Have universities enjoyed ‘rivers of gold’?

The Australian‘s High Wired column is bemused at the apparent contradictions between UQ VC Peter Hoj’s narrative of funding cuts and Simon Birmingham’s claim that universities have benefited from ‘rivers of gold’ in public funding in recent years.

It’s true that there have been some cuts to research funding, although it remains high by historical standards (some trends at page 51 of this pdf). Some increases in equity funding from the Gillard era were trimmed, and performance funding abolished. But these funds were not supporting long-term programs.

It’s much harder to claim that there have been cuts to core teaching grants, coming via the Commonwealth Grant Scheme and HELP (which as I keep pointing out, is heavily subsidised). The chart below shows the trend – up 50 per cent in real terms since 2008. From the Commonwealth’s perspective, this certainly looks like a river of gold.

Of course, over the same time there was also a substantial increase in student numbers. From a university perspective, this means that costs went up as well as revenue. For them, revenue per place matters more than total revenue. But over the medium term, universities are ahead on this indicator too. On a per student basis, after adjusting for inflation, we see that total revenue per place is close to record levels for the post-Dawkins era, although public funding as a share of the total has declined over time. This isn’t a river of gold, but nor is the stream drying up.

The per student place time series is complex, because many of the year-to-year shifts are not the direct result of government policy changes. These are affected by:

* Universities enrolling more students than they were funded for, and therefore not receiving the Commonwealth contribution or receiving a reduced one. While much less of an influence since demand-driven funding for bachelor degrees was fully implemented in 2012, it still affects postgraduate and sub-bachelor Commonwealth supported places.

* Changes in courses taken – if universities shift their enrolments to disciplines with higher or lower total or public funding rates that affects the average, even though the underlying per student rates are the same.

* Indexation – the now repealed shift to include the wage price index in the funding formula delivered high increases for a while, and then low increases. It was intended to give higher increases but that has not happened recently.

In the last few years, the Commonwealth has moved to constrain its higher education spending. But overall the last decade has been exceptionally good for universities, with the strongest increases in total public funding for decades and the strongest growth in private funding ever.

  1. As always an informed commentary by the best higher education analyst

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