University reform, part I: what are the options?

In previous posts I talked about the immense overhead in the university sector. Some 70 cents in the commonwealth dollar aimed at universities ends up in admin and US researchers have calculated that the optimal amount of administration is so much lower than the current Australian average that we should be able to axe 40% without a real reduction in teaching and research services. The immense waste (and corruption!) in our sector is thus increasingly being recognised in the Australian media and even in a recent commissioned Ernst and Young consultancy report.

The question to the readers though is what can realistically be done to deliver university teaching and research at reduced costs in Australia? Forget about being outraged or wishing for some return to a mythical glorious past by means of some remorseful redemptive action. In the real world everyone hangs on tight to their current positions and will fight changes that affect them negatively tooth and nail, morality be damned. that is normal and to be expected.

In that light, if you were the minister for education in Canberra, supported by the ministry, public opinion, and business, what would you actually do to turn things around and get more bang for the public buck?

On Friday I plan to blog about the existing barriers to reform and how they knock the teeth out of most of the reforms on the table. On Monday you get my best-guess as to what a minister might realistically do that would have some positive effect. Till then I think it important to hear what you would do and why you think it would work.

Author: paulfrijters

Professor of Wellbeing and Economics at the London School of Economics, Centre for Economic Performance

7 thoughts on “University reform, part I: what are the options?”

  1. Your assumption of 70c in the dollar ending up in administration is ludicrously wrong.

    “Instead of taking the account numbers on their official overhead as useful, I prefer to simply look at how many people DEEWRDEST employs.” So, instead of meaingfully assessing the data, you prefer to guess.

    “Instead of using the fanciful figure of 45% that they themselves produce as their estimate for how much of the wage budget goes to administrators, I looked at random staff in the phone books of 5 Australian universities, counted the 50 employed on the basis of what they did, and concluded that at least 56% of university wages gets paid to administrators and not academics.” So, instead of meaingfully assessing the data, you prefer to guess.

    “At best guess, around 30% of time of academics is spent on administrative tasks like sitting on committees, writing reports, training for the advent of cyclones, presenting in front of visitation committees, sitting on representative bodies, etc.” Leaving aside the silly cyclones example, it’s a little odd that all committee work is non-academic. So, determing the structure of a new graduate degree isn’t academic work? Oh, and there we are with the guesswork again.

    This is a sloppy piece of work. It can’t possibly be taken seriously. You don’t get to just make up data to suit your preconceived notion that there’s a problem.


    1. there you go again. Why dont you put in a bit more effort, Alister? For one, this post is about giving you the option to suggest something, which you seem loathe to do.

      As to the previous post, If you actually read the supporting documentation that the post links to you will find that the 30% comes from published time-use studies you can look up. Try it and come back to me on that one.

      As to Dest/Deewr, even if you put them at 0% overhead, you still end up with an overall figure around 70% (yes, the only effect of the DEEWR overhead is to lift the estimate overhead from 70 to 72 percent), so its the smallest bit and the previous post makes abundantly clear what I was assuming and why, calling quite openly for others to give me better information. The guess that there are 6000 civil servants in Australia in the ministries working on higher ed does not seem so bad, but you are perfectly at liberty to enlighten me as the previous post already says that its the most difficult bit to ascertain due to the Byzanthian nature of the financial reports of these ministries.

      Then to the %admin. You do realise even the university information puts them around 46% admin (of the wage bill)? And the issue of casuals/classification is clearly important so using a phone book methodology is way preferable because it is using open information that you too can replicate, Alister.

      So instead of moaning about the acknowledged imperfections, either give me your own alternative estimate of the amount of wastage or, better still, give me a real policy thought.


      1. If I were to give my own estimate of wastage – which, by the way, is obviously not the same as either administration or overhead – I’d be making the same mistake you did. The starting point needs to be to get some reliable data. Then you need to assess it. But it’s not clear that you’d be the correct person to do it, what with the elision of waste with non-academic work.

        Someone needs to run your payroll, calculate your tax rates, collect student fee income, and ensure correct accounting procedures are followed. This is non-trivial, and probably unlikely to be done by an accounting school. Someone’s got to build you a network, and a building to be networked. So if you’re going to talk about waste, you’re going to need to have a solid definition of it that goes beyond cyclone awareness training (which, one presumes, may actually be necessary in the tropics).

        I’m not defending unnecessary administration, or indeed anything else that goes on in Australian universities. So there’s no need to read ulterior motives into my response to your post.

        You’ve got a working hypothesis. So, test it. Get a group together (if necessary), put in for an ARC grant – or even see if the Go8 or ATN would fund it – and get some actual data that can properly be used to inform public debate and/or allow Vice-Chancellors to start taking action. No-one wants to see unnecessary make-work schemes in the Universities (or indeed anywhere else). Perhaps it is 46%. Maybe it’s higher. But before you start planning which administrative divisions and services you’d like to axe, you need something more substantial than what you’ve done to date.

        By way of disclaimer, for another month I’m employed as a professional staff member at an Australian university.


      2. We all want better data of course, and my calculation was called ‘best-guess’ and ‘back-of-the-envelope’ for a reason, so sure it should be done more properly. But real policy is never made waiting for the perfect data to come, and the data one gathers has an eye on possible policy reforms as well. So one does need to start thinking about things one might do based on imperfect info, getting better data as it becomes clearer what you might do.

        So, any actual policy ideas?


  2. I think this subject is important – but I have no insight about how to deal with it – except to apply the usual clever and passionate reform executed by people who are driven by the national interest.

    Really look forward to what comes out of your process.


  3. I suppose I might try to encourage universities within each state to specialise more and avoid overlap, so they eliminate schools that they hardly support anyway. After all, even a small faculty of a neglected school could have a significant administrative layer. Fewer schools at each institution might also diminish some of the administration above as well, and would hopefully diminish some marketing costs.

    The mechanism by which I’d encourage this specialisation? Can’t think of one off the top of my head, but if I’m Minister for Education, presumably someone in the ministry can sort out the details for me ?


  4. While not yet convinced that the ‘administration’ problem is as large as Paul says, a few ideas:
    1) Open the system to more competition from lower-cost providers, from here or overseas (competition and funding constraints are already having big effects, with the outsourcing of more back-office etc activities – it can have even more);
    2) Have one simple student loan scheme, not multiple different schemes creating complexity from the student to the central bureaucracy;
    2) Abolish all programs related to student/teaching micromanagement (eg ‘performance’ funding), which are time intensive at both the central and institutional bureaucracy levels;
    3) Abolish the requirement to have a wide variety of non-academic support services, and let the market set the appropriate level;
    4) Consider abolishing competitive research grants, given the huge amounts of time on applications for grants that have low success rates (or finding some other way of reducing the amount of administrator and academic time spent managing these).

    It is very hard for an outsider to say that this or that person or persons in a large organisation is not adding any value. But we can adjust some of the external factors that either directly drive up costs or reduce incentives to do things efficiently.


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