Future of Australia’s universities at risk

Already struggling in the “shallows” of inadequate domestic financial support, Australia’s universities are facing rising, well-resourced and aggressive international competitors, a leading educationist told a conference on higher education deregulation last Wednesday.

Michael Gallagher, executive director of the Group of Eight, or Go8, research intensive universities, said higher education institutions faced “a more miserable future” if the federal government’s reforms were not adopted.

Gallagher has played a significant role for more than 30 years as a university lecturer, federal education bureaucrat, World Bank and OECD consultant and, since 2007, as Go8 executive director.

In his address, he mounted a powerful argument to try and persuade members of the Senate to vote in favour of a government bill – with some amendments – that would transform the nation’s higher education system.

The bill would allow universities to set their own tuition fees and would change the current system of government loans, known as HECS, imposing higher charges on students.

Deregulation the ‘new normal’

Gallagher said “the new normal in the debate” about the future of higher education was the necessity for deregulation of tuition fees for domestic undergraduate students.

“Everything else has been deregulated: enrolment volumes and tuition prices for international undergraduate and postgraduate education and for domestic postgraduate education, and enrolment volume for domestic undergraduate education – an accumulation of policy decisions of governments across party-political lines over the 20 year period 1988 to 2008,” he said.

“Just one policy pillar from the past remains stubbornly against the rising tide, but it is rotted and precariously propped up. The reform bill is a watershed. It has passed through the House of Representatives and is now before the Senate, and offers to align Australian financing policy for higher education in all four of its markets for educational qualifications.”

Gallagher said this alignment would remove some current anomalies and “perverse behaviours” arising from an unbalanced structure of incentives. He argued that almost the entire higher education sector was now calling for deregulating fees for domestic undergraduates.

Well, not quite everyone: university lecturers, students and postgraduates are deeply opposed, with the National Tertiary Education Union and student groups calling on senators to reject or impose substantial modifications to the government’s reform bill.

But Gallagher said supporters of the bill were united in the view that public funding, while vitally necessary, was too insufficient, too volatile and too unreliable to sustain an expanding higher education system of good quality.

“A greater diversity of income sources is essential. The mainstream debate is no longer about whether there should be tuition price deregulation but how best to bring it to effect,” he said.

“This is now the new consensus within the higher education provider sector [and] is the overwhelming view presented in submissions to the Senate committee reviewing the bill. It may be a position arrived at by some reluctantly but it is where they all are now.”

The new position was a radical change from the previous view that government funding – even when increasing – was never enough, that the federal government “in distributing the revenues it receives from general taxpayers should bear the large bulk of the higher education funding responsibility”.

As Gallagher also noted, this change in thinking had gone much further and faster than anyone would have envisaged even six months ago. It was in fact a major shift in the culture of expectations, “and there is no going back to false promises of former years”.

He said the former Labor government had lifted federally imposed limits on university enrolments for domestic undergraduates but then was unable to pay for them. Instead, it had cut funding for research, imposed “efficiency dividends” and left research infrastructure and mid-career researchers with little money at all.

The new conservative government had inherited “an incoherent policy framework with an unfunded set of fundamental needs”. If the reform bill was rejected, universities would be back where they were – or with an even worse outcome.

No alternatives

Gallagher said no plausible alternatives to the current government’s reform direction had been proposed and the status quo was harmful: “There is no release valve from the mounting pressure. Policy is drifting [and] higher education institutions need to start preparing for the 2016 academic year.”

He said the issues were not just about public and private providers of higher education and not primarily about students and the opportunities that could be opened or closed to them. It was also not just about governments and their spending and regulations but it was about greater freedom of consumer choice and greater room for provider innovation.

Over the past 25 years, successive governments had made cuts in higher education spending at one time and increases at another. In constant 2013 prices, however, the average annual per student funding rate had varied by A$4,000 (US$3,500) between 1989 and 2014.

With no capacity to even out these variations in spending and with student fees capped, universities had had to adjust their costs largely through staffing. The result was increased teaching-only appointments and more casual staff.

Since 2008, most universities had also increased domestic undergraduate enrolments, predominantly in lower-cost teaching fields to generate more income.

University student-to-staff ratios had jumped from 12:1 to 22:1 and unless changes were made this would increase to 30:1 or even higher – with serious implications, Gallagher said.

Domestic undergraduate enrolments had expanded by more than 200,000 or 55% over the past 17 years to 563,223 in 2013 and this scale of enrolment growth had “breached fiscal capacity limits”.

Gallagher said that although this rate of growth might slow over the next few years, it would then surge again with another 250,000 students by 2030. If participation rates also continued to rise, more than 300,000 additional young students could apply for university with an increasing demand from the adult population seeking higher qualifications as well.

Australia slipping behind

“The challenges ahead relate to more than domestic matters. On various indicators Australia is slipping behind other advanced nations, and the advancing Asian economies are rising much faster than us on measures of research capacity and performance,” Gallagher said.

“Australia’s citations per paper are just below the European average, well below Denmark, Sweden and the United Kingdom, and even further below the rates for the United States.

“Singapore has eclipsed Australia already on citations impact relative to world five-year trends. South Korea, China and others are gaining on us quickly. Importantly, these are lagging indicators measuring past research outcomes.”

He said Australian institutions previously ranked between 100 and 200 in 2005 global rankings had all fallen outside the top 200 by 2011 and were slipping further as mainly Asian institutions took their place.

This was likely to impact on Australia’s reputation in attracting international students, one of the nation’s major export industries and a source of business and diplomatic networks and social ties in the Asian region.

“No government can afford, without raising taxes or cutting other services, to keep expanding student participation unless it lets the quality of student learning experiences continue to deteriorate.”

With no government capable of meeting the increasing costs of higher education, funding had to be found from private sources, including graduates who gained financially from higher education, Gallagher said. It was “socially progressive to tap those who could pay more to extend the opportunities and improve outcomes for many others”.

Graduates on average had a salary premium over non-graduates of A$400 per week by age 30 and A$500 per week by age 35, he said. Government loan repayments over the average life of a loan were less than A$100 a week on average.

The structure of the loan scheme was such that no student had to pay tuition fees while studying and there were no up-front financial barriers to access by any group. Graduates were required to repay their loans only when their annual income exceeds A$50,637.

Students also had options and if some universities were too costly relative to the prospective benefits, they could shop around whether in Australia or elsewhere, Gallagher said.

Competition from rival providers, “including those with lower cost overheads and innovators with new approaches that challenge an existing oligopoly”, typically exerted a moderating influence on price.


We urgently need government support, but more than this we need a change in culture here in Australia, where anti-intellectualism becomes less rampant.

Christopher Weir on the University World News Facebook page