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One of the distinctive features of an Australian university is its research activity. Under the
National Protocols, an Australian university undertakes research and provides research training in
at least three at least three broad fields of study.

But as the recent ERA National Report shows, research activity and quality in Australia’s
universities is pretty variable. One commentator noted, mirable dictu, the 2010 ERA round was
dominated by a band of 11 universities (the Great 8 plus Macquarie, Griffith and QUT). There was
a middle band another 9 or 10 universities with research excellence in a smaller range of
disciplines. Under the ERA methodology, the remaining universities had very limited claims to a
breadth of research excellence. A recent study shows the increasing concentration of research in
the Go8, with their share of research income up from 66.9 per cent in 1992 to 69.8 per cent in

Universities are obviously focussed on ERA. For starters, at some point ERA outcomes will
influence funding, although exactly how is as yet unclear. So it is all a bit of a virtuous/vicious
cycle, success begets more success and vice versa. But it also concentrates minds on the “meaning
of a university”, with some commentators saying that ERA debunks the myth of the so-called
“teaching-research nexus” and renews interest in the concept of a teaching oriented university.

This is not at all to suggest that some universities should abandon attempts at serious research.
The less research intensive universities almost certainly conduct research that is socially and
economically useful, which won’t be picked up by the ERA metrics (which themselves have been
subject to pointed criticism as to relevance and objectivity). A recent OECD report recommends,
among other things, that the Commonwealth government consider introducing core funding for
university engagement, to promote knowledge transfer and the interests of industry – a proposal
explicitly rejected in the Bradley Report.

Ultimately, the rules that govern our system ought to reflect reality and the reality is a continuum
of institutional types from “research intensive” to “teaching intensive”.

These rules are currently being revised, as the National Protocols are translated into Provider
Standards, one of the five proposed domains of the TEQSA regulatory regime. The current
iteration of the Standards is a fairly faithful translation of the current Protocols. There is,
however, one important difference: under the Protocols, a “university college” is actually a

university on training wheels and must satisfy the requirements of becoming a comprehensive
university within five years or relinquish the title. Under the proposed Standards, a university
college would be seemingly, a stand alone institution, which doesn’t appear to be much different
from a “university of specialisation”.

Why not a university college, affiliated to a comprehensive university, as a teaching institution in
the style of a US baccalaureate university, with its focus on “scholarship” rather than “research”?
Throughout Australia, there are multi-campus universities which cannot and do not maintain the
sort of research activity across all campuses/sites that is supposed to sustain the “nexus”. Such a
new type of institution would be a convenient vehicle for collaborations and partnerships.

Legislation to establish TEQSA is to be introduced into Parliament during March. Two earlier
attempts at it were greeted with dismay. Universities were particularly concerned that TEQSA’s
proposed powers would diminish the semi-autonomous, self accrediting authority which is
another essential characteristic of a university. To assuage university concerns, the revised bill
makes it explict that TEQSA will need to comply with regulatory necessity and adopt approaches
that reflect risk and are proportionate to risk.. Universities Australia has cautiously welcomed the
latest draft, subject to the provisos that the self-accrediting status of universities be fully
preserved and the detail of complex transitional provisions are acceptable (and so far, silence by
the Go8, which was strident in its criticism of the earlier drafts - see its 200 page critique, The
Accountability for Quality Agenda in Higher Education).

The proposed new arrangements still provide no effective role for the States and Territories,
which nominally “own” the public universities (except ANU). The National Protocols are owned by
the Ministerial Council, comprising all Ministers responsible for higher education. However, the
TEQSA Standards will be owned by the Commonwealth Minister (although they will be open to
disallowance by the Commonwealth Parliament). Why the Commonwealth considers this to be
the “best” model is unclear. It’s not as if the current Protocols are seen to be seriously flawed,
forming as they do the basis of the new Provider Standards. And the quality of Australia’s higher
education sector is well regarded internationally, so it’s not as if the quality regime is failing
(according at least to the Lisbon Council and British Council).

The imminent demise of the Australian Learning and Teaching Council, which has been working
on the teaching standards domain, adds a new twist to the TEQSA saga and will probably see even
more power devolve to it. The Government decided that the ALTC was a “lower order priority”
and its abolition, along with the Capital Development Program, formed part of a savings measures
package to help fund Queensland reconstruction after the floods. the Government has
backtracked to the extent that it will preserve the ALTC’s remaining funding (about $55 million
over the next three years) but the ALTC is still for the chop: its functions are to be absorbed by

Another source of growing concern for the sector is funding, as we move towards the new world
of an uncapped, demand driven funding system. The widely held view in the sector - and it is a
view rather than an established fact – is that there is a funding shortfall of $1400-1500 a year per
place (about &4700 million a year). The Base Funding Review headed up by former SA Minister
for Education, Jane Lomax-Smith, will be useful in establishing some facts. It’s certainly got off to

a good start, with its high quality discussion and background papers destined to become classics in
the genre. The Panel has a mind-bendingly complex task, in both technical and political terms, and
it hasn’t been particularly helped by terms of reference which restrict it to looking at the
Commonwealth contribution, through the CGS, and the student contribution through HECS-HELP.
It seems a bit more complicated than that: various threads of revenue contribute to maintaining
the “fabric” of a university and it’s not easy to unravel them.

In its discussion paper, the Review Panel has posed 23 “consultation questions”, the first of which
concerns “enduring principles” to underpin public investment (which we will interpret as “base
funding”) in higher education. Three or four immediately spring to mind but let’s settle for one for
the moment: The Commonwealth’s response to the Bradley Report (at page 7) sets out eight
expectations of the higher education system including providing the widest possible access,
contributing to the needs of the economy, providing a stimulating experience for students and
being in the top group of the OECD in terms of performance.

The first principle guiding the design of a funding model must be that base funding has to be
sufficient to secure these expectations. In particular, base funding needs to sustain the quality
requirements of Government: the five standards domains of the TEQSA regulatory regime, which
will impose significant additional costs. For example, a portion of base funding (between 16 and
30 per cent depending on who you ask) supports research activity. The background paper (Table
3.1 page 18) identifies that “general university funds” provided $3.5 billion of total R&D
expenditure of $6.7 billion, although it cannot identify what part of that is from base funding.
Similarly, a portion of base funding is for capital purposes. In a tight budget environment, with a
whole range of pressures and competing priorities, it’s likely that universities have deferred “non-
essential” expenditure and that a casualty may have been university infrastructure. A 2007 survey
of Go8 universities identified “backlog building liabilities” of $1.5 billion, with 38% of Go8 buildings
rated as in poor or critical condition. One recent estimate is is the, at current student;staff ratios,
the higher education sector will require an extra 22,000 staff and $45 billion in capital expenditure
to accommodate additional students expected under the demand –driven system.

A second principle will concern equity. In its reference to the Panel, the Government has stated
that student fees must not constitute a barrier to access and participation. This will go to the
allocation of base funding costs between government and students. But it will also go to the
allocation of costs between students. In its original form, HECS was set as a standard fee for all
students, intended to cover overall about 25 per cent of base funding (while all students were
paying the same fee, of course, the proportion of costs covered by these fees varied form
discipline to discipline – a student in a high cost course such as medicine was paying the same as a
student in a low cost course, such as business studies). Differential HECS, introduced in 1996, has
sharply differentiated proportional repayments of course costs by different discipline clusters –
from 83 per cent for business, law and such like to 32 per cent for medicine and dentistry. While
these “bands” are supposed to reflect the balance of public and private returns to higher
education, the relative costs of courses and the earning potential of graduates in particular fields,

it is not particularly clear how these relativities were derived or how equitable they are (while the
public returns of medicine may be thought to be higher than business, so are the private returns).

A third principle might concern student choice and institutional diversity. The current funding
model is basically “one size fits all”. Since 2005, universities have been able to set student
contributions zero to a maximum equivalent to 1.25 times the previous HECS amount. In practice,
all universities charge to the “cap”, which is assumed to reflect the general inadequacy of current
base funding. A common observation is that the Commonwealth has notionally “deregulated”
supply but continues to highly regulate price, which inhibits both choice and diversity (it could be
further observed that, ultimately, the universities have some say over supply as well, in terms of
overall numbers but importantly in terms of discipline specific numbers).

A fourth principle would concern sustainability and certainty in that the model has to be able to
accommodate changes in the operating environment (from external funding to the nature of the
student cohort).

Issues around the fairness of student income support have been the subject of heated debate with
changes to gap year eligibility rules for Youth Allowance taking the spotlight,. A move to extend
independent YA eligibility, at a cost of around $90 million a year was stymied by the Government
in bringing forward by twelve months a comprehensive review of student income support, with a
particular focus on the tougher independence work test for Youth Allowance. Meanwhile, other
income support changes came into effect in January – including a significant easing of the means
test. While it’s reasonable enough to argue that the funding envelope isn’t sufficient, the changes
actually extend benefits to a far wider group of students and unarguably make the student income
support system more equitable than it was. According to the Commonwealth Minister, in excess
of 100,000 students (and their families) benefit from these changes.


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