Please, sir, may we get some more?

IT'S that time of the year. The budget submissions are tumbling off printers all over Australia.

The fact it is an election year means that submissions are even more desperate and high-pitched than normal, with the fear of a change of government written in invisible ink.

Here's the template. If the government could just see its way clear to providing substantial additional funding on top of the substantial funding already budgeted for, then numerous benefits for the economy and Australians more generally would ensue.

In fact, the extra investment would pay for itself through time. Just insert field of spending and amount sought.

Here's the pitch from Universities Australia. "A smarter Australia is a stronger Australia. This simple statement is one everyone can agree with, yet currently Australia sits in the bottom 20 per cent of developed economies for public investment in universities. We believe the government should be ensuring a smarter and stronger Australia by investing in our universities."

Gosh, who can argue with smarter and stronger? And let's hope no one notices the fudge about public investment rather than total investment.

According to UA's budget submission, "central to every successful nation is a successful university system".

There is surely a case for a real increase in base funding, on top of the already generous indexation of annual grants? UA is looking for an additional 2.5 per cent for next five years. And of course there should be no cuts to research funding.

But how have universities fared under a Labor government? In keeping with its favoured technique, the government commissioned several reports, the most important being the Bradley review of higher education. Some of the recommendations in these reports have been implemented; others have been shelved.

The two core ideas of the Bradley review were that 40 per cent of 25 to 34-year-olds should hold degrees and that enrolments should be demand-driven. The first idea is not well-supported by evidence and, in any case, is inconsistent with the second idea.

But ditching Canberra's centralised and bureaucratic allocation of student places to Australian universities was a development that should have occurred years ago. Students are best placed to decide which university and which course suits them. And universities should be encouraged to respond to student preferences.

The shift to a demand-driven funding system has not come cheap for the taxpayer. According to Andrew Norton of the Grattan Institute, "the main tuition subsidy cost $5.5 billion in 2011-12", with the expectation that this sum will grow by another $1.5bn by 2015-16.

The real problem with new arrangements is that universities have not been granted any flexibility to alter the fees that undergraduate students can be charged. It is a bit like the government telling David Jones and Kmart to charge the same price for a set of saucepans.

With a centrally determined fee structure, which actually makes little sense, some universities are finding it difficult to compete, as the older universities are able to leverage off their locations and reputations to attract more students.

There is no doubt that some universities - generally the less prestigious ones located in the capital cities - are finding life tougher in the new regulatory environment. With the downturn in overseas student numbers, which may or may not be temporary, these pressures could grow.

At the same time, the open-ended nature of the commitment to fund all undergraduate students has raised questions about falling standards. Students with very low Year 12 results, as revealed by their Australian Tertiary Admission Rank, can now find places at university, including in education courses.

While there is much huffing and puffing about the apparent lack of correlation between ATAR scores and students' performances at university, what is becoming apparent is that students with low ATAR scores are much likelier to drop out - a fact the government has been trying to suppress.

Without more assurance that quality standards are being maintained, the taxpayer has every right to ask whether signing a blank cheque for every student who might want to give university a shot is really a good investment.

There is no doubt that the growth of overseas students has underwritten the financial position of many Australian universities. The fall-off in their numbers, which has occurred for a variety of reasons, has put financial pressures on faculty budgets.

Should the government give serious consideration to UA's request for even more public funding? In fact, there is a strange inconsistency in the UA pitch because much is made of how well Australian universities have done. For instance, Australia has the third highest number of universities in the top 100 universities in the world.

Overall, Australia's university system is ranked eighth globally and fourth in terms of efficiently producing graduates. With these sorts of results, it is unclear why there is a need for any additional funding.

It is further noted that higher education is Australia's fourth largest export industry, accounting for about $15 billion in revenue a year, and more than 100,000 people are employed in the sector.

Of course, these facts are neither here nor there when it comes to making a claim for taxpayer support. Using some sort of bogus industry development rationale is an illogical and substandard way of making the case for more government funding.

Universities should probably accept the fact it is about as good as it is likely to get in terms of support from the taxpayer - even non-economists can understand the idea of opportunity cost.

The future will involve heightened competitive and funding pressures on many universities, including dealing with the implications of the shift to online education.

The government would be wise to free up undergraduate fees to enable them to deal more effectively with the challenges ahead.