Universities Need Ongoing Support
23 April 2005
Very often universities are loved or hated by people in
societies all over the world. Hated because they are seen as
bastions of privilege, wealth, elitism and processes and traditions
that are beyond the experience of most. Loved because they provide
unparalleled opportunities to fulfilling careers in a way that few
other institutions can to the same extent.
After a two year process of national review the university
sector was confirmed as not wealthy and in need of a major
injection of funds. Many universities including ours were
beneficiaries of the funding reforms that in the short-term will
enable us to further enhance our range and influence.
But there are warning signs that these short-term gains could be
eroded for all universities.
This week the outcome of a review of university indexation of
grants by DEST, Treasury, Finance and Administration, and the
Department of the Prime Minister and Cabinet, concluded that the
general financial position of the sector is sound, and therefore
changes were not warranted.
The Australian Vice-Chancellors' Committee (AVCC) estimated this
would mean $337 million less funding flowing to universities in
2005 than is needed to avoid the gradual erosion of the reform
package.
Having helped universities because of demonstrable need, as well
as wealth-generating potential, there now seems to be a view
emerging that they have been dealt with in a generous enough way
that needs no further correction.
Taken together rather than individually, the warning signs for
universities are clear and they do not reflect entirely the view
that the 'financial position of the sector is sound'. Some
universities are clearly struggling and there are signs of
desperation in their attempts to be more commercial or expand.
Luckily, we are not in that position. But when the array of
financial factors is examined carefully it is not hard to conclude
that the university sector remains troubled about the future.
Many universities, for example, have been given a welcome
increase in student places, but it is at a time when annual
allocations for capital development (buildings) have sunk to a
maximum of $2 million per year, if successful at all. What we can
build for $10 million is now about one-third of what we could build
six or seven years ago, and building cost escalation soars at least
1 per cent per month, that is, $1.2 million less on a $10 million
project for the money, per year. The result is that universities
have to find ways of borrowing to fund new buildings and pay off
the consequent debt.
The reforms have also increased the administrative costs of
universities, and reporting and auditing (academic and financial)
requirements demand more administrative staff, thus diverting funds
from academic pursuits.
In addition, as a new University we have to remain competitive
with the established universities with respect to staff salaries,
in order to continue to attract some of the best academic staff,
and not all of those increased salary costs can be offset by
productivity increases, as staff are already under pressure across
the whole sector and stress levels are increasing and deterring
some academics from entry or continuing in the sector.
With greater emphasis on funding through competitive grant
getting, academic staff will experience more pressure.
Voluntary Student Unionism will mean the diminution of student
support for a range of services and the millions of dollars
expenditure will need to be picked up by individual universities in
different ways.
Australia's attraction to overseas students is diminishing.
Private universities may enter the sector and offer the cheaper
disciplines and thus limit public universities' capacity to
cross-subsidise disciplines that are expensive and need additional
support.
And so much is expected of universities like ours by the
regional community.
This is a formidable range of escalating costs. Universities
like ours are not wealthy, need continuing support, and I hope it
won't be too long before decisions such as this on indexation can
be revisited to ensure the long-term health of the public
sector.
Professor Paul Thomas is Vice-Chancellor of University of
the Sunshine Coast