University deregulation and the politics of funding
28 March 2012, by Bruce Muirhead
Professor Bruce Muirhead is CEO of Eidos Institute. He has more than 25 years experience in building partnerships between the public and private sector, focusing on the connections between economic, public and social innovation in the development of community capacity at local and global levels. Under Bruce's leadership, the Eidos Institute received an Australian Business Innovation Award (2010) and a Lord Mayor's Innovation Award (2011).
The deregulation of universities, effective as of January 1 2012 has a number of implications for the tertiary education sector, the most obvious of which is on resources and funds available to the already financially strained tertiary education sector.
In an address to the National Press Club earlier this month, Universities Australia Chairman Glyn Davis warned that the changes were set to have as dramatic an impact on higher education as floating the Australian dollar in 1983 had on other markets.
Although an anticipated development, the onset of the changes has seen university administrators and sector leaders scramble to adjust to the changes within an ever competitive and increasingly international higher education market.
The government review of tertiary base funding in 2011 reflects the ‘public good’ view of universities – that tertiary funding should come from governments and students – and that student fees shouldn’t be prohibitive. For this view to hold in light of the changes to student numbers, government needs to significantly increase its contribution.
The primary source of public funding for universities in Australia is the teaching based Commonwealth Grants Scheme (CGS). In the past these grants have been operated by specifying numbers of students both university wide and in specific courses. The deregulation of student numbers significantly alters this paradigm by undermining certainty around student numbers. From 1997-2004 government funding decreased in terms of CGSs, not because overall university funding decreased, but because the amount contributed by students was increased.
The oft-quoted target of the government that 40% of the population should hold bachelors degrees has been widely reported since the deregulation has been implemented. If the government is serious about this, raising student contributions again is not a particularly viable option given the disincentive this presents, especially to prospective students from lower socio-economic backgrounds that are significantly debt averse.
This deals with base level funding, which all universities have an interest in increasing across the board. Deregulated numbers mean student enrolment in different disciplines could vary significantly from year to year, and without sustained base funding for all disciplines some may cease to exist. This is particularly dangerous for non-vocational departments like philosophy and maths, which have already started disappearing in universities around the world. These departments dying out in Australian universities would not only be a significant loss to the tertiary sector but also to the quality of public thought and discussion in Australia, the very things the government is seeking to improve with these reforms.
The other major piece to this puzzle is concerns over international competitiveness. Recent reports suggest international students consider Australian universities ‘lightweights’ compared to other universities in the region. Under the status quo, prominent universities are having to choose between much needed new infrastructure and retaining well respected members of staff, a choice which is not in the interests of either those universities or the quality and reputation of Australian universities as a whole.
Ultimately, Universities need to professionalise their relationship with government in order to more effectively lobby for increases to both net funding and funding of individual institutions. The government needs to understand the pressures being placed on universities by this new scheme, combined with existing pressures in balancing research and teaching whilst constantly applying for grants, in order to appropriately respond. Only universities are in a position to properly inform government of these issues, and they should focus on that rather than pursuing potentially ill-fated relationships with business or risking closure of significant departments.