As a species, universities are one of the oldest recognisable forms of organisation in the Western Hemisphere. Their foundation principles were established by the ancient Greeks. Since then they have withstood wars, revolutions, political purges, economic depressions, technology innovations and industrial transformations. In Australia they have also withstood numerous government enquiries and policy shifts.1 The survival and importance of universities speak to the immutability of their purpose and their ability to adapt.
In their book The Enterprise University Simon Marginson and Mark Considine use history and location to segment Australia’s public universities into five groups:2
- Sandstone universities, named as such because of some of their prominent buildings. The Universities of Adelaide, Melbourne and Sydney are good examples. These were also the foundation universities in each state.
- Redbrick universities, founded after World War II. They include the Australian National University, the University of New South Wales and Monash University. These universities had some prominent (and ugly) red brick buildings.
- Gumtree universities, founded between 1960 and 1975, like the University of Newcastle and Griffith University, many of which are set in (gumtree) bushland settings.
- Unitechs which are the largest of the old colleges of advanced education like Queensland University of Technology and the University of Technology Sydney.
- New universities which are a mixed group of post-1986 universities like Southern Cross University and Edith Cowan University.
Marginson and Considine note that once a university becomes part of a group, it is hard for it to leave. These institutional identities are sticky. They also note that the older Sandstone universities have developed an identity as the establishment universities that they protect as a special place in the higher-education system.3 However, while the universities look different from the outside, they argue that these institutions are all quite similar in their size (mid-size), course offerings (many and varied), values (excellence) and aspirations (growth).
1.1 The Grand Bargain
Australian public universities are largely funded by the state and have been allowed to be self-governed. The state has entered into a Grand Bargain with its universities as described in part by the Australian Government Productivity Commission:
A well-functioning higher education system should provide students with opportunities and empower them to make the choice of whether or not to study. It should match students with suitable study opportunities and meet the needs of the labour market. It should be open to people regardless of their background. It should also encourage those who will benefit most from the many years spent acquiring a qualification, and support students to succeed while at university, recognising that university education is costly to students and the public more generally. Productivity Commission, The Demand Driven University System: A Mixed Report Card, Commission Research Paper, Canberra, 2019, p. 2
This is the demand requirement of the bargain. On the supply side the federal and state governments provide base funding for the universities. For top-up funding these governments sanction creating commercial relationships with industry and the capitalisation of university research. They also provide favourable conditions for attracting domestic and international fee-paying students.
The Grand Bargain comes with many rules and regulations. Each university is governed by its establishment legislation. The government also polices its public universities through various oversight and quality assurance bodies. And the federal government of the day via the Minister for Education plays a key role in shaping policy. This institutional structure requires constant attention and often creates frustration for university administrators. It also imposes significant governance and financial costs on each university.
The Grand Bargain grants universities a privileged position to provide higher education and a gatekeeping role to award degrees and help accredit a broad range of workforce occupations. The benefit to universities in this two-sided market, matching students with the perceived needs of the workplace, is to concentrate power in the hands of a small number of institutions. The benefit to graduates is that they receive credible credentials, which, in turn, provide more opportunities in life and work. In general, graduates do financially better than people without a university education. The benefit to the state is that it receives a good (tax) return from its investment in graduate education.
The Grand Bargain also resonates with a fundamental premise of contemporary higher education, namely that ‘knowledge is now the universal currency that underpins the relative performance and success of individuals, organizations and nations’ (Professor Paul Johnson, the vice chancellor of the University of Western Australia).4 Professor Johnson is talking about the knowledge economy. Because many universities around the world have bought into this idea, it is worthwhile describing what the Organization for Economic Cooperation and Development suggests it means:5
The knowledge economy is an expression coined to describe trends in advanced economies towards greater dependence on knowledge, information and high skill levels, and the increasing need for ready access to all of these by business and public sectors.
Luckily for the universities, a growing knowledge economy provides an economic tailwind for the university sector because it demands more graduates and more research. However, as noted in the next section, looking at education and research as economic products provides a distorted lens through which to manage universities and calibrate their outcomes.
As noted earlier, a part of the Grand Bargain is that university education will be available to all suitable students who wish to acquire it. However, this idea of a university education for the ‘masses’ has been challenged as a waste of public money, especially if it is designed to produce ‘job-ready’ graduates. As Bran Caplan notes, because much of the current university education is the study of irrelevancies, it results in empty credentials.6 As many graduates in arts, psychology, law, politics, science and media studies will testify, much of what they learn in their degree is of little relevance to the job they do or the life they lead. In many industries you learn more on the job than any university education can provide.
So the role of many degrees is to signal that you can apply yourself successfully to a big task, rather than you have gained a body of relevant knowledge and been assessed against a standard of proficiency. Here a degree helps get a job interview. For example, some of the large professional accounting firms who recruit large numbers of graduates are becoming degree-agnostic.7 Outstanding performance in any degree is what they are looking for.
Notwithstanding the concerns about the instrumental value of much higher education, currently we are seeing the universities doubling up in this labour certification game. First, as more and more people gain an undergraduate degree, the demand for postgraduate degrees rises to signal that the holder is better than his or her peers. Next we see universities talking about the benefits of their ‘lifelong learning ’ programmes. The key issue here is that the personal, social and economic benefits of university-based life-long learning are yet to be clearly shown. For example, in the corporate world there are a number of so-called academy companies like General Electric and BP, and consulting firms like McKinsey & Company that offer far better post-university management training than any Australian university. BP’s Financial University offers more than 300 courses for the company’s top 250 financial managers.8 General Electric’s Financial Management Programme runs for two years and involves assignments in various company roles. Because of the quality of these programmes, many graduates are poached by other companies. No Australian university can match the breadth and depth of these types of career-based lifelong learning programmes . So if universities are educating for the knowledge economy, they might want to reconsider where their comparative advantage lies.
Another part of the Grand Bargain with public universities is that they will be efficient, transparent and accountable. Since the 1980s the new public management movement has sought to achieve these outcomes. Because it explains why Australia’s public universities and many of its counterparts around the world are governed the way they are, we review its underlying logic.
1.2 New Public Management
Thomas Diefenbach...