Cuts focus moneyspinning minds

MELBOURNE. Australian universities generate almost 45 per cent - more than Aus$3 billion (31.5 billion) - of their operating revenues from non-Commonwealth sources but because of budget cuts they must find even more.

The federal government is axing Aus$1.8 billion over the next four years just when universities have to pay staff a 10 per cent rise. It is forcing universities to get more money from fees, donations and selling education and intellectual services.

Tuition fees and charges from postgraduates and foreign students at present generate nearly 12 per cent of operating grants. Investment income plus donations and bequests provide another 3 per cent, while state government grants add a further 2 per cent.

Money returned to universities from the Higher Education Contribution Scheme, through which students repay part of the cost of their study, supplies more than 13 per cent of total university operating grants. HECS charges to students are to rise sharply following the budget, raising expectations of greater university income.

But the extra HECS money - assuming there is not a drastic decline in enrolments as a result of the rise - will not begin to flow into university coffers until 1998.

The shift in university financing has been dramatic. In the 1980s institutions were raising a mere 12 per cent of their annual budgets from fees and contracts with industry. By 1991, annual federal recurrent and capital grants had dropped to 55 per cent of spending and by 1993, recurrent grants - excluding HECS money - fell below 50 per cent of the Aus$6 billion consumed by the university sector.

The ability of many universities to counter the decline in federal funding is limited. Rural-based institutions, and those in the poorer western suburbs of Sydney and Melbourne, do not have the same access to these markets as the big, well-established city universities.

For example, Melbourne University has just announced that it has a Aus$30 million scholarship fund which it intends to use to attract top students worldwide. It expects to boost the fund, with the help of corporate donors, to Aus$100 million by 2000.

To attract the attention of big corporations must seem an impossible dream to universities that rely on the federal government for 70 per cent or more of their budgets and whose current state is close to bankruptcy.

Many critics of the August budget believe the conservative coalition government's aim is to force prospective students out of university and into technical and further education colleges. This would further reduce the cost of higher education to federal government and pass the buck to states, which have the major responsibility for TAFE.

This, too, may fit in with what some suspect is the federal government's goal of ultimately creating a two-tier system of a few top-ranking research universities and a larger group of basically teaching-only institutions.