Top-ranked universities have more money than Australian unis could dream of

Harvard has around 20 times the investment of Australia’s top-ranked university. Flickr/Yoshi, CC BY-SA

Education Minister Christopher Pyne claimed his plan to deregulate university fees was essential to ensure Australia’s universities continue to climb the international rankings and don’t “slide into mediocrity”.

At present – depending on which ranking you refer to - Australia has between four and eight universities in the top 100 universities in the world, with the University of Melbourne, the Australian National University and the University of Queensland ranking in the Academic Ranking of World Universities (ARWU), the Times Higher Education World University Rankings (THE) and the QS World University Rankings.

Australia has more highly ranked universities than France, China, Japan or Russia. When compared to the US, Australian spends 1.6% of GDP on higher education, the US 2.7%. Australia has a population of 23 million, the US 319 million. Australia has 43 universities, the US has over 4500. The US would have to have 57 universities in the rankings (it has 46 in the THE) to match Australia’s “GDP to top university” ratio.

This says we’re performing remarkably well – and that’s a tribute to our higher education sector rather than our governments.

It’s seriously big money that counts in the rankings

The 10 highest-ranked universities in the ARWU rankings are among the 20 wealthiest universities in the world. The highest-ranked 15 are all in the 40 most wealthy.
Or to look at it in another way, 25 of the world’s 40 richest universities are in the 50 highest-ranked universities.

Whichever way you look at the relationship between university rankings and money, the correlation is very strong. That’s hardly surprising but it’s worth reminding the government’s policy makers that while money counts, what counts is a level of investment beyond the reach of any Australian institution.

No Australian university has endowments over A$1.5 billion and the majority are substantially less than this figure, with the Australian National University, for example, reporting to have little over A$200 million.

The endowments of the world’s highest-ranked institutions make these amounts look negligible. Harvard – sometimes referred to as a giant hedge fudge masquerading as a teaching institution – has US$35.9 billion, Stanford US$21.4 billion, Yale US$23.9 billion, Princeton US$21 billion and Massachusetts Institute of Technology (MIT) $US12.4 billion.

The top performers have up to 150 times the financial resources that Australian universities can draw upon. No amount of deregulation is going to enable Australian universities to accumulate such wealth.

Declining public investment in higher education doesn’t help matters

OECD figures demonstrate that the level of public expenditure on higher education has steadily declined in Australia. In 2000, Australian public expenditure was 49.9%. By 2011, it was down to 45.6%. In 2011, private expenditure was 54.4% (mostly from student fees). This contrasts with the OECD public expenditure average of 75.3% in 2000 and 69.2% in 2011.

Pyne’s first raft of higher education proposals included a 20% reduction in funding at the same time as undergraduate fees were to be de-regulated, continuing the downward trajectory of public expenditure on Australian higher education.

The policy aimed to substitute private funding for public funding. Effectively, this meant the privatisation of Australian higher education by a thousand cuts.

Pyne’s claims of deregulation being critical to Australian universities’ international rankings are, at best, fanciful and disingenuous. The current proposals will do little to improve research in Australian universities.

Rather, students’ escalating tuition fees will simply substitute funds withdrawn from the sector and will increasingly be required to cross-subsidise the research performance that is the basis of the rankings.

We should not ask students to shoulder the cost burden to enable institutions to move from 44 to 43 or from 74 to 70 in an international league table.

The most recent review of higher education funding in Australia (the Lomax-Smith Base Funding Review of 2011) recommended more rather than less public investment – 60% public funding and a maximum of 40% from students.

If Australia’s universities are to be players in the rankings game, then we need a bipartisan commitment to fund the sector appropriately – and equitably.

In Australia in 2015, ordinary Australians believe that a quality higher education should be available to all, and that their children and their children’s children are entitled to the opportunities that a quality higher education can offer.

This is not the likely consequence of the higher education policy that Pyne is trying so desperately to pass through the parliament.


Correction: The article’s original publication included endowment figures for Australian universities which were disputed by the universities and have been removed. ANU’s figure was provided by the university.

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