Australia’s fee and subsidy shake-up could further emasculate a research sector already reeling from the loss of international student income as a result of the coronavirus pandemic, it has been warned.

The government’s proposals, unveiled on 19 June by the education minister, Dan Tehan, could reduce the average surplus universities earn by teaching domestic students from about 10 per cent at present to a razor-thin margin of 3 per cent.

This would leave universities with less discretionary funding to support research as they confront a coronavirus-induced downturn of some A$16 billion (£8.9 billion) by 2023. This is already forecast to cost the sector the equivalent of 7,000 full-time research-active academics this year alone.

The federal Education Department the fees and subsidy changes will “better align funding with the average cost of delivery” while shepherding more students into economically important courses.

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Student tuition fees would be lowered in 18 of 23 broad disciplines, while government subsidies would decrease in 11 of the 23 broad fields. The combined impact of these changes would reduce universities’ per-student income in 12 broad fields, with the falls ranging from A$151 in languages to A$11,601 in medical science.

These funding declines would affect disciplines in which the government says it wants to encourage more study, led by engineering and science. Both fields stand to lose annual revenue of A$4,758 per student under the changes.

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Other fields set to lose income include mathematics (down A$3,513 per student per year), agriculture (A$3,444), clinical psychology (A$3,151), allied health (A$2,045), nursing (A$1,729) and education (A$1,066).

The Innovative Research Universities (IRU) group of unintended consequences for these fields. Executive director Conor King said courses that were already “run on small margins” could become uneconomical for universities.

The IRU said the proposals could also erode the link between education and research despite “the government’s strengthened requirement that a university must involve high levels of both”.

“Research systems are under pressure due to loss of revenue,” the group said. “They require financial support to ensure future capability across the breadth of human knowledge.”

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However, the government’s reform package also includes elements that may bolster research funding. The proposed A$900 million National Priorities Industry and Linkage Fund (NPILF), which the government plans to set up over the next three years, would allocate money for university-industry research collaborations alongside other activities.

In a 22 June media statement asking vice-chancellors to nominate members for a panel to design the NPILF’s operating rules and performance metrics, Mr Tehan said the fund’s aim was to channel more money into science and maths courses.

The government has also flagged a A$49 million research grants programme for regional universities and a A$705 million transition fund to help universities maintain their revenue over the next three years.

Australian National University policy expert Andrew Norton said the government’s proposals would “further squeeze” universities’ teaching-research employment model – particularly in science and engineering, which had long been “relatively profitable disciplines” to teach.

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Reducing the profit margins could diminish research activity in those fields, he warned, although the NPILF could help alleviate this.

A recent by Professor Norton found that funding for teaching was not well aligned with teaching costs, with the difference exceeding about A$2,500 per student per year in 50 per cent of broad fields. The alignment would improve under the government’s proposals, putting funding within A$2,000 of costs in most fields.

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john.ross@timeshighereducation.com