The Australian Government has rejected calls to increase spending on higher education and has instead demanded that the eight states and territories administered by Labor governments contribute more to university finances.
At the same time, a vice-chancellor has called for a shake-up of the funding system, arguing that if the federal Government will not provide more cash, it should allow universities to set tuition charges.
In her address to a national conference, Julie Bishop, the federal Education Minister, said that all public universities except Canberra's Australian National University, had been set up under state acts, yet the federal Government provided 98 per cent of public funding. But she said the states collected "A$148 million (£60 million) more... in tax from their universities than they invested".
Ms Bishop said that if the states were unwilling to cede power over universities to the federal Government, they should shoulder "a fairer share of the responsibility".
At another conference, Glyn Davis, University of Melbourne vice-chancellor, said Australian students paid among the highest fees in the world even though institutions took less money per student than it cost to provide their education. Instead of student charges being linked to course costs, they were tied to assumptions about future earnings, he said. The result was that the earnings of some faculties were used to cross-subsidise those that did not generate the income they needed.