policy & reform
Survival of the fittest
A prosperous future awaits for universities prepared to adapt to a changing landscape, writes Craig Lofts
The relief felt by the research community late last year when the freeze on Commonwealth research grants was lifted should not blind universities to the real message of the extended funding pause.
The higher education sector has been well supported over the past decade, an investment which has enabled Australia’ s universities to climb the world ranking tables such that we now have one of the best tertiary education systems in the world.
Which major industries, other than mining, can Australia claim to have the top seven performers in the world( 2012 QS World Rankings)? Like our banks, but unlike many US universities, our universities are financially sound with strong balance sheets and spend within their means.
The 2012 research funding pause signalled that the ommonwealth budget is going to be tight for years to come and universities will need to be more proactive and adaptive if they are to continue to maintain or grow their international status. The higher education sector is facing powerful forces of change. First, the move to a demand driven system for enrolments has increased competition and created greater uncertainty around future student numbers.
Second, the pausing of research funding indicated that the federal budget does not have the capacity to maintain funding of the sector as it has over the past decade.
Third, the traditional modes of teaching and structure of award courses are outdated; digital media and the internet are transforming teaching methods, both on and off campus.
Fourth, competition for international researchers and students is increasing from Asian universities which are also climbing the world rankings.
The Australian higher education sector has great growth potential given its world- class research capability and status, growing student market, and bipartisan support as an industry of national strategic priority. However, with constrained funding, increasing competition and profound change in education needs, our universities must find ways to adapt and be more selfreliant, which they can do by considering three broad options to grow revenue.
Increase industry research income
Research income accounts for 13 per cent of revenue in the $ 24.4 billion sector, with flow-on Research Infrastructure Block Grant funding contributing another 7 per cent. The Group of Eight universities, however, have the major share, accounting for two-thirds of all research income, and three-quarters of Category 1 of the Australian Competitive Grants Register.
There is major opportunity, especially for the non-Go8 universities that often find it difficult to compete for Category 1, to grow funding from industry which, unlike Commonwealth funding, is not limited to a legislated pool.
Rather, industry funding is typically predicated on the development of compelling business cases for research projects which offer increased market competitiveness for the sponsor. There is great room for improvement in how the research sector approaches the private sector for funding of research projects.
Increase revenue streams from consultancy, contract research and commercialisation of intellectual property
$ 1.1 billion or 5 per cent of industry revenue comes from consultancy and contracts and that amount can be grown through stronger industry links. In 2011, 12 out of the 38 public universities did not report any IP revenue and only six reported IP income more than $ 5 million. This result can be improved through earlier engagement with industry partners to guide universities’ choice of R & D programs and to stimulate a dialogue around IP commercialisation arrangements that can benefit both research and commercial interests.
Increasing student numbers to grow Commonwealth grants and course fee revenues is now a greater opportunity under the demand-driven system
Three ways to increase enrolments are: capture market share from other Australian universities; attract more international students; and create innovative courses to attract new segments of students.
Each of our universities needs to ensure that it has a focused strategy which it is organised to implement, and that means asking itself some key questions. Which academic disciplines will it be above world class at? What industry links and partnerships will it develop? What revenue streams will be grown for research, IP, consultancy, and teaching? How will it differentiate through innovation in learning and teaching? Which student segments will it position to attract and educate? How will it focus the organisation of human, knowledge, physical and financial resources to realise the strategy?
Hard strategic choices and the focusing of the university organisation is the true challenge of a sector facing unprecedented uncertainty and constrained Commonwealth funding.
There are exciting futures for those which innovate and proactively adapt to the changing landscape. n
Craig Lofts is a consultant at Consulting & Implementation Services( CIS) Pty Ltd( www. consultingis. com. au), a management consultancy with extensive experience in the Australian higher education and research sector.
www. campusreview. com. au March 2013 | 23