The Australian Vice Chancellors' Committee has warned the nation's new Conservative government that a burning issue facing the higher education sector is the claim by 80,000 university staff for a substantial pay rise.

AVCC president, Fay Gale, said a salary increase for academics and general staff was deserved and long overdue. Academics could now see school teachers, with smaller classes and lighter work loads, earning more money.

"High quality staff will be impossible to retain if money for the pay claim is not found," Professor Gale said. While congratulating the Conservative parties on their win at the election, she said their pre-election promises meant universities would lose at least $40 million (Pounds 20.2million) a year in federal grants."We will be seeking urgent discussions with the new education minister on this matter and the funding of the system in general."

Commenting on warnings by the various higher education unions of an industrial campaign of stopworks and bans in support of the pay claim, Professor Gale said universities could not meet the pay rise from their own budgets. She claimed that without additional funding from the government, universities would be forced to lay off staff."Unions have to realise that individual pay rises for their members will be at the cost of their colleagues' jobs. That is the first big challenge for us and the new minister."

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Confusion still exists over the coalition's promise to cut $171 million a year from the higher education budget while increasing spending on research and research infrastructure.

Professor Gale said the AVCC had been assured before the election that there would be a shortfall of only $40 million but that this would be money saved by scrapping the Labor government's quality assurance programme.

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Although vice chancellors had initially opposed the scheme, they had wanted it retained. However, abolition of the programme would not mean that niversities had abandoned quality assurance.

"We have all made improvements in our quality management and once you make those changes it is not easy to lose them. I can't see the programmes not continuing," Professor Gale said.

With the election of a new Conservative government committed to expenditure restraint, higher education was likely to enter a steady state for several years, she added. The huge increase in enrolments and in spending on universities under Labor over the previous 13 years had reached its maximum.

"Clearly, there will not be an expansion of the system. We have been able to develop initiatives by going with growth and it is always much more difficult to keep up with new initiatives in a steady state."

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