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If you think universities are expensive, try ignorance.

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2000 Australasian Research Management Conference


23 November


Keynote Address: If you Think Universities are Expensive, Try Ignorance


Professor Ian Chubb

President, Australian Vice-Chancellors’ Committee


In a week or two, the AVCC will launch a paper th at attempts to establish the case for greater public investment in universities. The paper is entitled ‘our universities: our future’.


Let me be clear. They are our universities. We, the public of Australia, ‘own’ them in a manner of speaking. While we, the Vice-Chancellors and the politicians are temporary custodians, fleeting players on the stage who must do all that is necessary to leave them better than they found them, the ‘owners’ have a right to expect them to be good.


And it is our future. We, the public of Australia, must take the necessary steps to ensure that we have some say in the directions and the prosperity of our future, not just for us and our benefit but also for those who will inherit this nation from us.


The AVCC asserts that the universities are an essential component of future building. Indeed the education they provide, the research they do and the developments that flow from them place the universities at the centre of our future.


We will ask that the public ensure that their universities are resourced well enough and supported strongly enough to do the job they have to do. For the benefit of all Australians


Part of this talk draws heavily indeed on that paper. The first part does not. It is the one time this year that I will draw from Australia’s Olympic experience. I do so today because it is an excellent recent example of seeing some forms of public expenditure as investment and not cost. Investment over a long period of what I will call patient capital: the funds that are invested in the full knowledge that the returns come later.


Let me begin.


The Olympics were a tremendous time for Australia. A superb demonstration of Australian skill, ingenuity, determination, and excellence, that has become and will remain an enduring testament to the capacity of Australia to punch above its weight in sporting achievement.


And then just to prove the point the Paralympians demonstrated that if you are good enough you don’t just punch above your weight, you can punch above every weight - you can be better than the rest.


Of course the Olympics and the Paralympics proved a number of other things to ourselves beyond sporting achievement.


I know we are not supposed to look for approval from overseas for our sense of self-worth but I think it is natural for us to find pride in our performance on the international stage, whatever the endeavour.


Notably, almost to our surprise, we found that we can be world-beaters in events management. Despite sometimes serious self-doubt in the years before, we woke at the end of the Olympics to find our events managers in world demand. Famously, one Sports Illustrated journalist declared we were so good at it that the Olympics should be held permanently in Australia.


There is another Olympics however, that I have been contemplating since that time, one perhaps provoked in my mind by the total indifference of the Australian dollar to our Olympic achievements.


In the Olympics-in-the-mind I see a news report that reads "Australia Comes 30th on the Medal table at the Olympics. Politicians and the public rejoice in the fact that for its size Australia achieved a result that was marginally better than the average."

Below a photo of Juan Antonio Samaranch being applauded by a crowd of happy Australian faces we read: "Australians were delirious when the IOC President declared the Sydney Olympics to be average, or slightly better than that allowing for our size."


On the back page, autograph hunters besiege Australia’s heroes, the winners of our only two bronze medals.


In fact we had an Olympics not unlike this. It was the Montreal Olympics in 1976, when we failed to win even one gold medal. As is now well known, Malcolm Fraser demanded action and the Australian Institute of Sport was established.


The improvements did not come overnight. There were several more Olympics of meagre results but through unwavering commitment and a quarter of a century of patient investment in the potential of our young athletes, the results eventually exceeded all but the most unrealistic expectations.


Cricket provides a similarly telling story. Two decades ago Australia had become almost a laughing stock. The response was another decisive plan built around long term investment, more patient capital in the nation’s young talent, this time through the Cr icket Academy in South Australia. Today our national cricket captain’s greatest problem is trying to convince the media that the opposing team is a genuine threat.


Yet still the dollar refuses to rise …


Over the last fifteen years, in quite a number of c ountries throughout the world, there have been a number of other remarkable turn-arounds in performance.


The arena for performance has not, however, been in sports at all but, if it helps to make the case in Australia, we should start to call these life-and-death struggles the "World Knowledge Games".


The biggest player in these Knowledge Games today is, as we all know, the United States. Yet their emergence as the superpower in the Knowledge Games was not clear-cut even a decade ago.


After ten years of prosperity and growth unparalleled in its history, it is hard to remember that around 15 years ago the US economy was facing one of its worst crises. While still an enormous player, it had begun to feel acutely the strain from a lack of investment in its knowledge base over the previous two decades. Japanese technology seemed on an inexorable march, with US industry strategists, technologist and managers regularly decried as not having what was required to meet the challenge.


The situation was so parlous that in 1985, a group of very prominent business leaders in the US released a joint statement published in the Washington Post, entitled "A Moment of Truth for America" calling upon the US government to make the investment of "patient capital" (their expression) that would see a gradual turn around in their country’s economic fortunes. A key part of their statement argued:


As the federal government undergoes downsizing, there is pressure for critical university research to be slashed. University research makes a tempting target because many people aren't aware of the critical role it plays. It can take years of intense research before technologies emerge that can "make it" in the marketplace. History has shown that it is federally sponsored research that provides the truly "patient" capital needed to carry out basic research and create an environment for the inspired risk-taking that is essential to technological discovery …For all these reasons, it is essential that the federal government continue its traditional role as funder of both basic and applied research in the university environment… As the Congress makes its decisions on university research, let there be no mistake: we are determining the 21st century today."


Just the following year, 1986, the White House Science Council issued a report that focused on the partnership between Government, universities and industry. It declared emphatically in favour of a government-led response of substantial re-investment in research and education noting that, America [of all places!] had to be "realistic about the very real limitations on the extent to which industrial support of basic research, important as it is, can replace that from the federal government."


It went further, the nation had to invest equally strongly in teaching as well as research, for what point would there be in discovering new ideas, the report concluded, unless there were also the myriad of other university-trained professionals needed to exploit them? Moreover, it declared profoundly "no nation can long afford to waste even a small fraction of its most able youth."


And what was the result? The level of Federal, State and local government investment in research and development, and in tuition, in the United States increased substantially up until the early 1990s, slowed until recently, and is now set to climb again.


And, if any more proof were needed, the Chairman of the United States Federal Reserve, Alan Greenspan was led to comment in July 1999 that: "something special has happened to the American economy in recent years …a remarkable run of economic growth that appears to have its roots in ongoing advances in technology."


Of course, Australia is not America. But that seems to me to be the best reason why we must do better. The US and the large countries of Europe and Asia will always draw reasonable returns from their average efforts but we never have and never will.


A fr ank appraisal of the geo-political outlook suggests a less than cheerful prospect for Australia. We have few natural allies. We do not have a population large enough to sustain our quality of life with ease or to sustain our own producers, and so create work. We are hardly a large enough market to be of critical interest to foreign producers. And there is no natural reason for Australia to be a significant part of dynamic international groupings.


Ignorance is going to come at a very high price.


If we are to prosper and to provide a quality of life worthy of our citizens we will need to look after ourselves. Looking after ourselves therefore means that we cannot be content with being average. Our size and position means we must be a winner, not an also ran, and that means making sure that our university system is supported well enough to play its part in positioning Australia where we want it to be - socially just, culturally dynamic, economically wealthy, and nationally secure.


That means recognising the need for a policy and funding environment that is stable and predictable. While not antagonistic to proper accountability, we must recognise that too many people in universities already spend too much time responding to changed rules, supplying endless statistics, coping with tinkering, applying endlessly for the basic funds we need simply to do our jobs, responding to frequent reviews…while all the time, more and more funds are tied or project-driven or supplied in packets in the name of accountability. We are slowly being made average. All Australians will suffer if that continues.


Enrolling an average number of students into universities of average quality, supported by government at average levels, would be an appalling outcome. Being in the middle of the OECD expenditure tables on education, on research and on development, on information and communications output, is simply to fail. We cannot afford to fail by just ticking along at average levels: of expenditure, of performance, of quality, of education, of leadership, of innovation, of product. Nobody will wait for us - nobody is.


The data compiled in 2000 Edition of Education at a Glance OECD Indicators provides an international comparison for Australian levels of investment in higher education. The report is based on data from 1996 to 1997 with some comparisons to 1990. These old data thus record the position of Australia before the full impact of the reductions in public investment announced in 1996 and the contrasting climate since then of investment by many countries in their university systems.


In 1997 Australia's direct public investment in higher education as a percentage of GDP was on the average for OECD countries. Our private investment, mostly student HECS and fees, was above the average, exceeded only by the United States, Korea and Japan. Over the period 1990 to 1996 total investment had grown in Australia as in nearly all OECD countries, but Australia experienced a much stronger growth in private investment than many other countries. In other words, the government was largely continuing to substitute public investment with fees during this period. After 1997, the full impact of the most recent substitution took effect. This is likely to mean that later OECD Tables will show that Australia is now below average in terms of percentage of GDP spent by government on universities.


Knowing where Australia sits in the Table is to know little of real value but knowing which countries are ahead of us, and what they are all doing is information we can use.


The international environment may be one in which the large countries of America, Asia and Europe are increasingly dominating world trade, and moving into regional and global alliances, however, the response of a number of other small countries has been instructive. Singapore (increased its next 5 year plan for science and technology to S$7 billion from S$4 billion, Finland, Israel, Norway, Sweden, and Denmark have all made decisive and successful moves towards more knowledge-based economies. Hong Kong plans to double school leaver transfers to university because it lags behind developed economies¼ and regional competitors such as South Korea and Taiwan; and because Hong Kong is to become an information industry hub for Asia. Ireland - once amongst the poorest European nations - has revolutionised its economy through educational and research investment. Canada has recognised the need for additional investment in both its research quality and output and in university learning.


The United Kingdom announced in July 2000 increased funding for higher education in England of £100 million. This is additional to the £295 million increase in public funding for higher education announced for 2001-02. The total increase of £395 million m eans an increase of 4.6% (in real terms) over the previous financial year and represents the first real increase in government funding per student in over a decade. British universities will also benefit from a 5.8% real increase in Government funding for the science base in 2001-02.


Governments in many countries clearly see their universities as central to sustaining prosperity in the fullest sense and fund them accordingly - sometimes reversing policy positions adopted only recently. We urge the Australi an government to do the same - for both education and for research.


We do so because Australia is just like any other advanced nation. We all depend increasingly on three critical elements: new discoveries, highly trained personnel, and expert knowledge. Australia’s universities, like those in the other countries, have a primary role in supplying two of these ingredients and are a major source for the third.


In this context, we hear a lot about Australia as an intelligent country. It is, of course, nice rhetorical flourish - easy to describe. But harder to deliver.


I would describe an intelligent country (or a knowledge-based society) as one that is prosperous, civilised, culturally rich and socially just. It is one that is wisely governed and led; and it will not let the circumstances of birth be a major obstacle to personal advancement because it will be understood that national advancement comes through the development and application of the talents of all its citizens. It will be a nation with a focus on quality in all that it does, and it will demonstrate, not just describe, inclusiveness.


Through history the commitment a nation makes to education has been a signal of the commitment that nation makes to its future and to the position it wants to adopt with respect to other nations. A study of history will also reveal, however, that the tide of support for education, both financial and moral, and particularly for universities, ebbs and flows with time and circumstance.


At some earlier time it might have been possible to be on the ebb while support flowed into universities in competitor nations. Now it is not; change is too rapid to play catch-up. And much of the world is moving.


In an intelligent country, the new discoveries, the highly trained personnel and the expertise will be encouraged in all fields of learning. Some fields will give rise to invention, innovation and economic wealth. Other fields will lead to yet better understanding of civilisations past and the generation of new literary, artistic and spiritual wealth. Together, they lead to intellectual wealth. Well-rounded educational opportunities in all fields will ensure that we analyse and critique the human costs and human benefits of what some will simply call advances.


Prosperity is therefore not just about the sciences, important as they are in the innovation and wealth creation cycle. To take another quote from the White House Science Council report of 1986 … "the health of the entire spectrum of…education - from chemistry to computer science to the classics - is important to our national future…the Nation can ill afford generations of scientists and engineers unable to appreciate the economic and social consequences of their work or the underpinning of values and moral judgements that are the primary focus of the humanist."


This judgement is one we have been fortunate recently in Australia to hear echoed in the report of the Chief Scientist Robin Batterham, the Chance to Change. In his report Dr. Batterham argues emphatically for a broadly-based, long-term and in-depth approach to funding: Beyond the commitments already made in areas such biotechnology, environmental sustainability and health and medical research,. Batterham writes, we must nurture our research capabilities in the ‘enabling’ sciences of physics chemistry and mathematics, and also in the humanities and social sciences. Research in the humanities and social sciences for example, can enhance the organisational, management, legal and marketing knowledge that is critical to successful innovation.


There is of course another glaring difference between the position of Australia and that of the "Knowledge Game" leader the US, that doesn’t relate to size : the direction of financial commitments from government. While after a period of stasis, US govern ments, federal, state and local, have all reinvested in their universities, the Australian government contribution has continued to slide and been replaced by higher contributions from students.


Nobody could sensibly argue that a path of fiscal responsibility is not a correct one. And, importantly, the AVCC has long argued that a proper mix of university funding is one that reflects the balance of benefits that are derived from universities to the public, industry and to individuals.


However, it was not just fiscal responsibility that saw Australia through the difficult period of the Asian economic crisis. In large part our capacity to manage that transition can also be ascribed to the expansion in Australian higher education throughout the late eighties and early 90’s (funded largely by students themselves).


With this set of challenges behind us and the Treasurer announcing record growth statistics and successive budget surpluses of major dimensions, it is time to move forward. Sustaining this growth, or changing the economy’s base unambiguously and sustainably from the old to the new, is challenge we must now tackle head on.


Not just Batterham, but also Miles (ISIG) and Wills (NHMRC) have assessed and recommended to government from the perspective of the new discoveries, their development and their application. The AVCC supports them all.


The parallel education of students, the development of the trained personnel, and the importance of all fields of study, are the next issues to be addressed. And in the wake of these three have come a growing raft of noteworthy business and community leaders all offering support. Media commentators (except for two) have also enjoined their support.


For a long time, the AVCC has been very wary of the "crisis" word. We live in a competitive global environment and we are jealous of our market position. But the veil over this crisis was lifted dramatically in October 1999 with the leaking of Dr. Kemp’s cabinet submission. The key words still resonate "higher student:staff ratios, less frequent lecture and tutorial contact, the persistence of outdated technology and gaps in key areas of professional preparation (including practical skills development) are fuelling a perception of declining quality…"


Our universities’ period of stasis has lasted for nearly 20 years, during which the funding environment was based on demonstrating efficiency through cost reductions; where efficiency came to dominate effectiveness, rather than through the greater value of the courses the universities provide and the research they undertake. Higher private contributions from students have been used to substitute for government funds, not even to supplement them in order to enhance the quality of the higher education system and its capacity to play the role that is expected of it.


We are now hopeful that the government will respond to these issues. But the question for us is whether any response will address the complexity and comprehensive nature of the problems we face?


The title of my speech today "If you think is universities are expensive, try ignorance" was suggested to me by the organisers of the conference who reminded me that this was the heading of a 1988 AVCC pamphlet. The pamphlet had a number of good one-liners other than the heading, worth repeating as well.


  • If you think autonomy is a luxury, try bureaucracy
  • If you think research is costly, try guesswork
  • If you think excellence is elitist, try mediocrity


The decade of the 1990’s may have come and gone but the arguments are fundamen tally the same. The difference however, is that the situation is now significantly worse than it was in 1988. In 1988, per-student funding had already been declining from its high in 1983 but of course much more was still to come.


We need as a nation to recognise the role of governments in funding universities adequately so that universities can play their role in the overall improvement in the economic, social and cultural wealth of Australia. It is governments which invest in the future by providing the patient capital that nobody else will: for long-term, particularly basic, research; for education. It is they that determine the future of this country and how well the universities can play their part. And what they contribute is indeed an investment in the real sense.


A year after the production of the AVCC pamphlet, in 1989, Australia moved to a mix of public and private funding for the public universities. It was argued at the time that it was appropriate for the public to invest because of the public good contribute d to the community by graduates; and that it was appropriate for the individual to invest in their own education because of the private benefits that they obtain (tangible in the form of higher salary levels on average, and less tangible in terms of quality of life). But the fees are not low by international standards.


And there is reinforced by the assessment that the rate of return to the public is better than to the individual.


The introduction of HECS has resulted in a return to the public from government investment in universities that is slightly greater (16.5%) than the private return (15%) to the graduate. There is no case to increase student contributions.


A report for the Business Higher Education Round Table has estimated the annual value of the economic impact of universities. It concludes that not only is there $10.6 billion of expenditure by universities and their students in the community, but that each year’s graduates add about $9.2 billion in additional human capital to Australia and that university research contributes a further $2.2 billion to industry from its spill-over impact. Government funding of research and development in universities is, of course, especially productive since the results are made openly available by contrast to privately funded research and development whose spill-over is limited by the owners’ wish to make first use of the new knowledge.


Separate studies by the ATAX show the positive taxation contribution of universities through their activities. These offset about one half of Government, investment in universities, especially State Government investment.


The Australian approach since 1983 of reducing public investment per student while shifting more of the financial load onto the individual might just be defensible if Australia were a rich country secure in its place in the world, with a highly educated and skilled community forging a knowledge society without peer. But it is not. And it will not be without adequate public investment in our universities.


It is time for the government to play a different role. It is time to stop our period of stasis. Australia must be on the flood rather than the ebb of public funding for education and for research.


We must be determined to be better than average - and to do what is necessary to get there. And the key is to invest in the talent to be found in Australians and in their ideas. It is time to get ahead of the pack.


This is not really a game that we are in; it is a deadly serious effort to make this nation what we want it to be.