The Australian government¡¯s latest higher education funding changes were spurred by authorities¡¯ frustration with universities¡¯ unruly internal financing arrangements, according to the author of a new book on the sector¡¯s future.

Economist and management consultant John Howard says the Job-ready Graduates (JRG) package was partly a?crackdown on rampant cross-subsidising in universities, and he warned that institutions should brace for more such interventions.

¡°The government basically wants money for teaching to be used for teaching,¡± said Dr Howard, a visiting professor at the University of Technology Sydney and former pro vice-chancellor of the University of Canberra.

The JRG package, which passed parliament late last year, has aligned courses¡¯ funding with the estimated costs of their delivery. This ends a long-standing practice of cross-subsidising research, which is not fully funded in Australia, from some degrees¡¯ profit margins.

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Dr Howard said he had observed similar imperatives as board chair of the Taree Universities Campus, funded under the Regional University Centres programme, which issued ¡°quite specific¡± instructions on the use of the A$1.6?million (?900,000) of federal money allocated to the campus.

¡°The government wants to know what other income you¡¯re getting and how it¡¯s being spent,¡± he said. ¡°You can spend the money on tutors, facilities, IT and so?forth, but if you want to spend it on something else, you raise the money separately.¡±

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He acknowledged that this presented problems for university administrators, following the axeing of dedicated funding streams for capital works and maintenance. ¡°Buildings, equipment and so?on should be funded specifically, as they used to be,¡± he said.

¡°The commonwealth got off the hook because universities were able to tap into the international education market, but from a?public policy point of view, that¡¯s just lazy.¡±

The JRG claims its own chapter in the book, . Dr?Howard¡¯s central premise is that the 30-year-old unified national system has been a ¡°massive failure¡± and should give way to a ¡°diversified¡± system.

Political scientist and former University of Melbourne vice-chancellor Glyn Davis, who wrote the book¡¯s preface, welcomed the ¡°unusual depth¡± of Dr Howard¡¯s data while disagreeing with some of his conclusions.

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¡°It¡¯s great to have somebody look carefully at the finances and express a?view,¡± Professor Davis told Times Higher Education. But universities are ¡°really complex businesses¡±, he stressed.

Dr Howard argues that universities actually run two ¡°fundamentally different¡± businesses ¨C international and domestic ¨C which should be separated for management and reporting purposes. ¡°If they did that, they¡¯d be in a far better position to [demonstrate the] costs of running the domestic education business and tell the commonwealth, ¡®you¡¯re not paying your way¡¯,¡± he said.

He said some universities could be losing money from their international operations, but it was impossible to be sure ¡°because the numbers aren¡¯t there¡±. While revenue flows from international education ¡°look impressive¡±, the full costs of salaries, marketing, agents¡¯ fees, student support and buildings are not reported.

Equally difficult was determining how much of this revenue was used to artificially inflate universities¡¯ research reputations by hiring foreign academics with exceptional publication profiles.

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¡°It¡¯s really hard to go into a set of university accounts and find out how much of the salaries are going to high-performing international staff. But there¡¯s no doubt that universities hire eminent professors to play the system.¡±

john.ross@timeshighereducation.com