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Universities: Who needs them? Value and Benefit of Australian Universities — Glenn Withers

Keynote for World Access to Higher Education Day (WAHED) Australia  28 November 2018  Curtin University, Perth

Glenn Withers[i], Australian National University (ANU) and the University of New South Wales (UNSW) Canberra.

Criticism of Universities in Australia

Let me start by recalling that, at Universities Australia we became quite used to a regular ritual cycle of criticism of Australian universities:

  1. Once a year when ARC grants were announced, those with esoteric titles would be denounced by backbenchers in parliament.
  2. Once a year when state auditors general would report on university accounts, those in the red would be excoriated in the media.
  3. Once a year when graduate survey results were released, business organisations would excoriate universities for not producing work-ready graduates. Plus,
  4. Whenever a student or staff protest became a little excitable, a cry from commentators would call for funding penalties

There are, of course, countervailing considerations for each of these concerns.

Let me take each of them in turn, as this is one way to guide us through the question I was given of the “Value and Benefit of Australian Universities”:

1. Grant Relevance:

Professor Ian Gust has pointed out that neither Elizabeth Blackburn’s studies on single cell pond dwellers nor Peter Doherty’s work on choriomeningitis in mice would have passed some backbencher “pub tests”, but they did impress the Nobel Prize Foundation.

Or note the leading ARC grant application cancelled by then Minister Birmingham looking at the Straits of Gibraltar. Guess which issue almost stopped the Brexit deal last week due to Britain’s misunderstanding of the Spanish psyche on the Gibraltar Straits?

Or think of the esoteric titles in social sciences ranging across computable general equilibrium analysis to utilitarian ethical paradoxes, and then look at what such social science analysis has brought to the very foundations of this nation, ranging from Medicare through HECS to immigration points and compulsory superannuation (see Annex 1).

And were we to add up their economic significance, this would be a very impressive dollar contribution to the nation indeed.  Which brings me to university research funding.

Let me ask: Do we really need a government national interest test here, as emphasised by current Education Minister Tehan? Well actually they have one and it is deficient, as Senator Tehan helps us understand. To borrow his phrase, “it beggars belief” that the government’s own statement of national priorities does not mention research into regional higher education!!!

Better though than trying to fix this broken system would simply be increasing research funding to the benchmark of OECD research to GDP shares, and achieve this by:

  • allocating universities all present block and competitive government research funding as a block grant and increase it by 50 per cent
  • do likewise for applied research through the TAFE system, just as government does already in other massive areas of public R&D funding such as DSTO, BoM etc.
  • institute a revenue contingent loan scheme based on private research partnerships with universities and TAFES etc.

(Call these Recommendations One, Two, Three)

In the process, the government would eliminate the massive inefficiency in the present competitive grants scheme arrangements. If you impute the value of the voluntary time devoted to grant processing and gave it instead for universities to administer, front-line research could increase massively.

Moreover, to come to the economics, research pays a social rate of return of 20-30% (yes, with huge variance but massive pay-off by the winners -think Gardasil, Wi fi, Child Support innovation), way ahead of the public hurdle rate for good investment. It can be at the core of a new Australian future that transcends our present political impasse.

2. University Budgets:

Almost all universities in Australia are not-for-profit entities such that red or black on the bottom line in any one year is a poor indicator of financial management success, but there has never been a sector deficit or bankrupt university in this country.

Moreover, the Australian taxpayer does get such excellent value for money because universities here receive only 40% of their revenue from the taxpayer (including HECS subsidies) unlike, say, a European norm of 90%, which did once also apply in Australia (chart 1).

To adjust in this way while building Australia’s number three export industry (after the easy ones of iron ore and coal) does rather speak to the management efficiency of the university sector in this country.

Australian education exports totaled $32.2 billion in 2017. Total Commonwealth government funding of universities in that year was $10.77 billion. Not a bad rate of return in that dimension alone.

3. Graduate Capabilities:

Whatever employers might say, they are evidently willing to pay a substantial premium for university graduates, as seen in the familiar age-earnings profile analysis shown in chart 2. The average graduate still receives more than $1.5 million across their lifetime compared to a school-leaver with no further qualifications.

Moreover, it is worth adding that education is a mutual responsibility such that firms have their own rarely discussed or acknowledged obligation to be ‘graduate-ready’, especially for firm-specific skills. Regrettably, surveys of global management standing put Australian management well down the rankings, and especially so in areas such as human resource management. A little more co-operation and a little less blame-shifting would help. To this end I once proposed a National Internship Program at the request of Prime Minister Kevin Rudd. His departure meant it was lost, but it is still there in a bottom drawer for any party looking for good ideas (Recommendation Four).

For the part of the universities, more attention to interdisciplinarity and to more generic personal skills would assist. The Chief Scientist is on record as opposing any watering down of rigour in education, such as for the teaching of mathematics, including in schools. He is half right. Equally each Secretary of Prime Minister and Cabinet regularly makes speeches as to the need for knowledge integration. These too are half right. Put them together and we are closer to an answer: we can have it both ways.

What is wanted is rigour plus. It is, for example, not a choice between hard skills and soft skills. Good pedagogy blends them. What is taught matters. So does how it is taught. A great math class can still matrix teach using methods that advance class leadership, diversity, integration, communication and more – all while actually enhancing core mathematical capability and understanding. Improving STEM pedagogy would go a long way to improving STEM employability, which continues as an issue. And HASS can do the same.  It is wrong to assume or imply that rigour and personal skills are inherently antithetical. For universities, they must advance this form of blended teaching, A dedicated Enhanced Teaching Fund from government would assist. (Recommendation Four).

Chart 2. The Age-Earnings Profile, Australia, by education level.

4. Academic Freedom:

See comments on Grant Relevance above!

But to take the argument further, contestation over ideas is the essence of the academic freedom that has kept universities as a core enduring human institution across several thousand years

While functional in narrow economic terms, let me emphasise also matters beyond the felicitous calculus and just look to make the point at the role of Australian thinkers from the social sciences and humanities whose ideas have been hotly contested and criticised and yet ruled the world.

Just look on a global scale at such Australian impacts on the wider world and the associated thinkers such as:

  • female liberation (Germaine Greer)
  • gay rights (Denis Altman)
  • animal rights (Peter Singer)
  • nuclear disarmament (Helen Caldicott).

Australians may only be a small percentage of the world population, as hard-core climate sceptics are want to remind us. But, by heavens, we can ‘punch above our weight’. Danny Green here in Western Australia could be added to the list- and no doubt these days would be a product of one of the sports degree universities.

Let us hope here then that Western Australia’s own Justice French, Chancellor of UWA, in his recently appointed task of examining regulatory arrangements for academic freedom in Australian universities, can be constructive in supporting and enhancing and not inhibiting the market place of ideas that underpins the role of the universities in these ways. And I hope he will see fit to talk to the Learned Academies as well as the universities in the process. They have complementary insights and the senior scholars have a voice less beholden to management that merits some attention that is neglected in my humble opinion. A modest lift in the National Academies modest grant, for which we contribute huge pro bono amounts in return and pay high membership fees, would help in the contestation of serious ideas in tertiary education in Australia. (Recent products such as our work on Precision Medicine show the value). (Recommendation Five)

Knowledge Beyond the University

Now, I am focusing on universities here first because that is what I know best. But it may seem strange, because so much of transmission of knowledge precedes the university. We normally think of a pyramid of knowledge (Chart 3)

Chart 3: The Pyramid of Formal Knowledge

What is exciting though is that primary education is now nearly universal and that by 2040 so will be secondary education. The pyramid of chart 3 is becoming more of a Tower of Knowledge, just like the age pyramid of demographers and, in part, for some common reasons.

According to the education economists Barro and Lee:

  • Transformation has taken place now in the twentieth century from elite education across and within countries to modern massification of schooling (though Sub Sahara, Rural, Female, Quality issues) (see Chart 4)
  • By 2040 the historical world of educational disparity in attainment will have gone for schooling. All across the globe education to completion of secondary education will be near universal.

Chart 4. Global Patterns of Primary School Access, 1991-2010, by region (enrollment share).

In a world where so much is dismal, such a fundamental advance is a source of considerable solace.

Moreover, I think there is much we can look forward to, as global participation in tertiary education increases. It is the next true frontier in global development.

Australia has somewhat actually helped lead the way here already. Consider the two following facts:

  • Australia is immensely attractive to international students. The British Council accords us a top internationalisation rating.
  • Australian domestic higher education participation is now leading in the OECD. The Lisbon Council accords us a top system rating.
  • We have the highest or next to top share of any country’s universities in major international rankings 1-500: SJT, QS, Times

Now note that, for those interested in equity analysis, this is for the Australian system as a whole. All our universities are good.

As I put it in a recent interview for the Campus Morning Mail:

  • “Despite all of the pretensions of the Group of Eight to be so much better than the others, all Australian universities are very good. I know I am in a good university wherever I go within the Australian university system – which I can’t say of the US nor of Europe.”
  • “What helps to make it so good includes “the things that don’t get much of a guernsey – our university insurance system Unimutual; Unisuper; AARNETand the way we developed the broadband for our universities, quietly and brilliantly; IDP is a global leader in international education: those elements, I think, have made us a really good university system.”
  • Australia’s universities are not complacent and are always pushing ahead. They have been innovative in areas like international education, distance learning, and work integrated learning – there’s a range of things they’ve done that have kept them in the game when government has reduced funding. They have found these other sources of revenue.

But the game is that of a squirrel in a barrel, running to stay in place. The more the universities are successful, the more the government withdraws funding and, bizarrely, the more it also seeks to impose regulation despite its progressive abdication from the field.

The price has been especially[ii]:

  • a rising managerialism in the universities leading to high administrative costs and frustration and loss of academic focus and purpose (see Annex 2)
  • a rising compromise to the student experience especially in class size and academic expertise, and study hours, as seen in our comparative international student standing on this criteria.
  • a functionalist approach to international education rather than a balanced focus on two-way education, research and engagement.
  • failure to properly address equity in tertiary education. Middle class domestic female participation increase has been great as has that of middle-class internationals. But what about the workers?

Conclusion: What can we do better?

Let me focus on equity, given the nature of this conference.

Well, lower socioeconomic absolute numbers have indeed increased with massification, which is good. But relative numbers have not. Moreover, the alternative post-school paths for non-university advancement have immiserated.

Essentially, publicly funded vocational education and training has had its government support relatively reduced, even more than has higher education. Private vocational education and training, largely unsubsidised, has expanded to fill the vacuum and indeed to encourage some governments to further reduce vocational support.

In Australia, vocational education and training is much more a state and territory responsibility than universities, despite most universities being established under state legislation. But states and territories finances have become increasingly derivative of the Commonwealth government because Australia has the highest vertical fiscal imbalance of any OECD federation. This means that the states and territories have responsibilities way ahead of their revenue capacity and so they must largely accept the Commonwealth’s funding priorities. In particular this has. favoured universities over vocational education in recent decades[iii].

The fundamental solution would be to reform Australia’s federal system with more taxing power accorded the states in line with global best practice. For example, shifting the burden of taxation more to the GST and away from personal and corporate income tax would facilitate this.

In the absence of this a full and integrated independent review of Australian Tertiary education is needed under, and reporting to, the Council of Australian Governments.

The Commonwealth determines the COAG agenda so that considerable pressure must be placed upon the Commonwealth to commit to this. This review would have particular attention paid to the equity aspects of the full system, as well as its pathways integration. VET has long been more a vehicle for lower SES studies. But in a modern revision it could integrate better and allow cross-flows better. (Recommendation Six).

Parallel to this there has been ongoing neglect in Australian policy of student support. There are welfare arrangements in place for very poor students and those in some special categories such as rural and regional. But these are not generous and often tightly means tested. As a result, many potential and able students with less well-off parents choose to work instead of study. And when they do study, they often require market work to fund their living costs. Indeed, Australia has one of the highest levels of paid work when studying part-time and full-time in the OECD. This means that the educational productivity of their studies is substantially diminished accordingly.

A thorough review of student income support is really necessary to ensure that study that is best for the persons and for the nation ensues. This is not the case at present. One policy that should be looked at to assist is the extension of HECS to also permit borrowing for living costs support, so as to allow students to focus on studies but not burden the taxpayer even further. The repayment burden, especially its timing, would need to be designed to assist this process. (Recommendation Seven)

Finally let me return to the theme of an unbalanced internationalisation. Australia could do much more to retrieve its profile as a supporter of developmental education and training and to ensure Australia itself shares in the insights to be gained from collaborative education, research and engagement beyond our borders and with our neighbours especially. Another modest measure would be government support for Australian participation in the World Bank’s Global Development Learning Network Recommendation Eight).

So here too is how innovation can unleash both efficiency AND equity as an underpinning for the Australian future. More can be defined too[iv]. We can break out of our impasse. And inclusive growth [v]through tertiary education and research should be at the very centre of this.

Summary of Policy Recommendations in this Address

  1. Allocate universities all present block and competitive government research funding as a block grant and increase it by 50 per cent.
  2. Provide new block grant funding for applied research through the TAFE system, just as government does already in other massive areas of public R&D funding such as DSTO, BoM etc.
  3. Institute a revenue contingent loan scheme for innovation based on private research partnerships with universities and TAFES etc.
  4. Ensure university teaching skills are enhanced via blended learning pedagogy that advances rigour while also advancing soft skills.
  5. Lift the National Academies grant by 50% and ensure consultation for academic freedom and national interest reviews.
  6. Establish a full and integrated independent review of Australian Tertiary education, reporting to the Council of Australian Governments.
  7. Undertake a thorough review of tertiary student income support including examining the possible the extension of HECS to also permit borrowing for living costs.
  8. Provide government support for Australian participation in the World Bank’s Global Development Learning Network.


Take the Triple Bottom Line of economy, society and environment:

  • setting monetary policy (think Adrian Pagan)
  • developing compulsory superannuation (think Richard Downing); or
  • managing water (think Quentin Grafton)

Or look to the social science knowledge contribution to health, education and welfare (HEW):

  • the development of Medibank (think John Deeble)
  • the funding of higher education (think Bruce Chapman); or
  • providing child support through parental payments (think Meredith Edwards)

And what about our foundational institutions for law and justice and looking to, say:

  • native title (think Larissa Behrendt)
  • equal pay wage setting (think Sue Richardson); or
  • urban planning (think Patrick Troy).

Not to mention our links to the world through:

  • immigration points (think Charles Price)
  • APEC (think Peter Drysdale); or
  • trade policy (think Max Corden).

and our contributions to the world from:

  • plain packaging of cigarettes, (think Simon Chapman) through
  • reintegrative justice (think John Braithwaite) to
  • agricultural export management (think John Crawford).


Keep an eye out for the following in a university:

  1. Parking reserved for office-holders burgeoning

  2. Business class travel for office-holders (but not academics)

  3. Conference attendance fees paid for office holders from general budgets (but not for academics)

  4. More and more building entry requiring identity cards

  5. Visiting faculty required to complete “person of interest” forms

  6. Decision-making and deliberative committees reserved for office holders

  7. Academic Senate, Faculty, and Department committee meetings abandoned

  8. The share of casual and fixed term staff rising inexorably

  9. Ruritanian titles such as deputy assistant pro vice president for this and that proliferating

[i] Professor Honorary ANU and Adjunct Fellow at UNSW Canberra. President of the Australian Council of Learned Academies. Chair of the Global Development Learning Network.

[ii] GlennWithers (2014), The State of the Universities”, in M. Thornton (ed.), Through a Glass Darkly. The Social Sciences Look at the Neoliberal University, Canberra: ANU Press,103-117

[iii] Glenn Withers, Australia’s Federal Future, Melbourne: Council for the Federation, Paper 1, 2007 (with Ann Twomey)

[iv] Glenn Withers (2019), “An Australian Humanities Crisis?” in D. Ahlburg (ed), The Changing Face of Higher Education: Is there An International Crisis in the Humanities, London and New York: Routledge (forthcoming).

[v] Glenn Withers (2018), “Inclusive Growth: hybrid policies into the future” in R. Breunig and M. Fabian (eds), Hybrid Public Policy Innovations: Contemporary Policy Beyond Ideology, London: Routledge.

[vi] Glenn Withers, Veritas Redux, Canberra: Academy of the Social Sciences in Australia, Cunningham Lecture, 2018 and Withers, G. (ed.) (2017), The Social Sciences Shape the Nation, Canberra: Academy of the Social Sciences in Australia (with P.Hanasz plus J.Beaton, L.West, M.Radcliffe and S.Kumar).


Posted 29 November 2018 Posted in General, Low SES