Australia’s higher education sector must be segmented

Different university groupings should have strong, distinctive capabilities that address specific markets, says John H. Howard

February 18, 2021
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The Australian unified national system for higher education was established in 1988 for various reasons, but its essence was to solve a funding problem. It was a one-size-fits-all solution, meaning that the government would fund all institutions in the same way. However, it was an approach that failed to stimulate difference and innovation in education services delivery.

Over 30 years, student numbers, staff, revenues and assets have grown to the point that higher education is now an industry making a direct contribution of around 2 per cent to Australia’s GDP. This growth has contributed to the emergence of an international education industry estimated to add around A$40 billion (£22 billion) to exports.  

The Covid-19 crisis has had a devastating impact on the industry through a massive drop in revenues, particularly in the “big five” research-intensive universities of Melbourne, Monash, Queensland, Sydney and UNSW Sydney. The effect has also been to refocus community attention on the performance of the domestic component of the system. The crisis provides an opportunity for change and readjustment within institutions and the transformation of the system itself. 

While the unified national system introduced uniformity in funding arrangements and regulation, the price of that uniformity has been a lack of diversity in institutional forms and education delivery, limiting the options for meeting the distinct educational needs of students, industry and the community in a growing and highly differentiated service-oriented knowledge economy. A more diversified national system would allow for more efficient allocation and use of resources between and within system segments; greater variety of educational opportunities and specialisations; and a better mix of teaching and research priorities and concentrations.

It is now clear that not all universities play on the same field. The five largest and wealthiest institutions have choices not open to the others, but the sector is treated as a single undifferentiated industry for regulatory purposes. And, to be fair, the unified national system's current operational reality suggests that the monolithic framework is already weakening, with attention being given, for example, to the “special place” of regional universities. Separate funding streams are emerging for regional education and research, while research-intensives find it easier to access funding streams in health and medical research. 

Now is not the time for root-and-branch structural change. But greater diversity is unlikely to occur through policy osmosis. A deliberative approach is needed. The path towards greater specialisation and distinctiveness may involve aligning with elements of the proposed provider category standards currently before parliament. But it should go further.

The higher education system should be encouraged to grow and transform around several connected provider groupings. Each should have strong, distinctive capabilities addressing specific market segments, with a clearly defined range of educational offerings. As indicated, many of these segments have already started to self-select.

The path towards segmentation may start with:

  1. Encouraging and supporting the emergence of the six established research-intensive universities at scale. These include the “big five”, plus the Australian National University.
  2. Building national capacity in digital technologies, engineering, design and management in the technology universities. Advanced technologies are the foundation for the growth of the new industries of the future. Several of these universities score very highly on international research rankings.
  3. Incentivising the further development of research and teaching in the growing outer metropolitan comprehensive universities: institutions that are adjacent to hospitals and medical research institutes and embedded in regional innovation ecosystems.
  4. Encouraging universities in large cities’ slow-growth areas to build specialisations for niche markets. They should withdraw from areas where there is low and declining demand and losses are substantial. Amalgamations should be considered where practicable.
  5. Assigning a specific charter for regional universities to support regional economic development and funding them accordingly. Priority should be given to education and research in the rural industries, covering production, processing, distribution and global value chains. Regional universities should be encouraged and consistently funded to participate in regional innovation hubs and smart specialisation strategies, with a special responsibility to support younger local cohorts. Regionally based campus centres should be allocated more commonwealth-supported places to encourage their involvement.
  6. Supporting the growth of non-university higher education institutions to address specific needs in disciplines not driven by research and scholarship, such as the arts and creative practice.
  7. Reforming public TAFE (technical and further education) colleges to enable their effective participation in a national tertiary education system.

The evolution of a diversified national system appropriate to 21st-century demand will be accelerated by Covid-19 disruption, the recent Job-ready Graduates funding reforms, changing demand for education and the probably continuing decline of public funding. System governance, rules and controls should be designed to facilitate this evolution rather than stand in its way.

John H. Howard is a visiting professor at the University of Technology, Sydney and director of Howard Partners consultants. He is author of Rethinking Australian Higher Education: Towards a Diversified System for the 21st Century.

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Reader's comments (1)

This is an excellent starting point for a discussion that is long overdue. The one size fits all policy, funding and governance approach needs to be addressed as it is a remnant from a different world as the author highlights. The impact of COVID on the Australian higher education system is highlighting what has been warned about for the past decade of so in relation to the approach to policy, funding and governance of the system and universities. Getting the relevant parties to the table to develop and implement a long term strategy to address the issues will be a challenge. Discussion of the author's proposed pathway could be a good first step.

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