Sydney skyline from the Quad

Universities Accord report highlights funding shortage

26 February 2024
Vice-Chancellor Mark Scott writes in the AFR that more investment is needed
If Australia is to have a world-class university system to sustain our standard of living and economic opportunity in a highly competitive world, we are going to need to invest far more in it.

One key theme erupts from the 408-page Australian Universities Accord report released yesterday.

If Australia is to have a world-class university system to sustain our standard of living and economic opportunity in a highly competitive world, we are going to need to invest far more in it.

The key findings of the report make it all the more remarkable that our universities have achieved as much as they have. We have much that is world-class. Australia, with 0.3 per cent of the world’s population, has nine universities in the global top 100.

But now we need to do much more.

The accord finds research isn’t adequately funded, the funding to educate students – particularly those from disadvantaged backgrounds – is inadequate, and there is no money for the infrastructure necessary to sustain excellent teaching and research.

It is tough for universities to make ends meet today, and it will be even tougher in the decades ahead with an expectation that by mid-century, at least 80 per cent of the population will need a tertiary qualification to meet the nation’s skills needs.

It is perplexing that the only revenue-raising measure proposed is a tax on universities themselves.
Vice-Chancellor Professor Mark Scott AO

The accord rightly focuses on equity. As I’ve often said, education is the most powerful tool yet discovered to overcome disadvantage and inequality. It changes families, communities, and life trajectories.

There will rightly be strong support for recommendations to increase participation rates of First Nations students, students from low socioeconomic status backgrounds and those from the regions. Setting clear targets around these key equity groups addresses the failed ambition of previous reviews.

The most crucial target, though, will be completion rates for these groups.

While participation is a prerequisite, it is not an achievement in and of itself. The achievement comes with successful learning, leading to graduation and, ultimately, valued employment.

What is at stake is too important to be left to best endeavours. A student dropping out before graduation, disillusioned and in debt, too often represents a personal crisis and institutional failure.

The objectives of the accord – to fund teaching more appropriately to reflect different student need; to move towards fully funding research; to build more diverse institutions to focus specifically on teaching and research specialisations – all are worthy ambitions.

But there is little detail or insight into how this will be done, let alone how to fund it. More work must be done to sort out the new teaching funding model, address the chronic research underfunding, and work out how to lead the sector with a new commission.

Tax on international students

Portrait photo of Vice-Chancellor Professor Mark Scott

Vice-Chancellor Professor Mark Scott AO

Given all that underfunding and uncertainty, it is perplexing that the only revenue-raising measure proposed is a tax on universities themselves to co-fund a new future fund with the Australian government.

It is scant on details, but the expectation is that universities will cough up half of the fund – $5 billion – and this will come from international students, research partnerships and philanthropy.

Let’s be clear: universities have been forced to rely on international student fee revenue to fund life-changing and lifesaving research because the relative contribution of the Australian government to the running of universities has dramatically decreased over the past decades.

The government’s contribution to R&D as a percentage of GDP has slumped to near the bottom of the OECD. The report rightly recognises this and wants to raise Australia’s current research spend. It should be a formal target and a national priority.

Therefore, it is a bizarre proposition to suggest that the pathway to improving a chronically underfunded university system is to tax those initiatives that have been used to prop up the underfunding.

This proposed levy on universities’ income sources will be rightly interpreted as a tax on international students and a tax on philanthropy. What an own goal.

International students have been critical to Australia’s economic prosperity and strength in the past two decades. They underpin our largest service export industry. They are crucial to meeting current employment demands and future skills gaps and are vital to our regional public diplomacy efforts.

It will be a hard sell to explain to them that some of their tuition fees will not be spent at the university where they are studying, just like it will be hard to explain to donors that their contributions to research and scholarship will also be subject to a tax bill.

We’ll await the government’s response to the accord with anticipation. This is one proposition that must be rejected outright.

The accord paper shows that quality higher education can transform the nation’s future. It is a compelling investment that pays off in terms of shared prosperity and overcoming inequality. We prioritise the spending now to reap the dividend over decades.

Nothing builds a nation like top-quality education. Around the cabinet table are men and women reaping the rich dividend of the investment made in their own education: lives transformed by the opportunity.

Now they can transform the lives of millions more for the generations that lie ahead. They need to fund the ambition of a great university system to secure the nation’s future.

This article was originally published in the Australian Financial Review. Professor Mark Scott AO is Vice-Chancellor of the University of Sydney and Group of Eight Chair.

Media Office

Related articles