Month: June 2020

Why did universities become reliant on international students? Part 3: The rise of research project grants

Andrew Norton6 Comments

In a previous post, I doubted that inadequate public funding for Commonwealth supported students could, with a few exceptions, explain why universities have enrolled so many fee-paying international students. For publicly-funded research, however, structural changes in how funding is delivered have changed its economics.

Government policy has moved away from block grant funding – lump sums of money that universities can spend as they choose – towards project funding awarded on a competitive basis, mainly through the Australian Research Council and the National Health and Medical Research Council.

In the 1990s, as the chart below shows, competitive grants made up less than a quarter of Commonwealth research spending on universities (counting Department of Education plus NHMRC). By the middle of the 2010s nearly half of Commonwealth funding was delivered through competitive grants, though with an easing off recently as ARC funding was cut.

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Why did universities become reliant on international students? Part 2: The cost of educating Commonwealth supported students

Andrew Norton2 Comments

In a previous blog post, I argued that stagnating or declining government revenues encourage universities to seek additional international student fee income. By 2018, international student fees provided 26 per cent of all university revenue, up from 10 per cent in 2000.

However, I doubted that aggregate public funding levels fully explained university dependence on international students, whose numbers grow when public spending is increasing as well as decreasing.

But in thinking about how government policy affects university decision making it is not just revenue that matters. The cost of the services universities deliver for their public money is also crucial to understanding university behaviour.

A recent article in The Conversation suggested that government student-linked revenue did not cover the full cost of growth in student numbers. Another Conversation piece this morning also suggested that universities have become reliant on international student fee revenue to cover the cost of teaching, as well as research and other activities.

However, a chart in my first post shows that since the mid-2000s average per student funding for Commonwealth supported students grew by more than inflation and then stabilised in real terms, although with a small recent decline.

But one point made in response to my original post was that wages usually grow by more than general inflation. This means that my CPI indexation of revenue does not fully adjust for the changing purchasing capacity of grants, given the bundle of goods and services universities actually buy. In 2018, 56 per cent of university expenditure was on wages.

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Why did universities become reliant on international students? Part 1: Government funding cuts

Andrew Norton2 Comments

A decline in international student numbers has triggered Australian higher education’s biggest-ever financial crisis. But why did universities became so financially reliant on international students?

In university constituencies, a common belief is that the government cuts going back to the 1990s are a factor.

Assessing trends in government funding is not straightforward. No official time series data exists. Different historical data sources do not always match.* There are notes about these issues in the text below, the footnote and the slides. I am confident of the overall pattern, although some year-to-year comparisons are not precise.

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