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Universities need funding reform, not more cuts

21 April 2016

A large cut to university funding will hurt Australia's innovation plans, writes Vice-Chancellor of the University of Sydney, Dr Michael Spence. 

Whatever happens on budget night, a 20 per cent cut to universities must come off the agenda.

The future of higher education funding remains uncertain, but the worst possible outcome for universities, students, potential students and the country would be for the budget papers to reflect a 20 per cent cut to universities without any option for them to recoup this income from elsewhere.

This dramatic scenario is not fiction. Indeed, it has been reality for universities since 2014, when then education minister Christopher Pyne announced the cuts assuming that deregulation legislation would pass the Senate (thereby allowing universities to increase student fees to cover the funding difference). As we know, deregulation was rejected twice by the Senate after much debate with a crossbench reluctant to support a reform which they thought was lacking the electoral mandate needed to justify its implementation.

Students walking through the archway at the University's Quadrangle.

"The worst possible outcome for universities, students, potential students and the country would be for the budget papers to reflect a 20 per cent cut to universities," Dr Michael Spence writes. 

In 2011, the Lomax-Smith report found that assumptions underpinning the funding of university places were out of date, and recommended funding be increased to improve the quality of higher education teaching. However, it elicited no policy response from the government. In fact, the Labor government's failure to increase public funding proportionate to the surge in enrolments following its 2012 decision to uncap student places significantly increased the financial pressure.

It was consequently chronic underfunding, rather than ideological agreement, that resulted in the majority of vice-chancellors supporting key elements of Pyne's 2014 proposal to deregulate course fees.

Two years on, we once again find higher education in the news cycle. Education Minister Simon Birmingham seems determined to present some type of funding reform on budget day, while the opposition continually reminds the government of the importance access to our best universities for those on average incomes. 

The fact that the government and the opposition are devoting so much airtime to such a crucial issue should be lauded. So too should be the fact that we have an Education Minister seemingly committed to tackling higher education reform while engaging with a notoriously fractious industry.

That the government's 2014 proposal to cut higher education funding by 20 per cent looks to remain a key part of its 2016 attempt at reform, however, is something that we should not be afraid to challenge.

As a vice-chancellor of a research intensive university I am excited about the government's national innovation and science agenda. Like Malcolm Turnbull, I believe Australia's future rests on the successful transition towards an innovation-driven economy. It will keeps us competitive, and ensure that our standard of living will remain among the best in the world.

It is thus paradoxical that the government advocates the importance of translating research into tools that will build the economy of the future while simultaneously proposing to cut funding to the very institutions where the majority of that research takes place. Indeed, universities can only act as the catalyst for innovation if they function within the right funding and policy settings.

The government must support our brightest minds with the right resources to bring out their best work.
Dr Michael Spence

Allowing universities to fully deregulate course fees is only one option. As I said in 2014, this would still be preferable to ignoring the issue of reform entirely. It would still deliver universities the requisite funds to ensure that unprecedented financial support could be provided to those from low-income families. Yet a significant increase in public funding to match the government's ambitious rhetoric regarding an "innovation economy" would be preferable.

The government must support our brightest minds with the right resources to bring out their best work. Increased investment will support the commercialisation of existing research and provide a stronger basis for innovation in the future. A better-funded system will lift the standard of Australia's teaching, as well as the quality of its research facilities: two critical factors in retaining and nurturing the talent that we need to spearhead our innovation drive.

Consequently, a durable reform package is probably one that combines an increase in federal funding, allows for at least partial-fee flexibility and encourages universities to spend the money that they have more efficiently. This combination would ensure that universities don't need to raise fees to make up for reduced public income, while also ensuring that the costs of degrees that will underpin the innovation drive are fairly paid for by both the taxpayer and the student.

The higher education sector stands ready to assist the government and the opposition in developing policies that safeguard our position among the world's best universities, while also ensuring we remain fair and equitable. This can only be done through recognising that current funding arrangements for higher education no longer work and that comprehensive and long lasting reform is needed.


Dr Michael Spence is the Vice-Chancellor and Principle of the University of Sydney. This article was first published in the Sydney Morning Herald. Read the original article.

The University of Sydney 2016-20 Strategic Plan

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