The funding landscape
Historically, public universities in Australia have received the majority of their funding for operations from the Commonwealth Government.
In 1989, the Commonwealth Government introduced the Higher Education Contribution Scheme (HECS) for domestic students. In addition to making compliance with the requirements of HECS a condition of receiving Commonwealth funding, the scheme also required students to make a financial contribution towards the cost of their higher education studies (student contribution). Students could elect to pay the contribution up-front (and receive a discount) or they could defer payment until their income reached certain specified levels. The scheme continues today, with the Commonwealth Government subsidising Commonwealth supported places (CSPs) at public universities for domestic students, and students paying a student contribution (either up-front or where eligible by accessing the HECS-HELP scheme).
In addition to CSPs, universities also attract revenue streams from domestic fee paying students (primarily postgraduate students) and international fee paying students.
Since the introduction of HECS in 1989, the amount of the student contribution as a percentage of course fees has increased significantly (approximately doubled). This reflects the reality that Commonwealth Government funding of universities in Australia is coming under considerable pressure. That trend is likely to continue.
As a consequence, universities in Australia are coming under pressure to find new revenue streams to help fund their operations, including for example private-sector funding for research, donations and bequests.
However, universities in Australia are now more commonly using their broad powers to enter into commercial activities intended to generate revenue for the university. Most commonly, these commercial arrangements will involve the university exploiting its core educational resources (for example, commercialising intellectual property generated from research at the university). However, we are aware that some universities are starting to consider commercial activities that have no (or only a subsidiary) connection with the university's core educational functions or purpose.
The regulatory landscape
There is a lack of uniformity between the State and Territories of Australia as to the power of universities to enter into commercial activities for non-educational purposes. There is also divergence in the various powers that universities have to engage in those activities. Although comparisons across the jurisdictions can be made.
We have prepared a ready-reckoner table, that summarises for each State and Territory:
- whether the university's functions, objectives or purposes include the commercial exploitation of university resources;
- the general powers a university has when entering commercial transactions;
- the specific powers a university has when entering commercial transactions in relation to their real property;
- the specific powers a university has to support their commercial transactions, including for example borrowing and investing funds;
- various approval processes that apply for particular activities; and
- whether the university is restricted in the use it can made of its revenue streams (which in turn can practically inhibit the types of commercial activities in which the university can engage).
As well as a guide to the regulatory context in each State and Territory, the ready-reckoner is intended to be a useful aid for audience members to participate in the panel discussion at this year's SOUL Conference on this topic.
The panel will be chaired by Bruce Cowley, the Acting Chancellor of the University of the Sunshine Coast and Chairman of the Board of MinterEllison. The panel will be comprised of four of the firm's higher education specialists, spanning jurisdictions and practice areas: Kylie Diwell (Melbourne – Commercial and Regulatory), Harriet Eager (Sydney – Human Resources and Industrial Relations), Lee Rossetto (Perth – Real Estate, Environment and Planning) and Tom Fletcher (Brisbane – Dispute Resolution and Regulatory).
The panel will be discussing:
- the context in which universities are looking at engaging in commercial activities, including for non-educational purposes;
- international trends;
- domestic trends;
- the regulatory landscape; and
- various scenarios and how universities might approach various opportunities in this space.