Master plan

Professor Richard Larkins

Monash Vice-Chancellor Professor Richard Larkins says the future of Australian universities are at a critical junction. During an address to the Melbourne Press Club, Professor Larkins outlined his plan for the future.

"The last dozen years or so have been a tumultuous time for Australian universities. The investment by the Federal Government in supporting the university education of its citizens fell by about 30 per cent per student in real terms between 1996 and 2004. This is at a time when other OECD countries were increasing their contribution to university education. This has been only partly compensated for by an increase in student contributions through HECS.

What has allowed universities to survive has been income from fee-paying international students. Only an average of 40 per cent of the income of Australia's public universities now comes from government. One quarter of students in Australian universities come from overseas and for most universities the income from these students is greater than the government income from the Commonwealth Grants Scheme.

Education is a business in its own right, and for Australia a very significant export industry earning $12.5billion. Only coal and iron ore earn more export dollars. Education is now ahead of tourism, and well ahead of our traditional agricultural products as an earner of export dollars.

So we should be rejoicing. The government contribution has decreased and a lucrative export market has been developed.

But it is not as rosy as it sounds. The increased number of students has not been accompanied by a parallel increase in staff numbers so student: staff ratios have risen in our universities from 14 to 1 to 20 to 1, a dismal ratio even when compared with the best universities in Asia let alone the elite universities in the USA and the UK. In addition, our buildings, lecture theatres and laboratories are struggling to cope. We cannot assume that the flow of international students will continue.

Public investment in research in universities through the national schemes has approximately doubled in real terms over the last seven years or so. This increase has paralleled increases occurring in most other developed countries. But unlike those countries, this has now plateaued and has not been accompanied by a comparable increase in research infrastructure. Given that investment by business and industry in research and development in Australia is close to the lowest in the OECD, the total investment in research and development is low by international standards.

Low industry investment in research and development is a particular concern. In a world where our wage structure does not allow us to compete on price alone, research and development is required to allow us to compete on innovation and quality. We are not making the transformation from traditional to high-to-medium technology exports that we must make if our manufacturing industries are to survive.

There are some promising signs. The new Federal Government has signalled a new constructive approach to partnership with universities. Business and industry have become aware of their importance. Both the City of Melbourne and the Committee for Melbourne released reports last year emphasising the importance of Melbourne's universities in the State's economy and the risks posed by underinvestment. The funding of the Australian Synchrotron by the Bracks Government was a visionary step which will help Victoria to be at the forefront of the development of high technology manufacturing and biotechnology in this country.

At the federal level, the Higher Education Endowment Fund introduced in the last federal budget by the Howard government is a step in the right direction but will provide in its current form only a fraction of the funds needed to address the capital needs of our universities. It is sobering to think that this fund, which is designed to address major capital infrastructure needs for our 39 universities, is less that one fifth of the endowment of Harvard alone.

During the election campaign, the focus of the "Education Revolution" was largely on early childhood education, schools and technical skills. Both parties made it clear that their market research showed that universities are not a big electoral issue. I believe that they could be and should be.

What is required is an awareness by government, business and industry that the future lies in a collaborative partnership where government and industry invest in our universities and the universities respond by ensuring that their education and research meet the needs of government and industry and indeed of the whole community. This is truly a win-win situation at a time when we cannot afford to lose.

The Rudd Government has foreshadowed that it will use "compacts" to determine funding packages to support the individual missions of our universities. There is little clarity yet about what these will look like, but unless there is an associated infusion of funds the ability of our universities to help our country to advance in the way it could, in the interests of all Australians, will be limited.

So what must we do? I believe these are the priorities that will ensure that we are real players in the knowledge economy of the 21st century. Most importantly, they are affordable and do not fuel inflation.

1. The progressive decline in the Commonwealth Operating Grants to universities must be arrested by introduction of a system of indexation analogous to the schools system;
2. The Higher Education Endowment Fund should be supplemented from budget surpluses and I would propose $2 billion extra added to the fund per year for seven years until it has built to $20 billion;
3. The "compacts" must be used creatively to allow innovative universities to achieve special outcomes in industry engagement, community development, research initiatives, leading-edge educational technology and international engagement;
4. The Innovation Review under Senator Kim Carr should lead to a substantial increase in the indirect costs accompanying research grants and the Cooperative Research Centre scheme must be modified so that it again becomes an effective mechanism for university/industry/CSIRO collaboration;
5. A national internship scheme will achieve a better match of graduate attributes to business and industry needs and help address the higher order skills shortage;
6. In the spirit of the "Sorry Statement" and the commitment to address Indigenous disadvantage, there must be more attention to Indigenous access and success at university;
7. Support for financially disadvantaged students must be enhanced;
8. A provision for the cost of laptop, computer hire or purchase, and home access to broad-band should be funded or allowed to be included in the HECS debt;
9. Finally, my personal view, not an official position of Universities Australia, is that the Student Contribution Amount for HECS students should be deregulated. There is no evidence that HECS is a disincentive for students and if our best universities are to be internationally competitive a step change in funding is required. Competition and the universities' own sense of fairness will ensure these fees are not excessive and the extra income will be used in part to support disadvantaged students.

The message that I wish to leave you with is that no institutions are more important to the future of Australia than our universities. Universities educate the leaders of the future, the innovators and the creators. They perform the research that will allow us to compete through innovation, technology and quality and the research that will allow us to mitigate and adapt to climate change, fresh-water shortage, soil degradation and other environmental problems. They reach out internationally and develop the cultural bridges and understanding necessary for world peace.