We were warned that the “education revolution” would be put on hold. And it was. In fact, the term has disappeared from this year’s budget papers, replaced by “an innovation and higher education system for the 21st century”.

The Government’s strategy of downplaying expectations seems to have worked with most higher education players grateful to have received anything at all.

But the bottom line is that funding per student in higher education remains lower than before the mid-1990s, and considerably lower than in most OECD countries.

In keeping with the economic stimulus theme of the budget, the biggest measures in the next two years are capital works projects for new teaching and research spaces. These have been spread widely, but the biggest winner is the Australian National University. ANU vice-chancellor Ian Chubb unleashed a wave of grateful media releases within moments of Wayne Swan finishing his speech.

Increases to recurrent funding are mainly confined to the later part of the four-year forward estimates. But equally importantly, the increased recurrent grants do not tackle the fundamental problems of the sector.

Yes, the budget has announced increases to the amounts universities receive to compensate for rising costs. By 2012, funding will be indexed based on movements in salaries (less 10 per cent for “productivity improvements”), rather than movements in the CPI, as at present.

While universities will welcome any funding increases, all the changes to indexation do is slow the rate of decline in resources per student.

What this inevitably encourages universities to do — as they have been doing — is to make up the funding shortfall by enrolling as many full-fee paying overseas students as possible in undergraduate degrees and masters by coursework programs.

While it is good for local students to mix with international students, it is not good when universities are so desperate to maximise numbers that they lower academic and English standards, something that a number of studies have confirmed is happening.

Universities will also be tempted to continue to offer popular and cheap courses, with the announcement that enrolment caps will be removed, allowing student demand to determine numbers. How many more law degrees do we need? Media courses are popular, but what do graduates do afterwards?

So who are the budget winners?

Students will be happy that they will eventually be considered independent for the purposes of income-support from the age of 22, instead of the current 25. This has been an ongoing issue for decades.

It’s likely that Innovation Minister Kim Carr has a smile on his face because he has accomplished a good part of his agenda for research.

Last year, he came up with $326 million to establish the future fellowships scheme to reverse the “brain-drain” among mid-career academics. This year he has scored $813 million to fund the indirect costs of research, such as administrative overheads, in line with the recommendations of last year’s Cutler report.

So the message from the budget to Australian universities is: focus on research, keep enrolling overseas students, run cheap, popular courses, but be wary of local undergraduates, especially if they want to study unpopular or expensive to teach courses.

Peter Fray

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