Because of pressure on resources, in many countries over the past decade research funding has been reduced, but in other countries, such as Australia, New Zealand and Japan, research funding has increased appreciably and special efforts have been made to establish new research centres and build additional links between universities and industry. A major policy dilemma for both higher education systems and research universities is how scarce research resources should be distributed and what mechanisms should be employed to do this. In Australia, where the former university and advanced education sectors were combined about a decade years ago, the general approach of both the Government and many universities is that resources should be distributed on a competitive basis, related to research capacity and track record. Thus, at the national level, substantial funds from the basic operating grant for universities are distributed through the 'research quantum' which is allocated to individual institutions on the basis of research funds attracted, publication output, and the number of research higher degree completions. Similarly, the 'block infrastructure grants' to institutions, special grants for research equipment, Australian Research Council large grants and small grants, and special research centres are all distributed on a competitive basis.
Many institutions also distribute large sums internally on a competitive basis.
However, nationally, a major policy dispute is whether available research and research infrastructure funds should be concentrated to an even greater degree in order to develop a small group of stronger internationally recognised research universities, or whether the current method of competition will ensure a sufficient degree of concentration. He also commented that this concentration could be achieved best through natural competition. At the same time, it should be noted that in submissions to the West Committee both Penington and a number of the major universities argued for greater concentration in research funding through increasing the research quantum proportion of the operating grant, from a current 4.9 per cent to 15 or 20 per cent. This, however, would mean substantial resources being taken away from newer and smaller universities who argue that their developing research activity needs special government support. Another policy dilemma relates to the balance between basic and applied research.