Higher Education: Challenges in a Golden Era

I would like to start by welcoming you, the distinguished leaders of so many prestigious institutions from around the world, to this beautiful city of Adelaide. You represent grand institutions and a grand tradition.

There are few more enduring institutions in society today that universities. Some of today's universities date back to the 11th century (University of Bologna, 1088; University of Oxford, 1096). But institutes of learning could be found a thousand or more years earlier in China, Greece and Egypt. So your profession is far older than mine - it was not until 1626 that Cardinal Richelieu invented the idea of the Foreign Ministry in France.

In Australia too, our Universities began before federal government had taken its current form. Sydney University was founded in 1850, only several decades after European settlement and half a century before Australian Federation. Over the centuries your institutions have remained remarkably settled in their mission - to be centres of learning and later, research - and in the way in which they are organised.

In most Commonwealth countries they have remained predominantly publicly run and funded. And over the centuries they have made a massive contribution to the world, generating and validating ideas, transmitting knowledge from one generation to the next, and solving the most complex of society's problems. But over the last few decades there have been enormous changes in the higher education landscape brought about by globalisation, technological change, the rise of the knowledge economy and the changing requirements of the workforce.

It is common to hear, at least in Australia but also elsewhere, that such change is creating a 'crisis' in higher education. My view, however, without wanting to diminish the challenges that your institutions are facing, is that we are in fact in a higher education golden era. Consider some of the broader statistics: the number of students that universities are educating today worldwide has risen to 80 million. In OECD countries, the number of people with higher education qualifications has almost doubled in 25 years to 41%. In Australia, we have had a 23-fold increase in the number of students since the 1950s.

Investment in higher education from all sources has never been greater: expenditure is now $300 billion or 1% of global GDP. Research papers being published have increased markedly which includes a doubling of the rate at which scientific papers are published over two decades. The number of academic journals is doubling roughly every five years. The number of people employed by universities is now 3.5 million. New campuses have sprouted. In short, universities have never touched so many people's lives and had such an enormous impact on human society.

If the global university sector was a stock that you had shares in, you would be a very happy person. One of the most welcome developments in this era has been the growth of the university sector in developing countries, many of whom are represented here tonight. As the Economist magazine puts it, across the developing world, "higher education is coming in from the cold."

Student numbers in the developing world, as they are in developed countries, are expanding rapidly led by China and India. In China, 17% of the school leavers are now going to university, up from 2-3% in the 1980s; in India, student numbers have almost doubled in a decade. Considering the size of these countries, these are remarkable figures.

Of course there is still some way to go before they are at OECD levels. The World Bank estimates that while developing countries contain 80% of the world's population, they contain only half of the world's tertiary students. Why are your universities so important in developing countries? Most importantly, because they directly support economic growth and hence poverty alleviation.

As the World Bank points out on its report on the tertiary sector in developing countries: "The vitality of higher education is a fundamental, and increasingly important determinant of a nation's position in the world economy. It contributes to labour productivity, entrepreneurial energy…and enhances social mobility, encourages political participation and strengthens civil society."

Importantly, universities in developing countries also improve the quality of the country's leadership and hence governance, a key necessity for ongoing development. Supporting the quality of the universities in developing countries should be a key goal for richer countries.

Australia is assisting along with the World Bank through our support of the Virtual Colombo Plan, which builds on our experience in distance and e-learning. Developing linkages between institutions in developed and developing countries (as occurs through associations such as yours) can also be immensely valuable.

In concert with the establishment and expansion of campuses in developing countries, has been the enormous growth in students studying abroad, most of whom originate from developing countries to study in English speaking OECD countries.

This is also a welcome development and one which we should continue to actively promote. From the host country's perspective, international students bring export dollars into the country. Australia is such a beneficiary with education today being our 4th largest export. The sending country receives the knowledge transfer, international networks and a cadre of highly skilled professionals.

There is also a broader benefit from the transfer of students which is often forgotten and that is the benefits which accrue from the deeper understanding of other countries which develop from students studying abroad. In my case, Australia's relationships with our near neighbours is undoubtedly strengthened as a result of several of its leaders having studied here.

In the more established university markets, including our own, I am also optimistic about the role and direction of the higher education sectors, although I appreciate the challenges both to the individual institutions and also to governments to allow the benefits to continue to accrue.

With the massification of any industry or sector of the economy, growing pains are inevitable and new business models emerge which challenge incumbents. Universities are no different and the forces upon them - globalisation, technological advancements, changing nature of workforce - are the same as those that are upon any industry. The key difference, of course, particularly with universities based on the British model is the dominant role of the government.

In Australia for example, the government is the primary funder, it dictates what a university must do (teaching and research), how many places will be funded in each course and where, and what fees can be charged. Wherever there is large taxpayer investment, government will rightly want to have some say over how that money is spent. However, to maintain high quality and community responsiveness in an era of mass participation will increasingly require a lighter touch from governments to allow market forces to operate - to allow you, the heads of the universities, to adapt and respond as appropriate.

A lighter touch from governments must also allow new university models and new entrants to operate and flourish. The advent and growth of private universities is inevitable and a good thing as it creates competition which will lift standards. Increased competition from foreign universities should also be allowed. Here in Adelaide, Australia's first foreign university campus has just opened with the establishment of a campus of Carnegie-Mellon University. I hope this serves as a model for others to open in Australia.

Public universities should be allowed - indeed encouraged - to specialise and focus on what they do best and drop or transfer activities that they are weak at or do not have sufficient scale. It is pointless - in an era of mass higher education - for every university to be all things to all people. For-profit universities are starting in the United States and will become more commonplace elsewhere and I see no problem with this. People will inevitably say they will not deliver quality but the simple fact is, if they do not deliver they will not survive.

A debate currently rages in this country and in others about the necessity for a university to conduct both teaching and research. To me, it is inevitable that it be de-coupled. It just seems nonsensical that in a mass system, every faculty in every institution must conduct research. It didn't occur in the past and I see no reason for it to continue to be a legislative requirement.

In fact, in many cases, the teaching part of universities will improve if decoupled from research as specialists will be employed for this purpose rather than teaching being added on as a nuisance to a researcher's activities. Transferring to a more market oriented system, as is occurring here and elsewhere, is not easy, but I believe it is inevitable.

Governments will continue to have economic and social reasons to invest in higher education, but in an era of mass higher education, it is unrealistic to expect that they will fully fund universities to each of your satisfaction. Lower cost education models will be required in some instances and alternative revenues streams will be increasingly relied upon. The challenge for you, the heads of universities, is how to respond to these changes. I do not underestimate the difficulty of this.

But fortunately, you are the repository of many of the world's great thinkers, so you should have an advantage. Let me conclude by again expressing my excitement and optimism for the university sector.

I began my remarks by saying that universities are in a golden era in terms of their scope and influence. This era is set to continue with global demand continuing to outstrip supply, with a knowledge economy increasingly relying upon universities as its engine room, and with societal problems still requiring the best and brightest minds to be put to them.

I thank you again for this opportunity to speak to you this evening and hope you enjoy your visit to Adelaide.

ENDS