Australian universities have escaped further cuts in spending next financial year.
The federal government's annual budget, announced last week, was designed to appease some of its strongest critics, including those in universities.
Federal education minister David Kemp announced that Aus$5.4 billion (Pounds 2.1 billion) would go to universities in 1998-99. This included operating grants, research, and capital and equipment grants.
Although Dr Kemp said the government wanted Australia to be recognised for its "world-class education and training", he repeated his demand for universities to demonstrate greater efficiency and effectiveness.
"The government will continue to encourage universities to expand and diversify their sources of income on a secure base of public investment but with increased self-reliance," he said.
However, federal spending cuts announced last year will take almost Aus$100 million out of higher education by 2001. The impact of these cuts, and the government's continuing refusal to meet the cost of a big salary rise for university staff, has already led to the loss of thousands of jobs, the closure of university departments, and poorer student-staff ratios.
The National Tertiary Education Union said the government had ignored strong community concerns about reduced federal funding of teaching and research.
Union president Carolyn Allport said that universities were facing a 6 per cent reduction in their operating grants between 1996 and 2000. This meant less money for libraries and equipment, increasing student -staff ratios and escalating workloads.
"There have been significant productivity gains made in the higher education sector but these do not translate into dollars for salaries," Dr Allport said.
"Continuing to ignore the real effects of the cuts, including failure to provide an effective indexation system to assist institutions to pay salary increases, means there will be less money for teaching, research and student support services."
But the vice-chancellors responded mildly. They welcomed the fact that no further cuts were to be made in this year's budget but said the government had to address key areas where financial stress was beginning to threaten quality.
John Niland, president of the Australian vice-chancellors' committee, said the government needed to tackle the looming financial problems caused by the third round of wage bargaining - due to begin in September.
"Funding to support proper enterprise bargaining is now the main priority," Professor Niland said. "We expect that to be addressed in the lead-up to the election."
The Federation of Australian Scientific and Technological Societies said the government was "bereft of ideas" and the budget missed golden opportunities.