The University for business

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Future Business Models Seminar, Bristol, 1-2 May
2008 Australia Malcolm Gillies
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Australia

• . . . the main lesson Britain can offer
  Australia on the funding and organisation of
  higher education is how not to do it.
• (Nicholas Barr, Higher Education in Australia
  and Britain What Lessons?, Australian Economic
  Review, 31/2 (June 1998), 179-88 ( p. 179).

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Australia Canada provincialism

• Like Canada, a federation of states/provinces
• Like Canada, education is a state/provincial role
• Like Canada, HE markets are not yet national
• Unlike Canada, federal government major funder
• Unlike Canada, very high HE international
  students (trade vs. aid)
• Unlike Canada, immature development culture
• Like Canada, sluggish private RD spend

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Australian HE Principles

• Citizen entitlement
• Once No fees (1974)
• Then ex post cf. ex ante loans (1989)
• Now voucher proposals (1998/2008)
• Equalisation of services
• Once Equity in admission
• Then University education in your region
• Now Access education

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Australian HE principles

• Institutional diversity of mission
• Once by region
• Then by social diversity
• Now by function (education, research, KT)

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Australian HE

• Tension in research/education relationship
• Tension in school/FE/HE relationship
• Pre-2007 (Federal, right wing)
• Education, Science, Training
• Post-2007 (Federal, left wing)
• Education, Employment, Workplace Relations (and
  Social Inclusion)
• Innovation, Industry, Science and Research

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Recent Australian HE successes

• Internationalization of student body and
  curriculum (driven by funding shortages?)
• Innovative student choice (double degrees,
  specialist Masters)
• Common quality assurance
• Growth in government research funding spend

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Recent Australian HE failures

• Over-uniformity of system (too unified?)
• Questionable quality enhancement (Staffstudent
  ratios)
• Confusion over role of research
• Failure to maintain early momentum in access

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Education funding features

• Government education funding (by subject band,
  course, home student, region)
• Undergraduate and research home student funding
  (by subject, course, across nation)
• International student funding (by program, by
  institution, full-plus fee)
• Postgraduate home student funding (by program,
  institution, cost-plus recovery)
• The current challenge compacts
• A move from pseudo-market competition to
  government investment in a plan?

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Research funding features

• National research-council grants
• Institutional general research support (formula)
• Institutional research infrastructure (formula)
• Private/industry/charity collaborations, KT
• Commercialisation earnings

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Other funding features

• Donations, development, alumni giving
• Services (accommodation, conferences)
• Australian Endowment Fund distribution
• Once-off grants and loans (public, private)
• Investments, IP royalties etc.

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Loans

• Early and successful adoption of HE income
  contingent loans, and export of model
• Part of reliable taxation system (cf. banks)
• Generous time allowance (now 7 years)
• Mainly for undergraduate fees
• Not successful for living allowance
• For residents overseas mobility questions
• Questionable incentives 0 real interest rate

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Current issues 1 Compacts

• Labors compacts would be the new long-term
  funding vehicle for universities
• (Julia Gillard, New funds off until 2010,
  theaustralian.news.com.au, 19 March 2008)
• These compacts will provide public universities
  with greater operating autonomy within a total
  funding envelope.
• (Julia Gillard, dewr.gov.au, 13 March 2008)

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Compacts

• Review of Australian Higher Education (2008)
• First key objective
• . . . quality, responsive institutions
  following clear, distinctive missions
• (dewr.gov.au, 13 March 2008)

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Compact responses Go8

• Each university should be funded for what they
  do and for how well they do it. This suggests a
  combination of activity-based funding and
  performance-based funding.
• Six principles underpinning compacts
• Autonomy Fitness for Purpose Accountability for
  Outcomes
• Simplicity Transparency Predictability.
• (Alan Robson, Compact funding for diversity,
  go8.edu.au, 3 April 2008)

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Compact responses Go8

• We are more likely to see diversity flourish
  when we address policy comprehensively across the
  whole tertiary sector, including institutional
  accreditation, financing mechanisms and student
  income support . . There is greater diversity
  within the university sector in provision for
  international than for local students. Outdated
  boundaries and regulatory arrangements are
  holding back structural reform across the
  domestic tertiary system . . . (Michael
  Gallagher, go8.edu.au, 17 March 2008)

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Compact Responses Model?

• Investment in a Plan (NZ Tertiary Education
  Commission)
• The new way of investing will ensure tertiary
  education organisations are funded to deliver
  quality education and training that is relevant
  to students, their potential employers and the
  communities they live in. How they will do this
  is outlined in each organizations Investment
  Plan. (TEC announces 2.2 bil investments for
  2008, scoop.co.nz/stories, 14 December 2007)

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Investment in a Plan?

• There are signs that planning for tertiary
  education in New Zealand will become
  incentive-driven funding by Government to run
  courses required by Government, to steer the
  system towards Government goals. . . . The new
  investment in a plan funding system is designed
  to achieve results sought by Cabinet in 2004
  (John M. Jennings, The role of the New Zealand
  Universities Academic Audit Unit, nzuaau.ac.nz,
  3 November 2007.)

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Current issues 2 Vouchers

• Citizen entitlement in the age of investment?
• a universal entitlement to an income contingent
  loan and, for meritorious and needy students, via
  national tuition scholarships
• stronger use of demand-side incentives in
  steering the development of the tertiary system.
• (Michael Gallagher, go8.edu.au, 17 March 2008)

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Vouchers and policy

• The Government could determine the number of
  scholarships to be awarded each year and the
  division of scholarships between school leavers
  and others. Additionally, the government could
  weight some scholarships to encourage increased
  flows of students into occupations of skills
  shortage or to promote the participation of
  under-represented groups. (Michael Gallagher,
  go8.edu.au, 17 March 2008)

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Australian HE in 2008

• Government as a co-investor in HE along with the
  students, industry and philanthropy
• Still strong principles of citizen entitlement,
  equalisation of services, diversity of mission
• Increasing blurring of public/private
  distinctions and national/international
  distinctions
• Does government have a sufficiently privileged
  role any more? Just another investor at the
  table?

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Business models A parting thought?

• Universities are not businesses you would want
  to buy (Paul Greenfield, Univ. of Queensland)
• . . .
• But perhaps your business school could be
• (Alec Cameron, Australian School of Business,
  UNSW)