In order to receive research block grant funding from the Australian Government, research activity and income must meet the Department of Education and Training Higher Education Research Data Collection (HERDC) Specifications, which contains definitions, inclusions and exclusions and which are updated annually. For full details, refer to the current 2018 Higher Education Research Data Collection Specifications, which are the specifications for income received in 2017.
HERDC Definition of Research (R&D)
In the 2018 HERDC Specifications, all references to ‘research’ have been replaced with ‘research and experimental development (R&D). From Section 3 of the Specifications:
"R&D is defined as creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture and society – and to devise new applications of available knowledge."
"For an activity to be an R&D activity it must satisfy all five core criteria:
- to be aimed at new findings (novel),
- to be based on original, not obvious, concepts and hypotheses (creative),
- to be uncertain about the final outcomes (uncertain),
- to be planned and budgeted (systemic), and
- to lead to results that could be possibly reproduced (transferable and/or reproducible)."
"The above definition encompasses pure and oriented basic research, applied research and experimental development, defined as follows:
- Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view.
- Pure basic research is carried out for the advancement of knowledge, without seeking economic or social benefits or making an active effort to apply the results to practical problems or to transfer the results to sectors responsible for their application.
- Oriented basic research is carried out with the expectation that it will produce a broad base of knowledge likely to form the basis of the solution to recognised or expected current or future problems or possibilities.
- Applied Research is original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific, practical aim or objective (including a client-driven purpose).
- Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes."
Activities and income that meet the definition of research and experimental development (R&D) include:
R&D activities include:
- professional, technical, administrative or clerical support staff directly engaged in activities essential to the conduct of R&D
- the activities of HDR students enrolled at the Higher Education Provider (HEP)
- the development of HDR training and courses
- the supervision of HDR students enrolled at the HEP
- R&D into applications software, new programming languages and new operating systems
- prototype development and testing
- construction and operation of a pilot plant where the primary objective is to make further improvements
- trial production where there is full scale testing and subsequent further design and engineering
- phases I to III of clinical trials. (Section 3).
The following income can be included in the R&D return:
- Stipends and scholarships for HDR students enrolled at the HEP, unless explicitly excluded in section 4.2.2.
- Income derived from the provision of R&D services (exclusive of GST).
- Travel grants where funds are provided specifically for the purpose of travel and used to enable access to a program of R&D. Researchers using the funds are expected to be active participants in the R&D program, rather than observers or visitors.
- Income derived from the investment of, and interest earned from, donations, bequests and endowments available for the expenditure on R&D. Research infrastructure income including funding for equipment purchase, installation, maintenance, hire and lease, non-capital aspects of facilities such as laboratories, libraries, computing centres, animal houses, herbaria, and experimental farms and grants for specific and specialised equipment used for the conduct of R&D (unless explicitly excluded in section 4.2.2).
- Income from non-Australian HEPs provided specifically for the conduct of R&D.
- Income received in support of the R&D activities and training of HDR students enrolled at the HEP. This includes funds providing the cost of a student’s HDR fee-paying place, but excludes HDR student fee income, Commonwealth supported places or places funded by the Research Training Program.
- Where a HEP receives income (such as a general or untied grant or a multi-purpose industry contract) that provides for activities other than R&D, the HEP may report the proportion of that grant that can be clearly and transparently attributed to the direct costs of conducting R&D. (Section 4.2.1)
Activities that do not meet the definition of research include:
R&D activities do not include:
- scientific and technical information services,
- general purpose or routine data collection,
- standardisation and routine testing
- feasibility studies (except into R&D projects)
- specialised, routine medical care
- literature reviews that are predominantly a summary of the current knowledge and findings of a particular R&D field or topic and do not include any critical assessment or report any new findings or original experimental work
- commercial, legal and administrative aspects of patenting, plant breeders rights, copyright, material transfer agreements or intellectual property licensing, option and assignment activities, and royalties
- routine computer programming, systems work or software maintenance
- stages of product development that do not meet the five R&D criteria above 5
- pre-production development6
- market research
- construction of fully tested prototypes for marketing purposes
- after sales service and trouble-shooting
- industrial engineering and design for production purposes
- artistic performance or expression
- R&D financing and support services. (Section 3).
The following income is excluded from the R&D return:
- Any income above the amount of net receipted income.
- GST amounts.
- Any interest income accruing to R&D grants, contracts and consultancies.
- Any interest income received from donations, bequests and endowments unless expressly for the purposes of R&D.
- Any in-kind contributions to grants, contracts and other enforceable agreements.
- Cash contributions made to a HEP on condition that the HEP use these contributions to purchase goods or services from a CRC or other funding provider. Such arrangements are regarded as in-kind contributions.
- Capital grants.
- Any R&D income received by the HEP from its subsidiaries8 or any independent HEP operations that do not meet the definition of a subsidiary.
- Any R&D income received by the HEP from any other Australian HEP or its subsidiaries except in respect of shared R&D income (in accordance with section 4.3) or transfers (in accordance with section 4.4).
- Any income received by a HEP or its subsidiaries from the sale of non-financial assets, even if that income is to be expended on R&D at the HEP’s discretion.
- Any income received by a HEP or its subsidiaries for the rental and use of its facilities and accommodation, even if this is related to the conduct of R&D.
- Any third party income except for those instances specified in section 4.3.
- Funds provided to the personal accounts of HEP staff, or funds used by a CRC to purchase goods or services for use by the HEP.
- Any scholarships or grants that are provided by the HEP for its own HDR students.
- Income received by students or by HEPs on behalf of students, for the R&D component of any degree that is not a Masters by Research or Research Doctorate, including externally funded scholarships or stipends.
- HDR student fee income.
- Income received from a multi-purpose contract or other enforceable agreement that cannot be clearly attributed to the direct costs of conducting R&D, even if the income was provided for R&D.
- Income received from a government grant, contract or other enforceable agreement for a specific purpose other than R&D (such as teaching), even if a proportion of that income is expended on R&D at the HEP’s discretion.
- Income provided specifically for the purpose of hosting, organising or attending a conference, workshop or meeting.
- Income provided specifically for the purpose of producing publications or teaching preparation (rather than conducting R&D). (Section 4.2.2).