Unis hope to loosen the shackles

16/04/2008 - 22:00

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Universities are set to benefit from the change in government, offering their services as a solution to growing pains. Mark Pownall reports.

Unis hope to loosen the shackles

Their balance sheets are robust and, in the main, they are sporting healthy surpluses, yet Western Australia’s public universities hope a sympathetic Labor government in Canberra will loosen the purse strings.

While local university leaders are not holding their breath for new funding in this budget beyond what was promised in the election campaign, there is a sense of optimism that policy changes will boost the sector.

By next year’s budget, there is an expectation of a considerable increase in spending on the sector.

In the interim, there is hope that a review of higher education and a separate review of innovation being undertaken by the new federal government will have some positive impact on the sector before the 2009-10 budget, due to be delivered in May next year.

The sector is of the belief that it is well-placed to benefit from much of Prime Minister Kevin Rudd’s objectives to raise Australia’s competitiveness through productivity and investment in people.

“We are strongly of the view that the education sector is important to building our human capital,” Murdoch University vice-chancellor, Professor John Yovich, said.

Professor Yovich believes universities were under-funded and over governed by Canberra under the former leadership of John Howard.

He believes grants need to be properly indexed to the costs that the institutions have to bear and that the government ought to increase the flexibility in the way Commonwealth grants are reconciled, allowing universities to better spend funding in areas they choose to focus on.

Edith Cowan University vice-president resources and CFO, Warren Snell, said there was an expectation of some largesse after years of neglect, as the proportion of government funding per student declined.

“It is a case of cautious optimism,” he said.

ECU also viewed positively the signals from government that would remove a climate of micro-management in favour of higher level broader funding agreed with each university.

“We need to get back into the business of delivering opportunities,” Mr Snell said.

“There has been a lot of red tape and control.”

University of Western Australia vice-chancellor professor Alan Robson is also critical of funding shortfalls.

Professor Robson pointed to the indirect funding of research, which pays for the infrastructure side of the equation, as a case in point. In the past few years, research funding had more than doubled while the indirect funding had grown little more than 15 per cent.

“We would like to see research fully funded,” he said.

It’s a wish list that comes as Australia’s education sector is being asked to provide many of the answers for the nation’s economic growth pains, with governments wanting to see more skilled people available to employers.

Employers, too, are increasingly turning to these institutions for solutions to their dilemmas. Resource giants have emerged as big backers of scientific developments in Western Australia’s tertiary sector as they seek to develop both people and ideas as close to the source as possible.

Professor Robson said the private sector had been a growing source of income that was needed to make up for the shortfall in government funding.

While all of the institutions produced a significant surplus, with the exception being  UWA, most still rely on federal government grants for between one third and one half of their income, before accounting for higher education loan programs, which amount to a significant additional income.

The state and local governments also have an impact, though that funding appears more varied and generally at only 10-15 per cent of the federal grants.

Generally, income was up across the sector and across revenue streams for the year ending December 31 2007, resulting in strong surpluses at most of the four public universities.

UWA was an exception to that with a $944,000 surplus, down from $36.5 million the previous year.

Professor Robson said that, while the university had not aimed for a significant surplus – as it sought to invest in growing its student base to 20,000 by 2010 and fund a number of longer term goals – its investment portfolio was hit at the end of the period.

UWA’s investment income of $31.8 million was 45 per cent below the budgeted $58.3 million due to lower returns in the market – quite a drop given much of the market falls didn’t come until 2008.

The biggest surplus went to Curtin University of Technology, which recorded $75.7 million for the calendar year, compared with $82.5 million the previous year. While this might seem to place Curtin in the clear in terms of profitability, vice-chancellor Jeanette Hacket has stated that these surpluses were part of a deliberate strategy to build up funds as the university prepared to restructure itself and pinpoint its focus on a select few areas of expertise.

Murdoch University’s $55.8 million surplus was up from $11.9 million during the previous period.

That included a $26.7 million contribution from the St Ives Retirement Village Murdoch, which it operates, a big rise from its $5.1 million impact on the bottom line in 2006, due to a change in accounting treatments.

Joondalup-based Edith Cowan University was also up significantly, almost doubling its surplus to $20.3 million.

Fee income also grew strongly in most cases, reflecting the fact that most of the universities have managed to grow their student numbers despite the prevailing boom conditions in WA, and reduced demand for education.

ECU’s Warren Snell, who is currently acting vice-chancellor in the absence of Kerry Cox, said the mining boom had drawn potential students away since 2006 – both school leavers and mature age candidates.

In addition, there has been a growing trend for younger people to take a gap year – in the European tradition – between school and university, creating a demographic lull.

The boom has also meant rising performances in surveys looking at the post-study jobs market, with more students not only getting work shortly after graduating but, notably, the employment they were seeking.

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