The Universities Accord draft contains 'spiky' ideas, but puts a question mark over the spikiest one of all

When he released the Universities Accord interim report last week, Education Minister Jason Clare drew attention to the echidna on the front cover.

As he explained, he had asked the review team to be bold.

To offer up a few big spiky ideas. They took me at my word, hence the echidna on the front page.

Clare also says he wants the ideas in the report to the “pulled apart” as they are digested and debated. One of the spiky ideas he is referring to is a levy on international student fees.

But overhanging the whole accord debate is the spikiest question of all: increasing public funding for universities and academic research in a cost-of-living crisis.

What does the report say?

The report acknowledges many stakeholders have been arguing that research funding needs to be “put on a sounder and more predictable footing”. It also notes the current research grant system does not cover the full cost of research, with universities having to pick up the rest of the bill.

It says more consideration should be given to “moving over time” to ensure National Competitive Grants (funding via the Australian Research Council) cover the full cost of undertaking research.

Despite these signals, some stakeholders were disappointed the review did not come out with a clear position when the problems are already well known. For example, Science and Technology Australia branded the report an “epic fail,” saying it had “disastrously missed an historic moment to recommend a ramp up of Australia’s research investment”.

Read more: The Job-ready Graduates scheme for uni fees is on the chopping block – but what will replace it?

The history and politics of uni funding

The last major review of higher education in Australia was the 2008 Bradley review. This recommended more taxpayer funds for university teaching and research. Instead, in 2013 Labour made a A$2.3 billion cut to the higher education sector to help pay for the Gonski school reforms.

Since then, all governments have expected universities to fend for themselves.

The basic political reason is no education minister (even if they wanted to and most have not wanted too) can convince their colleagues there are votes in university funding. Or as former University of Melbourne vice-chancellor and current head of the Prime Minister’s Department Glyn Davis noted in 2015:

all recent governments have cut university funding per student in real terms. There is no evidence that any paid a political price for doing so.

But this continues to be a problem

This is a simple way to understand university funding in Australia.

In 1998, federal funding for university research was 0.3% of GDP. As of 2021 it was 0.17%.

Australian National University vice-chancellor Brian Schmidt has also noted, Australian government expenditure on academic research as a percentage of GDP is the lowest among the world’s advanced economies.

How unis have responded so far

To meet their funding needs, the university sector upped both domestic and international student enrolments. Consequently, non-government sources of university revenue increased from 21.7% 1995 to 43% in 2019.

As of 2018, universities spent about A$12 billion a year on research.

About $6 billion came from the government while $6 billion came from universities’ own funds, of which $3 billion was from overseas student fees.

So international students are absolutely crucial to research funding in Australian universities.

An international student levy

But rather than demand more public funds for research, at this stage, the interim report turns the issue back onto universities. It does so by floating a levy on international student fees.

[to] provide insurance against future economic, policy or other shocks, or fund national and sector priorities such as infrastructure and research.

Admittedly the review notes “further examination” needs to be given to this idea, “including consideration of some level of investment from governments”.

The levy has already been met with scepticism from the sector. The University of Melbourne’s vice-chancellor Duncan Maskell said he believes the levy is “likely to undermine Australia’s global reputation”.

Students would effectively be taxed for studying in Australia, when they already pay high up front fees to do so.

Read more: International students are returning to Australia, but they are mostly going to more prestigious universities

International students as soft diplomacy?

Despite the levy, the review couches international students in diplomatic terms. It says it sees international education

less as an industry and more as a crucial element of Australia’s soft diplomacy, regional prosperity and development.

The idea that international students will also be imbued with Australian values when they return home takes us back to the Cold War-era Colombo Plan to train up anticommunist leaders throughout Asia.

And it is not likely to work. International students today have a lot of choice as to where to study, and Western values rank low on their list of priorities. If there are political tensions, they are more likely to support their home country anyway.

The student levy also seems unhelpful (and unworkable) from a domestic perspective.

Monash University vice-chancellor Margaret Gardner has noted there are only seven universities whose research income amount to 20% or more of total operating revenue and nine whose share of postgraduate research students amount to more than 5% of total enrolments.

Given this research intensity in less than ten universities out of more than 40 in Australia, the likelihood of redistributing the international student tax across the sector would be messy. And may see Australia take from research strong to give to the research weak at the expense of the whole sector.

It could also see funds diverted into projects like student housing instead of research.

Read more: A major review has recommended more independence for decisions about research funding in Australia

We simply need more funds

When the Universities Accord is finalised in December, the federal government wants a document that will drive social equity, increase the number of qualified people for jobs and keep Australian universities in the top rankings worldwide.

We cannot do this by simply rearranging the system. More government funding is needed. As COVID showed us, we cannot reply on international students to fund research indefinitely.

We need a target to increase university funding in line with other OECD countries. For example, the United Kingdom has full funding for competitive research grants.

In 2022, the Australian Institute estimated it would cost and extra $2.6 billion per year restore university research funding back to 1998 levels (of 0.3% of GDP).

But to do this, difficult political discussions need to be had – and cabinet needs to be convinced to put funds where they are needed, but not necessarily where they will win votes.