Australia has outlined the details of its planned performance-based funding system, putting the emphasis on the success of university graduates in the workplace.

The assessments ¨C similar to the UK¡¯s teaching excellence framework ¨C will be used to determine the distribution of an additional A$80 million (?43.7 million) under the Commonwealth Grants Scheme next year.

In an on 2 October, education minister Dan Tehan said that he would accept a recommendation of an expert panel headed by University of Wollongong vice-chancellor Paul Wellings that institutions should be judged on four key metrics: first-year attrition, graduate employment, student perceptions of teaching quality and participation by under-represented groups.

Rather than weighting the four areas equally, however, Mr Tehan said that graduate employment would account for 40 per cent of funding, with the other three measures weighted at 20 per cent each.

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¡°The performance-based funding model that has been finalised makes an explicit link between funding and one of the key goals of every university: to produce job-ready graduates with the skills to succeed in the modern economy,¡± Mr Tehan said.

The Education Department confirmed that universities would be judged on each metric against ¡°contextualised thresholds¡± accounting for the characteristics of their students. An ¡°excellence threshold¡± will also be applied for the graduate employment and teaching quality metrics, ¡°acknowledging that there are instances where it is statistically impossible for institutions to receive 100 per cent of funding¡±, the department said.

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Mr Tehan emphasised that the new system was ¡°not punitive¡±. Where institutions do not meet their targets, they will be allowed to access more funding once they have negotiated conditions with the government which will be designed to improve their performance.

The minister also confirmed a series of reviews to ensure the model is fit for purpose, with the first planned for next year and a second pencilled in for 2023.

The confirmation of the scheme follows the freezing of teaching grants for the last two years. The new performance-contingent component will grow in line with Australian population growth in the 18-64 age bracket, until it accounts for 7.5?per cent of each university¡¯s basic grant amount.

In 2020, the amount of funding available will be equivalent to 1.36 per cent of Commonwealth Grant Scheme funding.

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Professor Wellings said that the scheme ¡°creates a new horizon for growth while placing a spotlight on institutional performance.

¡°This new Australian scheme is distinctive as every university will receive support to encourage performance improvement and the sharing of best practice across the whole sector,¡± he said.

Catriona Jackson, the chief executive of Universities Australia, thanked the minister ¡°for his consistent reaffirmation that the intent of the scheme is not to be punitive ¨C but rather seeks to support all universities to perform highly¡±.

¡°We know prevailing economic conditions are the strongest determinant of jobs across the economy, and job prospects for graduates follow the curve of that trajectory very closely,¡± Ms Jackson said.

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¡°We appreciate the government¡¯s understanding of that relationship and the need for a strong economy as the single most powerful?factor that shapes?whether our graduates?can?find work.¡±

chris.havergal@timeshighereducation.com