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The international evidence for higher-education reform cannot be ignored

By John Hay - posted Thursday, 27 February 2003

Recent news reports inform us that the Minister for Education, Science and Training, Dr Brendan Nelson, has had his long-awaited package of higher-education reforms approved, in general terms, by Cabinet. While there is still some final tinkering to be done and no one seems to know exactly what is in the package, rumours are rife about the potential impact on students, academics and other stakeholders. We await the detail with a mixture of excitement and anxiety because these policy and funding decisions will have far-reaching consequences for the future of all Australians. Without a strong culture of education, research and innovation we will jeopardise our international competitiveness.

In our submission to the Government's Crossroads review of higher education, the Group of Eight put forward proposals aimed at delivering a tertiary education system capable of playing a leading role in the nation's economic development and its engagement with the world.

If there was ever any question of the economic impact that the education and research conducted in universities can have, one need only consider the results of the BankBoston Economics Department's 1997 study of the economic and job impact of the teaching and research conducted by the Massachusetts Institute of Technology.


The study, the first of its kind, found that if the companies founded on MIT graduates and faculty formed an independent nation, the revenues produced would make it the 24th largest economy in the world. The 4000 MIT-related companies employed 1.1 million people and had annual revenues which equated to a GDP of $116 billion. This was only slightly below the then GDP of South Africa and above that of Thailand.

The Blair Labour Government's White Paper: The future of higher education promises a six per cent real increase in public funding for Britain's universities for each of the next three years. Under the proposal, public funding for university research alone will increase by £1.25 billion or 30 per cent in real terms per year ($A3.36 billion) by 2005-2006.

The British funding increases will be accompanied by the introduction of a HECS-type loan system, and universities will be given the freedom to charge undergraduate course fees within certain limits. In committing to these reforms and more, the British Labour government has recognised the critical link between Britain's future economic and social wellbeing and harnessing the talents of its people.

Shortly after the release of the British White Paper, Australia's Productivity Commission released a report: University Resourcing: Australia in an International Context which confirms what anyone who studies or works in the sector already knows - without substantial reform and extra government support, Australia's university system risks being left behind those of comparable countries.

While the Commission found Australia's performance on a range of criteria mixed, it confirmed that total public and private spending on higher education in Australia as a percentage of GDP has declined dramatically since 1995, that student-teacher ratios have increased from around 14 students per teacher in 1993 to almost 20 students per teacher in 2001 and that 59 per cent of Australians are now expected to enter higher education at some point during their lives.

What the Commission failed to do, however, was quantify what these changes actually mean for students, their teachers and the wider community, or to adequately examine the amount and quality of research and development activity in our universities. New technologies and changed work practices have delivered some efficiencies that could expect to see a reduction in the proportion of staff to students but we have now reached a point where the quality of the student education experience is affected.


While the past 10 years have seen a dramatic rise in the number of Australians wanting to access higher education, budgetary pressures have forced universities to cut staff resources and infrastructure developments and to increase sources of non-government funding. Many university budgets are now being supplemented by revenue received from full-fee paying domestic and overseas students as well as from the commercialisation of research and consulting activities. This is being done against a backdrop of high levels of government regulation. A sustainable university system, especially one that fosters excellence in teaching and research, requires policy settings and funding support that recognises and rewards strengths while also granting sufficient autonomy to the individual universities. The resulting diversity within the university sector will enhance the teaching and learning experience.

The government has made much of the point that the threats of war and terrorism, the cost of the drought and global economic uncertainties mean there will be little if any new money in the budget for higher education, at least in the short term. However, The Group of Eight remains hopeful the package recognises that for Australia to meet challenges such as these into the future, and to have any chance of ensuring a prosperous economy, Australia needs a world-class university sector, one able to generate innovative ideas and produce highly skilled graduates.

The Group of Eight proposal recognised the reality that Australia's university sector today is vastly different from that of 20 or even 10 years ago. Like the British White Paper, it recommended that universities receive additional funding per student place, but also be able to vary fees. Funding for research would focus on areas of strength and performance. Resources meant for teaching would not have to be diverted to fund research and greater investment by industry in R&D would be encouraged through incentives.

Our proposal was based on the view that a healthy university research capacity, capable of achieving the results of an MIT can only be built on a platform whereby universities have adequate resources to discharge their teaching and general operations. Without adequate staff and infrastructure Australian universities cannot hope to match the standards realised in overseas institutions - nor produce the benefits that flow to the community.

Overall, the system the Group of Eight envisages would be characterised by improved resource levels, improved outcomes from both teaching and research and thereby improved returns to the nation. The essential elements to achieve these outcomes are an adequate rate of public funding per student and greater freedom for universities to set the price for the courses they teach. It is the Group of Eight's strong view that the long-term solution does not lie in simply throwing more money at universities but in giving them more freedom in the way they generate income and provide their services.

The release by the British Government of its vision for the future of its higher education system, our own reports produced during the Crossroads review and the Productivity Commission research exercise, put the case for the need for reform beyond question. The stakes involved for the nation are simply too high to ignore the warning signs. A balanced and considered package of reforms is needed. On budget night we will know if the Government has got the mix right.

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About the Author

Professor John Hay is Chair of the Group of Eight Universities and Vice Chancellor of the University of Queensland.

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