Australian universities' A$2 billion (£700 million) a year in non-government revenue is under increasingly critical scrutiny by state governments, their auditors general and a senate committee.
In a report last month, the senate committee reviewing higher education noted that 34 public universities ran 280 commercial entities. The report states that many of the newer operations have serious implications for universities' legal and financial standing and, in some cases, "for the reputation of Australia's higher education sector".
Both the committee and Victoria's auditor general have referred specifically to the University of Melbourne's commercial arms - notably its controversial Melbourne University Private. The senate report suggests that MUP's viability is in doubt. It adds: "If this is the case, there are some clear implications for the public university."
To maintain public confidence in the state's universities, Lynne Kosky, Victoria's minister for post-compulsory education, has formed a review, with a committee consisting of three government representatives and two vice-chancellors, including Melbourne's Alan Gilbert.
Ms Kosky said she was unconcerned that Professor Gilbert would be part of a review inquiring into university commercial activities when his own private offshoots had attracted public "notoriety".
She said the state's vice-chancellors had nominated their representatives and she would accept them. "I made it clear that we need a framework and a transparency of governance and financial arrangement, particularly for the private arms of universities. We need the vice-chancellors' knowledge because they understand the processes concerning their commercial arrangements."
The minister is about to investigate MUP's progress towards becoming a university. MUP was launched as a A$200 million venture in August 1998, when the parent university predicted that MUP would enrol almost 3,000 undergraduates and postgraduates by its tenth year. Once fully established with four schools, MUP was expected to generate up to 3,600 jobs and contribute up to A$2.48 billion to the economy.
But after nearly four years, MUP still loses money, has only two schools and enrols slightly more than 100 students.
Professor Gilbert has said that the senate report's references to his university contain more than a dozen errors, and he has called the report an unreliable source. He said MUP was expected to make a profit next year.
• University commercial arms have changed the name of their representative organisation to Knowledge Commercialisations Australia to bolster their image.