Australian performance-based funding system ‘a game of chance’

The Australian government’s decision to focus the country’s new performance-based funding system on graduate employment means that much of the exercise will be “a game of chance more than a game of skill”, a sector expert said.

In the assessments – which will be used to determine the distribution of an additional A$80 million (£43.7 million) under the Commonwealth Grants Scheme next year – graduate employment will be given double the weighting of the other metrics. It will account for 40 per cent of the additional funding, compared with 20 per cent each on first-year attrition, student perceptions of teaching quality, and participation by under-represented groups.

Universities have highlighted that this means that their results will be heavily shaped by an issue over which they have limited control.

“The state of the economy affects graduate outcomes more than the actions of any individual university,” said Andrew Norton, an honorary fellow in the University of Melbourne’s Centre for the Study of Higher Education. “This aspect of performance funding is a game of chance more than a game of skill.”

However, Mr Norton said he “[did not] think universities should be very worried” about performance-based funding.

“At least in the short term, luck is likely to be on their side,” he said. “The labour market for young graduates has been improving in recent years.”

Universities will be judged on each metric against “contextualised thresholds” accounting for the characteristics of their students.

Significantly, institutions that do not meet their targets will not be impoverished. They will be able to access more funding once they have agreed with the government conditions designed to improve their performance.

“The government appointed a committee of vice-chancellors to help design the performance funding scheme. Unsurprisingly, they recommended a soft scheme. Even universities that lose in the performance criteria lottery will still be eligible for some funding,” Mr Norton said.

Caroline Perkins, executive director of the seven-strong Regional Universities Network, said her members felt that the planned system was “quite reasonable”.

“It is not a punitive system, and universities can discuss their outcomes with the government,” Dr Perkins said.

But she said there needed to be “further consultation” on the proposals, highlighting the challenges that some graduates of regional universities faced in the labour market.

The amount of performance-based funding on offer will rise annually in line with Australian population growth in the 18-to-64 age bracket, until it accounts for 7.5 per cent of each university’s basic grant amount. The new system will be reviewed next year and again in 2023.

chris.havergal@timeshighereducation.com