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Ancora Imparo, July, 2008

2 July 2008

As we enter the budget setting process this year, we are faced once again with the dilemma of trying to deliver education at world's best standard and internationally first rate research in the face of funding for Commonwealth-supported undergraduate places and funding for research projects from ARC and NHMRC which fail to meet the real costs of these activities.

This problem has progressively worsened over the last dozen years with an absurdly inadequate formula for indexing the Commonwealth Grants Scheme which has delivered approximately two per cent per year increase when real costs have been rising by four to five per cent over the same time. By contrast, the secondary schools allocation has been fully-indexed and we now have the paradoxical situation where the Commonwealth allocates more funds each year to private schools than it does to its public universities for education.

The extent of the problem we face in this country was reinforced to me when I spoke at the National University and Design Forum. The speaker immediately preceding me was from the University of Pennsylvania. She stated that the student number at her university was 20,000, the recurrent budget $4b and the endowment $6.6b. In other words each year they have three times as much money as we have to educate one third the number of students and an endowment 25 times ours. Even so, their endowment is modest when compared with Harvard's $36b.

I mention this not in the sense that we should despair, but rather to emphasise that like other Australian universities we have to be both very smart and very efficient to be able to compete internationally. Monash has performed superbly in these respects but each year the dual constraints of decreased public funding for education and a highly regulated environment with respect to the fees we can charge undergraduate domestic students make the problem more difficult.

In this context, it is essential that the Bradley Review of Higher Education and the Cutler Review of Innovation convince the Government that our universities must receive more funding if they are to continue to be internationally competitive. This is necessary not merely because of our international standing and reputation but because the future of our economy depends on an adequate supply of well-educated and innovative new graduates and on research to allow our industries to compete on innovation and quality rather than forlornly trying to compete on price. We must also have quality universities to do the research necessary for environmental sustainability. This of course relates to water, clean energy and agricultural sustainability where technological and economic solutions are urgently needed.

At the very least, an outcome of the Bradley Review has to be either markedly elevated public funding of Commonwealth supported places or else deregulation of the fees charged to undergraduate domestic students. More radical solutions such as portable learning scholarships for students in a deregulated environment make a lot of sense from the point of view of flexibility of choice for students and breaking down boundaries between the VET/TAFE sector and universities so they should also be considered.

The Cutler Review must lead to full-funding of research. At present, for every dollar of research funding received from ARC and NHMRC the University has to subsidise around 40c as the infrastructure funds attracted by the grants have not kept up with the increase in the research funding. Quite simply, it costs forty per cent more to do the research than the funding granted.

Of course, more profound outcomes from the Cutler Review might also be hoped for, such as major funding to encourage research clusters incorporating universities, CSIRO and industry – there is no more exciting such cluster than that around the Monash Clayton campus.

Another element contributing to the eddies and currents of the debates around the reviews is the concept of "Compacts". They have been a feature of the Labor Party platform since the Macklin white paper of 2006. Nobody is sure what they will encompass and how they will be administered. They are intended to cover areas such as community and industry engagement, regional development and special initiatives for disadvantaged groups and to encourage diverse missions for different universities.

The sector in general and Monash University have high hopes that the real value to the Australian community of our universities might be recognised following the handing down of the reports of the two reviews. It is essential that this leads to significantly more funding or a more deregulated environment. Anything less will be to the real detriment of the future of our country.

Meanwhile, we face a very difficult budget setting process for 2009.

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