The University of Western Australia (UWA) will lay off 300 staff as part of sweeping cuts aimed at reducing costs. The university will slash 100 academic positions and 200 professional positions early next year. Fifty new academic positions will be created to enhance the university’s “capability and impact in areas of comparative advantage”.
UWA Vice Chancellor Professor Paul Johnson said in a statement that 2015 had been a challenging year for the Australian higher education sector:
UWA, like many universities, has a budget challenge.
As highlighted during the recent fee deregulation debate, there remains a long-standing under-funding of Australian universities amid a climate of greater competition at home and abroad.
We need to confront these financial challenges head on, which means changing how the university operates.”
University staff were told of the planned redundancies on 11 December 2015.
University ‘in good financial shape’: union
National Tertiary Education Union WA secretary Gabe Gooding said the union is “outraged” and that there is no justification for sacking 300 staff when the university made a $90 million operational surplus in 2014.
This is yet another poor decision of an ideologically-driven vice-chancellor who is becoming increasingly known for making bad decisions.
In the four years of his tenure he has effectively trashed the reputation of what was one of the country’s most formidable institutions.
The vice-chancellor told staff that he planned to significantly increase the intake of international students, but with fewer staff to teach them, this can only be interpreted as cynical exercise in treating international students as cash cows.
The worst thing of course is a couple of weeks to Christmas, and of the thousands of UWA staff none of them are going to know whether they are in that 300 or not.
The university has not finalised which roles would be made redundant, the statement said.
It expects the redundancy process to be completed by the end of next year.
The university recorded a $90 million net result in 2014, down from $125 million in 2013.
A report by the Grattan Institute report finds that universities earn up to $3.2 billion more from students than they spend on teaching, and have powerful incentives to spend the extra money on research. International students, who usually generate more revenue per student than domestic students, contribute a substantial proportion of this surplus. The report’s author, Andrew Norton, says the finding is concerning because, while university research matters to Australia, the evidence that it improves teaching is less clear. He observes that direct spending on teaching, by contrast, is far more likely to ensure that universities offer the high-quality courses students want. In this commentary in The Conversation, Norton observes that the priority of research within universities means that teaching does not always get its share of time and money. He proposes that any new funding system must ensure that money intended for teaching is spent on teaching.
No-one knows exactly how universities spend their money. But questions are asked about how universities have financed huge growth in the amount of research produced over the past 15 years – and a new report by the Grattan Institute could have the answer.
It finds that, in 2012, universities spent at least $2 billion on research that was meant for teaching. This means that around one dollar in every five was spent on research rather than tuition.
Universities are not doing anything improper in spending money this way.
The current legislation pays universities on student numbers, but is silent on how exactly the money should be used.
But the absence of specific teaching funding makes it hard to ensure that any extra money intended to benefit students is actually spent on students.
So why are universities so focused on funding research? And is there a need to be more transparent about how universities spend their money?
Some of the other half comes from non-government sources, including corporate sponsorship and donations.
By examining all revenue sources not specifically for teaching or research, such as investment earnings and profits on commercial operations, we were able to estimate the financial contribution teaching makes to research.
What our report shows is that at least $2bn must have come from teaching, as there were no other sources large enough to account for the nearly $10bn universities spent on research in 2012.
But exactly how much teaching surpluses contribute to research cannot be answered precisely.
An obsession with university leagues tables – which are largely based on research performance – further adds to the pressure to produce more research.
Universities are more likely to move up the league tables if they produce more quality research. This can also make their institution more attractive to students, both domestic and international, which then helps generate income via tuition fees.
Because of these research pressures, there is no guarantee that additional investment in universities aimed at students would be spent on teaching and student services.
But public funding has the same issue. The money could be spent on research rather than teaching.
This may not matter if research improves teaching. Universities hope that it does, pointing to the idea of a teaching-research nexus, mutually beneficial links between the two activities.
Unfortunately, empirical studies find that research performance does not reliably predict teaching performance. Some good researchers are good teachers too, but typically they are no better than colleagues with weaker research records. A policy to improve teaching should target teaching directly, not via research.
In England, the government has plans to link each university’s performance on various teaching indicators to their right to increase fees. Whether this is feasible remains to be seen.
Teaching needs its share of money
We can start more modestly, by improving university financial information.
New Education Minister Simon Birmingham hinted at this in a speech in October. This means requiring universities to report on how much they spend on teaching, research and other university functions.
This information would give us more precise estimates of the financial relationship between teaching and research.
It could also be used to monitor how universities spend any future increases in funding, whether from student fees or the government.
This does not rule out financing research on a per student basis, but we need to be clear about what we are funding.
Teaching and research are both vital university activities, but with tensions as well as synergies.
The priority of research within universities means that teaching does not always get its share of time and money.
Any new funding system must ensure that money intended for teaching is spent on teaching.
A national productivity windfall generated by university research has delivered economic benefits to Australia worth a third of the growth in average living standards over the past 30 years. These productivity gains have been worth an estimated $10 billion each year over those three decades.
The $10 billion productivity boost is in addition to the $25 billion that universities contribute to the Australian economy (directly and indirectly) and $12 billion from international education annually.
The report also finds that the Australian economy’s demand for university graduates is increasing, as is the calibre of education they require in the 21st century knowledge economy.
It projects that demand for university qualifications will grow by 34% in the decade to 2025, with an additional 342,000 graduates a year needed to fuel the knowledge economy.
Universities Australia Chief Executive Belinda Robinson says the report’s compelling findings are further proof of the vital role that our universities play in driving economic growth and prosperity.
Not only does this report outline the enormous contribution of our universities today, it argues that the importance of our universities will soar in the Australia of tomorrow. Over the coming decades, it will be the skills and smarts of our people that will be central to the strength of the Australian economy.
She says that, to realise the enormous potential of our universities, Australia must ensure that it properly invests in education and research now.
With our competitors investing heavily in the knowledge economy, we must make our own game-changing investment, or we will fall behind those that do.
The report helped to inform Universities Australia’s pre-election blueprint, Keep it Clever.
A two-year, part time course designed for middle to senior level educators, administrators and scholars seeking to extend their knowledge and skills in tertiary sector leadership and management. Read more about the course. Read also about the recent papers by our graduates which were published in a special edition of the Journal of Higher Education Policy and Management below.
Our one-year, part time course designed for aspiring and middle level educators, administrators and scholars seeking to extend their knowledge and skills in tertiary sector leadership and management. Read more.
Our one-year, part time course designed for educators, administrators and quality assurance practitioners seeking to extend their knowledge and skills in tertiary education quality assurance. Read more.
Following the popular seminars in Sydney and Melbourne, the Vocations seminar heads to Perth next. The event, hosted by the Centre for Training Excellence, will discuss the implications of the three-year research project, which was commissioned by the NCVER and conducted by an LH Martin Institute-led consortium. Read more.
Free public events at the LH Martin Institute and Melbourne CSHE
Note: although the following events are free, please register if you would like to attend to help us ensure venue comfort for all attendees as well as to contact you in the event of last minute changes. We thank you for your cooperation.
Presenter Dr Santoshi Halder will discuss the daily struggle of women in general and the compounding factors of torment, ostracism, pains and metal anguish impinged on women with disabilities in India. Read more.
LH Martin Institute community news
Master of Tertiary Education Management graduates’ contribution to public debate
We’re proud to announce that the third special edition of the Journal of Higher Education Policy and Management featuring papers by our Master of Tertiary Education Management graduates is now available (from Routledge). According to guest editor Geoff Sharrock, there is a strong practitioner focus to the works, which try to make sense of the operating context by identifying a problem and proposing or testing a possible solution. Two of the papers in particular – Tim Skinner’s work on bullying in regional universities and Chrissa Favaloro’s paper on the effectiveness of marketing spend relative to enrolments – caught the attention of the media recently (see media mentions below).
We’d like to congratulate all the authors, and Geoff for his tireless work in putting this fantastic edition together. We believe that each and every paper in the Journal can and will continue to contribute to public debate on our ever changing sector.
A team of researchers from the LH Martin Institute and the Melbourne Graduate School of Education are leading a research project, funded by the Victorian Department of Education and Training, on what makes quality teaching in VET.
The first phase of the research is completed and includes an extensive examination of national and international capability frameworks, and focus group discussions with teachers, organisational development managers and students from across the VET sector. The next phase of the research will involve one-on-one interviews and observations with recognised expert teachers.
LH Martin Institute for Tertiary Education Leadership and Management
Elisabeth Murdoch Building (Building 134), Spencer Road,
University of Melbourne, VIC 3010, Australia
Ph: +61 3 8344 0756
Web: lhmartininstitute.edu.auThe LH Martin Institute is based at the Melbourne Centre for the Study of Higher Education, University of Melbourne.
Universities have been warned their funding will be cut by 20% almost immediately, an average of $32 million a university, if the government can get its higher education reform package through the Senate by the end of the year. The legislation, rejected by the Senate in March, was due to be reintroduced during the budget sittings of Parliament but has been left to “lie fallow” as education minister Christopher Pyne presumably cultivates the Senate crossbenchers. Most informed commentary is that the legislation has little prospects of passing in its present form. So will the government amend the bill? Perhaps, but it would be deprived of a double dissolution trigger if government does amend it. We don’t think a double dissolution is likely – it’s way too complicated and high risk – but holding the legislation back keeps the option open, and Pyne himself raised the prospect in his negotiations with the crossbenchers in March.
The sector has been thrown into turmoil after the federal Department of Education and Training published cluster funding rates for next year that applied the 20% funding cut. Under the government’s reform package, universities are expected to be able to recoup the lost funding by charging higher, deregulated tuition fees.
Vice-chancellors and peak groups were forced to seek clarification from education minister Christopher Pyne and his department last week as to whether the government intended to apply the 20% cut whether the legislation was passed or not.
“The (department) numbers assume a 20% funding cut,” University of Melbourne vice-chancellor Glyn Davis said. “So the whole sector has been ringing each other up asking what it all means.”
Davis said the sector was particularly concerned about the cut after the government withheld payments for two years under a Rudd government “efficiency dividend” for which legislation was never passed.
Universities expect to have that money finally repaid next month.
A 20% funding cut would see large universities such as Sydney and Melbourne hit a reduction in revenues of about $50 million to $60m, but regional and outer metropolitan universities, which are more dependent on teaching grants, would be particularly hard hit.
Davis said he had no idea why the department had published new rates if it had no intention of imposing them if the legislation were not passed.
“We assume it’s part of the game Mr Pyne is playing with the crossbench to try to win support for his legislation,” Professor Davis said.
Mr Pyne was due to reintroduce the legislation to the Senate in the winter sitting session, but he told radio station 2GB last week it would not be put forward until spring.
I’ve deliberately let the higher education reform debate lie fallow for a while because I wanted to give the crossbenchers and the sector some time to pause and think about how they defeated a reform for universities, students and Australia. We will come back in spring and reintroduce the bill because it is too important to let go.
Conor King, executive director of the Innovative Research Universities group, said the legislation had only a slight chance of passing.
“The legislation is not going to pass and if it were to pass it wouldn’t operate from January 1. The department is working in the government’s hypothetical world and updated the rates (to include the 20% cut).”
A spokesman for Pyne said publication of the funding rates reflected government policy: “2016 payments will be based on the rates in the act as it stands at the time. The government is discussing the practical aspects of implementation with providers.”
Failure of the deregulation package and the way ahead
16 April 2015 | The failure of the government to carry the Senate on its proposed higher education reforms can be put down to the government’s arrogance and heavy-handedness and what would politely be called its disingenuousness. Parts of the package were not without considerable merit – for example, extending public subsidies to the students of non-university higher education providers is a long overdue fairness measure and extending them generally to sub-degree programs could considerably improve retention rates. But overall, the package was seen to be poorly conceived and fundamentally flawed – certainly in respect of total fee deregulation.
The Victorian Auditor General has reported that Victoria’s eight universities are in a strong financial position but he was critical of lax procedures governing travel expenditure.
The eight universities, and their subsidiaries, generated a combined surplus of $537.1 million for the year ending 31 December 2014. This includes, however, audit adjustments of $259 million arising from qualifications concerning the treatment of certain income by Deakin University, the University of Melbourne and the Australian National Academy of Music.
The auditor says that the surplus, when combined with the universities’ generally good liquidity position, means that the sector is in a healthy financial position and is a low financial sustainability risk in the short term.
He reports that, over the long term, there are emerging risks the university sector should monitor. There is a trend of declining available cash after operations to fund new assets and asset renewal. Coupled with this, spending on new assets and asset renewal has fallen from 2013 to 2014. He notes that “consuming more assets than you are renewing or replacing will have a cumulative adverse effect over time”.
The analysis of the financial sustainability risks of universities does not take into account proposed funding changes by the Commonwealth government. During the 2014 financial year, the eight universities received 45% of their revenue ($2 731 million) from Commonwealth Government grant funding, excluding capital grants. He notes that universities will need to respond to any changes to the funding model promptly and efficiently to ensure they remain financially sustainable.
He reports that, while universities have policies and procedures in place for travel and accommodation expenditure, they are not comprehensive, and compliance with these policies and procedures is poor. Consequently, universities cannot demonstrate public money is spent prudently and to the benefit of the university. He says these results are troubling and should concern those who govern universities. The report makes a number of recommendations for strengthening policies and procedures and compliance.
The Victorian secretary of the National Tertiary Education Union Colin Long said the audit report “throws out the window” the universities claim that financial problems justify cuts to jobs, student services and courses.
While universities squirrel away surpluses and management continue to give themselves generous pay rises, staff are losing their jobs, workloads are increasing, and quality is jeopardised.
He says that around 1000 staff at Victorian universities have lost their job in the last twelve months.
Victoria’s vice-chancellors have warned that their universities’ surpluses are artificially “inflated” and may bear little relation to reality.
Among other pressures, the end of the Education Infrastructure Fund means need to generate healthy surpluses to fund future investments.
Victorian Vice Chancellor’s Committee chair and La Trobe vice-chancellor John Dewar says:
This is the only way a university can fund a capital program given that there are no longer any sources of government funds for capital projects. By and large, universities operate with very low margins and with very little leeway for such large-scale organisations.
Dewar’s statement came after university annual reports for 2014 were tabled in state Parliament on 15 April.
Melbourne and Monash universities both reported increases in accounting surpluses to $182m and $213 respectively, but warned that “underlying” results were down after taking out investment gains and one-off items like capital-grants. Monash said its underlying result was $49m, down from $54m, while Melbourne said its underlying result was just $6m, down from $7m.
La Trobe paid out more than $35m last year in staff termination payments as part of its restructuring, reducing its operating surplus to $18m, down from $45m. Excluding such one-off items its surplus was up at $54m from $42m.
Victoria University reported a $10m deficit, as it undergoes restructuring to adapt to increased competition for university and TAFE students. While vice-chancellor Peter Dawkins said the result was ahead of target, he forecast another deficit this year.
Federation University’s surplus contracted to just $2.8m on revenue of $278m, down from a $4.2m surplus in 2013.
Swinburne reported a steep fall in underlying surplus to $13m from $33m, largely driven by the cost of implementing a new student management system.
Deakin’s underlying surplus rose slightly to $54m from $50m.
RMIT reported rise in surplus to $75m from $67m. In underlying terms RMIT posted a $51m surplus.
The Group of 8 consideration of the negative impact of the legislative impasse in the Senate on the government’s higher education package comes on the back of Melbourne University stating that it is unable to frame a budget for next year or beyond because there are to many “known unknowns. Neither can you say that its prognostications about the likely impact on other areas of university funding, such as research, are unreasonable: the government seems set to effect at least its savings, one way or another. Elsewhere, the Grattan Institute’s Andrew Norton suggests a freeze on student numbers would be on the cards if the deregulation package is ultimately blocked in the Senate.
Following the release of the report of the Senate Education and Employment Legislation Committee on 28 October, debate commenced in the Senate on the second reading of the Higher Education and Research Reform Bill 2014 on 29 October but was suspended that evening. The Senate is scheduled to resume sittings on 24 November for two weeks before rising for the year. If the Bill is not passed in an amended form by 4 December, the Government may wait for a period in the first half of 2015 before reviving debate. Such drift would exacerbate anxieties among school students and parents who are already confused by misleading claims of exorbitant fee rises. It would also raise serious questions about timeframes for implementation.
At this stage no amendments have been flagged. The Senate Committee recommended that consideration be given to amending the proposed HELP loan indexation, and providing structural adjustment assistance for some institutions. The Government appears not to want to initiate amendments of its own Bill. The ALP and the Greens are opposing the Bill however it may be amended. It will be up to cross-benchers to initiate amendments, and Minister Pyne has indicated a willingness to countenance some modifications to the Government’s proposals, such as to the structure of HELP indexation.
This situation places disproportionate burdens on the cross benchers, many of whom are new to the complexities of the higher education policy field, and have many other matters to deal with, but have fewer resources than those simply opposing the Bill and making no effort to work on bringing higher education financing into contemporary relevance. The dissenting reports of the ALP and Greens’ senators proposed no viable alternatives for addressing the crisis left by the outgoing government in 2013 and cost-effectively catering for future growth in student demand.
Meanwhile, the Government is making it clear that it will pursue savings on higher education outlays one way or another. At immediate risk are the funds for Australian Research Council (ARC) research fellows and National Collaborative Research Infrastructure Strategy (NCRIS) research infrastructure, for which the previous government failed to provide ongoing funding. At longer-term risk are programs for research, research training and research infrastructure, with associated job losses and a bleeding of talent, and a rapid decline in the reputation race where rankings underpin Australia’s success in the education export industry. Research-intensive universities would be hardest hit initially but the impact would be felt eventually all over the university sector. Without a capacity to diversify income sources the only outcome would be the further deterioration of quality.
As the cross bench senators weigh up the government’s higher education reform package, including university fee deregulation and student loan interest rates, they might well consider a comparison table released by Swinburne University of Technology to assist in the evaluation of four policy options that have been canvassed to moderate against excessive student fee increases from 2016.
Experts have predicted that the price of degrees will increase significantly from 2016. The proposed flat fee of $16,000 per year announced by the University of Western Australia for 2016 represents an increase over 2014 prices, ranging from +56% (Bachelor of Commerce) to +166% (Bachelor of Arts).
Any price rises from 2016 are likely to be compounded by the operation of the HELP scheme, which ensures that price signals are weak for consumers at the time of purchase. There will be no upper limit on the amounts that students can borrow either for undergraduate or postgraduate degrees from 2016.
A number of mechanisms have been proposed to moderate likely fee increases from 2016. Swinburne University of Technology has proposed an annual student loan limit (a ‘soft cap’) as one means of exerting downward pressure on price from 2016. Other options that have been canvassed include an advisory committee, a pricing regulator and the establishment of new maximum student contributions for higher education (a ‘hard cap’).
This resource presents how each of these four policy options would work and how strongly each would operate to produce downward pressure on prices set by higher education providers from 2016.
With the government’s university reform package, which includes funding cuts and fee deregulation, apparently stalled in the Senate, The University of Melbourne has been unable to draw up a budget for next year due to uncertainty.
With the government’s university reform package, which includes funding cuts and fee deregulation, apparently stalled in the Senate, The University of Melbourne has been unable to draw up a budget for next year due to uncertainty.
In an email to staff on 31 October, vice-chancellor GlynDavis said that because of the “known unknowns” concerning higher education funding in coming years, the university was unable to plan with confidence for next year, or beyond that.
There are too many known unknowns. Key financial measures for the sector remain untested before the Senate. Should the government’s plans for deregulation not prevail, as many predict, who knows what policy settings will follow?
He said the university’s Planning and Budget Committee had, in the past, held an annual two-day event to draw up a budget for the following year and make estimates for the next three years.
However this year it was unable to provide any estimates for the next three years and it was also unable to “predict with confidence likely minimum public funding for 2015.
The committee could only provide a “likely” budget for 2015.
We aspire to be autonomous, independent institutions, speaking without fear or favour to the great issues of the day through teaching, research and engagement. Yet our lived reality is the experience of 2014, waiting for the Senate to decide what it will allow governments to fund or universities to charge.
This need to plan amid uncertainty is a reminder that universities do not control their fate. Under present arrangements governments, state and federal, define many choices for universities.