University of Melbourne Vice-Chancellor Professor Glyn Davis has called for the establishment of an independent regulator to set minimum funding levels for Commonwealth supported university places.

Releasing Melbourne’s submission to the Federal Government’s Base Funding Review of universities, Professor Davis said a regulator would ensure tertiary providers were funded to meet the high standards expected by government, students and industry.

A funding regulator would bring the Australian higher education into line with practice in other sectors and provide universities with greater levels of certainty that the costs of teaching and learning reasonably incurred would continue to be funded.

He said it would also give universities a strong incentive to achieve the government’s policies of increased participation. (The government aims to have 40 per cent of Australians aged between 25 and 34 obtain a university degree of international quality by 2025, and for 20 percent of students to be from a low socio-economic background.)

“The government has delivered a range of excellent policy initiatives in recent years, including investment in university infrastructure through the Education Investment Fund, boosting student income support, and announcing a demand driven system from 2012,’’ Professor Davis said.

“Increasing participation can complete one of the greatest reforms in the history of our nation – transforming universities from the preserve of the privileged to institutions genuinely open to all Australians.’’

However, he said because the funding system had evolved in an ad hoc way, universities were not funded according to a reasonable estimate of appropriate costs and had to rely heavily on alternative sources of income, such as charging full fees to international students.

“While universities have generally been able to manage to date, the current funding environment is no longer sustainable. Class sizes are already well above international standard. The international market is likely to decline further in the long term as developing nations build their own domestic systems and international competition intensifies.

“To be world class, our universities need features like attractive class sizes, world class teachers, and work-integrated learning or clinical practice.’’

Professor Davis said establishing an independent regulator – with the government determining the public and private split – would provide a rational base for funding and would help universities plan with certainty and encourage efficiency. He said the Independent Hospital Pricing Authority had worked in a similar way, setting prices for hospital services.

“We think such a body would substantiate the need to increase Commonwealth funding to universities if we are to achieve the government’s participation targets, while delivering a quality system.

“We also believe more funding would be a great investment – in spreading opportunity, improving people’s lives and in lifting the national skills pool to boost productivity, which is a key to lasting prosperity,’’ Professor Davis said.