The Australian University System: The Locked Rotor

Editorial note. This is the fourth in a series on Australian universities, following posts on their purpose, their democratic function, and the challenges posed to the Australian system by AI.

To the outside observer, the Australian university system looks to be in reasonable health, as universities continue to make the grade in international rankings, and the Universities Accord supports ‘a better and fairer education system’. But under pressure of AI, the motor will not turn: structural impediments prevent adaptation; the machine is energised, immobile, drawing full current and cooking its own windings. Change will require the Commonwealth to fund independence from itself. That would mean reversing a trend of Commonwealth accumulation of power since 1901.1

The federal monopsony emerged through fiscal power substituting for constitutional power over 70 years. Step by step, the states sold their responsibility for universities to the Commonwealth in instalments—notably through Whitlam’s assumption of full funding, John Dawkins’ reforms and HECS, and now the Universities Accord. Any design that requires the Commonwealth to voluntarily fund independence from itself must explain why the Commonwealth would do that.

Higher education is useful to the Commonwealth for utilitarian reasons: skilling a workforce and managing unemployment; managing migration, especially of talented, contributing workers; meeting national security needs and alliance obligations. The tools that deliver these for the Commonwealth, regulations and tied grants, also facilitate control of the universities—away from the State interests and interference.

National security concerns are also helping the Commonwealth manage funding competition of universities, their staff and their research. Alternative overseas sources, including through philanthropy, personal connections, professional bodies and international partnerships must now pass through foreign interference, sanctions, critical infrastructure, counter-espionage, and export controls programs managed by the national security arm of government.

The Commonwealth’s grip is tightening on funding, standards, definitions, and the exchange of knowledge and expertise. The Dawkins reforms wrenched the system—establishing the Federal government as the single buyer, and the regulator of everything else.

The Dawkins reforms created a monoculture: over 20 institutions built for skilling were renamed universities, forced into the research template, and are now the most exposed to AI eating their founding function. The unified national system of over 40 ‘universities’ makes it politically impossible to say some should stop being universities, and it locks the funding mechanism into a state of unsustainability and eventual collapse.

Federal price administration, starting with Dawkins, allowed only one genuine market to emerge: full-fee international education. That in turn led universities to use international student revenue to cross-subsidise research and domestic teaching. But now AI strips the educational cover from a partially migration-driven product, and anti-migration politics is already tightening the tap. The funding model that everything currently stands on is failing, independent of any reform.

Universities continue to narrate themselves as teachers in a world where teaching itself has become the commodity. And that is the function with which the Federal government is most comfortable; the research, in a technology-taker society, is the nice-to-have, helps meet alliance expectations, and provides the gloss of a first-world economy.

Ultimately, the cost of the current single, rigid, legible ‘university’ template is extinction of the university as we understand it in a democracy.

As part of adaptation, universities and their courses must be allowed to die. A sector in which nothing is allowed to fail is one that never learns.

That’s tough in an environment where every child has to have a prize, where every state if not university must be treated equitably, and where Federal ministers enjoy handing out begged-for largesse. Australia does not have the population, skills base or willingness to fund fully over 40 universities of equal standing. Because government funding is limited, it is spread thinly across universities, degree programs and especially research grants. Universities struggle to build the critical mass that enables depth of expertise, innovation and reputation—often in advanced technical fields, but also core fundamentals such as history, languages, maths—needed for the skilling requirements of degrees.

The average researcher lives in a state of funding penury, cobbling together grants and fearful of losing favour with those peers in decision-making positions and status with the grant authority—and ask any researcher about the high overhead associated with low prospect of gaining a grant through the ARC grants process. Most also lack tenure. That makes them reluctant to exercise the independent judgement and contestability of a university.

Because the first universities—Sydney, Melbourne, Adelaide, Tasmania—were focussed on the liberal arts, pure sciences, and basic theoretical knowledge, entry into professional practice occurred largely outside the university; think of clerkships for lawyers, or technical apprenticeships and training in hospitals.

The professional associations were collaborators in the Dawkins reforms, which collapsed the post-WWII binary system2 and established professional gatekeeping fully into the universities—for example, nursing training moved out of hospitals into university degree programs. Professional associations pivoted from teaching to watchkeeping, through auditing and accrediting university degrees.

The role of the associations—supporting industry readiness—was later formalised through the Australian Health Practitioner Regulation Agency (2010). TEQSA, created in 2011, enforces monocultural academic standards. The two are sometimes in tension with each other; both act to freeze the system in place.

The professional associations are essentially modern guilds: jealously guarding their prerogatives. They are now thoroughly entrenched—inspecting infrastructure, auditing subject outlines and assessments, and setting mandatory learning outcomes and real-world practical or clinical hours students must complete (typically non-remunerated) to enter the profession. A university that loses its professional standing is at a major disadvantage.

As economist Joel Mokyr has pointed out, guilds are typically anti-innovation and anti-competitive.3 Their interests are retaining the rents from credential-scarcity; they will resist alternative verification because it dilutes members’ certification value.

Such guilds hold a hard veto over the verification redesign in every licensed profession; they must either be brought inside the redesign or competed against. Because AI threatens their identity, their members and their fortunes, expect considerable denial and resistance.

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The States and Territories are the latent second funder and the only existing source of institutional variation. Aside from the ANU—the Commonwealth Government’s university—each university has its own State or Territory enabling legislation. The pre-federation sandstones hold legal identities older than the Commonwealth.

States created and funded their own universities for several reasons—three were common to the pre-federation universities (Sydney, Melbourne, Adelaide and Tasmania).

First, nation-building, self-government and state survival—proponents believed that the colony could not rely on the training provided by another country, or colony.

Second, social mobility and democracy versus class privilege. Pre-federation universities were deliberately framed as secular, accessible and meritocratic institutions.

Third, colonial identity. Universities were a proof of maturity, showing that the colony was more than a sheep run, a goldfield or a copper mine, even as they may be explicitly tasked with supporting those activities.

The debates considered and discarded more utilitarian approaches. Wentworth, in 1849, was particularly damning:

‘…those who know anything of collegiate matters will admit that mere collegiate institutions engender a laziness and inertness, both in pupils and teachers, destructive of the ends such institutions are designed to advance, and to endow such institutions here would be the way most effectually to retard education.’4

Thus, in the current system, there remains latent capacity. The purpose of State universities remains unchanged. They each have enabling legislation. University councils carry state-appointed members. And there are real State interests in workforce localisation, specific domains of knowledge, regional development, and democratic governance. The question is whether the residue of State ownership and investment carries real independence-generating capacity or whether it has withered to simply a ceremonial role.

The monoculture, combined with guild credentials, unacceptable mortality and the Commonwealth’s tightening grip has reinforced the sector’s self-conception as content-developer and deliverer. The catalogue of structural impediments to change is not pretty:

• the Commonwealth holds the master veto on funding architecture and is currently disinclined to change;

• the guilds hold hard vetoes on verification reform profession-by-profession;

• the incumbent universities hold soft vetoes through lobbying and marginal-seat employment weight, and will defend the unified system and the credential monopoly; and

• the States’ enabling powers are latent rather than a veto.

No single item above is individually impossible to overcome. Every lever named has been pulled somewhere, by some system, for some purpose, at some point. Yet they are all held in place by the same hand.