It is time for Irish business to give something back to the State and to society

Troubles, they tell us, come in threes. For Irish universities, this week shows that in spades. On one day we see a number of threads which, taken together, should give us some significant concern. These three threads are the proposed new funding model for third level, Revenue auditing research and development tax credits, and the issue of how much or little businesses worldwide engage with universities.

Before we delve into these, it is perhaps worth reminding ourselves of a few issues. First, Ireland has, in fact, an excellent third- and fourth-level system. Second, we have less State involvement than is commonly thought. Of the €1.5 billion per annum, a large part is a subsidy for free fees. Third, we spend, over the tertiary sector, less on average than the rest of the OECD (which includes many countries much less well off than us). Fourth, we have had no national open debate on what we want from our third- and fourth-level education system. The changes that are coming are led from the centre with little input from either educationalists or the wider public.

So what do these three threads have in common? Funding.

As a state, Ireland is broke and every sector must contract in terms of State involvement and show value for money. The promised funding model suggests a series of key performance indicators that will determine the funding allocation.

These are reported to be the following: engagement in regional clusters; co-operation between individual colleges; student retention rates and inclusion of disadvantaged groups; teaching and learning excellence; research and increased commercialisation; meeting regional labour market needs; and enhanced internationalisation, including more non-EU students. It is not clear how these will be measured or even whether they can be measured.

Flawed premises
What evidence is there that increased engagement in regional clusters will benefit either enhanced student learning or greater and more impactful research? Given that we don't bother to measure research activity, how will we measure research impact – or will it be the usual dreary rhetoric of commercialisation patents and short-term jobs created? How will we ensure that we deal with the output of arts, humanities and social science in that model? How can we ensure that universities do not increase retention rates by dumbing down, and why is it the fault of universities if they are ill-prepared to cope with the academic and interpersonal demands of students emerging from the sausage factory of the second level?

How does a thrust on internationalisation mesh with the need to be focused on regional labour market needs? How can we attract more non-EU students when the visa regime is archaic and our facilities poor compared to competing countries?

Research commercialisation is one that goes to the second and third threads. It is often stated we need more university-business engagement and that Irish business also needs to increase its R&D profile. To achieve that, businesses have been given increasing tax breaks for research on top of an already generous tax regime.

In 2010, this amounted to €225 million, nearly a quarter of the total State budget for third level. Revenue audits now suggest a high level of suspected abuse. And yet, not content with this generous tax break, we find Irish business among the least likely to engage with third level.

A survey in the Times Higher Education on Monday suggested that Irish business invests only $8,300 per annum per scholar in third level on research and innovation. This is less than one-tenth the amount spent by Korean or Singaporean businesses, one-ninth the amount by Dutch business and one-eighth the amount by south African businesses. This is startling. Of course, there are a number of potential flaws with the indicator. It is based on the Times Higher Education university rankings which themselves are selective. It also draws from a subset of ranked universities and may spotlight a mix which conforms to a profile. It may miss hidden business involvement such as student numbers on courses.

It is hard to not conclude from the two issues, business involvement and the R&D tax issue, that Irish business is all too often happy to take from the State and society and not keen to give back.

Universities need to engage more with them but it is a two-way street. Engagement is not simply giving a few PCs or the odd bit of a chat to researchers, it is about business proactively funding PhD and postdoctoral students, about endowing centres and developing long-term research agendas, not chasing after rapid commercialisation of the latest whizzbang nor about accelerating the undergraduate cycle to two years to produce inputs to industry.

Debate on universities
A more educated society is a better one in all respects – that is why the State provides public funds, for the public goods coproduced by third level along with industrial and commercial-fitted students. We need a debate on universities and their role in society. They are not businesses. That is not to say they should not be run professionally with transparent budgeting. Universities exist to provide educated, engaged members of society.

They do not exist simply to train people for industry. Industry has been good at outsourcing its basic skills training and some core R&D to the State, in effect free riding. Perhaps its time to think about giving something back?

Brian Lucey is professor of finance in the school of business at Trinity College Dublin. A longer version of this article is posted on his blog, brianmlucey.wordpress.com