AUSTRALIA: More please sir, plead vice-chancellors

During the recent election campaign, Australian vice-chancellors sent out call after call to the nation’s political parties for more spending on higher education. Both the two major parties offered new funding deals and universities are now waiting to see if the Labor administration, having won, lives up to its promises.

In a surprise announcement before the election, the soon-to-be deposed Prime Minister John Howard said that if returned, his conservative government would establish a $6 billion (US$5.4 billion) higher education endowment fund. The money was to be used to improve university infrastructure but Education Minister Julie Bishop later said that not every university could expect money from the fund.

Bishop had long been critical of the incessant demands by universities for more government aid and claimed that since the government was elected in 1996, its spending on universities had increased by 26% in real terms. She said most were recording surpluses while collectively they had net assets of almost $26 billion and cash reserves of $7 billion.

Repeating a long-heard mantra, Bishop said universities were too dependent on government and should get better at seizing opportunities and controlling their own destinies.

“With one vice-chancellor's salary now breaking through the $1 million mark, comparisons with the corporate sector are increasingly valid,” she said.

But Professor Richard Larkins, vice-chancellor of Australia’s largest university, Monash in Melbourne, told a Senate inquiry of the serious decline in government funding per student, a huge blow-out in staff-student ratios, a $2 billion maintenance backlog and the rise of well-financed university competition overseas. He pointed to the huge increase in student numbers that had not been matched by the government.

In fact, universities are now less dependent on government income than at any time in their entire history. In the mid-1980s, universities raised a mere 12% of their annual budgets from non-government sources such as fees and contracts with industry. From 1988 on, they came under increasing pressure from the then Labor government to become more self-sufficient so that by 1991 federal recurrent and capital grants had plummeted to 55% of total spending on higher education.

Following the election of the Howard government, the pressure to find other sources of income increased and now some of the big universities receive less than 30% of their $1 billion a year revenues from government. Fees paid by local students, but especially the 250,000 foreigners enrolled, now contribute close on 40% of total university funding – more than the government itself has allocated to most institutions.

While conservative parties failed to offer universities much more than the endowment fund, Labor promised to double Australia’s investment in research and development. This brought praise from the Group of Eight research intensive universities. The group’s executive director, Michael Gallagher, said that while Labor had not specified the source of funds or time period for the doubling, the promise showed it understood the importance of greater levels of both public and private investment in R&D to Australia’s future.

“In 2004-05, Australia’s gross investment in R&D was $15.7 billion. A doubling of that level of investment over a reasonable period of time could not help but make a significant difference to Australia’s research system – with flow-on benefits for the economy and society,” Gallagher said.

“If Australia was investing in R&D in line with the OECD average, the Go8 estimates that a further $5 billion annually would be going into the system .... A key policy challenge facing Australia’s research system is the inability of current funding mechanisms to cover the full cost of research under our various national competitive grant schemes.”

He said the Go8 was urging the government seriously to consider shifting to a funding model that covered the full cost of research supported by competitive schemes – as was now the policy in Britain.