AUSTRALIA: A 14-year wait to resume his old job

Some 14 years since he last held the post, Simon Crean (pictured) has again become Australia's Education Minister - although this time he takes over the expanded duties bequeathed him by the nation's new Prime Minister Julia Gillard.

Gillard ousted former Prime Minister Kevin Rudd in a startling take-over last month and promptly announced her new ministerial line-up. As well as education, Crean assumes responsibilities for Gillard's former portfolios of employment, social inclusion and workplace relations.

Adding to the irony of re-assuming a job he lost in 1996, when the Labor government was defeated by conservative leader John Howard, Crean's overloaded portfolio includes higher education.

His last decision before the election Labor lost was to tell academics clamouring for a pay rise the government would give them the money - but they would then have to pay it back as a rather curious type of loan.

Now Crean also has to keep his eye on the vocational education sector and schools while also monitoring the government's $16 billion spending on school infrastructure. Plus he has to try to cope with calls by vice-chancellors for millions more for universities following decisions made by Gillard during her two-and-a-bit years in charge.

Perhaps the most significant of these was the switch to a student demand-driven funding of universities. This has lifted the maximum number of student places subsidised by the government a university can enrol from 5% to 10% above their target this year and next but the cap will be lifted thereafter.

Gavid Moodie, a keen observer of the higher education sector, says at the time Gillard announced the change there was some scepticism whether universities would increase their enrolments because the government did not increase the rate at which subsidised places were funded.

"But that ignored the recent experience of universities (unwisely) enrolling big numbers of marginally funded places, and was proved wrong," Moodie says. "Many universities are enrolling close to the maximum number of places they are permitted and seem set to continue expanding once enrolment caps are lifted."

He argues the introduction of student demand-driven funding may turn out to be as significant as the decision of the government in which Crean served to allow and then require universities to charge international students full tuition fees.

There was little effect for five years after the decision was made in 1990 but then universities began to experience a huge increase in money from fees. As Moodie says, domestic student demand-driven funding may similarly change Australian higher education substantially over the next decade.

Even before Crean stepped into Gillard's shoes, vice-chancellors had been urging the government to spend more on their institutions. As their representative organisation Universities Australia noted in April, the national economy needed additional sources of growth beyond mining to underpin "a healthy, diverse and sustainable national economy" and that meant spending more on higher education.

Releasing a report, Economic Modelling of Improved Funding and Reform Arrangements for Universities, commissioned from consulting firm KPMG Econtech, UA Chief Executive Dr Glen Withers said it showed that increasing public funding by A$5 billion (US$4.4 billion) over three years, and enhancing that to the OECD average for the longer term, would increase national GDP by 6.4 %, or $163 billion by 2040.

"These GDP increases would commence four years after the funding injection and steadily increase thereafter, commencing with a $13 billion increase in 2014," Withers said.

Instead, however, forward estimates from last year's budget showed a decline in share of GDP funding for higher education over the next three years.

The KPMG study found an overall 14% rate of return on funding higher education which meant it was an investment, "not a budget haemorrhage", Withers said.

"Universities can help to restore a budget surplus quickly since university graduates expand the work-force, pay high taxes and begin repaying their HECS after graduation. Many also work and pay tax during their studies."