Federal government funding for university research should benefit all Australians according to Charles Sturt University (CSU) Vice-Chancellor Professor Andrew Vann.

"The higher education sector needs to move away from self-reinforcing esteem indicators and work towards an inclusive approach that recognises the worth of all Australians and benefits the entire community," he said.

Professor Vann said a call by the Group of Eight (Go8) universities for funding to be tied to the Excellence in Research for Australia (ERA) assessment was not in the national interest.

"There is already a disincentive for universities primarily concerned with the perceived prestige of rankings to produce applied research with practical benefit, or research that delivers a public good," he said.

"That's because the reporting and evaluation systems, including the ERA ratings that the Group of Eight wants even greater attention paid to, are largely based on research publications and research income figures.

"That creates an aversion to taking research to the next step of intellectual property development because it risks limiting publication and other traditional measures of success."

Professor Vann said universities had a responsibility to ensure research met the genuine needs of the nation and its industries.

"Charles Sturt University supports the government's efforts to ensure the next generation of researchers undertake their PhDs in an environment where there is active collaboration between universities, local communities and industries," he said.

"To do this we should firstly better align competitive grants with industry needs through increased industry representation in assessment and review.

"There is also the opportunity to broaden the rural research and development corporation model of co-funding to other sectors. This model provides a model for industry to have a say in guiding research priorities and directing public investment to priority areas.

"Equally important is encouraging people currently working in industry to undertake Higher Degrees by Research and supporting entrepreneurial skills in for all students. These people are already keenly aware of their industry's challenges and will apply that approach in research. They are also more likely to be able to apply the entrepreneurial skills that are needed to deliver successful commercialisation of research."