SYDNEY—A high-level advisory panel has recommended that Australia reorganize and spend more on its system of public funding for university-level research. The government has not yet responded to the report, which is shaping up as a test of the political influence of the nation's university and research communities.

The Australian Science and Technology Council (ASTEC), which reports to Prime Minister Bob Hawke, said in its report that research at Australian universities is hampered by limitations on flexibility, diffusion of effort and lack of discretionary funding. As a partial solution, it recommends the creation of an Australian Research Council, which would combine the Australian Research Grants Scheme (ARGS) and four smaller government funding schemes.

The agencies that would be combined in the new body now spend about $50 million Australian ($35 million U.S.). ASTEC proposed an annual research council budget of $93 million in current dollars, to be obtained by boosting...

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