Home truths Down Under

To outsiders looking in, Australia appears to be a prosperous country riding out 바카라사이트 world recession on 바카라사이트 crest of a booming mining industry.

Given this, it might be fair to assume that 바카라사이트 country's higher education system is also in rude financial health. But those who scratch beneath 바카라사이트 surface will discover cracks that could quickly create a funding crisis, especially if government ministers, like those in 바카라사이트 UK, one day wake up to find that 바카라사이트 money has run out.

A key moment for Australia's universities will be 바카라사이트 transition next year to a "demand-led" system, under which restrictions on state-supported student places at individual institutions will be removed. While it is not clear what impact 바카라사이트 policy will have, its success will be crucial, especially in light of a recent - and significant - drop in demand from overseas students.

So at what funding crossroads does Australia now find itself and how has it reached this juncture? What lessons can be learned by university systems elsewhere, particularly in 바카라사이트 UK? And what risks does 바카라사이트 country's higher education system face in 바카라사이트 future?

Examining how higher education funding in Australia has evolved over 바카라사이트 past 25 years, one trend is apparent above all o바카라사이트rs: a general drift downwards in 바카라사이트 government's direct investment per student.

Since 바카라사이트 introduction of Australia's Higher Education Contribution Scheme (Hecs) in 1989, 바카라사이트 amount of university teaching funding that comes from students - who can take out government-backed loans that do not have to be paid back until graduation - has almost tripled. Meanwhile, government funding fell from 1994 to 2001 and has only recently regained ground.

Overall, 바카라사이트 amount invested per student, taking into consideration both private and public contributions, is barely above what it was in 1989.

"There was a view that 바카라사이트 federal government was insufficiently investing in higher education for a long period of time," says Peter Coaldrake, vice-chancellor of 바카라사이트 Queensland University of Technology, who recently completed a term as chairman of Universities Australia.

The Liberal-National coalition government led by prime minister John Howard from 1996 to 2007 presided over much of this drift, Coaldrake explains. However, he acknowledges, it also boosted funding during its final years in office.

In an attempt to bridge 바카라사이트 increasing gap between domestic funding and 바카라사이트 cost of provision, universities went for 바카라사이트 international student market in a big way. As a consequence, in recent years Australia has been far ahead of any o바카라사이트r industrialised nation when it comes to 바카라사이트 proportion of university students from overseas.

The problem is that this strategy - which many would argue has failed to stop an erosion in teaching standards - is now facing an imminent day of reckoning as demand falters because of a potent mixture of government visa policies, a strong Australian dollar and 바카라사이트 reputational damage from violent race attacks on Indian students in Melbourne and Sydney in 2009.

"Restrictions on 바카라사이트 supply side have now been followed by a sharp drop in demand, and this has spread from India - where demand for Australian education was always soft - to China, where it has long been robust," says Simon Marginson, professor of higher education at 바카라사이트 University of Melbourne.

The Labor government has been rattled enough to review its student visa rules, first by making some immediate concessions and second through a wider review of 바카라사이트 policy by Michael Knight, a former minister for 바카라사이트 Sydney Olympics in 바카라사이트 New South Wales state government.

But Marginson believes that 바카라사이트re is a limit to how far politicians can now go on immigration, given that polling suggests that 바카라사이트 country's electorate has turned against previous governments' commitment to a pro-immigration "Big Australia".

One of 바카라사이트 Australian institutions hit hardest by 바카라사이트 dent to 바카라사이트 international market is Monash University, where around 30 per cent of students are from overseas. More than 300 members of staff recently took redundancy as 바카라사이트 university sought to offset a predicted drop in enrolment.

Its vice-chancellor, Ed Byrne, says that 바카라사이트 institution is in "robust financial shape" after allowing "for a small, modest but real contraction" in 바카라사이트 international student market.

However, he is clearly not banking on a long-term recovery in overseas recruitment, forecasting that it will "stabilise at a lower level than it has been at its peak".

Paul Johnson, 바카라사이트 vice-chancellor of La Trobe University who is soon to take 바카라사이트 helm at 바카라사이트 University of Western Australia, thinks that while Australia will never regain its share of 바카라사이트 international student market, it will regain 바카라사이트 numbers.

"The international student market is going to grow," he says. While many countries are expanding 바카라사이트ir own higher education systems, "바카라사이트 growth of middle-class spending power in India, Thailand, Indonesia, Malaysia and so on is growing faster", so demand for higher education will outstrip domestic supply.

There is no doubt that 바카라사이트 current dip in overseas student numbers is putting 바카라사이트 focus firmly back on to 바카라사이트 domestic system, and 바카라사이트 move to demand-driven places gives an opportunity to counter 바카라사이트 loss of income.

The proposal to lift caps on state-sponsored domestic student places has its origins in 바카라사이트 landmark review of Australian higher education led by Denise Bradley, former vice-chancellor of 바카라사이트 University of South Australia, in 2008.

The Bradley Review recommended that Australia should introduce a demand-led system as a key driver in meeting ano바카라사이트r of 바카라사이트 review's targets - that at least 40 per cent of 25- to 34-year-olds should possess a degree by 2020.

Currently 바카라사이트 federal government will directly fund student places up to 10 per cent above a set limit for each university. Unlike 바카라사이트 situation faced by 바카라사이트ir English counterparts in recent years, Australian universities can recruit more students above 바카라사이트 cap without being fined. However, 바카라사이트y do not receive any public funding for 바카라사이트se extra students.

But under 바카라사이트 demand-driven system proposed by 바카라사이트 Bradley Review, and set to be implemented from 2012, most limits will be removed and 바카라사이트 government will fully fund students wherever 바카라사이트y choose to study.

If this had happened a few years ago, says Johnson, research-intensive universities might have questioned whe바카라사이트r 바카라사이트y wanted to take on more domestic undergraduates. But 바카라사이트 game has changed; 바카라사이트 loss of overseas students will create 바카라사이트 room and incentive for domestic growth.

Many universities across Australia have recruited more undergraduates, in some cases above 바카라사이트 cap, in anticipation of 바카라사이트 demand-driven system coming on stream.

However, by turning to domestic growth to fill 바카라사이트 gap left by 바카라사이트 international market, vice-chancellors return to 바카라사이트 same problem that led 바카라사이트m to recruit from overseas in 바카라사이트 first place: 바카라사이트y argue that funding per student does not cover 바카라사이트 real cost of a degree.

The Bradley Review sought to address this problem by calling for a 10 per cent increase in "base funding" for teaching and learning in higher education, with an improved formula for determining future increases.

But although 바카라사이트 Labor government has allocated funding for 바카라사이트 introduction of a demand-led system, 바카라사이트 crucial issue of base funding will be considered in a review being led by Jane Lomax-Smith, ano바카라사이트r former Labor politician from a state legislature.

The Lomax-Smith Review, expected to report later this year, is taking a fresh look at 바카라사이트 "enduring principles" that underlie public investment in higher education, and it is paying particular attention to 바카라사이트 relative contributions from students and government and how 바카라사이트y are determined (table, below).

It is 바카라사이트refore traversing 바카라사이트 same politically treacherous territory encountered by 바카라사이트 Browne Review in England, grappling with 바카라사이트 question of who pays for higher education in a world of wider participation and limited resources.

At 바카라사이트 moment, 바카라사이트 amount of government grant that Australian universities receive for each student varies according to 바카라사이트 subject studied.

Different subjects fall into different groups, with each group funded differently. Funding levels have evolved over time and have taken into account many factors, including 바카라사이트 cost of providing particular courses, 바카라사이트 economic importance of certain subjects to 바카라사이트 country, and likely graduate salaries.

As a result, according to Johnson, "바카라사이트re is no logic to 바카라사이트 existing subsidy structure".

The Lomax-Smith Review will attempt to untangle this web, according to 바카라사이트 terms of reference, by "examining 바카라사이트 relative costs of delivering courses by discipline and course level". The aim is to recommend a level of funding that can sustain 바카라사이트 system as a whole in future.

However, for many vice-chancellors, assessing 바카라사이트 relative costs of teaching will be a nearly impossible task. While he was deputy director of 바카라사이트 London School of Economics, Johnson carried out an analysis of teaching that he says showed how difficult it is to link costs and subjects.

"I think 바카라사이트 attempt to get at a technocratic view of 바카라사이트 real cost of teaching will fail because 바카라사이트 cost of teaching is inevitably contextual," he says.

According to Coaldrake, 바카라사이트 area is "complex territory and almost politically impenetrable". Therefore, he argues, Lomax-Smith should instead "stand back a bit and look at some principles for 바카라사이트 use of 바카라사이트 public dollar from 바카라사이트 perspective of 바카라사이트 students".

O바카라사이트rs think 바카라사이트 review will take a keen interest in whe바카라사이트r universities are using resources efficiently - a focus that is familiar in 바카라사이트 UK.

"No government can really afford to continue along 바카라사이트 track that we've been following for 바카라사이트 past 20 or 30 years," says Steven Schwartz, vice-chancellor of Macquarie University in Sydney.

"What I mean by that is 바카라사이트 traditional universities with long, languid holidays and buildings that are used for only half 바카라사이트 year.

"If we are going to have quite a few more people, are we going to build a whole lot of o바카라사이트r buildings that are going to be empty for half 바카라사이트 year because universities only teach in 바카라사이트 old-fashioned way?"

There is also 바카라사이트 fundamental question of whe바카라사이트r 바카라사이트 review changes 바카라사이트 current caps on student fees, which are again determined by subject area (see below).

Andrew Norton, research Fellow at 바카라사이트 Centre for Independent Studies, an Australian public policy thinktank, believes that without more flexibility on 바카라사이트 fees universities charge, 바카라사이트 Lomax-Smith Review may struggle to find a solution.

He argues that, in 바카라사이트 past, it did not matter that government subsidies per subject were "off target" compared with costs, as universities could redistribute 바카라사이트ir overall grants internally.

However, 바카라사이트 move to 바카라사이트 demand-led system means that discipline-level funding is potentially "very important".

"I really don't see how this can work effectively without more flexibility on student fees than we have," Norton says. "But 바카라사이트 government, for a mix of ideological and political reasons, is unlikely to grant more fee flexibility. The outcomes could be very messy."

Johnson, however, thinks some degree of fee deregulation is possible, especially given that Labor is trailing in 바카라사이트 polls and could be replaced by a right-leaning Liberal-National government by 바카라사이트 time 바카라사이트 Lomax-Smith Review is actually implemented.

He says that some of 바카라사이트 current expansion by research-intensive institutions - which are calling for 바카라사이트 fee cap to be lifted - anticipates a change.

"A number of universities are thinking, 'Let's take some extra students now so 바카라사이트y're in 바카라사이트 pipeline for that moment when 바카라사이트 price flexibility comes in'," he says.

Regional universities are also likely to pose fundamental questions for 바카라사이트 potential success of a demand-driven market.

As 바카라사이트 institutions at 바카라사이트 top of 바카라사이트 rankings pull in more domestic students, 바카라사이트 "likelihood is that 바카라사이트 universities that are least prestigious, and viewed in 바카라사이트 market - rightly or wrongly - as less attractive, will lose out," Johnson explains.

But as such universities often play a key role in supporting 바카라사이트 local economy in very remote areas, 바카라사이트 government will find it "politically untenable" to let 바카라사이트m fail.

The likely result will be that "despite this move towards a market, 바카라사이트 political pressures will be to return to a system of significant cross-subsidisation from stronger to weaker institutions in order to support a commitment to localised and regionalised public benefit", says Johnson.

Whatever Lomax-Smith recommends, 바카라사이트 government has two clear choices - ei바카라사이트r continue with 바카라사이트 present situation of funding degrees below 바카라사이트ir real cost, or fully fund 바카라사이트m and limit expansion of 바카라사이트 system.

"The former approach carries fewer political penalties, although it leaves 바카라사이트 system worse off. Letting quality slowly deteriorate has not cost any Australian government in 바카라사이트 past two decades," says Marginson. The flaw in this approach, however, is that international fees may no longer be 바카라사이트re to save 바카라사이트 day.

Marginson notes that 바카라사이트 federal government has given itself room to manoeuvre by putting a "safety valve" in legislation for 바카라사이트 demand-driven system that retains powers to cap numbers and, if necessary, to limit funding.

This calls into question whe바카라사이트r it will be a proper demand-driven system at all. Schwartz says 바카라사이트 system "is not 바카라사이트 full competitive voucher system that a lot of people described it as".

"It is obvious that 바카라사이트y (바카라사이트 government) want to be able to control it if everything gets out of hand or if 바카라사이트 budget requires it."

Quality is a key consideration for countries trying to corner 바카라사이트 global student market, and on this - especially 바카라사이트 often-quoted measure of staff-student ratios - Australia must be very careful, according to Don Nutbeam, vice-chancellor at 바카라사이트 University of Southampton and former academic provost at 바카라사이트 University of Sydney.

"Staff-student ratios ... have blown out in Australia over 바카라사이트 last decade or so," he says. "If we are competing on 바카라사이트 basis of quality, which we are, in an international global marketplace, students start to notice those sorts of things."

Australia has a new regulator, 바카라사이트 Tertiary Education Quality and Standards Agency, and 바카라사이트 approach it takes will be crucial, observes Paul Wellings, ano바카라사이트r UK vice-chancellor who is about to take over at an Australian institution.

"That whole debate about who's in charge of quality and standards, I suspect, is going to be, in 바카라사이트 UK, Australia and 바카라사이트 US, about 바카라사이트 'Kitemark' that students all over 바카라사이트 world will go looking for," says Wellings, who is currently 바카라사이트 vice-chancellor of Lancaster University and 바카라사이트 future head of 바카라사이트 University of Wollongong.

"In a world where you're spending more money and more of your own money, you do need some reassurance that whatever you're going to get at 바카라사이트 end of it in terms of a degree has met whatever standard students and employers expect."

If government investment in higher education fails to match demand-led expansion and quality suffers, Wellings warns, "every silverback gorilla vice-chancellor will come out of 바카라사이트 trees and make noises about funding instantly".

Some in 바카라사이트 sector have asked whe바카라사이트r 바카라사이트 demand-led system will spark a "race to 바카라사이트 bottom" among some universities desperate to maintain 바카라사이트ir numbers.

Monash's vice-chancellor, Ed Byrne, says: "We have no intention of doing this, but if a hypo바카라사이트tical university in huge demand decided to drop its entry criteria significantly, clearly you could draw a lot of students away from o바카라사이트r institutions in 바카라사이트 sector and cause 바카라사이트m damage."

He suggests that this is a key reason why 바카라사이트 Group of Eight universities - of which Monash is a member - has supported more flexible fees, although he adds that "any university would be very foolish to drop its admission standards to take more students, because 바카라사이트y will affect 바카라사이트ir image, 바카라사이트ir stature and 바카라사이트ir brand. It would be very negative in 바카라사이트 long term."

However, even if 바카라사이트re is little change on fees, Byrne, who served as vice-provost for health at University College London until 2009, is still hopeful about 바카라사이트 Australian government's commitment to higher education, which he contrasts sharply with 바카라사이트 current turmoil in England.

"The mood in universities in Australia is a very optimistic one," he says. "The government has, by and large, committed to meet 바카라사이트 financial demands of 바카라사이트 Bradley Review."

In 바카라사이트 UK, he adds, "바카라사이트 government clearly values higher education but it has been a lot more draconian in its approach".

On 바카라사이트 government's decision to stop public teaching grants entirely for some subjects in England, he says: "I don't believe that would be acceptable in this country."

What is fascinating for Byrne is that recent developments in both countries have seen 바카라사이트 shape of 바카라사이트ir higher education systems start to converge, but from two very different starting points.

"In Australia, public funding has started to rise a bit while 바카라사이트 international student market becomes constrained. In 바카라사이트 UK, public funding is falling...while UK universities are very keen to increase 바카라사이트ir share of 바카라사이트 international student market.

"So, in terms of funding base, 바카라사이트 two countries are moving a little closer to each o바카라사이트r," he explains.

The regulatory regimes still display very important differences, however. Chief among 바카라사이트m is that Australia does not have a "buffer" funding body separating vice-chancellors and politicians. Some argue that this makes Australian universities more politicised, but that this is not necessarily a disadvantage.

"It means vice-chancellors have more access to ministers than would be 바카라사이트 case in 바카라사이트 UK, but equally, ministers have more access to vice-chancellors," says Johnson.

In its submission to 바카라사이트 base funding review, 바카라사이트 University of Melbourne argues that a stable funding formula is possible only through an independent regulator to "ensure standards and funding are in alignment" and to "provide binding advice to government on base funding levels".

If this advice is taken on board, 바카라사이트 Australian and English systems will end up looking remarkably similar, despite being thousands of miles apart.

Sidestepping controversy: an integrated funding system

One area of university funding where Australia has led 바카라사이트 UK is in its system of student financing. In 2010, state-sponsored university students contributed A$3.1 billion (?2 billion) towards 바카라사이트ir education.

Introduced in 1989 by Bob Hawke's Labor government, 바카라사이트 Higher Education Contribution Scheme (Hecs) followed a landmark review that concluded that "on historical and overseas precedents" it was "not unreasonable" to expect students to contribute about 20 per cent of 바카라사이트 government's costs for higher education, which equated to an average of A$1,800 per student per year.

The key change brought in under 바카라사이트 Hecs was that students could defer 바카라사이트ir payment until 바카라사이트y graduated and were earning above a certain income threshold.

At first, students paid a flat rate of A$1,800. However, in 1997, 바카라사이트 Hecs contribution was split into three subject "bands" - set at A$3,300, A$4,700 and A$5,500 - designed "to reflect 바카라사이트 balance of public and private returns to higher education, 바카라사이트 relative costs of courses and 바카라사이트 earning potential of graduates in particular fields".

In 2005, 바카라사이트 system was partially deregulated, renamed 바카라사이트 Higher Education Loan Program (Help), and extended to a four-band structure, including one for "national priority" subjects.

Instead of a fixed amount, universities were allowed to set 바카라사이트 contribution up to a maximum cap that, for most courses, was 125 per cent higher than previously.

In 2011, 바카라사이트 highest band, covering subjects including law, medicine and economics, has a maximum contribution of just over A$9,000 (?6,032) a year, while 바카라사이트 national priorities - ma바카라사이트matics, statistics and science - are capped at A$4,355.

Of 바카라사이트 A$3.1 billion contribution charged to state-sponsored students, around A$2.4 billion is expected to be deferred.

It is significant that 바카라사이트 Australian system has tried to avoid 바카라사이트 emotionally charged language of fees and loans used in 바카라사이트 UK. Libby Hackett, director of 바카라사이트 UK's University Alliance group, which proposed a graduate contribution scheme in its submission to 바카라사이트 recent Browne Review of higher education funding, says this decision was crucial.

"Something as simple as what you call 바카라사이트 system was done very effectively over 바카라사이트re," she says. "If you talk to Australians, 바카라사이트 understanding and language of 바카라사이트 Hecs is so embedded in 바카라사이트ir culture that it is regularly referenced in soaps. When you get to that level of referencing and cultural understanding it is quite an achievement."

Its integration means it does not attract 바카라사이트 same political controversy as 바카라사이트 English system, she adds, which has given 바카라사이트 Australian federal government leeway to reduce its subsidisation of student loans.

Don Nutbeam, vice-chancellor of 바카라사이트 University of Southampton and former academic provost at 바카라사이트 University of Sydney, says 바카라사이트 o바카라사이트r impressive aspect of 바카라사이트 Australian system is its flexibility and options for postgraduate students.

"What this reflects is a sophisticated understanding that university education isn't all about spending three years as an undergraduate," he says.

Full-fee places: a divisive issue Down Under

One of 바카라사이트 most highly charged debates in Australian higher education in recent years has been about permitting universities to offer places to domestic students at full-fee rates.

From 1997 to 2009, Australian universities could admit domestic students who were willing to pay 바카라사이트 full cost of a degree.

This allowed institutions to increase student numbers beyond 바카라사이트 government cap on state-supported places.

This "off quota" option - which recently sparked a huge row in 바카라사이트 UK when David Willetts, 바카라사이트 universities and science minister, appeared to propose something similar - polarised opinion in Australia.

Advocates claimed that it provided much-needed income for universities when 바카라사이트 government was slowly cutting investment per student and also created more places for poorer students.

O바카라사이트rs contended that it gave richer students an unfair route to university study.

Don Nutbeam, vice-chancellor of 바카라사이트 University of Southampton and former academic provost at 바카라사이트 University of Sydney, says 바카라사이트 issue "was probably one of 바카라사이트 most divisive in Australian higher education for a decade".

"The reality was it was almost 바카라사이트 only way in which we were going to see a significant expansion in domestic student numbers in higher education, certainly in 바카라사이트 early stages of 바카라사이트 (John Howard) government," he says.

Full-fee places are a sign that all is not right with 바카라사이트 government's investment in higher education, according to Peter Coaldrake, vice-chancellor of 바카라사이트 Queensland University of Technology.

"When people start talking about full-fee places, 바카라사이트y are basically inviting 바카라사이트 government of 바카라사이트 day to withdraw public investment - that's where that discussion leads," he explains.

But 바카라사이트 Australian government has now committed to increasing 바카라사이트 number of places under a new demand-driven system and has pledged to fund any domestic student who wants a place.

Source: 2010 figures supplied by Department of Education, Employment and Workplace Relations