Our global position and future potential

The challenges facing Australian higher education

Simon MarginsonCentre for the Study of Higher Education

The University of Melbourne

ATEM Branch Conference, South AustraliaGlenelg, 26 July 2006

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

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.

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!

1. Australia’s current global standing

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%

Global markets, global competitionThere 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

Research papers in science and technology 2001

USA, 200,870

Japan, 57,420

UK, 47,660Germany, 43,623France, 31,317

Canada, 22,626

Italy, 22,313

China, 20,978

Russ ian Fed, 15,846

Spain, 15,570

Aus tralia, 14,788

Netherlands , 12,602

India, 11,076

Korea, 11,037

Sweden, 10,314

Thailand, 655

others , 111100

Growth in science papers 1988-2001 (ISI data)

change between 1988 and 20011988 = 100.0

Korea 1431.5

Turkey 808.3

Singapore 634.9Taiwan 571.6Portugal 499.3China 454.2Brazil 408.0Mexico 363.0Australia 149.4

Jiao Tong rankings: weightings

criterion weighting

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%

total 100%

Top 100 research universities 2005

from Shanghai Jiao Tong University Institute of Higher Education

USA 53

UK 11

Ge rmany 5

Japan 5

Canada 4

France 4

Swe de n 4

Switzerland 3

Ne therlands 2

Australia 2

others 7

Others: Israel, Finland, Denmark, Austria, Norway, Russia, Italy each 1.

Peaks of the global education market: the top 20 research universities 2005

from Shanghai Jiao Tong University data

1 HARVARD USA 11 Yale USA2 Cambridge UK 12 Cornell USA3 Stanford USA 13 UC San Diego USA4 UC Berkeley USA 14 UC Los Angeles USA5 MIT USA 15 Pennsylvania USA6 Caltech USA 16 Wisconsin-Madison USA7 Columbia USA 17 Washington (Seattle) USA8 Princeton USA 18 UC San Francisco USA9 Chicago USA 19 Johns Hopkins USA

10 Oxford UK 20 Tokyo JapanAustralia has ANU at 56, Melbourne at 82

Australians in the top 500, 2005 from Shanghai Jiao Tong University data

top 100 ANU (56), Melbourne (82)

top 150 Queensland, Sydney

top 200 NSW, WA

top 300 Monash, Adelaide, Macquarie

top 400 Newcastle

top 500 Tasmania, Flinders, La Trobe, Murdoch

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

HiCi researchers selected universities, 2005

Stanford USA 91

UC Berkeley USA 81

Harvard USA 72MIT USA 72all USA combined 3568

Cambridge UK 42Oxford UK 29

All Australia combined 97

all China combined 20

HiCi researchers Australia 2005

(Stanford) (91)Australia combined 97ANU 25Melbourne 9WA 7Sydney 6UNSW 6Macquarie 3Newcastle 3Murdoch 2Southern Cross 2others include Queensland, Adelaide, Monash, Tasmania, La Trobe, Flinders, UTS, UWS each 1, CSIRO 9, personnel in industry laboratories and medical research institutes, etc.

Exporters of cross-border education

2003 OECD data

USA 28%

UK 12%

Germany 11%France 10%

Australia 9%

Japan 4%

Russian Fed. 3%

Spain 3%

others 20%

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 U 17,077 160.3 19.5%

2 RMIT U * 15,132 122.8 25.2%

3 Curtin UT * 14,319 96.4 23.2%

4 Central Queensland U 10,460 97.1 39.5%

5 U South Australia * 10,257 51.3 16.2%

6 U Sydney 9806 124.3 12.7%

7 U NSW 9481 116.4 15.0%

8 U Melbourne 9215 154.8 14.7%

9 Macquarie U 8725 83.6 24.5%

10 Charles Sturt U * 8429 13.7 6.4%

11 U Southern Queensland * 8333 20.9 16.0%

12 U Wollongong 7940 55.2 20.6%U Southern California (2004-05) 6846

Education export: pluses & minusesPLUSES •$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)

MINUSES •Too 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

Enrolment shifts 2003-2004Australia 2004 DEST data

students from 2003 2004 2003 = 1.00

China 27,020 37,106 1.37

Malaysia 27,267 28,862 1.06

Singapore 29,878 28,290 0.95

Hong Kong 29,169 27,461 0.94

India 11,133 16,320 1.47

Indonesia 11,865 11,316 0.95

USA 9418 9522 1.01

The top 20 in 2005 according to the Times Higher

1 HARVARD USA 11 Duke USA

2 MIT USA 11 LSE UK

3 Cambridge UK 13 Imperial College UK

4 Oxford UK 14 Cornell USA

5 Stanford USA 15 Beijing China

6 UC Berkeley USA 16 Tokyo Japan

7 Yale USA 17 UC San Francisco USA8 Caltech USA 17 Chicago USA

9 Princeton USA 19 Melbourne Australia

10 Ecole Polytechnique France 20 Columbia USA

Australians in the top 200, 2005 according to the Times Higher

19 Melbourne 82 RMIT

23 ANU 87 UTS

33 Monash 98 La Trobe

38 Sydney 101 Curtin

40 NSW 118 QUT

47 Queensland 127 Newcastle

67 Macquarie 154 South Australia

80 Western Australia 166 Tasmania

80 Adelaide

Times Higher rankings: weightings

criterion weighting

‘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%

total 100%

2. Factors affecting Australia’s global position and potential

Constituents of global position and potential: summary

Geography Isolated 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!)

History English-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

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

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

0

0.5

1

1.5

2

2.5

3

USA Australia Netherlands Finland Korea

public private total

• 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) .

• 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.

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, MexicoItalics: over 20% of students in independent private sector

Australia in the global market inmobile doctoral students

Percentage (%) of all international students enrolled in research degreesOECD data for 2003 except USA is 2003-2004

0

5

10

15

20

25

30

35

US doctoraluniversities

Swizerland Sweden UK Australia

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

Intensified global salary competition 2000-2004 data, various sources, Purchasing Power Parity

nation data year

Professorial salary USD p.a.

USA (salary only, 9-10 months) 2003-04 $101,000 average

Singapore 2001 $92,000-130,000

Australia 2003 $75,000

Korea (private sector only) 2000 $71,000 average

Germany, Netherlands 2002-03 $60,000-70,000

France, Spain, Finland 2002-03 $40,000-70,000

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

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

3. Five possible futures

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’

Australia and Canada comparedCanada Australia

population (2004) 31.9 million 20.4 million

GDP (2004) $905.6 billion $541.2 billionGDP per head (2004) $28,390 $26,900universities in Jiao Tong top 100 (2005) 4

UT 24 UBC 37 McG 67 McM 90

2ANU 56 Melbourne 82

universities in Jiao Tong top 500 (2005) 23 14 universities in Times top 100 (2005) 3 12

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 source provinces/national national

Student flows in the global education environment

ASIA-PACIFIC (demand for foreign study

In China, India, Korea, etc.)

EUROPE

UNITED STATESUK Canada

AUSTRALIANZ

JAPAN

Export and import in Asia OECD data for 2001

0

50,000

100,000

150,000

200,000

China & Hong Kong

Korea India JapanMalaysiaIndonesiaSingaporeThailandPakistan Vietnam

Exports Imports

Five possible scenarios1 Present trends

continuePrivate 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