Student revenue fall a blow to research

What now for our universities?

Last month, we had our first on campus graduations in more than a year.

It was a joy once again to experience what this day means to our students and their families.

The photos, tassel hats and proud parents provided a poignant reminder of not only the role played by universities in teaching and mentoring our future generations, but also of the important role these graduates will play in our economy, in our health system and in our schools.

It was also a pleasure to see our campuses opening up again – and I hope the latest lockdowns here in Victoria will not prevent us from bringing our campuses back to life as soon as possible.

At the same time, our teams of academics were busy working on research, the effect of which will change lives. From improving food and medicine production to developing better diagnostics and treatments for disease, research is another fundamental component of what it means to be an Australian university.

Teaching our future workforce and funding world-standard research costs money; $19bn in funding for universities in 2021-22 to be precise. Around $5bn will support research and development in higher education. This includes money through research block grants and competitive grants through funding bodies such as the Australian Research Council.

Unfortunately, even this funding still does not cover the full cost of conducting research.

This has been the case for some time, under successive governments. In response, universities, with full support and encouragement from governments over many years, turned to outside revenue streams to make up the difference. In doing so, they built a sector that has brought vast cultural and economic benefits to Australia, and has helped to spread Australia’s influence around the world.

That revenue has also helped to fund much-needed infrastructure (also not adequately funded by government) and to close the research funding gap. Universities Australia estimates that universities cross-subsidise their research by $3bn a year from their non-government income. The model served the sector and the country well for many years.

Australian universities punch well above their weight globally in research; while in 2019 educating more Australian students than ever before (about one million) and 450,000 international students.

Of course, the model’s flaws have been dramatically exposed under Covid-19. The significant loss of international students has had a profound effect on research because of the way the current government funding model operates.

The sector lost $1.8bn last year and faces a further loss of $2bn this year, as a result of national border closures. Because of our funding model, the sector cannot absorb such revenue hits without long-term damage to our national research effort.

The federal government’s one-off $1bn funding boost for university research in last October’s budget, while much appreciated, offered a short-term solution. But with international borders expected to remain closed until the middle of next year, and the recovery in university finances likely to take at least four or five years beyond that, we need to decide how we will sustain our national research effort, which contributes so much to our prosperity and social cohesion.

Federal Education Minister Alan Tudge reminded us last week that one way of shoring up our research revenue is through increased commercialisation of our excellent university research. We look forward to the proposals of the Research Commercialisation Taskforce in the coming months.

However, it would be unwise to believe that research commercialisation is going to plug the gaping hole our research funding now faces. There is no doubt that industry partnerships and research commercialisation produce great benefits to the Australian economy – about $12.8bn a year in revenue directly for the companies that partner with universities and a further $26.5bn a year to Australia’s income, creating an estimated 38,500 full-time jobs across the country. However, these partnerships return relatively little to universities.

While Covid-19 has dealt us many blows, it presents us with an opportunity to rethink what we want from our universities and to find a long-term solution for their adequate funding. Universities now have less funding for a range of important degrees, many of which are very costly to teach.

During this month’s Universities Australia conference, the Minister floated the idea of a more specialised and diversified sector.

We will be interested to learn more of what the Minister has in mind – while pressing the case for a recognition of the looming crisis in university research funding.

We cannot alter the effect of Covid-19; yet we can grasp the opportunity it has provided us to rethink the way we fund our universities and therefore to re-imagine their role in our economy and society.

This opinion piece was previously published in the Herald Sun.