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Criticism
In the 1990s, during the early years of the unified national system, the solution to future sustainability, as perceived by Australia’s (then) vice chancellors, was to get more money into the system, rather than to rationalize the system itself. The Australian Vice Chancellors Committee argued on a number of occasions about the level of funding provided to Australian Universities relative to those in other OECD countries.
Another problem with the unified national system was that the major source of university funding (the Federal Government, through the Department of Education Science and Training) was performance-based (calculated via a performance formula) and, because the total funding was fixed, represented a zero-sum-game. In other words (arithmetically), if all universities simultaneously boosted their performance by expending more money then, in practice, they were financially disadvantaged. If all universities simultaneously decreased their performance by reducing their expenditure on staffing then, in practice, they were all potentially in a better financial position.
University fund raising schemes – international students
As a consequence of the ‘zero-sum-game’ funding model imposed by the Federal Government, by far the largest non-Government contributor to funding of the Australian University system is the international student ‘fee-paying’ market – in the order of $5,000,000,000 per annum by 2004. Australia’s share of the international student market is disproportionately high by international standards. The Australian Department of Foreign Affairs and Trade estimated that the Australian higher education sector accounted for some 12% of all education in countries with an English speaking base in 2004. This extraordinary success was essentially the product of three factors:
Early penetration of Australian universities into the emerging Asian market for education
The good international reputation established by the traditional universities.
Opportunistic fortune
The opportunistic elements of the success led to an over-confidence in fast-money schemes based upon fee-paying international students. It also led to numerous accusations of declining educational standards in Australian universities and a culture of ‘fee-for-degree’. The Australian Broadcasting Commission's (ABC's) flagship current affairs television program '4 Corners' highlighted this problem in 2005, stating:
"And as foreign students have flooded in, universities have become mired in allegations about falling standards, soft marking, plagiarism and backdoor immigration..."
This was particularly evident in postgraduate coursework programs (particularly Master’s coursework degrees) which had significant appeal to the burgeoning Asian markets.

Governance
With a larger proportion of university turnover derived from non-Government funds, the role of university vice chancellors moved from one of academic administration to strategic management. However, university governance structures remained largely unchanged from their 19th Century origins. All Australian universities have a governance system composed of a vice-chancellor (chief executive officer); chancellor (non-executive head) and university council (governing body). However, unlike a corporate entity board, the university council members have neither financial nor vested specific interests in the performance of the organization (although the state government is represented in each university council, representing the state government legislative role in the system).

Melbourne University Private venture
The late 1990s and early years of the new millennium therefore witnessed a collection of financial, managerial and academic failures across the university system– the most notable of these being the Melbourne University Private venture, which saw hundreds of millions of dollars invested in non-productive assets, in search of a ‘Harvard style’ private university that never delivered on planned outcomes. This was detailed in a book ("Off Course") written by former Victorian State Premier John Cain and co-author John Hewitt who explored problems with governance at the University of Melbourne, arguably the nation's most prestigious university.
The Melbourne Age newspaper reported in regard to the Melbourne University Private affair, and John Cain's book that:
"It (the Cain/Hewitt book) argues that the University of Melbourne has put the raising of money from private sources above its duty as a public university, that its most strenuous efforts in this endeavour have failed, that it refuses to admit the failures and reports them inadequately."
A number of universities and research centres/institutes were also plagued with financial and academic scandals arising from poor governance; lack of management experience; lack of strategic planning capability and direction. Many of these were reported in the Australian media, including:
The ABC's 2000 4 Corners program which looked at the public float of the Melbourne IT company from the University of Melbourne
The ABC's 2003 4 Corners program which looked at issues of academic impropriety at the University of New South Wales
The ABC's 2005 Latelineprogram which examined inappropriate conduct in the Cooperative Research Centre for Photonics
One of the underlying governance problems for Australian Universities is that, as a legacy of their establishment, legislative control of universities resides with the states, but funding is derived from the Australian Federal Government. This means that whenever there is no consensus between state and Federal governments in regard to directions, universities are subsequently left in an ambivalent position with potentially conflicting objectives. Moreover, despite having a Federal funding system, the legislative process for universities can vary from state to state and hence, nationally, there is no uniformity of governance.

Management approaches
By the early years of the 21st Century, the participation rate in Australian Universities had increased significantly. The DEST 2005 Statistics showed that enrolments in Australian universities had reached 674,092 effective full time students, an increase of more than tenfold since 1960. It was infeasible to scale the fee-per-student, provided by the Government to each university in the 1960s, accordingly to the levels required in the 21st Century. Either costs had to be reduced (through a combination of rationalization, technological change and administrative efficiency) or income had to be increased through additional fee raising mechanisms.
In 2002, Jim Breen of Monash University wrote in his paper Higher Education in Australia: Structure, Policy and Debate
"Despite, or because of the massive growth in the higher education sector, there is a general view that all is not well:
staff are mostly unhappy:
increased teaching loads
falling staff/student ratios (from 1/12 in 1980 to 1/19 in 2001)
entrepreneurial and management practices dominating research and scholarship
decline and elimination of traditional areas such classics, physics, etc.
university administrations are asking for more flexibility to charge fees, specialize, etc.
a common public perception that a good higher education system is important for the country's future, and that more can/should be done.
a refusal by the Commonwealth to increase funding levels, in line with philosophies of tight fiscal control and user pays."
An inability to scale up operations, in a climate of reducing dollars-per-student, was manifested in reports of poor operational performance of individual faculties, particularly those in high cost areas such as science and engineering. Indeed, in 2006, Lord Alec Broers of Cambridge University conducted a review of the Faculty of Engineering at the University of Melbourne. The resulting ‘Broers Review’ confirmed the sorts of issues raised earlier, and presented a litany of maladministration, poor teaching methods, collapse of undergraduate infrastructure, lack of planning, and so on. There was evidence to suggest that these poor practices were not restricted to one university but existed throughout the entire system– indeed, by some external measures the faculty reviewed by Broers had previously been judged to have been performing well relative to other comparable faculties in Australia.
In 2006, the Federal Education Minister (Julie Bishop, Liberal Party) made a number of public statements about the need for reform and rationalization. In one statement, the Minister suggested that Australia’s interests might be best served by having only a dozen generalist universities and a collection of other specialist entities. To date, this is the only indicator of significant change at a Federal level.

Federal Government quality measures
The Australian Federal Government has established two quality systems for assessing university performance. These are the Australian Universities Quality Agency (AUQA) and the Research Quality Framework (RQF). The AUQA reviews of universities essentially look at processes, procedures and their documentation. The AUQA exercise, largely bureaucratic rather than strategic, is currently moving towards its second round of assessments, with all Australian universities having seemingly received mixed (but generally positive) results in the first round. AUQA’s shortcoming is that it does not specifically address issues of Governance or strategic planning in anything other than a bureaucratic sense. In the April 2007 edition of Campus Review the Vice Chancellor of the University of New South Wales (Fred Hilmer) criticized both AUQA and the RQF:
"... singling out AUQA, Hilmer notes that while complex quality processes are in place, not one institution has lost its accreditation - 'there's never been a consequence - so it's just red tape...'"
"...The RQF is not a good thing - it's an expensive way to measure something that could be measured relatively simply. If we wanted to add impacts as one of the factors, then let's add impact. That can be achieved simply without having to go through what looks like a $90 million dollar exercise with huge implementation issues."
The RQF (scrapped with the change in government in 2007), was modeled on the British Research Assessment Exercise (RAE) system, and was intended to assess the quality and impact of research undertaken at universities through panel-based evaluation of individual research groups within university disciplines. Its objective was to provide government, industry, business and the wider community with an assurance that research quality within Australian universities had been rigorously assesseded against international standards. Assessment was expected to allow research groups to be benchmarked against national and international standards across discipline areas. If successfully implemented, this would have been a departure from the Australian Government’s traditional approach to measuring research performance exclusively through bibliometrics. The RQF was fraught with controversy, particularly because the cost of such an undertaking (using international panels) and the difficulty in having agreed definitions of research quality and impact. The Labor government which scrapped the RQF, has yet to outline any system which will replace it, stating however that it will enter into discussions with higher education providers, to gain consensus on a streamlined, metrics-driven approach.

Current university performance – the Melbourne Institute study
Australian universities do not feature prominently in the top 100 international universities as ranked by the Jiao Tong Index. The two universities which regularly appear therein are the University of Melbourne and the Australian National University. Australian universities do, however, perform somewhat better in the Times Higher Education Rankings, which are more Anglo-centric in their composition.
Overall, however, the relative international performance of Australian universities suffers from the dilution associated with a unified national system which encourages almost 40 universities to be generalist in their nature and approach.
In 2006, the Melbourne Institute conducted a ‘discipline by discipline’ study of the performance of all Australian universities, and combined this with a national and international survey. Notwithstanding the fact that the Melbourne Institute is part of the University of Melbourne, the Institute's Discipline by Discipline Rankings Paper provides the most comprehensive assessment of the status of Australian universities which is currently available. A number of parameters (including undergraduate entry scores; student satisfaction; the official Federal Department of Education Science and Training research figures; publication data from Thomson Scientific; student/staff ratios, international rankings, etc.) were assessed to provide a discipline by discipline ranking of universities, on a scale of 0 – 100.
Of the universities which were included in the rankings, only six were able to average a relative score of more than 50 in the areas in which they competed. Two of the G8 universities (University of Adelaide and University of Western Australia) did not achieve a 50% average. Most of the newer universities average around 30% relative performance in their chosen disciplines. This study highlights a lack of capacity, investment and focus in chosen areas (a number of universities average zeros in their chosen research areas in terms of outputs). It should also be noted that a score of 100 is relative to other Australian universities and is not an absolute measure in an international sense.

Future directions
The current Australian Federal Government (Liberal Party) and the Federal Opposition Party (Labor Party) have both signaled that the ‘one size fits all’ approach to universities, which emerged from the Dawkins’ reforms, is nearing an end. Universities are being encouraged to find their own niches. The difficulty with this is that the undergraduate and postgraduate programs which prove to be financially lucrative (i.e., profitable) in terms of sustaining the core business of a university are limited (Medicine, Law, Business, Economics and Commerce), and there is a tendency for all universities to pursue high profile areas, rather than invest in high cost areas which have national economic significance (engineering and science). None of the Australian universities have currently taken steps for significant cost cutting in administration and rationalization of duplicated services and facilities.
Of the current universities, only the University of Melbourne has signaled a change in direction in terms of its education. Again, this is based upon increasing income rather than through cost reductions through modern management principles. The so-called ‘Melbourne Model’ is due for implementation in 2008. The objective is to pursue an American-style educational program composed of generic undergraduate degrees which as yet have no professional recognition in Australia, and then follow these with professional postgraduate degrees which do have professional recognition (e.g., Law or Engineering). This strategy enables the University to by-pass the current Federal Government restrictions on fee-paying undergraduate places by effectively reclassifying former undergraduate programs as a combination of generic undergraduate and professional graduate programs. In its website The University of Melbourne claims that this will provide a broader educational model in line with the so-called Bologna Model of education applied in Europe. Opponents claim that identical educational outcomes could have been achieved by a five year undergraduate program without the introduction of full-fees.
None of the other G8 universities have signaled any intention to make any fundamental changes to the way in which they function, although some have indicated interest in the Melbourne Model of fee paying education.
Given the positions of both the Federal Government and Federal Opposition, it is clear that universities will change over the coming years. The data from the Melbourne Institute Study (particularly the research output data which the study derived from Government DEST figures and Thomson ISI) highlights the fact that a number of the current universities have insufficient capacity in their chosen disciplines to achieve threshold performance at an international level.

Australian Universities
Many universities in Australia have gained international recognition. Two of the most acknowledged are the Academic Ranking of World Universities, produced by Shanghai Jiao Tong University, and the THES - QS World University Rankings, which in 2006, had no fewer than 13 universities amongst the world's top 200.

Vocational Education and Training
The major providers of vocational education and training (VET) in Australia are the various state-administered institutes of Technical and Further Education (TAFE) across the country. TAFE institutions generally offer short courses, Certificates I, II, III, and IV, Diplomas, and Advanced Diplomas in a wide range of vocational topics. They also sometimes offer Higher Education courses, especially in Victoria.
In addition to TAFE Institutes there are many Registered Training Organisations (RTOs) which are privately operated. In Victoria alone there are approximately 1100. They include:
commercial training providers,
the training department of manufacturing or service enterprises,
the training function of employer or employee organisations in a particular industry,
Group Training Companies,
community learning centres and neighbourhood houses,
secondary colleges providing VET programs.
In size these RTOs vary from single-person operations delivering training and assessment in a narrow specialisation, to large organisations offering a wide range of programs. Many of them receive government funding to deliver programs to apprentices or trainees, to disadvantaged groups, or in fields which governments see as priority areas.
All TAFE institutes and private RTOs are required to maintain compliance with a set of national standards called the Australian Quality Training Framework (AQTF), and this compliance is monitored by regular internal and external audits.
VET programs delivered by TAFE Institutes and private RTOs are based on nationally registered qualifications, derived from either endorsed sets of competency standards known as Training Packages, or from courses accredited by state/territory government authorities. These qualifications are regularly reviewed and updated. In specialised areas where no publicly owned qualifications exist, an RTO may develop its own course and have it accredited as a privately owned program, subject to the same rules as those that are publicly owned.
All trainers and assessors delivering VET programs are required to hold a qualification known as the Certificate IV in Training and Assessment (TAA40104) or demonstrate equivalent competency. They are also required to have relevant vocational competencies, at least to the level being delivered or assessed.