Universities with poor outcomes could find themselves exchanging autonomy for extra teaching grants under a performance funding system being considered by Australia¡¯s government.

Money left unallocated because universities have not met performance benchmarks would be given to them anyway under conditions negotiated between the Education Department and the universities in question.

The suggestion is among 18 recommendations from an expert panel headed by University of Wollongong vice-chancellor Paul Wellings. Education minister Dan Tehan said the idea did not contradict the logic of a performance-based scheme.

¡°It enables government to say to that university, we would like you to lift your performance in this area,¡± Mr Tehan told ³ÉÈËVRÊÓƵ. ¡°The universities give up a tiny bit of autonomy where they¡¯re not performing as well as they otherwise would?be.¡±

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Under the recommendations, universities would need to meet four separate performance thresholds to earn their full complements of additional funds from the Commonwealth Grant Scheme.

The measures include ¡°adjusted¡± attrition rates ¨C the percentage of students who drop out or do not return to complete their courses the following year, excluding those who have transferred to other courses or institutions ¨C and the proportion of graduates who obtain full-time, part-time or casual jobs within specified time frames.

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The other two measures are ¡°equity¡± ¨C participation by Indigenous, economically disadvantaged and regional students, with each of the three groups given equal weighting ¨C and student satisfaction with teaching quality.

Extra funds would be awarded separately for each of the four measures, with the performance-contingent component of teaching grants allowed to accumulate up to 7.5?per cent of each university¡¯s basic grant amount.

Mr Tehan would not be drawn on whether the government would accept all of the panel¡¯s recommendations, but suggested that there would be a final decision by the end of August. ¡°I?must say the framework that has been presented is an excellent one,¡± he said.

Professor Wellings said the sector had ¡°broadly come alongside the proposals¡± after he and Mr Tehan outlined the scheme to most of the country¡¯s vice-chancellors, who had congregated at his university.

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¡°It leaves the possibility of expansion of the sector with student number growth, and it also leaves the possibility of a small pool of funding to allow each university to have a performance improvement process,¡± he said. ¡°That is a very distinctive thing and one, to my knowledge, which has never been thought about elsewhere in the world.

¡°We¡¯ve looked at the international framework, and we¡¯ve built something which is special to Australia and which I?believe will enhance the performance of the sector.¡±

He stressed the ¡°contextualised¡± nature of the proposed scheme, whereby attrition and employment rates would be judged against each university¡¯s historical performance rather than sector-wide thresholds.

¡°We¡¯ve attempted to buffer out unintended consequences,¡± he said. ¡°We¡¯re pretty certain¡­the model is fair and feasible and can be operated safely by all universities, irrespective of the catchment of students or the subject?mix.¡±

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The says contextualisation elements in the scheme¡¯s design will also mitigate perverse outcomes such as making the sector more uniform.

¡°The proposed model has very low implementation risk: it relates to a limited number of measures; its impact scales slowly over time; the total amount is unlikely to be distorting; and an incremental approach to funding allocation reduces the risk of shocks,¡± the report says.

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john.ross@timeshighereducation.com