The corporatisation of the Higher Education System is complete. It is no longer driven by the community of science but by money. Public higher education institutions are run as “businesses” in a higher education industry where revenues account for approximately 2% of GDP.
Corporatisation has meant that power and influence has shifted from scholars to managers in the managerialist paradigm that started in the broader public sector 30 years ago.
Corporatisation has enabled universities to grow into large profitable enterprises. The overarching mission of corporatisation is to source as much money as possible, generate a specific financial return, and meet benchmarks set by accountants, ratings agencies and auditors.
But the system is now in crisis on a number of fronts.
As their revenues have grown there has been a trend towards internal specialisations with an increasing professional disconnect between corporate managers, administrators and academics. There is roughly a 50:50 split between these roles across the system, although corporate and administration roles are growing more quickly.
Vice-Chancellors (Presidents) and senior executives (Vice-Presidents) have been rewarded with remuneration packages of similar-sized private organisations, creating community disquiet.
From a business perspective, there are two principal generators of money: “effective full-time student load” (EFTSL) and research income.
Current strategies are built around maximising both. Money is spent principally on salaries which universities try to minimise through sessional and casual appointments and reducing standard hours for teaching activity.
This focus on financial drivers works against achieving high standards in the mission of teaching and learning. In particular, universities have been criticised for becoming disconnected from their students. Some universities have tried to redress this with specific “student experience” strategies.
Australian higher education institutions constitute a growing and economically significant industry. As an industry grows it tends to segment into components that focus on specific market sectors that reflect the structure of demand, distinctive capability, and the strategies in place to respond to that demand. A few higher education organisations have progressed some way in this direction, but in the absence of policy guidance or incentive. Segmentation is constrained by the straitjacket of the rules driven Unified National System.
There is no clear policy differentiation between research universities, technology universities, comprehensive universities, regional universities, private and not for profit universities, or non-university higher education providers. Policy follows a “one-size-fits-all” approach. However, differentiation would provide for greater diversity of education service offering and student choice.
Additionally, over the past 20 years, a small number of universities have become very wealthy on the basis of access to private money (through feepaying international students) and their judicious management of public money.
With only two exceptions, since 2003 every university has generated a cash surplus on operations which has been used to buy property, plant and equipment and invest in financial assets. Property investment has filled a gap created by the withdrawal of Commonwealth capital funding, particularly around research infrastructure.
The 2020 Job Ready Graduates Package is fundamentally about money. The Government is reducing the amount of money going to Higher Education, as is also happening in Canada and the US. The government is also creating a clear separation between its funding for education and for research.
Despite a drop in government funding, the higher education industry will continue to grow, but in a different way. New “products” will be supported (such as short courses), and online education will expand as content and technology advances. These developments will encourage further segmentation of the industry as disruptive influences take shape. For example:
The growing abundance of new approaches and players will lead to more affordable and convenient options. This is a familiar theme that disruptive innovation has fashioned in numerous other fields.
Australian Higher Education policy has a role to encourage and support the growth and development of specific market segments in a Diversified National System which will complement the disruptive forces that are underway.
For these reasons Australian Higher Education must not only be profitable for its own survival, but it must also define and address its specific mission. It must also be fair and equitable. Achieving this will require a fundamental transformation of the Higher Education System into a framework where money is the enabler of system performance – not the driver.
The currently narrow debate about university funding must shift to a broader engagement with the community about developing a system of higher education that underpins a modern civil society, supports economic development, and enables the growth of the new industries that will provide the jobs of the future.
But there can be no turning back from the corporate university: the pressure is possibly in the other direction – perhaps towards privatisation in some of the very profitable institutions. The immediate challenge is to make the system work for the benefit of students, staff, industry, government and the broader community.
One way forward would be a complete separation between domestic and international businesses, the ending of the cross-subsidy for research (which Job Ready does), and a segmentation that includes a re-invention of teaching only/polytechnic models and greater recognition of the role of non-university Higher Education providers in practice-based fields, such as in the performing arts, design, and creative practice.
The new Provider Category Standards and the Australian Qualifications Framework can facilitate this progression from the strait jacket of the Unified National System to a Diversified National System that offers wide choice of delivery options with each segment meeting demand for higher education in ways that make best use of distinctive institutional capabilities and capacities.
This is an extract from a larger project that addresses the Corporatisation of Australian Higher Education and the Growth of a National Industry: Policy Issues, Implications and Options.
A comprehensive review of Australia's higher education system was published as Rethinking Australian Higher Education by Howard Partners and UTS on 18 February 2021.
In May 2020 an extended analysis of Australia's research capacity was published as Challenges for Australian Research and Innovation by UTS as an Occasional Paper.
In 2019 Howard Partners completed the first ever comprehensive Performance Review of the Rural Innovation System for the National Primary Industries Research and Innovation Committee.
Dr John Howard
PO Box 47
Rose Bay NSW 2029
M 0403 583 600