“The decision not to raid other research programs to pay for its innovation plan reinforces the Government’s determination to put research and innovation at the heart of its agenda,” said Universities Australia Chief Executive Belinda Robinson.

Ms Robinson said the difficult budget balancing act was evident in MYEFO.

“The community will be concerned that the Government, despite one year’s reprieve, intends to pursue the cuts to university funding announced in the 2014 budget.

“These cuts are at odds with the Government’s acknowledgment of the need to invest in Australia’s productive capacity to transform and diversify the economy.”

The sector has, however, welcomed the Government’s commitment to consult further on its reforms.

“With the nation relying ever more heavily on university graduates to replace the 40 per cent of today’s jobs that are tipped to disappear within two decades, to proceed with the cuts would be counter-productive,” Ms Robinson said.

“The sector is disappointed that $20.8 million has been shaved from the Higher Education Participation Programme (HEPP) – a program that supports disadvantaged students to succeed at university.”

The outlook reveals an expected increase of $206 million for 2015-16 in foregone revenue associated with the R&D tax incentive ($1.8 billion over the four years to 2018-19).

This growth reinforces the need for the Government’s review of the effectiveness and integrity of the incentive – which is an opportunity to appraise if it is as effective as it should be in lifting Australia’s low rates of collaboration between industry and the research sector.

“As a budget work in progress, the Government’s MYEFO begins the transition to a new era in which skills, knowledge and ideas will be our most precious commodities.”