Government approach to efficiency can hurt unis: Houghton

INSIGHTS & RESOURCES

Government approach to efficiency can hurt unis: Houghton

The Australian
by Bernard Lane
16 August 2017

“……..Year after year universities have made productivity gains but not of the scale that could consume $1.2 billion without some consequences,” said researcher Keith Houghton, a former business dean at the Australian National University.

With colleagues he studied the efficiency track record of universities, finding a sector-wide productivity increase of 15.2 per cent between 2007 and 2013.

However, the performance of individual universities varied widely, with some showing great efficiency and others struggling. And although all institutions benefited from system-wide changes such as better technology, only half were able to lift their institution-specific efficiency.

“The way the government has (handled this 2.5 per cent efficiency dividend) it seems to imply that every university is equally efficient or inefficient — that’s just not true,” Professor Houghton said.

“Overall, the industry has done well in terms of efficiency, it has been saving the taxpayer.

“But there are a small number of universities that, when you look year on year, they have either stagnated in terms of efficiency gains or, in one or two cases, they’ve actually going backwards.

“If I was the federal government, I would want to know which those institutions are — to try to support them to turn around that level of inefficiency.”

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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