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Strong tertiary sector the engine room of Australia’s prosperity

Opinion piece by Chief Executive Belinda Robinson, published in The Australian on 1 June 2016

Entwined in every successful global economy is a strong university system. This is no accident.

The work of universities creates wealth for nations because they build human capital and push the boundaries of knowledge that drives innovation and human ­advancement. Smart countries know this.

In a report released late last year, Deloitte Access Economics pointed out that productivity gains generated by university ­research had delivered economic benefits to Australia worth a third of the growth in average living standards over the past 30 years.

More recent modelling by ­Cadence Economics found that without the entry of new univer­sity graduates into the Australian economy, the growth rate in jobs for people without a university ­degree would have been zero over the past eight years.

With both major parties heading to an election talking about the challenge of economic transition, it’s timely to remind them about the crucial role of universities in driving that transition.

In the past fortnight, two global rankings systems have rated Australia’s university system in the top 10 for comparative performance. Without opening a debate about methodology or whether the relative placings are right, both confirm that Australia’s university system is globally competitive.

The Universitas 21 rankings also highlights the efficiency of Australia’s university system. It ranked Australia third for output — which includes the amount and impact of research, educational attainment and the employability of graduates. Only when you look at our ranking for the level of ­resources that support these outcomes — 14th — do you realise what an outstanding achievement this is.

This affirms we have not only one of the world’s best university systems but also one of the most efficient.

We achieve these results ­despite investing comparatively fewer resources than some of our key global competitors.

And yet $2.5 billion in funding cuts remain in the budget forward estimates — on top of major cuts in each budget since 2011, adding up to $1 billion a year.

We will continue to oppose those future cuts.

We should be in no doubt that every dollar stripped from the system brings us inexorably closer to the point where the system tips into quality and competitiveness decline.

Let’s not forget also that our world-class universities are the backbone of Australia’s third largest export industry, and the means by which we keep replenishing the productive capacity of the economy through a highly skilled graduate workforce and groundbreaking research.

Whoever wins the election, universities will continue to make the case for policy certainty and will continue to assert our world-class higher education and research system as legitimate priorities for public investment.

It is true that the federal budget is under pressure and that governments face difficult choices on public investment priorities. Yet there’s an important rationale for not cutting wealth-generating investment which is inextricably tied to stated national interest policy goals.

Is Australia really spending too much on higher education and research? The international and historical comparisons don’t support that case.

According to the latest OECD report, in 2012, public spending on tertiary education institutions was 0.9 per cent of GDP in Australia, ranked 27th out of 32 OECD countries. This compared to 1.5 per cent of GDP in Canada, 1.4 per cent in the US and 1.2 per cent respectively in NZ and Britain.

While total expenditure has increased over time as the number of students has increased, total resourcing (that is, the Commonwealth Grants Scheme payments plus student contributions) is broadly the same as it was in 1997, at around $18,000 per student (in 2014 dollars).

That’s why Universities Australia launched our refreshed public awareness campaign this month, urging every party and candidate to ‘‘Keep It Clever’’.

We’ll continue to remind all political players that continuing to reduce public investment in higher education and research will have consequences and sits starkly at odds with the desire for Australia to make the transition to a new economy based on ideas and ingenuity.

It is also at odds with what other countries are doing. Canada is investing $2bn more over the next three years in its universities and colleges.

The US has outlined significant new investment, with the goal of having the highest proportion of college graduates in the world by 2025. And Singapore has lifted its investment in research and development by 20 per cent for 2011-15.

Meanwhile current budget proposals will strip a further $2.5bn over four years from the engine room of Australia’s prosperity.

As a nation, we cannot continue to talk up the need for economic renewal at the same time constraining the means by which it can be achieved.

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