The rising phoenix of competition: what future for Australia’s public universities?

IN MID-WINTER, NEW Brunswick is a long, cold train ride from Penn Station in Manhattan. The New Jersey transit runs out of the city and through suburbs until the scenery seems an endless process of small depressed towns strung together along the line. Few students alight from the clean but empty train in January, leaving the streets of New Brunswick bleak and deserted. Yet for much of the year this is a lively place, one of three college towns hosting campuses of the State University of New Jersey. The coffee shops and pizza joints lining the freezing walk from the New Brunswick train station to the front gates of Queen's College are closed for the New Year break. They serve a campus chartered in 1766 but soon patriotically renamed after a hero of the American Revolution, Colonel Henry Rutgers.

The university now bearing his name spans New Jersey and reaches its 8.5 million residents. Rutgers is the result of successive amalgamations, a combination of former independent colleges dotted around New Jersey and a land-grant university from the nineteenth century. Most United States universities are single-campus and so do not face the academic and administrative coordination challenges common in Australia. Rutgers is unusual, operating from three regional centres. Like the typical Australian public university, Rutgers must find ways to speak with staff and students scattered across many sites. It does so through new teaching technologies, broadband connections that allow a law professor in Camden to address a class in Newark, a study group in New Brunswick to include students from across the Rutgers network.

As usual, the promise is better than the delivery. Rutgers has excellent equipment, but watching distant figures on a plasma screen with a slow refresh rate is hard work. Still, Rutgers sees itself at the forefront of a new delivery model for higher education. The campus may remain the focus of the university experience for Rutgers students, but computers and television monitors provide students with access to a richness of course material and teachers beyond the resources of any single site. The future becomes an enticing blend of personal attention from the professor supported by online content.

Or so the Rutgers leadership thought until Phoenix appeared. Calling itself a "university for working adults", the University of Phoenix offers a range of bachelor, masters and doctoral courses. Students can study online and attend local 'learning centres' to interact with contract tutors. The emphasis is on courses leading to employment – business but not arts, health administration but not social work. The Phoenix web site promises that students can complete "100% of your education via the Internet, including all administration, registration, and book buying".

When Phoenix started in 1976 it appeared just one among the many marginal US colleges, offering courses from a small campus but also available by correspondence. It was not perceived as a threat by Rutgers or other established tertiary providers. It remains largely unknown in Australia, despite the challenge it poses to traditional public institutions. Yet after just three decades Phoenix is America's largest accredited private university, claiming 17,200 qualified instructors (some perhaps moonlighting from other universities) and 128 learning centres and internet delivery worldwide. Media reports put the student body as high as 295,000.

When I visited New Brunswick in January 2003, Rutgers Vice President (Continuous Education and Community Outreach) Ray Caprio recalled his first inkling of change a year or two earlier. He had heard of Phoenix but was unconcerned. How could an internet provider, without research facilities or serious professors, compete against Rutgers with its 51,000 students, 2,500 faculty and 7,000 general staff, working out of 857 different buildings on campuses across New Jersey? Rutgers would always be the more desirable destination, with its attractive mix of campus life and interactive video teaching facilities.

If academics dismissed the pretensions of Phoenix, general staff seemed more impressed. Many wanted to upgrade qualifications for career advancement but could not face the high fees and lengthy courses of established universities such as Rutgers. Several passed over their own university to enrol in the Phoenix MBA program, attracted by its moderate prices and accelerated timetable. Intrigued, Caprio sponsored a staff member to undertake two courses at Phoenix, and used the opportunity to assess the quality of course material provided by the virtual provider.

"Though all our academic prejudices make us want to discount Phoenix," he reported, "actually the stuff was pretty good. Phoenix will stick to popular paying courses like the MBA and nursing. They'll never teach philosophy but they will be a force."

Phoenix has achieved prominence and profitability in a landscape otherwise littered with 'e-learning' failures. It has refined a business model that minimises investment in the expensive infrastructure usually associated with older university, those spires, cloisters, gargoyles and cumbersome overheads such as tenured staff and libraries. Instead Phoenix reaches out to Americans who want career opportunities through college education at an affordable price, and who want to study without leaving home. Rutgers has spent vast sums on information technology to knit together three campuses in one small state, only to see a private competitor use the same equipment to span the entire American continent and soon, perhaps, the world. As Caprio looked out his office window at desolate New Jersey in January, he could see a competitor not tied to a single place, bound neither by railways lines nor state boundaries.

Phoenix was no overnight success. Some reports suggests 25 years of cumulative losses before the University reached the scale necessary to make its online approach financially viable. Phoenix has been joined by a handful of other successful providers, including De Vry University and Kaplan University, each offering vocationally-focused qualifications at modest prices. At the more expensive end of the market, there have been numerous examples of failure in cyberspace education. Promising online tertiary initiatives from prestigious universities such as Columbia University in New York produced instead embarrassing losses. A joint public-private venture in Britain labelled UKeU opened in 2001 and closed three years later with losses over £62 million ($148 million). Getting e-education right has proved more difficult than most imagined, but those few pioneers which survived now lead a revolution in higher education.

Ray Caprio grasped earlier than most the transformation heralded by Phoenix. Though e-education still commands only a small overall portion of the market, here is a new teaching model for higher education, one that dispenses with a campus as the core of university life. The university becomes instead a virtual space connecting contracted teachers with paying customers. It is a business in which not academics but a professional management decide hiring, course content and delivery mode in response to market signals. From the sunny American south arises a new creature, a "for profit" approach to higher learning. For Rutgers in the frozen north this is a worrying vision. Public universities have seen the future, and maybe they're not in it.


THE CONCEPT OF an internet university can shock because it runs sharply against the grain of long tradition. Universities are places, not web sites, tutorial chat rooms and email instructors. Our sense of what it means to be a university is shaped by history, familiarity and too many reruns of Brideshead Revisited. In Australia, this ideal type is particularly narrow. Regulation allows only one model of a university, one set of acceptable characteristics. Phoenix is disturbing because it dispenses with every aspect of the standard Australian package – a campus, lectures, laboratories, indifferent catering and inadequate public transport. Above all, Phoenix does not assert that teaching and research are inextricably linked. On the contrary, this private institution shows no interest in research as an essential part of the university.

The Phoenix model is profoundly disturbing to public universities working within a long-established delivery model, able to present their embedded values as the very definition of quality tertiary education. It is likely international Phoenix-style operators will find common cause with an already burgeoning local private sector to present unprecedented competition for Australia's public universities. In rising to the challenge, public institutions must first confront their own assumptions about what constitutes a university, and then persuade Canberra to take seriously its rhetoric of diversity.

Yet for all the angst a Phoenix provokes, there is something familiar about the emphasis on teaching rather than research, on vocation as the principle purpose of 'going to university'.

The first Australian universities, established in Sydney and Melbourne, reflected the conventional wisdom of the 1850s that teaching is the principal occupation for a scholar. In 1755 Dr Johnson's Dictionary had defined a university as "a school where all the arts and faculties are taught". A century later John Henry Newman's lectures of 1852, published as The Idea of a University, strongly opposed any place for research in a true university. As a rule, asserted Newman who "went up to Oxford" at sixteen, teachers are too busy to do research, and researchers too preoccupied to teach.

This focus on teaching appealed strongly to colonial governments. Professor John Woolley, a classics scholar, Oxford graduate, and the first Principal of the University of Sydney, used his inaugural address to define a university as a school for liberal and general knowledge and a collection of special colleges, devoted to the learned professions. He did not mention research. In 1878, Charles Pearson, a member of the Council of the University of Melbourne, asserted that the main function of a university professor was to "impart, not invent".

Other models were available to colonial governments. As early as 1809, Prussian scholar and administrator Wilhelm von Humboldt proposed a new university at Berlin that combined education and research, making fundamental inquiry part of the work of a university professor. The idea took considerable time to travel. Only in the late 1880s, with the appointment of professors in chemistry and biology, did the University of Melbourne acquire scholars directly involved in research. Although the German model inspired doctoral studies in the United States from the 1880s it had little impact in Britain and doctoral studies were not available in Australia until the 1940s. By then Humboldt's

idea that combining research and teaching in one place would enrich both student learning and discovery was becoming the orthodoxy.

In shifting from Newman to Humboldt, from teaching to teaching and research, Australian universities evolved from small, collegiate and teaching-only to large, comprehensive and research-oriented institutions. To early faculties of arts, science and divinity, Australian universities added the learned professions such as medicine, law and engineering during the 19th century. Faculties of agriculture, veterinary science, commerce and dentistry appeared early in the 20th century, and business, nursing and teaching faculties more recently. The journey was slow and the destination not always certain. Threaded through most Australian universities are competing educational philosophies, the accretion of internal choices and changes in government direction. The mission statement of any Australian university is likely to mix elements of Newman's focus on teaching and intellectual formation, Humboldt's focus on advancing knowledge, the elite technical training of the French grandes écoles, and the new language of community engagement.

From 1850 these overlays accrued in universities that were fostered and supported at state level. While the relatively small scale of the sector worked against significant diversity along American lines, different patterns of tertiary education emerged. In the late nineteenth and early twentieth century, colonial and then state governments created traditional universities– today's sandstones. As demand for university education grew after the second world war, a number of new technically-inclined universities were created, such as UNSW and, later, Monash, along with a national research university in Canberra. The Martin report of 1964 emphasised the need for further expansion of places, promoting a new wave of suburban institutions embracing a more multidisciplinary approach to knowledge – Macquarie and La Trobe first in 1964, then over the next decade Newcastle, Flinders, Griffith, Wollongong and Murdoch. These existed alongside older technical colleges and a newer crop of colleges of advanced education, many also dating from the 1960s.

The shift to national consistency began when the Whitlam government assumed national control of universities from 1974. Commonwealth supervision offered the prospect of better funding and more equitable access, but also established the conditions for centralised control. While Canberra at first devolved operational questions to an independent expert commission, over time federal education ministers exercised their authority to direct higher education (principally in response to endless demands from states for more places and from local politicians who insisted on a campus in their electorate). An unintended effect of the Commonwealth imposing uniform operational requirements was to smooth away regional differences, along with differences between universities, institutes and colleges.

In 1988 Minister John Dawkins decided to remake the system. Dawkins dissolved the divisions between types of institutions to make nearly every higher education institution a university. He did so in the name of equity – expanding opportunities for students to attend local universities, allowing former institutes of technology and colleges of advanced education to offer higher degrees, do research, and access broader pools of funding. The trade-off was size – 63 higher education providers would become just 36 universities. Dawkins achieved this by imposing minimum size conditions that required smaller, specialised teaching colleges to become parts of larger institutions. Research became the mission of all universities, even those with little experience or infrastructure. Per student funding was equalised in the name of a 'national unified system'. A single model of the university had triumphed. Henceforth, by ministerial fiat, all Australian universities would be essentially the same.

The Dawkins model has exercised a powerful effect on the Australian imagination, shaping the thinking of both sides of politics about higher education. It was further entrenched in 2000, when state and federal Ministers agreed on a common protocol for accrediting universities. By requiring a "sustained culture of scholarship", including the "creation of new knowledge through research" the protocols rule out teaching-only universities along the lines of America, where half of all bachelor students enrol in institutions that do not award doctoral degrees. This was also the case in Australia before Dawkins. In 1987, 54 percent of tertiary students were enrolled at colleges of advanced education.

These new rules made research the defining characteristic not just for public universities, but for any private university as well. The Dawkins model has structured how knowledge is created, packaged and conveyed within all Australian higher education institutions. It has reinforced research as the measure of competition and prestige. The Humboldt tradition of research as the defining characteristic of a university is not just triumphant; it is the only accepted approach in Australia.

For those who share Humboldt's belief in research-led teaching, this uniformity is a virtue. It ensures consistent standards and makes student choice remarkably simple – every Australian public university operates in broadly similar ways, with largely indistinguishable goals and degrees. It is therefore no surprise so few Australian undergraduates leave their home state or territory to study elsewhere.

Academics support the Humboldt approach, since research is what draws many to the scholarly life. More intriguing is the willingness of the broader public to accept the model, given that it is also the most expensive and least flexible way to run a university. For an undergraduate student the advantages of research-led institutions are uncertain. Since time is scarce, research and students compete for academic attention. While great teaching may be informed by research, it can also lead to other less desirable outcomes, such as a temptation to teach around research interests. After all, the basic credential for an academic position, the doctorate, is a research rather than a teaching qualification.

More fundamentally, in a research-focused culture large parts of the calendar year must be set aside for research and for the time-consuming process of drafting articles, writing grant applications, reviewing the applications of others, reporting on research outcomes, appearing before ethics committees, supervising doctoral students and research assistants and doing research of merit and value. Teaching institutions without research requirements could teach the standard three-year undergraduate degree in less time, so allowing faster access to employment. The pedagogic argument – that students need the summer to digest their studies – is challenged by growing student interest in summer semesters and online opportunities.

Since students and their parents vastly outnumber academics on election day, it says much for the persuasive power of the Humboldt model that a research-led approach to Australian higher education retains its sway. The narrow Australian convention of a university has shaped public expectations to a remarkable degree. If that model is now under challenge, this reflects external circumstances rather than a local loss of faith. The world is shifting in ways that undermine Australian insistence on a single model of the university.


FOR STUDENTS AND staff alike, recent changes to higher education have implications for life on campus. The first and overwhelming effect of system change has been the growth in student numbers. In the early 1950s Australia enrolled just 30,000 university students. This reached 300,000 by 1977, 600,000 by 1995, and is now more than 944,000, including some 228,000 international students studying in Australia. While the wider population has increased less than three-fold since the 1950s, the domestic student population has increased more than 23-fold.

Since the number of universities has not kept pace with student demand, the average size of institutions has grown markedly. Unlike many British or American universities, Australian institutions often host 30,000 or higher students, typically scattered across many sites. The possibilities for small cohorts and personal attention diminish accordingly. For many Australian students, university proves a lonely experience as one student among a great many. This is particularly the case for the 45 percent of Australia's tertiary students who are over 25, and struggle to balance study with family and work.

While student numbers have grown, public funding has not kept pace. On the contrary, funding per student has fallen steadily for more than two decades. This is felt most keenly in the quality of the facilities and the size of classes. Until the 1980s, teaching ratios were stable at around one staff member for every twelve students. Once funding declined class sizes grew, reaching an average of 16:1 by 1996 and 21:1 by 2003. Two Australian public universities recently reported ratios of 33 or more students for every staff member.

This education does not come cheaply. Australian students pay for their course through an income-contingent loans program, the Higher Education Contribution Scheme (HECS). Prices are capped by the federal government, as are available places. From a student viewpoint, in a single generation Australia has moved from free tertiary education to among the most expensive courses found within the OECD. That demand for places remains strong is testament to the perceived importance of tertiary qualifications in getting a good job.

For contemporary students then, there is irony: the system growth that has improved their chances of getting to university simultaneously produced a campus more crowded and less well resourced institution than the university fondly remembered by parents. Graduating students can look forward incomes higher than average but must first pay off a substantial debt.

It can be hard to grasp just how fundamentally the funding landscape has changed for Australia's public universities. In 1981 the Commonwealth provided around 90 percent of the income of a typical public university in Australia. By 2002, the figure was just 40 percent of total university sector income and still falling. Some Australian universities derive less than a quarter of their income from guaranteed Commonwealth funds, and must raise the rest from students, competitive research grants and commercial activity. Such institutions remain public in spirit but not in income. They have been "privatised from within".

If classes are more crowded for students, employment is less certain for staff. Tenure has disappeared even as class sizes have grown. To contain costs and deal with budget fluctuations, universities have developed a large casual workforce – a shrinking "tenured core" of older scholars supervising a tenuous periphery of younger academics. Combined academic and non-academic casual employment in Australia's universities rose almost 270 per cent between 1990 and 2000.

Yet just cutting costs has not been sufficient. Universities have also required new income, and here they have looked abroad. Australian public universities have been aggressive in recruiting paying students, helping create an astonishing $6 billion a year industry in fee-paying places. Indeed, in the export of education Australia outperforms most OECD countries, and accounts for more than 12 per cent of onshore international higher education across the English-speaking world. The Australian higher education system is now underwritten by international student fees; even a small decline in international numbers would have immediate consequences for the continued viability of many public universities.

Australia's public universities have enjoyed an early-mover advantage, but it is less clear the system can survive indefinitely on income from exporting higher education. Traditional Australian sector markets such as Singapore, Malaysia and Hong Kong are building their own campuses and becoming competitors. Universities from the United Kingdom and United States are opening facilities in this region and some, such as the London School of Economics, already target Australian domestic students, advertising in local newspapers.

For critics of the current funding approach, the issue is whether a predominantly commercial approach to higher education is in Australia's long-term interest. A reliance on markets dictates what universities can do. Forced to compete for income, universities begin behaving like private organisations.

Yet an entrepreneurial spirit does not always please the federal government. When universities must rely on student income, they focus on areas of strong demand. Non-performing courses and even whole campuses may come under threat. Governments, however, worry about the electoral effects of course or campus closures. Hence legislation introduced by the former Education Minister Brendan Nelson empowers the Minister to require that particular programs and locations remain open, whatever the prevailing economics. Universities are expected to satisfy both the invisible hand of uncertain markets and the long arm of micro-managing governments. In the words of RMIT Vice-Chancellor Margaret Gardner, it is as though government has simultaneously "floated the dollar and fixed the exchange rate".

The stringency of tight budgets and larger student loads has transformed how universities are managed. Institutions now face competitive pressures and fluctuating income, and must manage growing levels of debt and risk. They must invest in enterprise information systems and make commercial decisions alongside academic judgements. Consequently, older collegial modes of governance jostle with a more corporate approach to management. The university of popular imagination, with witty word play at academic board and languorous afternoon seminars, has vanished.

Three decades after tertiary education became a national responsibility, Australian public universities find themselves in a difficult and fragile position. On the one hand, they are much in demand – student competition for places remains vigorous. On the other, the dollars offered for each student place from Canberra has fallen to a new low, with Commonwealth income conditional on meeting detailed instructions about industrial relations and student services.

For students, education is more expensive and less personal, while for staff the attractions of an academic life – time for research and interaction with bright young people through teaching – seem under threat. Through ingenuity and good fortune universities have made up the gap between falling government revenue and rising costs, though the task gets more difficult each year. But now the public sector faces a new challenge, this time from a vigorous private sector keen to break into its markets.


UNTIL RECENTLY, TRADE in higher education was largely one way – hundreds of thousands of international students spend their money in Australian institutions, but relatively few Australians study abroad. International universities have not been able to find a place in the Australian system because regulation protects the local industry from competition at home. An Australian university could set up a campus in south-east Asia or the Middle East, but an institution from such countries would struggle to get accreditation in Australia unless prepared to invest in expensive and unprofitable research.

This success in locking out the world will not remain viable in an era of free trade agreements. The international student market is now a huge world trade, worth more than $35 billion a year in English speaking countries alone, and Australia has proved unexpectedly successful. There will be international players, including those using a Phoenix-style online approach, seeking access to Australian domestic students and to international students studying here. Such providers will complain about a regulatory regime that effectively bans "for profit teaching-only" universities, arguing such rules are an impediment to student choice and capital investment.

If external providers prove keen to find a place in the Australian system, so too will the local private sector. There is a large and growing cadre of domestic private providers eager to challenge current policy arrangements. They have watched public universities create a multi billion a year export business, and want a place in the market. At present they are excluded by national protocols requiring research-led teaching in any institution called a university. Research may be prestigious but it is unprofitable. Hence the private sector provides, for the first time, an articulate domestic lobby hostile to the prohibition of teaching-only universities and pressing politicians for policy change.

These external and internal forces for change are knocking on government doors, seeking to overturn the established regulatory framework. The first of the Americans, an offshoot of Carnegie Mellon University, opens in Adelaide shortly, albeit with the benefit of a subsidy from the South Australian Government. The National University of Singapore has advertised its public policy courses to prospective Australian students, and could note that classes in Singapore are smaller and facilities better thanks to generous public funding. Other international players are likely to follow – including perhaps the University of Phoenix, which could operate through the internet without being caught by Australian regulation. Victoria alone has reported serious approaches from three international universities considering a local base.

Recent decisions by the Commonwealth support significant expansion by private providers. To encourage Australians to finance their own education rather than take Commonwealth-funded places, Canberra created contingent loan schemes known first as PELS and then as FEE-HELP. These income-contingent loan schemes were modelled on HECS, and allow Canberra to pass the cost of higher education from Treasury to students. Importantly, these changes to the way students fund their education also influence which institutions benefit. While FEE-HELP makes available a deferred low-interest loan for study at a public university, the policy also allows public money to flow to students choosing private providers. This allows students to pay fees to local providers, and so builds a private sector alternative to public universities. To date, students at 35 private institutions have access to FEE-HELP, including the nation's two private universities. Another 20 or more private providers are working through accreditation processes. Minister Nelson announced FEE-HELP would be available to Carnegie-Mellon students, so overturning the current restriction to institutions based in Australia.

In response, there has been rapid growth among private providers, offering courses in every state and territory across a vast array of fields – natural medicine, tourism and hospitality, business administration, fashion, real estate, legal studies, dance, sport, music, multi-media and information technology among others. Like any new industry the players vary in size, from the marginal to the national. All are subject to state accreditation processes. Students paying fees to private institutions increased by 50 percent from 1999 to 2005, with more than 45,000 students studying at a private institution.

Few private providers are yet direct competitors with public universities. Twelve of those with FEE-HELP approval are affiliated with religious groups, a market in which public providers are unlikely to venture. Others are niche providers of professional education. Some, like the stock-market listed firm IBT Education (market capitalisation $630 million) collaborate with public universities, offering pathway programs to several institutions or even delivering courses on behalf of a public university.

Yet the emergence of a private market is an important warning for Australia's public universities. It indicates demand for tertiary qualifications is not being met by the public sector. Clearly some students want more vocationally-orientated courses, more flexible delivery, or access to faith-based qualifications rather than the liberal education promoted by public institutions. They are attracted to private organisations which are clear about their objectives and often focused around a particular area of expertise (the Australian College of Natural Medicine, the William Blue International Hotel Management School). Students choose private providers which offer a broad range of training, from certificates through to degrees and which are affordable, in part because the private sector does not undertake expensive research.

At present, just one impediment constrains such private providers from even greater expansion, and that is access to the title 'university'. While ever this celebrated label is reserved for the Humboldt model of research-led teaching, the private sector is at a disadvantage. I've heard just this point argued at a public forum by Dr John Cox, the President of Avondale College in New South Wales, an institution affiliated to the Seventh Day Adventist Church. Thanks to FEE-HELP, Avondale is growing rapidly, but student recruitment is hampered by being called a college. The university brand is strong in Australia, and the private sector wants access to this prestigious label without the prohibitive costs of research.

Minister Nelson heard the call. His 2005 discussion paper "Building University Diversity: Future Approval and Accreditation processes for Australian Higher Education" surveys the grounds on which institutions can call themselves universities. The Minister is still ambivalent – in a single paragraph he argues we need a "wide diversity of institutions" and "a nationally consistent, well-defined brand". It is hard to have both, unless brand means no more than quality-controlled education in a pleasant, relatively safe country. But the direction of policy is increasingly clear – away from the uniform national system of the Dawkins era toward something like competition.

Thus circumstances converge to challenge the orthodoxy of Australian universities. From outside our shores new providers seek access to the Australian market. From within comes a new private sector, ably represented by lobby groups such as the Australian Council for Private Education and Training, eager to compete on equal terms with the public sector. The federal government has assisted both international players and private providers by providing a loans scheme that gives students a choice between public universities (HECS and FEE-HELP) and private providers (FEE-HELP). Soon perhaps the loans schemes will merge, along with accreditation of institutions, creating a single market that pits public against private, comprehensive against specialist, vocational against academic, local against international, Newman against Humboldt.


AS COMPETITION BREAKS out, it will be dangerous for all public universities to be stretched out in single file along the narrow road to the deep north. A capacity to meet the market, to respond to a very different context, will be imperative if the public sector in education is to prosper in a very different world.

The public sector cannot respond with the agility of private providers. Public universities find themselves held firm like Gulliver by endless taut lines of regulation. The Commonwealth, not the university, decides institutional size, scale, location and course profile. Regulation leaves little flexibility. Thus while Canberra restricts which public universities can offer prestigious medical training, Australia's two private universities have both announced medical schools. Commonwealth controls mean public universities cannot respond quickly as student demand shifts, cannot reconfigure undergraduate profiles in response to market signals, cannot abandon declining disciplines and embrace new ones, cannot close campuses or sell capital to move into new territory.

Hence the risk that diversity in Australian higher education will just mean creating a private sector in higher education, rather than encouraging difference within the public sector. Under current rules, public universities are unable to evolve, and may find themselves marginalised as thriving private providers seize the new opportunities. This is a now familiar story in Australia, an echo of policy development in child care and public schooling, in which federal government funding supports private competition to long-established public provision.

The issue for the public sector is how to respond. Certainly the current emphasis on uniformity is no longer a virtue. Offering 37 variants of the same product does not seem a viable strategy in a market. Once a significant private sector emerges, everything changes. Consistency is suddenly a handicap for the public sector (just ask the remaining government schools, which are busy developing local specialisations in response to the growth of private providers). How do comprehensive public institutions, limited by rules and processes imposed from Canberra, compete against private providers which brand themselves as specialist, small, student-focused and able to offer intensive two-year degrees at a lower cost than a public sector which must carry the overheads of unprofitable product lines and expensive research facilities?

There are at least two lines of defence open to public sector institutions. One is to emphasise the traditional virtues of a research-led university. A healthy market remains in the United States for such universities, and there will always be students in Australia who value the opportunity to interact with active scholars, to study in a setting with research facilities, to ruminate about new ideas over the summer or work as research assistants for eminent professors.

The second, and compatible, line of defence is to specialise, to embrace diversity within the public sector. Frustratingly, when diversity appears in public debate it is discussed only in narrow terms as a stark choice between research or teaching-only universities. Yet diversity can be realised across a range of categories – institutional size, mission, student mix, course offerings, mode and language of instruction, undergraduate and postgraduate, generalist and professional. Current regulation, for example, discourages the development of a Caltech in Australia, a university that makes its principal contribution in technology-related fields. We have no university of the performing arts, no university dedicated to agriculture, no liberal arts college, no industry-specific institution attending to aviation, to banking or software engineering. All of these might undertake research, yet still break out of the current national model of large and comprehensive public institutions.

A federal minister cannot legislate for diversity. Rather, policy settings must encourage choice by students and institutions. This sounds simple but requires a major change in thinking, with close attention to how Canberra regulates the system, the incentives provided to universities, and the options open to students.

Regulation is fundamental. Whatever the rhetoric, universities are not autonomous institutions but extensions of Commonwealth policy, shaped by the incentives Canberra expresses in its voluminous rules and reporting regimes. The options open to public universities are highly constrained. Hence the need for a fundamental mindshift. The Commonwealth needs to see higher education as an industry in which governments own some important assets, rather than as an extension of the federal public service. An industry approach implies a single and consistent regulatory framework for all participants, public and private. Government must remember its principal interest as a regulator – to ensure quality, and so protect one of Australia's top ten export industries.

A quality framework should make accreditation dependent upon meeting clear minimum standards, and allow an independent accreditation body to make the assessment. This autonomous body, modelled on contemporary financial regulatory organisations such as Australian Prudential Regulation Authority or Australian Securities and Investments Commission, would certify standards in any institution, public or private, offering higher education qualifications. The charter for accreditation could be decided by a joint meeting of Commonwealth, State and Territory education ministers, so addressing the constitutional divide which sees universities created and accredited at state level but regulated from Canberra. The membership of the accreditation body might likewise represent the interests of different levels of government.

Within the public university sector, government can encourage difference by broadening the incentives available. At present the overwhelming bulk of discretionary funding available through competitive bidding is in research and research training. The dollars to reward other sector goals remain, by comparison, very small – while $986 million was distributed for research in 2004, just $114 million was available for teaching excellence and only $27 million for equity performance and community engagement.

We need larger funds for teaching and equity. As with research funding, these should be performance-based and peer-assessed. Instead of all competing for a single measure of success and additional funding – research grants – universities could make strategic choices about their profile. A community focus, an emphasis on small classes and individual student attention, would become possible. Universities could rethink their essential mission, knowing funds are available across the spectrum of possibilities. Thus, an institution might choose, as does Evergreen State College in the United States, to emphasise liberal arts training with a public outreach program, or elect to support a program similar to the Undergraduates Ambassadors Scheme in the United Kingdom, in which university students spend time in schools, offering support and individual tuition, particularly in science and mathematics.

Finally, diversity can be encouraged by providing students with greater choice about where they might study. At present places in particular courses are allocated to universities and funded at rates determined by the Commonwealth minister. If, for example, demand for media and communication studies at a public university suddenly increases, then entry scores for the Bachelor of Arts course rise but there is no increase in the number of places available to HECS students. This is a rigid system in which government controls the price, supply and location of public places. A better approach would be to allow the flexibility of a market. Universities should have more control over their own profile and over the price they can charge. If the Commonwealth is concerned about under-supply in a particular discipline, it should offer scholarships to influence the attractiveness of particular courses rather than regulate price and demand.

Diversity in short is not a single dimension, but a range of potential attributes. Public universities can be encouraged to specialise through better designed regulation, more imaginative funding schemes and greater student choice to shape the system. Faced with a radical change of environment, the public sector needs different institutional types to compete against international and private providers. We need public universities scattered across the range of possible spaces, offering choice and competition. We need many different public universities, not just variations on a single theme.


MANY INDUSTRIES IN Australia have faced the difficult transition from a protected local market. As a sector becomes more international, with services traded in both directions, and as overseas players move into Australia, the old regulatory framework proves untenable.

In other industries facing globalisation, governments have gradually abandoned close controls, adopting instead a 'hands-off' regulatory framework that stresses fair competition, clear minimum service standards, and transparency of scrutiny. Unprofitable public providers have been allowed to go out of business. The local industry that emerges from exposure to international competition looks very different from the days of isolation and uniformity.

Governments have yet to allow such a transition in higher education. The experience of other sectors suggests that over time the Australian higher education sector will look less like a tightly planned, funded and regulated system and more like a state-sponsored participant in a loosely-regulated international market. Eventually even the notion of a self-contained Australian higher education system may give way. For the moment, though, public universities remain closely controlled by government. Ministerial control has tightened over significant operational areas, such as the ability to close small courses or unviable campuses. The Commonwealth decides and allocates public university places available to Australian students. Canberra has proved reluctant to consider alternative modes of regulation. Public higher education is losing its monopoly in Australia, but inflexible policy settings give it nowhere to go.

Within higher education, calls for more diversity are often dismissed as attempts to impose status hierarchies. To question the interests of those advocating change is always wise, but policy proposals ultimately stand or fall on their logic. It is the burden of my argument that the Dawkins model of populating the public sector only with large, comprehensive, multi-campus, research-led institutions is no longer viable in the face of a competitive market.

Yet our thinking is still shaped by the Dawkins paradigm. The sector should instead think about alternatives. When Murdoch and Curtin universities contemplated merging to become another large, comprehensive research university, it was because they judged themselves too divergent from the norm. The Minister welcomed this move and offered support for such conformity, only to see the plan abandoned by the players. Yet unless the sector begins to think about alternatives public universities risk the fate of the public school system, pushed into residual service provision for students with no other option.

That said, there remains a strong future for most public universities. Some will retain their present form, since neither Phoenix nor its imitators will seek to replicate the tradition niche of the research-intensive public university. Others will find new identities, thereby creating the diversity at the heart of a sustainable public sector.

Sitting at Rutgers in New Jersey, Ray Caprio viewed the rise of Phoenix as a reminder the future of public universities cannot be taken for granted. The apparent solidity of a 900 year tradition is no guarantee of viability. There are other ways to think about higher education, other models capable of delivering quality learning. The challenge is not to mistake institutional form for the substance, an ideal single model for the very many different kinds of universities possible. The Australian government must let go, so that public universities can realise their many different futures.

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