Performance-based funding will ‘transform HE’ – Minister

Australia’s 40 public universities will be subject to ‘performance-based funding’ from the start of 2020 in what Education Minister Dan Tehan calls “a transformational moment for higher education in this country”.

Announcing the new scheme, Tehan said four “key performance metrics” would affect government grants to each university. These were graduate employment outcomes; student success; the student experience of university; and the participation of indigenous, low socio-economic status, and regional and remote students.

“From next year, we will begin increasing funding in line with population growth and, by 2023, universities will receive around AU$230 million [US$156 million] in performance-based funding,” Tehan said in an address to the National Press Club in Canberra.

“Performance-based funding will incentivise universities to focus on their core business: producing job-ready graduates with the skills to succeed in the modern economy.”

The new system would help universities “lead the way in driving productivity growth across the nation over the next decade”, he said, adding that the focus and “key driver” would be on producing “job-ready graduates”.

“If we get this right, preliminary analysis by Ernst and Young shows a potential boost to national productivity of AU$2.7 billion per annum by 2030,” Tehan said.

“If we combine this with better student outcomes, which can save AU$408 million in economic resources by the same timeframe, we are looking at a total of AU$3.1 billion per annum productivity improvement delivered by the sector based on the performance-based funding model.”

No association with student performance

But Dr Alison Barnes, National Tertiary Education Union (NTEU) president, said research had shown that performance-based funding policies were not associated with higher levels of student performance. In fact, they might contribute to lower performance over a longer period.

“There is also substantial research that shows educational institutions in some cases respond to narrowly based student outcomes in performance-based funding by either restricting student entry or even easing academic standards to improve pass rates,” Barnes said.

“Reducing academic standards will undermine the reputation and standing of our universities.”

In a submission to the government, Barnes said the NTEU had clearly argued against the introduction of such a funding scheme and instead had called for policies that ensured genuine public accountability by universities.

One of the union’s recommendations was that each university’s individual agreement with the government should specify certain goals or objectives in relation to teaching and learning, research and research training, and community service obligations.

“These transparent public accountability agreements would be structured so that each institution is held accountable to its students, staff and community and government,” Barnes said.

A ‘uniquely Australian model’

Tehan, however, argued the government’s funding plan was a “uniquely Australian model” that would reward achievement and offer universities incentives to improve their performance.

“It is part of an agenda that includes implementing reviews that will reshape the architecture of higher education in this country,” he said.

The reviews include one by the Australian Qualifications Framework setting out how qualifications are recognised. Tehan said this would play an important role in the quality assurance of Australia’s tertiary education system.

Another study was investigating if the focus of reviews was too much on differences between types of universities while ignoring the diversity of non-university providers by “lumping them into one category”.

A third review would provide recommendations to improve how senior secondary students decided what to study at university and what was the most optimal stream of tertiary education for them.

Another was the development of guidelines for universities to address cyber-security and foreign interference. This is being led by Universities Australia along with the Group of Eight leading universities.

Economic value of research

Tehan said the economic contribution of Australian university research had been valued at AU$160 billion, while collaborations between Australian businesses and universities was estimated to generate more than AU$10 billion a year in additional revenue for the businesses involved.

Despite this, however, he said business collaboration on innovation was generally low compared to other OECD countries.

“We must get better at commercialising our research; better at turning ideas into jobs, productivity gains and growth [when] the sector is capable of producing productivity gains worth AU$3.1 billion to the economy if we get it right.

“That is why our government is strategically investing in partnerships between universities, industry and government to drive the commercialisation of research.”

Centres of excellence

Referring to the Australian Research Council’s 21 ‘centres of excellence’ based at universities across Australia, Tehan said each was undertaking highly innovative and transformational research.

“These centres bring together experts from universities, business, government and research organisations to lift capabilities across the board and break down silos.

“Having visited some of these centres as minister, I can say that the more we tell the Australian public about the work our universities are doing the better because it is truly outstanding.”

Underground lab at gold mine

A university involved with one such centre was given AU$5 million to build a physics research laboratory one kilometre below ground at a gold mine in western Victoria, the only one of its kind in the southern hemisphere.

Because it is built so deep underground, the lab will allow researchers to conduct experiments that rely on precise measurements using some of the world’s most sensitive scientific equipment, Tehan said.

“It will also keep the research conducted there away from unwanted radiation sources, such as solar particles, which can distort results.”

When opened next year, the facility will attract researchers from around the world, and grow Australia’s reputation as a world-class research destination, he said.