Productivity Commission calls it: Australia needs demand driven funding

Governments should establish an effective and fiscally sustainable demand-driven system for providing Commonwealth supported places for domestic undergraduate students”

The PC’s five yearly report on national productivity states, a demand driven system, “would better support students with reasonable prospects for success at university, with productivity benefits for the economy and higher lifetime wages.”

Under such a model, “total funding per student should be based on a measure of the efficient cost of delivery” which would require higher student contributions based on private benefits during working lives and funded by income-contingent loans.

“Fiscal costs do need to be controlled, but this can be better achieved by recalibrating subsidy and loan settings so that more of the costs are borne by students rather than reducing overall funding … .”

The Commission also states that the only way to deal with perverse incentives under any capped enrolment system is to remove the cap.

Other proposals include,

* all university (and appropriate VET) lectures available to all students open-access

* stronger teaching-quality assurance and “better published quality indicators”

* “coherent” national supports for life-long learning

The PC also calls for a change to the “overly narrow focus on university research commercialisation”

“policy initiatives to increase knowledge transfer treat knowledge transfer as synonymous with commercialisation, even though other channels — such as consulting by academics — may be more relevant for certain types of firms and industries (especially service industries), research areas (especially social sciences) and research institutions.”


The Group of Eight was out early with a response to the PC , welcoming its pointing to flaws in the HE funding model, and recognising “the perverse nature: of the former government’s Job Ready Graduates Scheme.

But the Eight laments the PC “fails to fully understand the influential role of basic research in underpinning innovation and the urgent need for a national research strategy.