Opinion
I was excited for a moment this weekend with the suggestion that somebody had achieved the holy grail and determined the true cost of HE delivery, when I read a headline ‘Simply poor management’: The truth about our universities’ finances'.
And then I was disappointed.
I’m not one to shoot the messenger – the headline would have been written by a subeditor, and the graphic showing 16 unis in the red in a table on net margin provided some robust context to the story.
Virtually every month for the last year or so there have been news stories about the excessive costs of higher education and what stands out to me is not so much whether the story is fair, unfair, true or not – it’s just that the sector still fails to explain itself on costs, despite some counter arguments that are rarely made.
That’s why it was great to receive a piece from ACU Vice-Chancellor Zlatko Skrbis (abbreviated version below, follow the button at the bottom of the newsletter for the full version online). He tackles the finance question head-on, arguing for the importance of fiscal responsibility and budget surpluses to ensure sector sustainability. He also underscores the importance of rekindling social licence by reframing the positioning of universities with a focus on serving community and consensus approach to demonstrating core values.
This is a sound start.
The question is, why doesn’t the sector start to explain why course costs so much? Unless the holy grail has been found and nobody has let me know, here’s part of the answer. The cost of studying at an institution involves some obvious direct costs (lecturer and tutor time, electricity, online platform costs, markers etc) but it also involves way more indirect costs. It’s really difficult to get people to agree on what the final cost is – and that’s within a university.
If students chose to study based on the direct costs, then student demand would align with QILT data – but it doesn’t. Group of Eight universities typically enjoy the highest levels of domestic and international demand for a whole range of reasons that may not affect the student during their entire degree, despite often lower QILT scores.
Research drives rankings, research income, philanthropic appeal and status, and while it sometimes informs curriculum updates, much of it does not. Compliance with a slew of new and existing regulations costs a small fortune; marketing and communications is critical in engaging and attracting students and likewise is not cheap; campus buildings and grounds might be worth billions but cost a huge amount in upkeep. What proportion of these costs should be apportioned to the value of a degree? And what is the monetary value you put on brand – the old school tie value of a degree from an institution when an alumnus is on the selection panel for your next job?
The public isn’t stupid. But they also do not run a university. Once you have been called into a dozen institutions and identified and implemented a change program that drives enrolments up, and rescues jobs, you start to get a much clearer view of the impact of indirect costs. You also get a much clearer view of the costs that could be slashed if management and unions could agree. Then you have external policies such as JRG, which continues to distort pricing, without a clear relationship with course delivery costs.
The article by Professor Skrbis is a welcome start, to start to restore some balance to the public discourse around HE cost. A lot more strategic dialogue is needed to build a better understanding of university costings.
You only have to look at the effectiveness of some displaced Ukrainian universities in running low cost, high-productivity universities with strong enrolments and completions and increased research productivity to recognise that alternative, lower-cost operating models could pose a significant threat – or a massive opportunity – for Australian institutions in coming years.