Blurred vision obscures uni merger big picture

Amid rhetoric and urgency but a lack of detail about the impact and benefits of merging two Adelaide universities, Geoff Hanmer has a closer look at the vision.

Apr 12, 2023, updated Apr 12, 2023
Image: Tom Aldahn/InDaily

Image: Tom Aldahn/InDaily

“Drivel” was the succinct summary of an eminent University of Adelaide professor to the Vision Statement for a South Australian University for the future published recently by the vice-chancellors of both the University of Adelaide and UniSA.

Drivel is being kind. The document reads as if it was written by an early version of ChatGPT. It tops this off with a cover photograph of the sun setting over Adelaide, which is the sort of symbolism this project could well do without.

Nowhere does the vision document explain how the combined university will achieve all the good things that the document aspires to. The cost of the merger does not get a mention, even conceptually, as in ‘the government will pay merger costs’ or similar. The practicalities of taking two completely different institutions with different cultures, different promotion criteria, different IT systems and making them work together is not addressed. Centrally, the document does not explain how a bigger university will make a bigger surplus than two smaller ones.

The document repeats the assertions (it’s impossible to describe them as arguments) in state Labor’s policy document and then makes up some PR speak to describe them.

An example: These investments, once realised, would make the combined university a stronger magnet for domestic and international students, as well as for creative and talented staff – creating a flywheel which would drive a step change compared to where our institutions are separately today.”

A flywheel driving a step change – got it.

Nowhere does the vision document explain how the combined university will achieve all the good things that the document aspires to

First, let’s review some of the basic assertions. In a previous InDaily article I attempted to demonstrate that “bigger is better” is completely out of kilter with high-performing universities worldwide.

Although Australia has quite a few large universities. This is almost exclusively due to a funding agreement that from 2012 allowed funds for teaching to be redirected to subsidise research.

The Commonwealth stopped this in the funding changes it made in 2017 and 2020, on the entirely reasonable grounds that this was unfair to domestic students, who were paying for research through their HECS/HELP contributions. It is unlikely that the new federal government will ever allow teaching to subsidise research again.

Nearly all the top-performing universities in the world are about the size of the University of Adelaide or UniSA. Harvard, Oxford, Cambridge, Stanford and ETH Zurich have a comparable number of students, but a far larger percentage of higher degree by research students (generally those students doing a PhD) and a larger proportion of staff doing high impact research.

Why? Because their research funding does not depend on the number of undergraduate students that they teach. They get research funds direct from government, from semi-government authorities, benefaction, corporations, and fees.

Attracting research funds is hard work for all high-achieving universities. Even though they are the best universities in the world, all of them still have difficulty in raising the necessary funds to support their research without dipping into their reserves.

From the enormous amount of data ARINA has collected over the past 20 years, three things are strikingly apparent: 1) top-ranked universities in any country generally has less than 20,000 Effective Full-Time Student Load; 2) student satisfaction is inversely related to the size of an institution (between 5 and 20,000 EFTSL is best) and; 3) the higher the proportion of teaching delivered online, the higher the attrition rate will be.

The bigger an institution, the less chance there is that students will enjoy the experience or feel engaged, and being disengaged appears to make them considerably less generous as donors to the university post-graduation. UoA received $11 million in donations in 2021, UniSA a less impressive $1.7 million, but this source of income for both universities will now have collapsed due to the uncertainty caused by the merger.

This evidence suggests a super-sized Adelaide University will find it harder, not easier, to compete for interstate students, especially if it is proposed to focus on online delivery as the vision document suggests:

“Every course in our university for the future would have a digital underpinning. We want our online curriculum to be the highest quality in Australia – and we would aim to deliver inclusive online education to more students than any other Australian university.”

The merger, instead of creating another University of Melbourne, may well generate another RMIT.

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Many Australian universities, particularly UNE, Southern Cross and Charles Darwin University, have been developing digital infrastructure for a very long time, and many others, including the largest universities in Australia, have been pouring money into digital resources over the last 10 years. Despite this investment, digital delivery is still closely related to high rates of attrition, low student satisfaction and poor retention, an outcome which is the opposite of the vision. The recent TEQSA review of online teaching during COVID is instructive, identifying beneficial points but also many negative impacts.

Merging two universities that are so different will be challenging. Thanks to the 2021 university financials released by the Department of Education last month, we can now clearly see how different UoA and UniSA are.

The table below shows key metrics:

2022 DoE
World Ranking THE 2023Total Revenue AUD $BillionIncome from Overseas Students
AUD $Million
Net Operating Result (surplus)
AUD $Million
AUD $Billion
AUD $Billion

Despite teaching 2000 more EFTSL, UniSA has about half the revenue of UoA, generates a surplus that is only a quarter the size of UoA’s and has assets and reserves which are less than half those of UoA.

With $1.1 billion of revenue, the University of Adelaide is one of the largest businesses in South Australia.

UoA is ranked by Times Higher Education (THE) at 88 in the world and number seven in Australia. UniSA is 301-350 in the world ranking and number 24 out of the 37 Australian universities ranked by THE.

RMIT with 54,000 EFTSL (about 8000 more than UniSA and UoA combined) is also ranked 301-350 and generated a surplus of only $71 million in 2021, proving conclusively that size isn’t everything.

There is nothing wrong with UniSA’s performance. It is financially viable and fulfils an important role in SA higher education by focussing on vocational teaching and on industry-linked research. But to pretend that UniSA is an equal to UoA is flying in the face of reality. The disparity in income from international students is stark: UoA makes four times as much as UniSA due to its ranking and prestige.

IN the foreseeable future, the key to generating income at Australian universities will be high fee-paying international students. This means that ranking is crucial, as international students tend to judge the worth of a university by its ranking. University of Adelaide Vice-Chancellor Peter Høj has already conceded that there may be ‘a dip’ in the ranking of the merged university. As a result, the loss of income from international students will be a serious challenge for the bottom line, thus commencing a vicious circle where a lower surplus undermines research and leads to further loss of ranking.

The merger, instead of creating another University of Melbourne, may well generate another RMIT.

Already, the impact of the proposed merger is being felt at both universities. As of March 27, senior staff at both institutions are taking time out from their substantive positions to work on merger plans. These are merger costs that will never be recovered, and which will directly impact the performance of both universities over this year.

In 2016, work on a merger was abandoned after it became clear that additional costs would be over $100 million in the first year of combined operations. A senior person close to that process, speaking on condition of anonymity, is astonished that a merger is even being considered. Given that Premier Peter Malinauskas should be aware of this prior work, his determination to press ahead with the merger, whatever the business case says, is curious. It must also be extremely disheartening to those staff at both institutions who appear to be wasting their time preparing data.

Perhaps the Premier is poorly advised, but I can’t imagine he wants to join those SA Premiers who have caused economic devastation in their state. No one forgets John Bannon and the collapse of the State Bank or John Olsen’s disastrous privatisation of ETSA, or the MFP which, perhaps in atonement, Olsen finally killed.

Everyone in SA should understand that this merger may cost substantially more than $250 million to achieve and that it may not work.

Even if the federal government was responsible for the full cost of the merger, this whole proposition should be seen for what it is – an unnecessary gamble on the future of higher education in SA.

Geoff Hanmer is Adjunct Professor of Architecture at the University of Adelaide.

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