Commonwealth funding formulae have caused Australian universities to become obsessed with maximising external research funding. Considerable pressure is applied to faculties, departments and scholars to apply for funding, and relative success in attracting it is given excessive weight in evaluating research performance. This may be productive in disciplines that require large amounts of research funding. But it can have many negative effects, especially in other disciplines, such as: (a) it is a grossly inaccurate method of evaluating research performance; (b) the inundation of the ARC with excessive numbers of grant applications; (c) the diversion of funding from applicants who desperately need it to those who have much less need for it; (d) an enormous waste of time and effort on doomed grant applications that would have been better spent writing books and journal articles; (e) the giving of excessive weight to "grantsmanship" at the expense of substantive scholarship in determining appointments and applications for promotion; (f) subtle distorting effects on research agendas, as projects are devised in order to attract income rather than for their inherent interest and importance, and consequent damage to scholarly morale and enthusiasm; and (g) the distortion of research agendas across entire disciplines.