Simon Birmingham tells unis: the pressure to constrain funding won’t go away

INSIGHTS & RESOURCES

Simon Birmingham tells unis: the pressure to constrain funding won’t go away

AUSTRALIAN FINANCIAL REVIEW
by Tim Dodd – Education editor
29 August 2017

Key Takeaways:

  1. Universities should not expect the pressure to constrain funding on higher education to disappear.
  2. Birmingham defends the proposed $2.8 billion cuts for higher education, citing the government’s budget deficit.
  3. University leaders disagree, arguing they have been unfairly targeted for cuts.
  4. The Education Minister suggests that technological adoption and modernizing teaching practices can bring efficiencies without compromising education quality.
  5. Professor Margaret Gardner, Universities Australia chair, opposes increased productivity calls and criticizes funding reductions, warning of unintended risks and consequences.

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Full Article:

Federal Education Minister Simon Birmingham will bluntly tell universities they are “kidding” themselves if they think the pressure to constrain spending on higher education is going to go away.

In a speech to The Australian Financial Review Higher Education Summit on Wednesday, he will accuse them of “resting on their laurels with easy taxpayer funding flowing into their coffers”.

In his speech he strongly defends the need for the $2.8 billion cuts the government proposes for higher education over the next four years, including a 4.9 per cent efficiency dividend.

“The need for budget savings should be self-evident. The Commonwealth government remains in deficit, has been for nine years,” the minister will say.

Legislation for the cuts is expected to go to Parliament soon but the government is struggling to get support to pass it in the Senate.

Senator Birmingham’s tough line puts him on a collision course with university leaders, who believe they have been unfairly targeted for cuts to help repair the budget deficit.

On Tuesday, Universities Australia chair Margaret Gardner told the summit that without a clear nation building strategy and clarity around the role of tertiary education there was a risk “our university sector will continue to be seen by government mostly as a site for further savings for a federal budget driven by extraneous budget repair priorities”.

Senator Birmingham will say that the huge growth in student numbers in recent years should offer economies of scale, and that other productivity improvements are also available.

“Surely there are efficiencies that can be gained from adoption of new technologies. Surely there are work or teaching practices that can be modernised,” he will say.

“There are plenty of areas where universities can manage their costs within their available revenues – savings and efficiencies don’t have to go to the heart of teaching, learning or regional campuses.”

He will cite research by former ANU business and economics dean Keith Houghton, reported in the Financial Review, which showed universities had scope to save at least $2 billion over the next four years if institutions with lower productivity matched those which were more efficient.

No ‘nickel and diming’


On Tuesday, Professor Gardner, who is also vice-chancellor of Monash University, hit back at calls for increased productivity saying that great reform in higher education didn’t come from “nickel and diming” the efficiencies.

In her opening keynote to the summit Professor Gardner said universities were continually becoming more productive.

“Ever heard anybody talk about where the increased productivity has come from as opposed to where the inefficiencies are presumed to be?” she asked.

Professor Gardner said too little credit was given to universities’ achievements and there was little discussion of the strengths of the higher education system.

“The fruits of scholarly inquiry struggle for recognition,” she said, although she conceded that scientific and medical discoveries did “garner public kudos”.

Unintended consequences


Professor Gardner warned that recent tertiary education policies had led to “unintended risks and consequences”.

She attacked government funding reductions to universities which, in the 2017 budget, proposed cuts of $2.8 billion over the next four years.

Currently, Professor Gardner pointed out, national research infrastructure had no forward funding from the budget, and government proposed schemes that needed more administration as ways to improve education.

She said higher education was one of Australia’s few comparative international strengths, pointing to the punching-above-weight performance in global universities rankings.

With six universities in the Shanghai rankings top 100, Australia has stronger representation that any other country except the US and Britain.

Universities are responsible for most of the $22 billion export revenue earned from international students each year, but continued strong performance could not be taken for granted, Professor Gardner said.

“One consequence is that, as other countries build capacity in their own university sectors, the exposure of ours to missteps in government policy and funding regimes and any downturn in a major international student market is considerable,” she said.

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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