Adelaide and South Australia unis aren’t broke, so why fix them?

INSIGHTS & RESOURCES

Adelaide and South Australia unis aren’t broke, so why fix them?

The Australian
by Tim Dodd
27 June 2018

Key Takeaways:

  1. Australia has several large universities due to the higher education funding system, encouraging more students for increased research funding.
  2. The proposed merger of the University of Adelaide and the University of South Australia should be approached with caution.
  3. Both universities have been well managed and have improved in efficiency over the years.
  4. The universities are currently doing well, so the merger might not be necessary.

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Full Article:

Australia has, by international standards, a lot of large universities. The biggest, Monash, tips the scales at 60,000 full-time equivalent students. In actual student numbers (including part-timers) the total is around 75,000.

Why do our universities get so large? In the main it’s because of the design of our higher education funding system, which forces universities to skim student funding from the government, and tuition fees paid by students, to top up their research funding. More students equals more research money. And when our universities get so large, they also become very similar.

Britain hasn’t gone down the same route. Its biggest university, Manchester, has 40,000 total enrolments, just over half the size of Monash.

It’s true that universities need to be a certain size to reach economies of scale. But get too large and the economies are lost in unwieldiness and the cost of too little variety and lack of competition.

That is one reason why the proposal to merge the University of Adelaide and the University of South Australia should be viewed with a high level of caution.

Interestingly, the innovative “efficiency frontier” method of measuring university productivity developed by former Australian National University business dean Keith Houghton shows that both universities have been well managed in recent years. His method plots research efficiency against education efficiency year by year and finds they have both improved about 30 per cent from 2008 to 2016 and are close to the efficiency frontier determined by the most efficient institutions.

Houghton says present University of Queensland chief Peter Hoj deserves particular credit for his work as UniSA vice-chancellor up to 2012.

One conclusion to draw is that the proposed merger is not one of desperation, as both universities are doing well. That’s a positive because a merger forced by sagging performance is the worst.

But another conclusion is that even without merging and enduring the period of huge dislocation as they unwind overlapping courses and bring administrative systems and computer platforms together, they are improving in efficiency.

And that’s another reason to think that a merger is not necessary. The unis are doing fine.

There is growing anticipation that the federal government’s response to the Universities Accord review’s final report will come soon. Given this and the fact that the budget is less than a month away, it is timely to review one of the final report’s key insights.

Recently released analysis finds that one large Group of Eight university outperformed other public universities in its research and education productivity outcomes during the pandemic.

The joint and common cost problem arises where there are two or more outputs that arise from costs that are shared in the production of these outputs. In many situations, the ability to assign costs to these two or more outputs is not complex. But there are instances where it is highly complex. In these situations, there is a need to use advanced analytics to provide a valid and reliable estimate of costs.

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