THE obsession with research at universities is helping to create an oversupply of graduates in certain areas and potentially bad outcomes for students and taxpayers.
That's according to a Productivity Commission report, Shifting the Dial, released Tuesday which set out a broad agenda for reform spanning health, schools, universities, transport and energy.
It noted that universities were being encouraged to churn out students in "high-margin courses", which are cheap to teach but have high fees, so they can funnel more money into research.
This risks creating an oversupply of graduates, wastes both students and taxpayers money, and could ultimately affect Australia's productivity and economic growth.
"Many university staff are more interested in, and rewarded for, conducting research," the report said.
This is due partly due to its importance of research in international rankings as well as the culture in universities that gives prestige to research and sees teaching-focused positions as a "low-pay, low-progression and low-value career pathway".
"Teaching therefore plays second fiddle to research, with consequences for student satisfaction, teaching quality and graduate outcomes," the report noted.
The commission found that student fees that should be used for teaching, were instead being directed towards research and this was undermining student outcomes and teaching quality.
About 80 per cent of teaching-only staff at universities in 2015 were working as casual employees, and many teachers were part-time workers who were themselves students.
"It seems likely that a system where a significant share of the teaching is provided by junior staff with limited long-term teaching interest will not generate the best educational outcomes for students," the report said.
It noted that the use of money for teaching to cross-subsidise research was also creating an oversupply of certain graduates and there was evidence this was already happening.
One study found nearly 45 per cent of recent law graduates who were employed were actually working in clerical, sales and service occupations.
On the flip side, universities may also be discouraged from providing more student places for "low-margin" or loss-making areas that can create an undersupply of graduates in essential professions including dentistry, veterinary science, health sciences and engineering.
While the commission has not made any recommendations because it acknowledged the complexity of the system and did not want to create unintended adverse outcomes, it did suggest options that should be considered.
It said one solution could be to change government funding so that it more closely reflected expected teaching costs, and the public and private benefits.
"For example, disciplines with a high degree of personal benefits and limited positive spillovers (such as a degree in finance) could require students to pay most (or even all) of the cost of tuition," the report said.
However, it said this would need to be offset by other changes to how research was funded.
It has also supported the Federal Government's plans to introduce a form of performance-contingent funding from 2019, which would make 7.5 per cent of funding contingent on the university's teaching performance.
The exact design of this plan is still being developed but the commission said this was a "step in the right direction, although there are a range of challenges with making this approach fair and effective".
The commission was also sceptical about the benefits of the Turnbull Government's plan to lower the income threshold that students need to start paying off their HELP debts.
Instead it believes outstanding HELP debts could be collected from deceased estates from those aged over 60 years and potentially only from estates worth over a certain amount.
This would also allow HELP debts to be recovered from the increasing number of students aged 65 years or over, who are accessing these loans but are less likely to pay them off.
Other suggestions from the commission include relaxing restrictions on the use of the term "university" so that institutions don't have to do both teaching and research to qualify.
The commission believes this could be dropped to encourage some institutions to focus on teaching.
It said universities should also assess students carefully to ensure they start the right course and are more likely to finish it.
The commission found there was a link between how high a student's Australia Tertiary Admission Rank was and whether they were likely to drop out of uni before finishing their degree.
Students with an ATAR above 95 had an annual attrition rate of less than 5 per cent in 2014 but this jumped to about 20 per cent for those whose score was between 50 and 59.
Similarly nearly 40 per cent of those with an ATAR between 50 and 59 had left uni without a degree after nine years, while just 4 per cent of students with an ATAR above 95 had done so.
However, the commission noted the ATAR score was just one reason why students quit and others include the student's motivation levels, financial security and personal or health-related factors.
Group of Eight, which represents Australia's leading research intensive universities that account for two-thirds of all research funding to universities, is supportive of the commission's findings.
"The Productivity Commission rightly questions how we do our job, how we use our funding and our focus," Go8 chief executive Vicki Thomson told news.com.au. "We would expect no less.
"It has therefore been particularly pleasing to concentrate on the substance of the report and find that the Commission is in agreement with the Go8's consistent advocacy push for an end to the current dysfunctional and distorted funding model for research, and to our call for an independent review of how the sector is financially structured, and on our outcomes."
Update your news preferences and get the latest news delivered to your inbox.