1. Our global position and future potential The challenges facing Australian higher education Simon Marginson Centre for the Study of Higher Education The University of Melbourne ATEM Branch Conference, South Australia Glenelg, 26 July 2006

2. coverage today Australia’s current standing in the global setting, including research, and the market in cross-border degrees Factors affecting Australia’s current position and global potential: history, geography, organisational cultures, public and private investment and composition effects, system stratification, government and Labor policies Five possible futures, given different assumptions about public/private sector balance, public and private funding at varying levels, and the extent of mission specialisation

3. Positioned but also position-taking: Factors determining global potential Institutions, and national systems, are both ‘positioned’ and ‘position-taking’ in the global field of higher education (Bourdieu). They have some control but not total control over their potential and opportunities. Those with stronger resources and reputations have more room to move than do others Position affects the capacity to operate globally, which is unevenly distributed between nations and institutions on the basis of history, geography, size, resources, language of use, etc. Nations and universities have a greater range of position-taking options in the global setting than national/local setting. The global setting is more open, less path-bound, with more possibilities for securing position via policy moves, cultures of responsiveness, executive strategies, novel teaching and research initiatives, etc.

4. Elements of global effectiveness The key is to be fully engaged globally while maintaining a grounded, evolving national/local identity. A spirit of global engagement, grounded in national/local identity, while at the same time fostering an active, informed curiosity about other cultures. Openness plus a strong sense of own project. Long term solid national government support is crucial Institutional autonomy and academic freedom to operate Research capacity and outputs are crucial to universities Vocational education that is cutting edged, properly resourced Communications power: both in (1) IT and (2) languages Executive steering capacity based on professional managers Staff and student movement inwards and outwards Timing: take the opportunities when they are there!

5. 1.Australia’s current global standing

6. Australia in the global setting: An upper middle ranking higher education system Key advantages: (1) being English-speaking, (2) relatively safe and tolerant social setting, (3) location SE of the Asian continent, (4) responsive and enterprising university cultures Compared to other English-speaking nations, stronger in international education, in the sale of degrees especially in Asia, than in research. Academic capacity has been de-emphasized 1.6% of GDP spent on tertiary education (2002) USA 2.6% Relatively high dependence on private income as is USA None of the top 20 research universities, two of top 100, 14 of top 500 (Shanghai Jiao Tong, 2005) USA has 53 of top 100, 17 of top 20 2% of world scientific papers (2001) USA 31% 97 ISI ‘HighCI’ researchers 3568 in the USA, 409 in UK, 161 in Canada, 16 in NZ 8000 foreign doctoral students USA 102,000 9% of the cross-border market in degrees (2003) USA 28%

7. Global markets, global competition There are two tier global markets in tertiary education: 1. The ‘super-league’ of leading research universities in USA/UK that dominate research and doctoral training. A status competition not a commercial market: relationships are conducted (and dominance exercised) as much via academic collaboration and exchange of public knowledge goods, as by competitive relations and private good production; 2. The market in commercial vocational training, produced by both non-profit and for-profit institutions, in both university and polytechnic/VET sectors. Australian institutions sit here 98% of students are educated at home. But in many nations global markets and the ‘super-league’ now overshadow once unchallenged leading institutions; and ‘rising star’ institutions can leverage global activity to lift themselves at home

8. Research papers in science and technology 2001

9. Growth in science papers 1988-2001 (ISI data) change between 1988 and 2001 1988 = 100.0 Korea1431.5 Turkey 808.3 Singapore 634.9 Taiwan 571.6 Portugal 499.3 China 454.2 Brazil 408.0 Mexico 363.0 Australia 149.4

10. Jiao Tong rankings: weightings criterionweighting Alumni of institution: Nobel Prizes and field medals 10% Staff of institution: Nobel Prizes and field medals 20% High citation (HiCi) researchers 20% Articles in Nature and Science 20% Articles in citation indexes in science, social science, humanities 20% Research performance (compiled as above) per head of staff 10% total100%

11. Top 100 research universities 2005 from Shanghai Jiao Tong University Institute of Higher Education Others: Israel, Finland, Denmark, Austria, Norway, Russia, Italy each 1.

12. Peaks of the global education market: the top 20 research universities 2005 from Shanghai Jiao Tong University data 1HARVARD USA11Yale USA 2Cambridge UK12Cornell USA 3Stanford USA13UC San Diego USA 4UC Berkeley USA14UC Los Angeles USA 5MIT USA15Pennsylvania USA 6Caltech USA16Wisconsin-Madison USA 7Columbia USA17Washington (Seattle) USA 8Princeton USA18UC San Francisco USA 9Chicago USA19Johns Hopkins USA 10Oxford UK20Tokyo Japan Australia has ANU at 56, Melbourne at 82

13. Australians in the top 500, 2005 from Shanghai Jiao Tong University data top 100ANU (56), Melbourne (82) top 150Queensland, Sydney top 200NSW, WA top 300Monash, Adelaide, Macquarie top 400Newcastle top 500Tasmania, Flinders, La Trobe, Murdoch

14. Research rankings fully expose Australia to global competition Universities are widely judged by research performance which is foundational to reputation, and operates as a proxy for degree power and even teaching quality. Now Shanghai Jiao Tong has provided a credible set of data on research performance, and this is feeding into the market in cross-border degrees Marketing (‘we are world-class’, ‘one of the finest’, ‘a research university’ etc.) is no longer enough - the data must confirm it! Governments/nations now want super-league universities. Implies greater concentration of research activity, greater stratification of universities, selective investment increases Every university (except Harvard) wants to lift its rankings, every university in the top 500 wants to hire more high citation (HiCi) researchers. This competition is generating price effects

15. HiCi researchers selected universities, 2005 Stanford USA 91 UC Berkeley USA 81 Harvard USA 72 MIT USA 72 all USA combined3568 Cambridge UK 42 Oxford UK 29 All Australia combined 97 all China combined 20

16. HiCi researchers Australia 2005 (Stanford)(91) Australia combined97 ANU25 Melbourne 9 WA 7 Sydney 6 UNSW 6 Macquarie 3 Newcastle 3 Murdoch 2 Southern Cross 2 others include Queensland, Adelaide, Monash, Tasmania, La Trobe, Flinders, UTS, UWS each 1, CSIRO 9, personnel in industry laboratories and medical research institutes, etc.

17. Exporters of cross-border education 2003 OECD data

18. Largest Australian providers Institution * More than 50% of international students off-shore International students 2004 International fee revenues 2004 $sm Proportion of all revenues 2004 1 Monash U17,077160.319.5% 2 RMIT U *15,132122.825.2% 3 Curtin UT * 14,319 96.423.2% 4 Central Queensland U 10,460 97.139.5% 5 U South Australia * 10,257 51.316.2% 6 U Sydney 9806124.312.7% 7 U NSW 9481116.415.0% 8 U Melbourne 9215154.814.7% 9 Macquarie U 8725 83.624.5% 10 Charles Sturt U * 8429 13.7 6.4% 11 U Southern Queensland * 8333 20.916.0% 12 U Wollongong 7940 55.220.6% U Southern California (2004-05) 6846

19. Education export: pluses & minuses PLUSES$5 billion export industry with 230,000 students built in 15 years – thanks to university entrepreneurship and business models (and the strength of revenue incentives) Market share in university sector third in world Sustains a major national engagement in Asia Provides 15% of university revenues: fiscal savings National quality assurance (though needs strengthening) MINUSESToo dependent on high volume medium quality standard cost training in business and IT – lack of diversity of product Not enough top quality students, including PhD students ‘Franchising’ operations weaken quality and reputation Growth over-dependent on incentives created by public funding cuts, creating downward pressures on standards Lack of attention to international student security Market position vulnerable to price effects, declining research reputation, import replacement in Asia, non-English languages

20. Enrolment shifts 2003-2004 Australia 2004 DEST data students from200320042003 = 1.00 China27,02037,1061.37 Malaysia27,26728,8621.06 Singapore29,87828,2900.95 Hong Kong29,16927,4610.94 India11,13316,3201.47 Indonesia11,86511,3160.95 USA 9418 95221.01

21. The top 20 in 2005 according to the Times Higher 1HARVARD USA11Duke USA 2MIT USA11LSE UK 3Cambridge UK13Imperial College UK 4Oxford UK14Cornell USA 5Stanford USA15Beijing China 6UC Berkeley USA16Tokyo Japan 7Yale USA17UC San Francisco USA 8Caltech USA17Chicago USA 9Princeton USA19Melbourne Australia 10Ecole Polytechnique France20Columbia USA

22. Australians in the top 200, 2005 according to the Times Higher 19Melbourne82RMIT 23ANU87UTS 33Monash98La Trobe 38Sydney101Curtin 40NSW118QUT 47Queensland127Newcastle 67Macquarie154South Australia 80Western Australia166Tasmania 80Adelaide

23. Times Higher rankings: weightings criterionweighting ‘Peer review’ (survey) 40% Global employer review (survey) 10% Internationalization of academic staff 5% Internationalization of student body 5% Student-academic staff ratio (proxy for ‘teaching quality’) 20% Research citations per head of academic staff 20% total100%

24. 2. Factors affecting Australia’s global position and potential

25. Constituents of global position and potential: summary GeographyIsolated from the Atlantic zone which will never be home (sigh…); forever located SE of Asia; SE Asia our natural backyard; we are closer to China than is the USA or Europe (embrace this destiny!) HistoryEnglish-speaking. Reputation based in strong comprehensive research universities created 1950s-1970s, second layer only partly developed Organizational cultures Responsive, enterprising, internationalised, capable of a range of position- taking strategies. Weaknesses: Monocultural, and neglect of academic capacity (except sandstones) amid emphasis on marketing/revenue-raising Investment in higher education Above OECD average overall. Below average public investment but well above average private investment. This composition of investment has implications for the patterns of activity and resource use Public/ private balance Negligible private sector transforming into major player via FEE-HELP, broadening diversity, centering innovation and growth in that sector Overall system stratification Average for an OECD nation but becoming steeper. Potential for very strong research universities as yet unrealized, ‘tail’ of weaker institutions

26. Languages of 100 million + voices English1000 million Putonghua (‘Mandarin’)1000 Hindi/ Urdu 900 Spanish/ Portuguese 450/ 200 Russian 320 Arabic 250 Bengali 250 Malay-Indonesian 160 Japanese 130 French 125 German 125 [Thai] [45] [Lao/Isan] [30]

27. Investment in tertiary education as a proportion of GDP (2002)

28. Australian investment in tertiary education is high relative to the OECD norm but the composition of investment has changed dramatically. In the last two decades the public share of funding has fallen from 85% to 40%. Incentives have been transformed. The pattern of activity has altered. ‘It is notable that the rises in private educational expenditure have not generally been accompanied by cuts in public expenditure on tertiary education. On the contrary, public investment has increased in most of the OECD countries for which 1995-2002 data are available, regardless of changes in private spending. In fact, many OECD countries with the highest growth in private spending have also shown the highest increase in public funding… The main exception is Australia, where the shift towards private expenditure at tertiary level has been accompanied by a fall in the level of public expenditure in real terms’. - OECD, Education at a Glance, 2005, p. 193. The decline in public spending 1995- 2002 is 8 per cent in total (p. 187) and about 30 per cent on a per student basis (p. 175).

29. Total university revenues have not declined. Public funding per student is down, private funding per student is up, the effects seem to cancel out. But on the private income side, what matters is not total income but surplus. In many universities international student marketing provides additional cash flow but does not generate net surplus. The new revenues have been largely or wholly absorbed by the new functions needed to raise them: marketing, off-shore activity, special services, etc. The old public income, the gift of government that cost little to ‘raise’, is not replaced. And in some cases where international marketing does generate significant surplus, quality is suffering. This is why in the midst of the export bonanza, universities are impoverished, and quality and value are in question. In sum, with the shift to market-based incomes, universities spend more on revenue raising functions and less on the ‘core businesses’ of teaching and research. Yet it is these core businesses from which business draws value. The incentives are wrong. Universities are spending more on reproducing themselves, and less on producing valuable products.

30. National research performance compared to economic capacity Nations with research capacity greater than their economic wealth suggests (in order of performance) Israel, Sweden, Switzerland, UK, Netherlands, Canada, Finland, Denmark, Australia, USA Nations with research capacity about on par with economic wealth Germany, New Zealand, Hungary, Belgium, Austria, Norway, Chile, France, Hong Kong, South Africa Nations with research capacity less than their economic wealth suggests Ireland, Brazil, Japan, India, Portugal, Czech Republic, Russia, Italy, Korea, Spain, Poland, Greece, China, Argentina, Mexico Italics: over 20% of students in independent private sector

31. Australia in the global market in mobile doctoral students Percentage (%) of all international students enrolled in research degrees OECD data for 2003 except USA is 2003-2004

32. Where will public institutions raise the new money they need? Limited scope for HECS increases given faltering participation and fact most institutions are at maximum No sign of serious increase in targeted research money to support RQF, or ANU-style funds to other institutions Full fees a bonanza to emetging private sector institutions but choked by red-tape in public sector, e.g. uniform caps by program: no bonanza for sandstones,others not competitive Serious increases in industry and philanthropic money dependant on tax changes Limited potential for further cranking up foreign students

33. Intensified global salary competition 2000-2004 data, various sources, Purchasing Power Parity nationdata year Professorial salary USD p.a. USA (salary only, 9-10 months)2003-04$101,000 average Singapore2001$92,000-130,000 Australia2003$75,000 Korea (private sector only)2000$71,000 average Germany, Netherlands2002-03$60,000-70,000 France, Spain, Finland2002-03$40,000-70,000

34. Private and public sectors The main impact of the Nelson reforms is the fostering of the private higher education sector, now about 10% of enrolments Here the federal government is creating a pro-coalition constituency akin to the newer private schools; like them some are communities of faith The change to the national protocols permitting specialist universities (originally triggered by Carnegie Mellon in SA?) is a decisive innovation, with the potential to radically remake the map of provision in the longer term The private zector has become the main site of growth and innovation while the public sector has little growth potential However there are signs of a new trend to mission specialisation in the public sector, notably at Melbourne

35. Stratification Slow evolution into steeper market, not dramatic change The sandstones have not taken flight - limits of undergraduate full fees, no RQF yet, and anyway the RQF is unlikely to deliver major shifts in research funding Elite private sector yet to emerge (but watch this space) Spate of new medical faculties strengthens some contenders Middle level institutions under new pressure to merge, and with or without this face difficulties in cost management Volume maximisers with weaker research face declining reputations and possibly, declining fee-based incomes Serious money for regionals yet to appear. A hard time

36. 3. Five possible futures

37. Some worrying signs We have lived off a strong research reputation accumulated on the basis of public investment in the 1960-1985 period, but Jiao Tong rankings now make research reputation a function of measured performance, not history or marketing They also emphasise the need for top 40 universities Downward pressures on quality of teaching (doubling of staff student ratios) and research (funding cuts hurt basic research) We are weak in comparisons with the UK and Canada Our international market share and revenues are vulnerable, e.g. import replacement and export competition in China, Singapore We lack a national approach to standards Fiscal policy is locked up, seems to be downward flexibility only Global capacity? National policy is ‘leave it to the universities’

38. Australia and Canada compared CanadaAustralia population (2004) 31.9 million20.4 million GDP (2004) $905.6 billion$541.2 billion GDP per head (2004) $28,390$26,900 universities in Jiao Tong top 100 (2005) 4 UT 24 UBC 37 McG 67 McM 90 2 ANU 56 Melbourne 82 universities in Jiao Tong top 500 (2005) 2314 universities in Times top 100 (2005) 312 world share of foreign students (2002) 1% 9% GDP for tertiary education (C2001 A2002) 2.5%1.5% public share of funding (C2001 A2002) 67%50% public funding sourceprovinces/nationalnational

39. Student flows in the global education environment ASIA-PACIFIC (demand for foreign study In China, India, Korea, etc.) EUROPE UNITED STATES UK Canada AUSTRALIA NZ JAPAN

40. Export and import in Asia OECD data for 2001

41. Five possible scenarios 1 Present trends continue Private sector fostered while public sector remains stagnant, private sector eventually becomes main site of quality, research withers 2 Vouchers/ full fees across whole system High tuition high aid: USA with less money: strong private sector, privatised rich sandstones, steep resource differentials, long-term costsof FEE-HELP 3 Private sector plus elite research layer Japanese system. Research publicly fostered in a few top universities (3-10?) while private sector is site of mass growth and teaching innovation 4 Nuanced missions One-by-one negotiation with funded institutions over mission/ profile, divergence in content depending on whether Labor or coalition, needs buffer body 5 Reinvestment across the public system One off or long term? Selective or general funding? Fiscal cost. Leaves unresolved global competitiveness of top research universities