Vice chancellors have begun warring with each other over moves to create an elite group of research-based institutions.
The so-called Group of Eight is accused of trying to insulate member universities from federal budget cuts while obtaining a greater share of research funding.
Vice chancellors from the group, which includes Sydney, Melbourne, Queensland, New South Wales and the Australian National University, met in Canberra last week following a meeting of the board of the Australian Vice Chancellors' Committee. They argued that international research competitiveness was in jeopardy because limited cash was spread across the 37 public universities.
But the remaining vice chancellors, unkindly called "the lesser 28", bitterly condemned the setting up of another such lobby group - a similar plan was floated more than two years ago.
La Trobe University vice chancellor Michael Osborne described the move as "self-serving bleating by a small number of older institutions. They are now making ludicrous claims that they form an elite group and could be world-class universities if only they were given more, if not all, of the research funding at the expense of the rest of the university system".
While this row was brewing, vice chancellors also learned their worst fears would become reality: the new conservative government is preparing to abandon its pre-election promises to higher education. At a meeting with the AVCC board, education minister Amanda Vanstone made it clear she would not be held to any commitments by the coalition of conservative parties before the election.
Higher education sources later confirmed that the government had no intention of providing additional money to meet the demand from academic and general staff for pay rises of up to 15 per cent.
While in opposition, the coalition said that pay would be a top priority if it got into power. Education spokesmen also vowed that the coalition's higher education policies would allow the university system "to consolidate and strengthen after a period of tumultuous change".
They claimed a government under prime minister John Howard would maintain the level of operating grants to universities and there would be no cuts in student places.
Now that seems unlikely, unions are preparing for a full-scale campaign of industrial action.