional funds attracted by the institutes over the 1999-09 period). Heightened investment indicates that the institutes’ activities and outputs increase productivity of the Queensland and Australian economy. Further, the increase in productivity drives output levels up and increases the rate of return to capital, hence encouraging further investment.

The cumulative boost in Australia’s investment in real terms over the period 1999-2009 is expected to be between $1.3 billion and $1.4 billion. Again, as the institutes are located in Queensland, the boost to Queensland investment is larger than the national average. The cumulative boost in Queensland’s investment in real terms over the period 1999 2009 is between $2.3 billion and $2.5 billion.

Employment impacts

Employment is closely linked with economic activity and investment: as demand for a firm’s goods increases, it can expand its operations and levels of capital and, in turn, their requirements for labour change. Hence, changes in employment typically mirror changes in economic output.

We now know that the adult brain contains stem cells, and much research is now focused on harnessing these adult brain stem cells to help combat devastating disorders as such as motor neuron disease, Alzheimer's disease and Parkinson's disease.

Dr Michael Piper QBI



Indeed, the simulation results show that Queensland and National employment are significantly increased as a result of the investment in the institutes. Impacts on national employment peak in 2015 when national employment is expected to be higher by between 652 and 672 jobs, depending on the SROR.

The institutes are expected to attract industries and companies to Queensland from the rest of Australia. Therefore, the growth in employment in Queensland is expected to be stronger than the national average. By 2029, employment in Queensland is projected to be higher by between 2,225 and 2,404 jobs as a result of the investment in the institutes. 21

From these results, it is clear that the economic impact of the additional funds attracted by the institutes is positive under both SROR scenarios. Importantly, these estimates are conservative in two ways. First, the analysis does not consider the impact of any additional funds flowing to the institutes after the 1999-09 funding period (i.e. the estimates do not consider future funding or projects created by the institutes). Second, it is assumed that returns on investment are terminated in 2029.

21

These employment results cannot be derived directly from the employment results outlined in the individual institute’s reports (ACG 2005, 2010a, 2010b, 2010c, 2011). This mainly has to do with the way the IMB was evaluated in previous reports. The 2010 IMB report produced by ACG does not evaluate the economic impact of the institute since its inception; rather, it focuses on the period 2005-09. Furthermore, while ACG produced a report in 2005 evaluating the IMB over the period 1999-04, this report used different modelling assumptions to those used in the 2010 report. No separate modelling of the IMB since its inception (that is, for the period 1999-09) under the same modelling assumptions as the other institutes was undertaken for this study (the institutes were analysed as a composite).



Chapter 6

Conclusions

Queensland is fortunate to have these four world-class institutes located in Brisbane. The economic contribution of these four institutes to the Australian and Queensland economy is assessed in this report. The analysis shows that investment in the institutes is resulting in significant benefits to Queensland and Australia more generally. Further, the institutes have substantially advanced the profile and reputation of The University of Queensland.

Assessment of the institutes’ performance to date suggests that the additional funds that the institutes have attracted over the period 1999-09 (that is, income that in the absence of the institutes would not have been invested in Queensland) are making a significant contribution to the Queensland and Australian economies. Specifically, in real terms the institutes are expected to deliver in total between $3.4 billion and $3.7 billion in increased GDP over the period 1999-2029 (2005-06 dollars). Significant gains in real terms are also expected in the Queensland economy, with cumulative GSP increasing by between $8.2 and $9.0 billion over the period 1999 to 2029 (2005-06 dollars). Such a positive economic contribution will result in significant benefits to Queenslanders and Australians in terms of increased employment and welfare.

However, the benefits of the institutes go beyond the direct economic benefits detailed in the economic modelling analysis. Through the development of the institutes, The University of Queensland has developed well-defined, internationally recognised research strengths across a range of key research themes. Their employees are internationally acknowledged for their ability to secure external research income and for their high quality research publications. In addition, they provide world-class education in highly specialised fields.

Such high performance has substantially advanced the capability, credibility and international reputation of The University of Queensland and the State. University reputation is very important as it has tangible benefits in the attraction and retention of researchers and staff, the recruitment of high standard students and the employability of university graduates. Further, reputation is significant to panels awarding competitive research grants and to other donor support.

The work of the institutes directly with industry has also secured further benefits for Queensland and Australia. Productive relationships between the institutes and specific companies results in researchers working on some of the major challenges facing the minerals sector and bio sectors around the world, and the experience gained feeds back into work for Queensland and other Australian-based companies. This helps these companies to be world competitive, underpinning Australia’s current prosperity. The result is increased investment in Australia and this includes investment and quality jobs for Queensland.



The funding provided to the institutes by the Queensland Government is not a large component of their annual income, but its importance is much greater than might be expected. The Queensland Government funding is the essential base funding on which much of the institutes’ other income is built. In this report it has been clearly demonstrated that the institutes are delivering value for money in converting income into a range of tangible benefits. In the long term, it will still be important to build and strengthen diverse sources of revenue and employment for Queensland. With continuing government support, the institutes can play a key role in this regard.



Appendix A

The MMRF Model

A.1 The MMRF model

The Monash Multi-Regional Forecasting (MMRF) model is a Computable General Equilibrium (CGE) model of Australia’s regional economies developed by the Centre of Policy Studies (CoPS) at Monash University (CoPS, 2008). It is a model of the entire Australian economy where interactions between different regions and sectors are captured. For a detailed description of the theoretical structure of the model see Peter et. al., 1996.

The MMRF model has been used for a wide range of policy studies, including the analysis of State tax reforms and the potential benefits of the National Reform Agenda. More recently, the Department of the Treasury and the Garnaut Climate Change Review have applied MMRF in climate change modelling to assess the impacts of the proposed CPRS on the Australian economy.

This appendix provides an overview of the MMRF model, detailing its modelling capabilities, core structure and economic principles.

A.2 Introduction to the MMRF model

The MMRF is a dynamic model of the Australian economy, which models the behaviour of economic agents within each of Australia’s eight states and territories. Each region is modelled as an economy in its own right, with region-specific commodities, prices and industries. The model contains explicit representations of intra-regional, inter-regional and international trade flows.

Each sector produces capital that is specific to the region in which the sector is located. In each region, there is a single representative household and a regional government. At the national level, a federal government is also represented. Finally, the rest of the world is represented as a single agent, whose behaviour is driven by regional international exports and imports. The regions are linked through inter-regional trade, labour and capital mobility, and the taxing and spending of the federal government.

A.3 The database

There are many versions of the MMRF model. The version of MMRF used for this project provides a representation of the Australian economy as it was in 2004-05.

The model allows for joint production — where one industry can produce a number of different commodities. Specifically, the model contains 58 industrial sectors, which produce 63 commodities. The industries and their related commodities are detailed in Table A.1 and Table A.2 respectively.



Table A.1

MMRF: INDUSTRIES

Industry

Agriculture, Forestry and fishing 30. Motor vehicles and parts

1. Sheep and beef cattle (high emissions) 31. Other manufacturing

2. Dairy cattle Utilities

3. Other livestock (low emissions) 32. Electricity generation: Coal

4. Broadacre agriculture except for animal 33. Electricity generation: Gas

5. Other agriculture 34. Electricity generation: Oil products

6. Agricultural services and fishing 35. Electricity generation: Nuclear

7. Forestry 36. Electricity generation: Hydro

Mining 37. Electricity generation: Other

8. Coal mining 38. Electricity supply

9. Oil mining 39. Gas supply

10. Gas mining 40. Water supply

11. Iron ore mining Services

12. Non-ferrous ore mining 41. Construction services

13. Other mining 42. Trade services

Manufacturing 51. Financial services

14. Meat and meat products 52. Business services

15. Other food, beverages and tobacco 53. Dwelling services

16. Textiles, clothing and footwear 54. Public services

17. Wood products 50. Communication services

18. Paper products 43. Accommodation, hotels and cafes

19. Printing and publishing 55. Other services

20. Petroleum and coal products 56. Private transport services

21. Chemicals 57. Private electricity equipment services

22. Rubber and plastic products 58. Private heating services

23. Non-metal construction products Transport

24. Cement 44. Road passenger transport

25. Iron and steel 45. Road freight transport

26. Alumina 46. Rail passenger transport

27. Aluminium 47. Rail freight transport

28. Other non-ferrous metals 48. Water, pipeline and transport services

29. Metal products 49. Air transport

Source: CoPS, MMRF database.



Table A.2

MMRF: COMMODITIES

Commodities

1. Sheep and beef cattle (high emissions) 33. Other non-ferrous metals

2. Dairy cattle 34. Metal products

3. Other livestock (low emissions) 35. Motor vehicles and parts

4. Broadacre agriculture except for animal 36. Other manufacturing

5. Bio fuel 37. Electricity generation: Coal

6. Other agriculture 38. Electricity generation: Gas

7. Agricultural services and fishing 39. Electricity generation: Oil products

8. Forestry 40. Electricity generation: Nuclear

9. Coal mining 41. Electricity generation: Hydro

10. Oil mining 42. Electricity generation: Other

11. Gas mining 43. Electricity supply

12. Iron ore mining 44. Gas supply

13. Non-ferrous ore mining 45. Water supply

14. Other mining 46. Construction services

15. Meat and meat products 47. Trade services

16. Other food, beverages and tobacco 48. Accommodation, hotels and cafes

17. Textiles, clothing and footwear 49. Road passenger transport

18. Wood products 50. Road freight transport

19. Paper products 51. Rail passenger transport

20. Printing and publishing 52. Rail freight transport

21. Petrol 53. Water, pipeline and transport services

22. Diesel 54. Air transport

23. LPG 55. Communication services

24. Aviation fuel 56. Financial services

25. Petroleum and coal products nec 57. Business services

26. Chemicals 58. Dwelling services

27. Rubber and plastic products 59. Public services

28. Non-metal construction products 60. Other services

29. Cement 61. Private transport services

30. Iron and steel 62. Private electricity equipment services

31. Alumina 63. Private heating services

32. Aluminium —

Source: CoPS, MMRF database.



The MMRF database is comprised of detailed input-output tables for each state and territory as well as a set of government fiscal accounts. Each of the eight input-output tables details the core cost structure of each region specific industry and how each industry in each state economy is linked to other industries within that state and other states. Further, they show the flow of goods through the economy and the final demands of the principal economic agents.

A.4 Structure of the model

The core structure of MMRF is detailed in Figure A.1. Producers use primary factors (labour, land and capital), region specific intermediate goods and imports to produce domestic commodities. Domestic commodities and imported commodities flow to households, investors, and governments. In addition a proportion of domestic commodities flow to foreigners as exports. As well as demand schedules, MMRF has a detailed government budget and a set of regional labour markets.

Figure A.1 STRUCTURE OF THE MMRF MODEL

Source: Allen Consulting Group, 2010, adapted from Monash.



The MMRF model is built on the core assumptions of neoclassical economics. Consumers aim to maximise utility within a fixed budget constraint, while firms select the mix of inputs that minimises costs for their level of output. This optimising behaviour determines the regional supplies and demands of commodities and the demand for primary factors within the model. Labour supply at the national level is governed by demographic factors and national capital supply is determined by rates of return. Both labour and capital can cross regional borders such that each region’s stock of productive resources reflects relative employment opportunities and relative rates of return.

Assumptions regarding the economic behaviour of agents together with detailed input-output tables for each of the eight regions are linked by mathematical equations. This allows for second round impacts or feedback responses to be accounted for in the modelling framework. For instance, it allows for price response adjustments across all industries and factors. In this way, the results detail the actual effect of a change on the entire economy, not just within the region or industry that is directly affected. This allows a more sophisticated insight into policy analysis than is possible from partial equilibrium analysis or input-output analysis.

The model is driven by the assumption of competitive markets. That is, all markets clear and there exists equality between the producer’s price and marginal cost for each sector in each region (all markets clear with the exception of the labour market). The purchasers price and producers price differs by the size of any government taxes and associated margins. All government taxes are levied as ad valorem sales taxes on commodities. Margins are additional costs associated with transport or retail trade required for market transactions.

Aggregate demand

Demand for goods from households, investors, governments and foreigners together comprise aggregate demand as represented in the equation below.

!

Y = C + I +G + (X "M)

Where:

•

!

Y is aggregate demand;

•

!

C is household consumption;

•

!

I is investment;

•

!

G is government spending;

•

!

X is exports; and

•

!

M is imports.

The components of aggregated demand and how they are represented within the model are discussed below.



Household demands

There exists a utility maximising representative household in each of the eight regions. Households consume bundles of goods from either domestically produced or imported commodities. Domestically consumed goods are a combination of goods from the eight regions. Total household demand is disaggregated into essential goods and luxury goods, as represented in the equation below.

!

Xi = XiSub + Xi

Lux

Where:

•

!

Xi is total household demand;

•

!

XiSub is essential consumption; and

•

!

XiLux is luxury consumption.

In MMRF it is assumed that a household will first purchase all essential goods before purchasing any luxury goods such that disposable income for luxury goods is a function of total income and the summed value of essential consumption.

!

Y Lux =Y " Pi# XiSub

Where:

•

!

Y Lux is income for luxury goods;

•

!

Y is total disposable income

•

!

Pi is price of good i; and

•

!

XiSub is quantity of essential good X.

MMRF assumes a non-homothetic utility function (MMRF applies a Klein-Rubin utility function), which allows both income and relative prices to affect consumption.

Capital creation

Investors in each regional sector combine inputs to generate capital. Investors are limited to the technology set that is available for production in that regional sector. Rates of return are used as a signal for capital investment or disinvestment.

Government demands

There are nine governments represented in MMRF — the eight regional governments and a federal government — each demanding commodities. Government demands are either imposed on the model or determined endogenously by setting government expenditure rules. For example, government expenditure could be linked to aggregate consumption.



Foreign demand

Most exports can be categorised as either traditional exports, non-traditional exports or tourism exports. Demand for traditional exports is characterised by a downward sloping demand curve and associated assumptions regarding foreigners’ preferences for Australian goods. Each regional sector has an associated export market, which faces a downward sloping foreign demand curve. It is assumed that the foreign demand schedules are specific to the regional sector; as such movement in world prices can differ across different regions.

The demand for non-traditional export goods is driven by the average price of the collective non-traditional export bundle. In the MMRF database, non-traditional exports account for two per cent of total national exports and include: electricity generation, gas and water, construction, trade services, rail transport and dwellings.

Within MMRF, it is assumed that the tourism sectors — hotels and cafes, road transport, air transport and other services — do not face their own individual demand schedules. Rather, foreigners purchase a holiday bundle, the quantity of which is determined by the average price of the tourism goods.

Demands for inputs used in production

Producers in each region utilise primary factors — land, labour and capital — intermediate goods and imported goods to produce domestic commodities. Producers are assumed to choose the mix of inputs that minimises costs for a given level of production. The MMRF model assumes a multi-stage nested structure of production. At the first stage the optimal combination of region specific intermediate goods and the optimal combination of occupational specific labour is selected. At the second stage, producers make decisions regarding the optimal combination of the three primary factors and the combination of imported and domestically sourced goods. Finally, producers combine primary inputs and intermediate goods to produce a level of output at minimum cost.

A.5 Government finances

MMRF contains a set of equations detailing government revenues and government expenditures for each government. Government revenues are comprised of income taxes, sales taxes, excise taxes, taxes on interregional trade and receipts from government assets. Government expenditures include — as detailed above — expenditure on commodities as well as transfer payments to households. In addition, for the Federal government there is a set of equations describing fiscal transfers to the states.

A.6 MMRF dynamics

There are two main types of inter-temporal links incorporated into MMRF: physical capital accumulation and lagged adjustment processes.

Physical capital accumulation

It is assumed that investment undertaken in year t becomes operational at the start of year t+1. Thus, given a starting point value for capital in t=0, and with a mechanism for explaining investment through time, the model can be used to trace out the time paths of industry capital stocks.



Capital stock in industry i in state/territory s in year t+1 is determined by the equation below.

)()(*)1()1( ,,,, tINVtKDEPtK sisisisi +!=+

Where:

• )(, tK si is the quantity of capital available in industry i located in state/territory s at the start of year t;

• )(, tINV si is the quantity of new capital created through investment for industry i in state/territory s during year t; and

•

!

DEPi,s is the rate of capital depreciation in industry i, treated as a fixed parameter.

Investment in industry i in state/territory s in year t is explained via a mechanism that relates investment to expected rates of return. The expected rate of return in year t can be specified in a variety of ways. In MMRF two possibilities are allowed: static expectations and forward-looking model-consistent expectations. Under static expectations, it is assumed that investors take account only of current rentals and asset prices when forming current expectations about rates of return. Under rational expectations the expected rate of return is set equal to the present value in year t of investing $1 in industry i in state/territory s, taking account of both the rental earnings and depreciated asset value of this investment in year t+1 as calculated in the model.

Lagged adjustment processes

One lagged adjustment process is included in MMRF. This relates to the operation of the labour market in year-to-year simulations.

In comparative static analysis, one of the following two assumptions is made about the national real wage rate and national employment:

• the national real wage rate adjusts so that any policy shock has no effect on aggregate employment; or

• the national real wage rate is unaffected by the shock and employment adjusts.

MMRF’s treatment of the labour market allows for a third, intermediate position, in which real wages can be sticky in the short-run but flexible in the long-run and employment can be flexible in the short-run but sticky in the long-run. For year-to-year simulations, it is assumed that the deviation in the national real wage rate increases through time in proportion to the deviation in aggregate employment from its baseline-forecast level. The coefficient of adjustment is chosen so that the employment effects of a shock are largely eliminated after about ten years. This is consistent with macroeconomic modelling in which the Non Accelerating Inflation Rate of Unemployment (NAIRU) is exogenous.



A.7 Closure assumptions of MMRF

In MMRF, there are more endogenous variables than the number of equations. For the model to generate a solution, the number of endogenous variables must match the number of equations. Hence, some endogenous variables are set to be exogenous to ensure the number of endogenous variables matches the number of equations.

The desired economic environment/assumption for the policy scenario determines the choice of exogenous variables. These choices are also known as the closure assumptions. The most common closure assumptions are the long-run, short-run economic closure and fiscal closure.

Short-run closure

In the short-run, the economy is less able to respond to policy changes, as prices and wages are sticky (or fixed). Labour market (in terms of employment) is flexible and unemployment rate can be above or under its natural rate. Capital stock is fixed in the short-run, and investment responds to changes in rates of return.

Long-run closure

The key elements of a typical long-run economic environment are described below.

• At the national level, long-run employment is determined by demographic factors (birth and death rates, the level of international migration, etc.). Additionally, the unemployment rate reverts to its natural rate or NAIRU in the long-run. Therefore, the national employment figure is fixed. However, labour is perfectly mobile across industry and states, thus there can be changes in industry and state employment.

• Labour market adjusts via changes in real wages.

• Capital stock in each industry adjusts to equilibrate its expected and actual rates of return on capital. The baseline expected rates of return are determined by values in the MMRF database. Industries’ demands for investment goods are linked by an exogenous investment/capital ratio to changes in their capital stock.

• Nominal household consumption in each region is a constant share of post-tax household disposable income.

Fiscal closure

The role of government also plays a part in determining the impacts of a simulation. A typical fiscal closure will have the following assumptions:

• real government consumption (Commonwealth and States) is fixed; and

• government budget balances (Commonwealth and States) are fixed, via changes in the fiscal item ‘Government transfers to households’.

A.8 Interpretation of MMRF simulations

The MMRF can be solved in comparative static or recursive dynamic modes. Comparative static modelling shows the effect of a policy shock only. That is, it answers ‘what happens when this happens?’ without stating the adjustment process.



A dynamic CGE model would provide answers on the forecast structure of the economy under the baseline and the alternative case. It provides an explicit baseline over time against which the impact of a policy change can be compared. The model could incorporate more up to date data and the timing and policy paths are clear.

Figure A.2

COMPARATIVE STATIC INTERPRETATION OF RESULTS

Source: Allen Consulting Group, 2010.

Figure A.3 DYNAMIC INTERPRETATION OF RESULTS




Appendix B

Detailed modelling report

B.1 Modelling of the economic value of the institutes

Introduction

To evaluate the institutes economic contribution to the Australian and Queensland economies, the MMRF model was first used to project a business as usual scenario where the institutes were assumed to not have been created. This provides the counterfactual against which to judge the impact that the institutes have had on the economy since their creation. Then a series of simulations were conducted based on alternative assumptions regarding performance of the institutes.

Economic model

The MMRF model is a multi-sector dynamic model of the Australian economy covering the six states and two territories. It models each region as an economy in its own right, with region-specific prices, region-specific consumers, region-specific industries, and so on. Since MMRF is dynamic, it is able to produce sequences of annual solutions connected by dynamic relationships. The model also includes enhanced capabilities for environmental analysis.

As each state and territory is modelled as a mini-economy, MMRF is ideally suited to determining the impact of region-specific economic shocks. It has already been used to address a wide range of issues, including the economic impacts of large export-oriented projects, the effects of global trading in greenhouse emission permits, and the effects of changes in state and federal tax rates.

Simulation design

A number of assumptions have been used in the modelling analysis. These assumptions are detailed in Table B.1. Notably, the modelling assumptions align with those used for recent evaluations completed by ACG on other institutions in Queensland, such as the Institute for Molecular Bioscience (IMB), the Australian Institute for Bioengineering and Nanotechnology (AIBN), the Queensland Brain Institute (QBI) and the Sustainable Minerals Institute (SMI). They also align with an evaluation of the Smart State program undertaken by the Queensland Government. Further, these assumptions are generally conservative, and hence the modelling results in this report represent conservative estimates of the impact of the institutes on the Queensland and Australian economies.

Additional details about these assumptions and other key methodological issues are provided below.



Table B.1

SUMMARY OF ASSUMPTIONS USED TO DERIVE MODELLING INPUTS

Variable Assumption

Level of leveraged investment Leveraged investment for the 1999 to 2009 period

Industry sectors receiving the returns from research

• Agriculture • Defence • Education • Electricity, Gas and Water Supply • Health • Manufacturing • Mining • Property and Business Services • Tourism

Rate of return on investment 2 scenarios: • average performance scenario: 25% • strong performance scenario: 35%

Time lags for accrual of benefits 5 years with a ramp up of benefits, assuming 25% of the benefits by year 5, 50% of the benefits by year 6 and 100% by year 7.

Useful life of research 20 years


Level of leveraged investment

For studies of economic benefit to be credible, it is essential that they are firmly based on a clearly argued case for ‘additionality’ of economic contribution. From an economic benefit point of view, to determine the ‘net benefit’ a necessary condition is to show that certain streams of economic benefit can be identified and associated with the institutes. However, this by itself is not sufficient. It is also necessary to show that the identified streams of economic benefits (or a substantial part of them) are ‘additional’ in the sense that without the presence of the institutes, the economic benefits would not have occurred or occurred to the extent they did.

Assessing additionality requires two separate questions to be answered:

• would the specific projects have proceeded in the form they did in the absence of Queensland Government funding for the institutes?; and

• to what extent would the resources invested by other parties in the institutes have been invested elsewhere within the Queensland science and innovation system?

Judgements in relation to these two questions are necessarily subjective. Therefore, assessments of ‘additionality’ rates should be seen as estimates rather than as definitive figures.



In order to evaluate the impact of the institutes on the Queensland economy, we have examined the individual institute’s sources of revenue to determine the extent to which they have successfully obtained additional funds. These are funds that, in the absence of the institutes, would not have been spent in Queensland. A detailed break down of the institutes revenue and assessments regarding additionality is provided in the SMI22, the IMB23, the AIBN24 and the QBI25 detailed modelling reports.

Table B.2 provides details of the total funds received by the institutes since their creation and Table B.3 sets out the assessed additional investment associated with the institutes over the 1999 to 2009 period from the five identified funding source categories. For modelling purposes, all figures in this table are in 2005-06 dollars. These figures show that the institutes have been very successful in attracting additional investment to Queensland. Indeed, it is estimated that from their establishment the institutes have successfully attracted $525 million in additional investment to Queensland (that is, money that without the presence of the institutes would not have invested in Queensland).

Table B.2

TOTAL INVESTMENT IN THE INSTITUTES 1999-09, $ MILLION, CURRENT DOLLARS

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Total

Qld Gvt Funding

15.0

5.5

2.9

6.5

14.9

20.6

13.0

25.3

27.1

30.8

27.0

188.7 a

Cwth Gvt Funding

15.0 9.1 15.2 14.4 22.6 26.2 34.6 63.4 53.0 60.2 67.4 366.0

Other Australian funding

- 3.5 9.1 9.2 10.6 10.1 13.9 14.3 22.9 22.8 25.5 142.0

International funds

10.0 0.5 1.9 3.3 15.6 3.8 12.7 18.7 4.3 5.7 6.0 82.4

UQ - - 0.9 1.6 8.1 21.6 46.6 23.1 26.4 12.8 18.3 159.4

Total 40.0 18.6 30.0 35.0 71.9 82.4 120.7 144.8 133.7 132.3 144.1 953.5

a) From this total, the IMB received $105.2 million since inception (this includes $15 million towards construction of its building and $82.5 million as a State operating grant); the AIBN received $35.4 million since inception (including $13.3 million towards construction of its building and $2 million for the BnDF received from the Queensland Government as loans repayable over 20 years, interest free); the QBI received $37.1 million since inception (this includes a $20 million contribution towards the cost of its building and a total of $13 million towards its operating costs) and; the SMI received $11.3 million since inception (this includes a contribution of around $10 million towards the cost of its building). Note: Totals may not add due to rounding. Source: AIBN, IMB, ABI and SMI data, 2010 & 2011.

22

Allen Consulting Group 2011, Economic contribution of the Sustainable Minerals Institute to Queensland and Australia: Final report, Sydney, March.

23 Allen Consulting Group 2010a, Economic contribution of the Institute for Molecular Bioscience to Queensland

and Australia: Final report, Sydney, May. 24

Allen Consulting Group 2010b, Economic contribution of the Australian Institute for Bioengineering and Nanotechnology to Queensland and Australia: Final report, Sydney, August.

25 Allen Consulting Group 2010c, Economic contribution of the Institute for the Queensland Brain Institute to

Queensland and Australia: Final report, Sydney, August.



Table B.3

ADDITIONAL INVESTMENT ASSOCIATED WITH THE INSTITUTES 1999-09, $ MILLION, 2005-06 DOLLARS

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Total

Queensland Government Funding a 16.6 6.0 2.7 6.2 8.7 10.0 0.0 0.0 0.0 0.0 0.0 50.2




Total 44.2 10.3 15.9 25.6 49.4 41.4 54.1 79.1 64.2 67.4 73.8 525.4 a) The majority of the funds invested by the Queensland Government in the institutes would have been spent elsewhere in Queensland if it had not been invested in the institutes, so, from the state economy perspective, this is not additional investment because it would have occurred anyway. More information about what funds have been considered additional can be found in the individual institute’s reports. Note: Totals may not add due to rounding. Based on provided estimates of AIBN, IMB, QBI and SMI income. Source: AIBN, IMB, ABI and SMI data, 2010 &2011; Allen Consulting Group, 2011.

Opportunity cost of investment

The ‘cost’ of the additional investment associated with the institutes needs to be taken into account when modelling the economic impact for Queensland and Australia. This additional investment in the institutes by definition cannot be used for other purposes. Therefore, to account for the opportunity cost of the investment in the institutes within the modelling, the following offsets have been made:

• Commonwealth Government consumption has been reduced by $267 million (2005-06 dollars). This is to reflect the fact that the money invested in the institutes would likely have been expended elsewhere in Australia in the absence of its commitment to The University of Queensland; and

• private sector investment in other states (an approximation for the source of the other Australian funding) has been reduced by $129 million (2005-06 dollars). This is to reflect the fact that this money would have likely been invested elsewhere in Australia if it had not been committed to The University of Queensland.

No account for the opportunity cost of the international investment has been made as in the absence of the $80 million (2005-06 dollars) being committed to the institutes during the 1999 to 2009 period, as this money is unlikely to have been invested elsewhere in Australia. In a sense this additional investment is ‘free’ for both Queensland and Australia as a whole.

Rate of return on investment

In assessing the economic impacts of the institutes, a crucial variable is the assumed Social Rate of Return (SROR) that is associated with the additional investment in the institutes. The social rate of return is the increase in long-run GDP relative to the size of the investment that generated this increase. For instance, if a $1 million investment in research generates a $200,000 constant long-term increase in GDP, the social rate of return on this investment is 20 per cent. The higher the social rate of return on the investment, the greater the economic benefits associated with The University of Queensland institutes.



A review of the economic literature shows consistent findings of a significant and positive rate of return on publicly funded R&D investments. Furthermore, the literature reviewed shows that there is great variation in estimated rates of return by sector and by study. In spite of this variation, many studies place the social rate of return on overall publicly funded research in the order of 20 to 50 per cent. More details about the literature on rates of return on publicly funded R&D in Australia are provided on the individual institute economic contribution reports.

Given the information gathered from a range of Australian and international studies, a conservative estimate of the average SROR on publicly funded research in Australia appears to be around 25 per cent. Therefore, the ‘average performance case’ for the investment in the SMI modelled in this study uses a rate of return of 25 per cent.

In addition to the 25 per cent SROR ‘average performance scenario,’ a 35 per cent SROR ‘strong performance scenario’ is also modelled.

Scenarios

In generating the results, the following three scenarios that cover the period 1999 to 2029 (scenarios 2 and 3) were modelled.

1. Base case. The base case is a hypothetical projection for the Australian and state economies, compiled on the assumption that the institutes do not exist.

2. Average 1999 to 2029 (25 per cent SROR). This scenario assumes that the institutes start up at The University of Queensland, resulting in research that increases the value of output of a range of Queensland sectors in line with a 25 per cent Social Rate of Return (SROR) on investment.

3. Strong 1999 to 2029 (35 per cent SROR). This scenario assumes that the institutes start up at The University of Queensland, resulting in research that increases the value of output of a range of Queensland sectors in line with a 35 per cent Social Rate of Return (SROR) on investment.

The sections below report the economic impact of the Scenarios. Results are reported as deviations between the values of variables in the specific scenarios and their values in the base case scenario.

B.2 Exogenous shocks

The simulations are driven by imposing on the model annual changes in investment expenditure and changes to the value of output of particular industries in Queensland. The exogenous changes from reference values are summarized below in Table B.4 (scenarios 2 and 3) and Table B.5 below.



Table B.4 EXOGENOUS SHOCKS TO INVESTMENT SPENDING AND OUTPUT ($ MILLION, CONSTANT 2005-06 PRICES, DEVIATIONS FROM REFERENCE VALUES), 1999-2029 TIMEFRAME, AVERAGE 25 PER CENT SCENARIO

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015>

QLD government investment in the UQI 16.6 6.0 2.7 6.2 8.7 10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

QLD government consumption (offset) -16.6 -6.0 -2.7 -6.2 -8.7 -10 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Federal government investment in the UQI 16.6 1.4 4.1 4.3 13.6 17.9 28.1 48.2 40.1 43.8 48.7 0.0 0.0 0.0 0.0 0.0 0.0

Federal government consumption (offset) -16.6 -1.4 -4.1 -4.3 -13.6 -17.9 -28.1 -48.2 -40.1 -43.8 -48.7 0.0 0.0 0.0 0.0 0.0 0.0

Private sector investment from interstate 0 2.9 7.6 12.2 11.1 9.9 13.2 12.7 20.3 18.7 20.0 0.0 0.0 0.0 0.0 0.0 0.0

Private sector investment interstate (offset) 0.0 -2.9 -7.6 -12.2 -11.1 -9.9 -13.2 -12.7 -20.3 -18.7 -20.0 0.0 0.0 0.0 0.0 0.0 0.0

Investment from overseas in the UQI 11 0.0 1.5 2.9 16.0 3.6 12.8 18.2 3.9 4.9 5.1 0.0 0.0 0.0 0.0 0.0 0.0

Increase in output in QLD Agriculture sector 0.0 0.0 0.0 0.0 0.4 0.9 1.9 2.3 3.0 4.0 5.3 6.5 7.8 9.1 10.6 11.8 12.7

Increase in output in QLD Defence sector 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.5 0.8 0.9 1.0 1.1

Increase in output in QLD Education sector 0.0 0.0 0.0 0.0 0.1 0.3 0.7 0.9 1.2 1.8 2.6 3.7 5.0 6.6 7.8 8.8 9.4

Increase in output in QLD Electricity, Gas and Water Supply sector 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.4 0.6 0.8 1.0 1.3 1.6 2.0 2.3 2.5

Increase in output in QLD Health sector 0.0 0.0 0.0 0.0 0.8 1.9 3.9 4.8 6.3 8.7 12.3 17.0 22.6 29.2 34.2 38.2 40.9

Increase in output in QLD Manufacturing sector 0.0 0.0 0.0 0.0 1.1 2.5 5.2 6.3 8.2 10.8 14.4 18.1 22.1 26.5 31.0 34.4 36.8

Increase in output in QLD Mining sector 0.0 0.0 0.0 0.0 0.0 0.0 0.3 1.0 2.4 3.8 5.2 6.5 8.3 10.4 13.1 15.1 16.6

Increase in output in QLD Property and business services sector 0.0 0.0 0.0 0.0 0.1 0.3 0.7 0.9 1.1 1.5 2.0 2.4 2.9 3.4 4.0 4.4 4.8

Increase in output in QLD Tourism (tourism exports) sector 0.0 0.0 0.0 0.0 0.1 0.3 0.7 0.9 1.2 1.6 2.2 2.9 3.7 4.6 5.5 6.1 6.6

Source: The Allen Consulting Group, 2011.



Table B.5 EXOGENOUS SHOCKS TO INVESTMENT SPENDING AND OUTPUT ($ MILLION, CONSTANT 2005-06 PRICES, DEVIATIONS FROM REFERENCE VALUES), 1999-2029 TIMEFRAME, STRONG 35 PER CENT SCENARIO

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015>

QLD government investment in the UQI 16.6 6.0 2.7 6.2 8.7 10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

QLD government consumption (offset) -16.6 -6.0 -2.7 -6.2 -8.7 -10.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Federal government investment in the UQI 16.6 1.4 4.1 4.3 13.6 17.9 28.1 48.2 40.1 43.8 48.7 0.0 0.0 0.0 0.0 0.0 0.0

Federal government consumption (offset) -16.6 -1.4 -4.1 -4.3 -13.6 -17.9 -28.1 -48.2 -40.1 -43.8 -48.7 0.0 0.0 0.0 0.0 0.0 0.0.

Private sector investment from interstate 0 2.9 7.6 12.2 11.1 9.9 13.2 12.7 20.3 18.7 20.0 0.0 0.0 0.0 0.0 0.0 0.0

Private sector investment interstate (offset) 0.0 -2.9 -7.6 -12.2 -11.1 -9.9 -13.2 -12.7 -20.3 -18.7 -20.0 0.0 0.0 0.0 0.0 0.0 0.0

Investment from overseas in the UQI 11.0 0.0 1.5 2.9 16.0 3.6 12.8 18.2 3.9 4.9 5.1 0.0 0.0 0.0 0.0 0.0 0.0

Increase in output in QLD Agriculture sector 0.0 0.0 0.0 0.0 0.6 1.3 2.7 3.3 4.2 5.6 7.5 9.1 10.9 12.8 14.9 16.6 17.8

Increase in output in QLD Defence sector 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.3 0.7 1.1 1.3 1.4 1.5

Increase in output in QLD Education sector 0.0 0.0 0.0 0.0 0.2 0.4 0.9 1.2 1.7 2.3 3.3 4.3 5.7 7.4 8.6 9.5 10.2

Increase in output in QLD Electricity, Gas and Water Supply sector 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.5 0.8 1.1 1.4 1.8 2.2 2.8 3.2 3.6

Increase in output in QLD Health sector 0.0 0.0 0.0 0.0 1.2 2.6 5.4 6.7 8.9 11.4 15.1 18.8 23.7 29.9 33.7 36.8 38.9

Increase in output in QLD Manufacturing sector 0.0 0.0 0.0 0.0 1.5 3.5 7.2 8.9 11.4 14.1 17.3 18.6 20.4 22.6 24.4 26.0 27.1

Increase in output in QLD Mining sector 0.0 0.0 0.0 0.0 0.0 0.0 0.5 1.4 3.4 5.3 7.2 9.1 11.6 14.6 18.3 21.1 23.2

Increase in output in QLD Property and business services sector 0.0 0.0 0.0 0.0 0.2 0.4 0.9 1.2 1.6 2.0 2.4 2.5 2.7 2.9 3.2 3.4 3.6

Increase in output in QLD Tourism (tourism exports) sector 0.0 0.0 0.0 0.0 0.2 0.4 0.9 1.2 1.7 2.2 2.8 3.2 3.9 4.6 5.3 5.8 6.1

Source: The Allen Consulting Group, 2011.



It is assumed that spending by the Queensland government and by the Commonwealth government to support the institutes is financed via reductions in general consumption expenditure. It is assumed that private sector investment is financed by reduced investment spending in other states. It is assumed that investment sourced from overseas is a free gift to Australia. The induced increase in value of output of the Queensland sectors shown in Table B.4 and Table B.5 occurs via productivity improvements that increase output per unit of capital and labour input.

B.3 Other assumptions

Labour markets

At the national level, it is assumed that the deviation in the consumer's real wage rate (i.e., the nominal wage rate deflated by the CPI) from its base case forecast level increases in proportion to the deviation in employment from its base case level. The coefficient of proportionality is chosen so that the national employment effects of the institutes to the economy are largely eliminated after five years. In other words, after about five years, the benefits of the institutes nationally are realised almost entirely as an increase in the real wage rate, rather than as an increase in employment. This labour market assumption reflects the idea that in the long-run national employment is determined by demographic factors (birth and death rates, the level of international migration, etc.) which are largely unaffected by the existence, or otherwise, of the institutes. It is also consistent with conventional macro-economic modelling in which the Non Accelerating Inflation Rate of Unemployment (NAIRU) is exogenous.

Although in the simulations the institutes do not affect Australia-wide employment in the long run, it does affect the regional distribution of employment. It is assumed that labour moves between state economies so as to maintain interstate wage and unemployment rate differentials at their base case levels. Accordingly, Queensland, which is favourably affected by the institutes, will experience increased employment and population at the expense of regions that are less favourably affected.

Public expenditure, taxes and government budget balances

It is assumed that the shocks associated with the institutes make no difference to state and federal government budget balances.

Private consumption and investment

Consumption expenditure of the regional household moves in line with changes in Household Disposable Income (HDI). HDI is the sum of factor payments (wages and dividends) to Australian residents and government transfer payments (unemployment and other personal benefit payments) less direct income tax. HDI is calculated net of income that accrues to foreigners. Accordingly, changes in real private consumption are an appropriate guide to the change in welfare due to the UQI.

It is assumed that in each year, investment in each regional industry will deviate from base case in line with the deviation expected rate of return on the industry's capital stock. Investors are assumed to be myopic, implying that expected rates of return move with contemporaneously observed rates of return.



Rates of return on capital

In deviation simulations, MMRF allows for short-run divergences in rates of return on industry capital stocks from their levels in the base case forecasts. Such divergences cause divergences in investment and hence capital stocks. The divergences in capital stocks gradually erode the divergences in rates of return, so that in the long-run rates of return on capital over all regional industries return to their base case levels.

Production technologies

MMRF contains many types of technical change variables. In the deviation simulation it is assumed that all technology variables have the same values as in the base case simulation, except for those used to implement the exogenous changes.

B.4 Effects

Table B.6 and Table B.7 show the absolute deviations ($million, or thousand persons) of a range of macroeconomic variables for the 1999 to 2009 simulation for the average and strong SROR cases, respectively.

E C O N O M I C C O N T R I B U T I O N F R O M F O U R U Q I N S T I U T U T E S


Table B.6 MACROECONOMIC VARIABLES: 1999-2029 TIMEFRAME, AVERAGE SROR (25 PER CENT), ABSOLUTE DEVIATIONS FROM REFERENCE VALUES

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Real gross value added (GDP/GSP) ($M, 2005-06 prices)

Aus -10.3 -6.2 -4.0 -7.5 -8.9 -6.7 5.7 5.4 14.0 27.3 44.9 89.9 125.6 150.0 169.8 184.1 192.7

QLD -19.4 -11.7 -11.5 -20.6 -15.7 -7.2 22.6 38.1 49.8 78.1 113.1 171.3 220.7 264.6 305.6 340.4 368.7

ROA 9.1 5.5 7.5 13.1 6.8 0.5 -16.9 -32.7 -35.8 -50.8 -68.2 -81.4 -95.1 -114.6 -135.8 -156.3 -176.0

Real consumption ($M, 2005-06 prices)

Aus -12.7 -9.2 -6.9 -11.3 -15.5 -17.0 -7.6 -8.4 -3.3 6.0 18.0 55.2 88.2 114.2 137.5 157.0 171.8

QLD -11.0 -7.3 -4.4 -6.6 -6.8 -4.9 9.2 17.9 27.3 39.5 56.0 76.5 100.9 126.0 150.3 172.3 191.5

ROA -1.8 -2.0 -2.5 -4.7 -8.8 -12.0 -16.8 -26.3 -30.5 -33.5 -37.9 -21.3 -12.7 -11.7 -12.7 -15.3 -19.6

Real investment ($M, 2005-06 prices)

Aus -19.1 -1.6 -5.0 -11.1 -14.1 -10.2 0.9 -8.5 5.8 18.0 30.6 102.1 107.5 114.6 118.2 116.3 109.7

QLD -12.1 -2.4 -0.5 -4.2 -2.1 1.9 20.0 23.0 31.2 42.2 57.2 76.5 94.1 108.3 119.8 126.6 129.3

ROA -10.3 -6.2 -4.0 -7.5 -8.9 -6.7 5.7 5.4 14.0 27.3 44.9 89.9 125.6 150.0 169.8 184.1 192.7

Employment (‘000 persons)

Aus 8 -57 -12 -48 -65 -48 79 84 129 201 281 506 645 697 714 698 652

QLD -265 -102 -27 -84 -64 -12 326 439 566 741 979 1175 1480 1749 1979 2147 2256

ROA 129 46 15 37 -1 -36 -247 -355 -437 -539 -698 -669 -835 -1052 -1265 -1449 -1603




Table D.3

MACROECONOMIC VARIABLES: 1999-2029 TIMEFRAME, AVERAGE SROR (25 PER CENT), ABSOLUTE DEVIATIONS FROM REFERENCE VALUES (CONTINUED)

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029


Aus 190.3 186.0 182.1 178.6 175.6 173.2 170.8 169.0 167.3 166.3 165.4 165.2 165.5 166.4

QLD 380.8 391.5 402.0 412.3 422.4 432.4 442.5 452.5 462.7 473.0 483.3 493.9 504.7 515.9

ROA -190.5 -205.5 -219.9 -233.7 -246.8 -259.2 -271.7 -283.6 -295.4 -306.7 -317.9 -328.7 -339.2 -349.5


Aus 177.6 179.6 180.5 180.9 180.8 180.4 179.5 178.1 176.7 175.1 173.4 171.6 170.0 168.7

QLD 204.0 213.6 222.5 230.8 238.6 246.0 253.0 259.7 266.1 272.4 278.4 284.4 290.4 296.3

ROA -26.3 -34.0 -41.9 -49.9 -57.8 -65.5 -73.5 -81.5 -89.4 -97.2 -105.0 -112.8 -120.3 -127.5


Aus 91.9 77.6 65.5 56.4 48.8 43.9 38.5 35.0 31.9 30.7 28.9 28.2 28.0 28.7

QLD 122.0 116.4 111.9 108.4 105.6 103.5 102.1 101.2 100.9 100.9 101.3 102.0 103.0 104.6

ROA -30.1 -38.8 -46.5 -52.0 -56.8 -59.6 -63.7 -66.2 -69.0 -70.2 -72.3 -73.8 -75.0 -75.9


Aus 556 461 387 333 294 266 244 229 218 213 209 209 211 215

QLD 2238 2215 2200 2191 2186 2183 2185 2188 2192 2198 2203 2210 2217 2225

ROA -1681 -1754 -1812 -1858 -1892 -1917 -1941 -1959 -1974 -1985 -1994 -2001 -2006 -2010




Table B.7

MACROECONOMIC VARIABLES: 1999-2029 TIMEFRAME, STRONG SROR (35 PER CENT), ABSOLUTE DEVIATIONS FROM REFERENCE VALUES

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


Aus -10.3 -6.2 -4.0 -7.5 -7.3 -3.0 14.0 16.8 29.6 45.6 64.6 105.4 137.1 164.5 184.1 198.2 206.7

QLD -19.4 -11.7 -11.5 -20.6 -12.9 -0.6 36.9 57.6 77.0 110.3 148.4 200.1 243.6 295.4 337.2 372.9 402.1

ROA 9.1 5.5 7.5 13.1 5.6 -2.3 -22.9 -40.8 -47.4 -64.7 -83.8 -94.7 -106.5 -130.9 -153.1 -174.7 -195.4


Aus -12.7 -9.2 -6.9 -11.3 -14.7 -14.8 -2.8 -1.2 7.2 19.3 33.8 70.6 103.1 129.9 153.6 173.1 188.0

QLD -11.0 -7.3 -4.4 -6.6 -5.8 -2.5 14.7 26.1 39.0 54.4 73.2 93.0 116.0 142.8 168.2 191.0 210.9

ROA -1.8 -2.0 -2.5 -4.7 -8.9 -12.3 -17.4 -27.2 -31.8 -35.0 -39.4 -22.4 -12.8 -12.8 -14.6 -17.9 -22.8


Aus -19.1 -1.6 -5.0 -11.1 -12.6 -7.1 7.4 -0.5 16.6 29.7 42.3 108.5 111.3 121.4 124.1 121.5 114.6

QLD -12.1 -2.4 -0.5 -4.2 -0.6 5.2 27.1 31.9 43.3 55.5 70.7 84.9 99.3 118.2 129.2 135.9 138.6

ROA -7.0 0.7 -4.5 -6.9 -12.0 -12.3 -19.7 -32.4 -26.7 -25.8 -28.4 23.6 12.0 3.2 -5.1 -14.3 -24.0


Aus -136 -57 -12 -48 -57 -30 118 136 197 277 357 561 680 730 741 720 672

QLD -265 -102 -27 -84 -42 38 433 581 761 964 1218 1363 1627 1939 2166 2334 2443

ROA 129 46 15 37 -15 -68 -315 -445 -564 -687 -861 -802 -947 -1210 -1425 -1614 -1770




Table D.4

MACROECONOMIC VARIABLES: 1999-2029 TIMEFRAME, STRONG SROR (35 PER CENT), ABSOLUTE DEVIATIONS FROM REFERENCE VALUES (CONTINUED)

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029


Aus 204.1 199.5 195.3 191.5 188.3 185.6 183.1 180.7 178.9 177.6 176.5 176.1 176.2 176.9

QLD 414.9 426.2 437.3 448.1 458.8 469.3 480.0 490.6 501.3 512.0 522.8 533.9 545.1 556.8

ROA -210.8 -226.7 -242.0 -256.6 -270.5 -283.7 -296.9 -309.9 -322.4 -334.4 -346.3 -357.8 -368.9 -379.9


Aus 193.8 195.7 196.5 196.7 196.5 195.9 194.8 193.2 191.5 189.8 187.9 185.9 184.1 182.6

QLD 223.9 234.2 243.5 252.3 260.5 268.3 275.7 282.7 289.5 296.1 302.5 308.8 315.0 321.2

ROA -30.1 -38.4 -46.9 -55.5 -64.0 -72.3 -80.8 -89.5 -98.0 -106.3 -114.6 -122.9 -130.9 -138.6


Aus 96.3 81.7 69.3 60.0 52.3 47.2 41.7 37.6 34.7 33.3 31.7 31.1 31.0 31.7

QLD 131.1 125.4 120.9 117.4 114.5 112.4 111.1 110.3 110.0 110.0 110.5 111.3 112.3 114.0

ROA -34.7 -43.7 -51.6 -57.4 -62.2 -65.3 -69.5 -72.7 -75.3 -76.7 -78.7 -80.2 -81.4 -82.3


Aus 573 476 401 346 306 277 255 239 228 222 219 218 220 225

QLD 2423 2400 2384 2374 2369 2366 2367 2370 2374 2379 2384 2390 2396 2404

ROA -1850 -1924 -1983 -2029 -2063 -2089 -2112 -2132 -2146 -2157 -2165 -2172 -2176 -2179



Appendix C

References

Allen Consulting Group 2011, Economic contribution of the Sustainable Minerals Institute to Queensland and Australia: Final report, Sydney, March.

Allen Consulting Group 2010a, Economic contribution of the Institute for Molecular Bioscience to Queensland and Australia: Final report, Sydney, May.

Allen Consulting Group 2010b, Economic contribution of the Australian Institute for Bioengineering and Nanotechnology to Queensland and Australia: Final report, Sydney, August.

Allen Consulting Group 2010c, Economic contribution of the Institute for the Queensland Brain Institute to Queensland and Australia: Final report, Sydney, August.

Allen Consulting Group (ACG), 2005, Assessment of the Performance and Economic Impact to Queensland of the Institute for Molecular Bioscience: Final Report to The Institute for Molecular Bioscience, University of Queensland, March 2005.

Australian Institute for Bioengineering and Nanotechnology (AIBN), 2010, data provided.

Australian Institute for Bioengineering and Nanotechnology (AIBN), 2009, AIBN Annual Report 2008, University of Queensland, June.

Australian Research Council, 2011, Excellence in Research for Australia 2010: National Report, Commonwealth of Australia

Deloitte 2007, Queensland Brain Institute: the impacts of QBI research, June.

Institute of Molecular Biology (IMB), 2010, data provided.

Institute of Molecular Biology (IMB), 2010b, Quinquennial Review Submission 2005-2009, University of Queensland, Brisbane.

Institute of Molecular Biology (IMB), 2010c, IMB Output, No.21, University of Queensland, see www.imb.uq.edu.au/download/large/output21online.pdf, last accessed March 2011.

Luiggi, C, 2011, Best Place to Work for Post Docs, The Scientist, Vol 25.3 pp 45

Mining Technology Australia, 2011, Making research a Commercial Reality, see http://www.miningtechnologyaustralia.com.au/technology-transfer

Queensland Brain Institute (QBI), 2010, Research, Published on the website http://www.qbi.uq.edu.au/research, last accessed 7 July, 2010.

Queensland Brain Institute (QBI), 2010, data provided.

Sustainable Minerals Institute (SMI) 2010, data provided.

Sustainable Minerals Institute (SMI) 2011, data provided.

Sustainable Minerals Institute (SMI) 2007, 2006 Annual Report, The University of Queensland.

The University of Queensland research institutes: working ... · Institute for Molecular Bioscience...

Documents

Transcript of The University of Queensland research institutes: working ... · Institute for Molecular Bioscience...