The additional money promised under Australia¡¯s contentious performance-related funding scheme will not keep pace with inflation, let alone a demographic bump triggered by a turn-of-the-century ¡°baby bonus¡±, universities have warned.

The proposed scheme, if implemented, would see teaching grants accumulate by about an extra A$70?million (?39?million) annually from next year. The money would be shared by universities that perform acceptably on measures such as retention, completion and student satisfaction.

But the Innovative Research Universities group said that the extra money would not match increases in either population or teaching costs. Conor King, executive director of the IRU, said that it was ¡°shifty¡± to suggest that the scheme would fund universities to increase their admissions in line with population growth.

This is because the additional money is tied to the growth rate of the overall adult population, while the number of school-leavers is expected to expand at more than double that rate between 2022 and 2025.

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The bloated pipeline of 17- to 18-year-olds ¨C thought to be the result of a financial incentive scheme introduced in 2002 to encourage couples to have more babies ¨C means that demand for university is likely to grow at more than twice the rate of funded university places.

Moreover, when the government capped the overall value of teaching grants at the end of 2017, it did not introduce any mechanism to index the cap. This means that the real value of funding for teaching is declining at the rate of inflation ¨C about 2?per cent ¨C which is considerably more than the population growth projections underpinning the performance funding.

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¡°Universities are going to be standing still at best, assuming they get the full performance-based complement,¡± Mr King said.

The government should index the cap on teaching grants, he said, so that the base funding keeps pace with inflation, and then tie the performance-contingent funds to the growth rate of the 17- to 18-year-old population. Such a measure would cumulatively increase the cost of the scheme by perhaps A$95?million a?year.

Responses to a on the proposed scheme were due on 15?February. The government has undertaken to publish the submissions after that date.

La Trobe University vice-chancellor John Dewar said the scheme was the ¡°wrong mechanism¡± for meeting the government¡¯s objectives. ¡°I?don¡¯t have a problem with a framework for measuring the sector¡¯s performance; I?just don¡¯t think it should be tied to funding,¡± he told ³ÉÈËVRÊÓƵ.

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¡°The paper talks about wanting to improve participation rates in regional and rural areas, which I?thoroughly endorse. The problem is that the universities that most need the growth places are least likely to do well on these metrics.¡±

Professor Dewar said that the proposed metrics did not measure performance. ¡°They measure outputs, a?lot of which just reflect inputs in the form of students¡¯ demographics. Performance on a?lot of the metrics being proposed is highly correlated with socio-economic status and ATARs [university admission scores].

¡°A university that draws higher socio-economic students with higher entry scores is likely to do better on these measures than universities that draw from a different demographic. Unless you¡¯re very careful, all you¡¯ll end up doing is rewarding institutions that attract more middle-class students.¡±

john.ross@timeshighereducation.com