Adelaide and South Australia unis aren’t broke, so why fix them?

Why the proposed merger of the universities of Adelaide and South Australia should be viewed with caution.

Prod growth 2008- 16 --- Hi Ed

Australia has, by international standards, a lot of large universities. The biggest, Monash, tips the scales at 60,000 full-time equivalent students. In actual student numbers (including part-timers) the total is around 75,000.

Why do our universities get so large? In the main it’s because of the design of our higher education funding system, which forces universities to skim student funding from the government, and tuition fees paid by students, to top up their research funding. More students equals more research money. And when our universities get so large they also become very similar.

Britain hasn’t gone down the same route. Its biggest university, Manchester, has 40,000 total enrolments, just over half the size of Monash.

Its true that universities need to be a certain size to reach economies of scale. But get too large and the economies are lost in unwieldiness and the cost of too little variety and lack of competition.

That is one reason why the proposal to merge the University of Adelaide and the University of South Australia should be viewed with a high level of caution.

Interestingly, the innovative “efficiency frontier” method of measuring university productivity developed by former Australian National University business dean Keith Houghton shows that both universities have been well managed in recent years. His method plots research efficiency against education efficiency year by year and finds they have both improved about 30 per cent from 2008 to 2016 and are close to the efficiency frontier determined by the most efficient institutions.

Houghton says present University of Queensland chief Peter Hoj deserves particular credit for his work as UniSA vice-chancellor up to 2012.

One conclusion to draw is that the proposed merger is not one of desperation, as both universities are doing well. That’s a positive because a merger forced by sagging performance is the worst.

But another conclusion is that even without merging and enduring the period of huge dislocation as they unwind overlapping courses and bring administrative systems and computer platforms together, they are improving in ­efficiency.

And that’s another reason to think that a merger is not necessary. The unis are doing fine.