Home World Business Does Australia have too many universities?

Does Australia have too many universities?


What is the optimal number of Australian universities? The point that maximises the return on taxpayer funds and community impact through outstanding research and teaching.

That question is rarely asked or answered. Instead, the Federal Government seeks change in universities that punishes students, high-performing academics and industry. A debate on whether the sector requires radical restructuring is needed.

Should we accept that 43 universities, in a population of 24 million, is the right number? Should we accept that 43 universities, in a population of 24 million, is the right number?  Photo: Louie Douvis

I have often been criticised by academics, sometimes savagely, for daring to suggest that Australia has too many universities. Or that sector consolidation would create much-needed efficiencies, freeing up funds for research and teaching, and easing fee pressure.

My argument for consolidation is about improving the university sector, not turning it another Australian industry dominated by a few giant organisations. Nobody wants a handful of big universities, a few regional unis and nothing much in between (this model is bad enough in banking).

But nor should we accept that 43 universities, in a population of 24 million, is the right size. That’s 43 sets of university bureaucracy and costly, unnecessary duplication. Money that could be spent on research and teaching is wasted on administrative overlap.

Other countries are achieving more with fewer universities per capita.

The Netherlands, with about 17 million people, has 13 research universities. All of them ranked in The Times World University Rankings (top 200) in 2016-17. Only eight Australian universities made the top 200.

Put another way, The Netherlands has 1.3 million people per research university and ranks higher than Australia, which has about 550,000 residents per university.

The Netherlands also has applied sciences universities that focus on teaching, so it’s not a straight comparison. But it’s fair to say Australia has more universities compared to several medium-size countries and still achieves less in international rankings.

Geography explains some of the difference. Australia needs universities in extra places given its geographic size compared to compact European countries. At best, that seems a flimsy argument for having so many second and third-tier universities.

History and legacy is the real reason we have so many universities. Nobody would plan 43 universities if the sector was rebuilt, just as nobody would argue for 43 Australian supermarket chains, department stores, big banks or newspaper companies.

Some universities resemble a house that has added one room after another over years and decades, without ever demolishing anything.

For example, why does Australia have 27 law schools and why are smaller universities launching law schools when there is chronic graduate oversupply in the field?

Why? Because law degrees are a cash cow for many universities, thanks to their popularity with students who tack on law through a combined degree. It makes no sense having 27 law schools producing broadly similar course content in some subjects, yet that’s what we have.

I don’t know the right number of Australian universities. My hunch is that students, industry and the community would be better served in the long run with about half as many universities – 24 unis for 24 million people seems a starting point for debate.

On that logic, Western Australia would have two or three universities instead of five now. Does WA, great state that it is, need five universities for 2.5 million people? Would it not do a better job of serving residents through three universities with greater scale?

We must be open-minded about the right number of universities. If a federal government international-benchmarking study finds that 43 is ideal, so be it. But if we have 43 universities “because we’ve always done it that way”, urgent change is needed.

The government, through funding models, could aggressively encourage underperforming universities to merge. Perhaps that is where the sector is heading anyway as smaller universities face mounting revenue challenges. And where the largest universities further dominate the research funding pie.

Other not-for-profit organisations, charities for example, have shown the benefits of mergers that create scale and better serve stakeholders.

Charity leaders have been willingly stood down if the merged organisation is in the community’s interests. They had the skill to oversee complex merger talks, put emotions aside and bring cherished organisations together.

Done well, university consolidation could slash administration costs, freeing up resources for researchers and teachers.

Top academics would come together in larger universities, rather than have small pockets of research excellence at several smaller universities. Lazy, underperforming academics would be weeded out, as ought to happen.

Greater research scale would help our universities compete internationally. Also, grouping the best researchers would add to inter-disciplinary collaboration across campus. Smaller universities that join forces would find new vibrancy and competitiveness, and lift their industry collaboration.

Surely, 24 universities – or whatever the right number is – would ensure sufficient competition and student choice. The university sector would still have greater diversity than most Australian sectors that are dominated by oligopolies and duopolies.

Although I favour sector consolidation, I firmly believe universities are not businesses. And that students are not customers.

The “bottom line” in universities is often not apparent – academic thought, intellectual rigour, community impact and so on. Universities have a higher purpose that can be lost with rigid commercial thinking and industry comparisons.

But no NFP organisation should not be immune from industry consolidation if it is in the best interests of stakeholders.

No taxpayer should tolerate (or fund) underperforming universities that refuse to consider mergers because overpaid people are protecting their patch.

Australian industry should not tolerate having so many smaller universities that add little in terms of global research rankings, innovation or commercialisation.  

Most of all, students should not tolerate paying higher fees, partly because of overlap in a sector that could achieve far more, with less.

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