Australia’s university research boom

Last weekend I posted some concerns about whether ABS research expenditure figures were over-estimates. They may attribute a higher proportion of academic working hours to research than a proper time-use study would show, and therefore put a too-high share of academic salaries into the ‘research expenditure’ column.

On the other hand, research output evidence is consistent with the 21st century research boom suggested by the ABS figures. The number of academic journal articles with at least one Australian author increased dramatically, as seen in the chart below.

Although missing the 1990s comparison, journal article volume data collected as part of the Excellence in Research for Australia exercise shows the same very large upward trend.

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Reality testing teaching and research cost results

My recent blog post on the cost of the teaching-research academic employment model prompted various Twitter comments on its analytical assumptions.

Friday’s post and the comments made on them also link back to other recent posts that try to understand how universities finance themselves. The posts have consistently acknowledged data issues, and that precise dollar figures cannot be attached to most of the conclusions. At best, we can get to a credible range.

The most important criticism is that my analysis assumes that the two main sources of university expenditure data, the Deloitte Access Economics study for teaching, and the ABS for research, can adequately distinguish between and separately cost scholarship and research.

According to the ABS, which uses international definitions, research is ‘creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture and society – and to devise new applications of available knowledge’. Scholarship, by contrast, I take as activity leading to or maintaining in-depth understanding of existing knowledge.

It is hard to have research without scholarship. How can academics claim to have increased knowledge if they are unaware of the current state of their topic or field? The literature reviews that appear in many ‘research’ articles in academic journals are scholarship.

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Why did universities become reliant on international students? Part 4: Trying to maintain a teaching-research academic workforce

In my previous post in this series, I argued that international student fees help pay for under-funded government-sponsored research grants. But these research projects are not the only partially-funded research universities are trying to finance. They also have many teaching staff on contracts that include research time, but who do not attract equivalent research income.

For academics, the expected and preferred academic career is generally to have a teaching and research or research only role. For most academics, however, teaching is not their top priority. A survey about a decade ago found that, among teaching-research academics, nearly two-thirds leaned towards or were primarily interested in research.

This bias is reinforced by the academic recruitment process, which favours people with PhDs. In 1987 less than a quarter of academics in the Colleges of Advanced Education, which by then taught the majority of higher education students, had PhDs, and 69 per cent of university academics. In 2018, across the now unified system, nearly 74 per cent of academics have a PhD.

Not surprisingly, most people who do PhDs are interested in research. In a 2010 survey, only six per cent of research students planning an academic career nominated a ‘mainly teaching’ role as their ideal job.

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Why did universities become reliant on international students? Part 3: The rise of research project grants

In a previous post, I doubted that inadequate public funding for Commonwealth supported students could, with a few exceptions, explain why universities have enrolled so many fee-paying international students. For publicly-funded research, however, structural changes in how funding is delivered have changed its economics.

Government policy has moved away from block grant funding – lump sums of money that universities can spend as they choose – towards project funding awarded on a competitive basis, mainly through the Australian Research Council and the National Health and Medical Research Council.

In the 1990s, as the chart below shows, competitive grants made up less than a quarter of Commonwealth research spending on universities (counting Department of Education plus NHMRC). By the middle of the 2010s nearly half of Commonwealth funding was delivered through competitive grants, though with an easing off recently as ARC funding was cut.

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Why did universities become reliant on international students? Part 2: The cost of educating Commonwealth supported students

In a previous blog post, I argued that stagnating or declining government revenues encourage universities to seek additional international student fee income. By 2018, international student fees provided 26 per cent of all university revenue, up from 10 per cent in 2000.

However, I doubted that aggregate public funding levels fully explained university dependence on international students, whose numbers grow when public spending is increasing as well as decreasing.

But in thinking about how government policy affects university decision making it is not just revenue that matters. The cost of the services universities deliver for their public money is also crucial to understanding university behaviour.

A recent article in The Conversation suggested that government student-linked revenue did not cover the full cost of growth in student numbers. Another Conversation piece this morning also suggested that universities have become reliant on international student fee revenue to cover the cost of teaching, as well as research and other activities.

However, a chart in my first post shows that since the mid-2000s average per student funding for Commonwealth supported students grew by more than inflation and then stabilised in real terms, although with a small recent decline.

But one point made in response to my original post was that wages usually grow by more than general inflation. This means that my CPI indexation of revenue does not fully adjust for the changing purchasing capacity of grants, given the bundle of goods and services universities actually buy. In 2018, 56 per cent of university expenditure was on wages.

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Why did universities become reliant on international students? Part 1: Government funding cuts

A decline in international student numbers has triggered Australian higher education’s biggest-ever financial crisis. But why did universities became so financially reliant on international students?

In university constituencies, a common belief is that the government cuts going back to the 1990s are a factor.

Assessing trends in government funding is not straightforward. No official time series data exists. Different historical data sources do not always match.* There are notes about these issues in the text below, the footnote and the slides. I am confident of the overall pattern, although some year-to-year comparisons are not precise.

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The university JobKeeper rules change again, with Bond and Torrens universities to benefit

And so we have another turn in the twists and turns of universities and JobKeeper.

The universities listed on Table B of the Higher Education Support Act 2003 – Bond, Notre Dame, Divinity and Torrens – will be exempted from one of the three rule changes designed to prevent universities getting JobKeeper.

They are still not counted as charities to get the lower 15 per cent decline in turnover threshold (not that Torrens is one anyway). They still have to count government grants in their revenue base. However, their revenue loss can be calculated over the month or quarter that applies to most enterprises, rather than the six months that applies to Table A universities.

In practice, I think this change is irrelevant to Notre Dame. In 2018, only 2 per cent of their revenue came from international students. Another 10 per cent came from up-front payments from domestic students. With their Commonwealth Grant Scheme and HELP funding guaranteed, there is a very low likelihood that Notre Dame will have the required 30 per cent decline in revenue.

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How reliant is Australian university research on international student profits?

The decline in international student numbers has many people worried about the future of university research in Australia. A recent report from the Chief Scientist predicted that 7,000 research jobs could go due to reduced teaching profits, philanthropy and corporate funding.

In this post, I estimate how reliant research is on international student profits. It combines data from multiple sources. None of them were designed to calculate this profit, so my result should be taken as being in a plausible range rather than as a precise total. But it can give us a sense of the scale of reliance on international students.

According to the 2018 ABS higher education research report that was released yesterday, in 2018 universities spent $12.158 billion on research. The ABS also gives sources of research funding, but these only explain 44 per cent of the total, with the rest coming from ‘general university funds’.Read More »

University domestic bachelor-degree student profits and losses by field of education

In an earlier blog post, I calculated that universities made about $1.3 billion in 2018 from teaching domestic students. This post looks at profits and losses by field of education. Due to data limitations, the analysis is restricted to domestic bachelor degree students in Commonwealth supported places.

The first post included several methodological caveats. In drilling down further I must add more words of caution.

Costs are allocated according to the ABS fields of education. These do not necessarily correspond to the faculties and departments that organise and pay for teaching, and which have common cost structures from shared infrastructure and staffing.

For example, ideally law, which often has its own faculty, would have been separate from other ‘society and culture’ fields like humanities and social science. Economics is usually taught in commerce faculties, and so its costs would be closer to those of business courses than the ‘society and culture’ category in which it is placed. (If the ABS has ever had a worse idea than ‘society and culture’ I am yet to see it.) Read More »

How profitable is university teaching?

Last month the government released the latest teaching and scholarship cost data, which is for 2018. The bachelor degree data by field of education is here, and Deloitte Access Economics also provides a detailed report. The Deloitte report looks at costs compared to discipline-level funding rates, but does not aggregate these up to analyse teaching’s contribution to sector finances. This post tries to do that.

As Deloitte’s report notes, teaching cost numbers should be used with some caution. Universities are multi-purpose institutions, carrying out teaching, research, community engagement and other activities. Staff and facilities are often not dedicated exclusively to a single purpose, and so costs need to be attributed to different activities. University accounting systems differ in their design and their ability to allocate costs in a detailed way.

Because of joint production, any ‘profits’ on teaching are not necessarily cash left over that universities can decide how to use. The money may already be spent on the research time of staff employed on a teaching and research basis, or in the capital and running costs of university buildings used for teaching and research.

With these caveats, across the sector Deloitte estimate that 52 per cent of university expenditure is attributable to teaching and scholarship. Based on the university finance report for 2018, that means Table A universities spent about $16.7 billion on teaching in 2018.Read More »