Suggestions that the demand driven system is unaffordable are flat-out false, according to post-secondary education funding expert Mark Warburton. “The demand driven funding system is sustainable if managed correctly,” he told a Melbourne Centre for the Study of Higher Education/KPMG seminar in Melbourne this week.

“The trick to preserving the demand driven system always was to work out how to ride out the first couple of years – let the players get over their youthful exuberance and take steps to reinforce mature behaviour,” he said.

For the future, Mr Warburton says, adopting five principles can make the  system sustainable.

# Stronger public accountability, more effective regulation. “We should expect and demand responsible mature behaviour from any provider in receipt of public funding.” But reputational risk and public censure make performance funding unnecessary.

# Common regulation and resourcing of higher education and VET. “I cannot see that there is any basis for having funding arrangements that privilege the higher education sector over the VET sector.”

# Resourcing and regulation that is ready for disruptive change: “Our funding arrangements and regulatory systems should not entrench the status quo.”

# Funding for student places should meet tuition costs but not support research: “The benefits of research do not primarily accrue to students.  “There is no policy justification for making domestic students more responsible for Australia’s research effort than other tax payers. This clarification is necessary to achieve equitable funding of student places across higher education and VET.

# Recognise limits on financing through income contingent loans and limit student borrowing: “The days in which HECS and HELP provided easy extra finance for the sector are over,” Mr Warburton argues. But demand driven funding is not in consistent with government setting expenditure priorities; “Should a retired baby boomer interested in literature be able to study for free utilising a loan they will not repay, while a disadvantaged young person is required to make up-front payments for their training?”

Read Mr Warburton’s full analysis in CMM’s Feature for this morning