Australian universities have begun a desperate search for alternative sources of funding from federal government.

The incoming conservative administration in Canberra has vowed to slash spending by Aus$8 billion (Pounds 4.1 billion) making it is inevitable that higher education will suffer cuts.

When Labor took office in 1983, universities received almost 90 per cent of their recurrent funding from the government. By the time Labor was voted out last month, federal grants had fallen to below 50 per cent of the Aus$6 billion a year that universities spend and they were under pressure to generate income.

Fees paid by overseas students and Australian postgraduates now earn universities more than Aus$500 million a year, while annual income from other non-government sources such as contracts with industry, consultancies and hiring out facilities, has risen to Aus$1 billion.

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A report released by the Department of Employment, Education and Training shows that Australian students are meeting a growing proportion of university budgets through the ³ÉÈËVRÊÓƵ Contribution Scheme. Until 1988, there were no tuition fees whereas today about half the universities receive up to 20 per cent of their income from the scheme. Under HECS, undergraduates must pay about a quarter the costs of their tuition, either on enrolment or through a tax surcharge on graduation.

The Australian Vice Chancellors Committee has long argued that universities should be free to charge full-cost fees to students who miss out on a government-sponsored place.

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Before the election, the opposition promised that full fees would not be introduced but fees for non-quota places were not ruled out.

That is an issue vice chancellors are almost certain to take up with the new government. Meanwhile they have urged individual faculties and departments to develop innovative programmes that will increase income and reduce reliance on government grants.

Sydney University arts faculty plans to double its discretionary income from alternative sources in three years. Several projects are already under way. These include a study-abroad programme for students from foreign universities wanting to study English language and literature; a centre for travel, tourism and translation and interpretation run jointly with the University of Western Sydney; and a consultancy service for the arts, humanities and social sciences in place of the ad hoc system where most academics offer advice to outside bodies for nothing.

Professor Crittenden said the biggest project would be the study-abroad scheme which was intended to attract students majoring in English language and literature at universities in Japan, Korea, Indonesia and China. A pilot study in Japan and Korea had aroused interest.

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