Sustainability of Research Centres - Advisory Science Council

Appendix 9: RTOs
Appendix 9A: The key Characteristics of RTOs
1 Focused on market segments with a clear focus on customer demands
In order for RTOs to be able to source a cash income stream from industry, they must operate in a
technology area that has at least a burgeoning need for their R&D capability. This can also be viewed from
the other perspective: in the absence of at least some customer need, there is no requirement for an
RTO. It is acknowledged that there is a push-pull factor to consider (between providing access to medium
and short term R&D capability to companies and the capacity and capability for companies to engage),
however, there must in the first instance be evidence of some potential growth market for the RTO.
2 Level of autonomy to be able to create a business focused culture
As centres move to the right hand side of the spectrum, they need increased independence from the HEI
so as to be able to operate in a manner that is appropriate to their objective of focusing on enterprise
customer driven needs. Governance, management processes and the presence of people capable of
delivering a research strategy and managing its implementation are key components of a centre. However,
for RTO centres to operate effectively while located in a HEI environment they need to be able to make
plans and decisions with some level of autonomy from the HEI. Greater autonomy from the HEI, than is
typical for Group 1 and Group 2 centres, is necessary to:
Reduce the barriers associated with being in a structure that has a key focus on education.
Conduct a business type operation over and above academic type operation.
Allow for provision of a focus on the industry customer needs, rather than satisfying the HEI needs.
Allow for the flexibility required in hiring and retaining staff with a background that is in line with the
needs of the -delivery of RTO strategy.
Fully look after and control its own finances 106 .
3 Type of research
The RTO centre must be focused on delivering the appropriate type of applied research to underpin its
commercial credibility or brand. The centre should engage in industry-driven applied research:
With a base of underpinning research being carried out which acts as a source of knowledge and
knowhow to keep one step ahead of industry.
In collaboration and partnership with industry.
To provide services and consultancy to industry.
106 RTO economics work successfully in stand-alone organisations such as research institutes, where there is subsidy but where the full economic costs
are visible and paid through a combination of core funding, competitive state funding and private funding. In this context, payment in kind is not
relevant. If an RTO-lime centre is to be inserted into a HEI, it must be accounted for fully and separately from the other business of the HEI, without
cross-subsidy in either direction.
Sustainability of Research Centres 65 June 2012