Is the Universities Accord the funding answer? – Education

Not in the short term, and maybe not at
all.

The Final Report of the Universities Accord is
finally here. To help unpack it, here’s a quick summary and our
analysis of what it may mean to universities.

The Accord in brief

The Accord Final Report creates a blueprint for higher education
planning out to 2050. Its core proposition, from which almost all
else follows, is that the sector must double in size by 2050 if the
nation is to meet the forecast need for graduates in the
workforce.

Several proposals flow from that starting point:

• More students from equity groups – especially low SES,
  regional and Indigenous – will need to be recruited and
  retained if this target is to be achieved. The Report proposes a
  tertiary education attainment target (in vocational and higher
  education) of 80% for the working age population by 2050. The
  sector will need to double in size by 2050.




• There will need to be changes to the way government funds
  teaching and student support, to reduce unfairness to students and
  to lower barriers to participation (such as assisting with the cost
  of work-based placements and improved income support for
  students).




• The real cost of teaching equity students will need to be
  recognised in how universities are funded. The current fixed
  funding system would be replaced by one that takes account of the
  needs of different categories of student and the cost of teaching
  and supporting them.




• The growth in the system will need to be managed by an
  overarching Tertiary Education Commission (ATEC). ATEC would have a
  mandate to drive greater diversity of provider types and over time
  to facilitate the integration of the VET and higher education
  sectors.




• New qualifications, such as micro credentials and degree
  apprenticeships, will need to be developed to meet the skills needs
  of a more diverse range of learners and to ensure graduates are
  equipped with the skills employers need.




• There are significant proposals relating to research, most
  notably that 50% of the indirect costs of research funded under
  nationally competitive grant schemes be supported (an increase from
  the current 20%).

These are the headlines. There is much more in the detail.

This is what we think it means for universities.

No immediate financial relief

Since the onset of COVID, universities have been on a revenue
rollercoaster as domestic and international student demand has
waxed and waned in response to the pandemic itself and government
policy, especially on student migration.

If universities hoped the Accord would be the answer to their
financial problems, they are likely to be disappointed, for many
reasons.

First, the Accord proposals are just proposals. Much will depend
on the capacity and willingness of this and successive governments
to fund them. In the education portfolio alone, there are competing
claims from early childhood and school education.

Second, much of the detail of revised funding arrangements will
be delegated to ATEC, which is unlikely to be up and running much
before 2025.

Third, many of the proposed funding changes address issues of
unfairness to students rather than perceived under funding of
universities for their core activities of teaching and research. A
needs-based student funding model may create some winners, such as
regional universities, but there is unlikely to be a significant
overall increase in the unit of resource coming in to universities.
Indeed, resources are likely to be stretched further if the overall
number of students in the system increases.

The proposal to increase the support for indirect costs of
research could be significant, because it could remove some of the
current incentives to continually increase in size and scale.
However, it could also lead to a narrowing of the range of research
that will be funded and a concentration of research support into
fewer institutions.

In short, universities who continue to face financial challenges
from weak domestic demand and high visa refusal rates will need to
face up to them now, rather than hoping that government will come
to their aid.

Strategic choices open up

On a more positive note, we believe the Accord will unlock
strategic choices for universities. This stems from a number of
factors;

• The proposed growth in the system overall.




• ATEC would have a specific mandate to promote diversity within
  the system. This could include encouraging new types of higher
  education provider, greater collaboration between VET and higher
  education and an increased focus on skills relative to
  knowledge.




• The promotion of new types of qualification.




• A new needs-based funding model, and




• New funding arrangements for research and incentives to greater
  collaboration with end users of research.

As a result, universities will have more choices about their
future strategies – should they expand, specialise, or
contract? Should they collaborate with VET providers or seek to
enter new partnerships, or create altogether new kinds of provider?
Should they expand into new qualification types, and if so, how?
Should they specialise in their research programs, or aim to become
more teaching focused?

These are all questions universities will need to answer over
time. The strategic choices made over the next five years will be
critical and the financial consequences of each choice will need to
be well understood in advance.

To do this, universities will need to think differently and draw
on industry-specific management skills. Responding to these
challenges will require the ability to transform and make some
tough decisions.

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