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House of Assembly - Fifty-Fifth Parliament, First Session (55-1)
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Parliamentary Committees

Joint Committee on the Establishment of Adelaide University

Adjourned debate on motion of Hon. S.E. Close (resumed on motion).

The Hon. J.A.W. GARDNER (Morialta—Deputy Leader of the Opposition) (15:37): I am pleased to resume where I left off. I was talking about some of the risks that were identified in relation to the government's proposal to establish a new Adelaide University, including the investment of $440 million through a range of mechanisms. I don't know whether that is the best way to characterise the investment actually—I will come back to that—but certainly it is an investment of funds with revenue to be disbursed to the universities annually, including purchase of land and a grant of $30 million to support international student attraction.

That is a significant expense on the one hand; on the other hand, there are broader risks to the institution if it is not realising its ambition in the way that we hope it will. Some of those risks were elicited by Professor Derek Abbott, a distinguished professor at the University of Adelaide. Before the break in transmission I was going through some of the risks he identified in his testimony.

For context, I have also not said that I agree with all of the risks that he has identified but I think it is important to reflect on them. Some of them are significant risks, some of them are risks that have mitigation strategies in place, and there are just a couple I disagree with, but it is important to bear these in mind before undertaking the ventures such as that which we are talking about. I think that we got through to Risk 8. For Risk 9 that he identified, he said:

…the merger increases systemic problems. Currently, many large universities throughout Australia are under fire for a range of issues—including increasing corporatisation, overuse of consultants, poor governance, poor transparency, top-heavy management on inflated salaries, wage theft, overcasualisation of staff. These are the real issues that need fixing. A merger is a distraction and will worsen these problems. A merger will embed us more deeply with expensive consultants.

I am not sure I agree with him on all of those aspects. There are certainly some issues there that do need to be considered. I think that if there is one argument that has been put by advocates for this—and we will talk about timing later, but one of the benefits of resolving this this week and next week is that it does enable the university to get on with the business of merger rather than people having an uncertainty hanging over them.

I think that in an ideal world the committee might have taken more time and had more time to report, but if there is a benefit of having had the abbreviated time it is not so that students know what brand their university will have come Christmas this year for something that they might be applying for in 2026, as I think one minister said earlier this year, but it is that the focus work that is distracting senior management of the universities, and other staff, can have clarity around it. Therefore, that informs our position.

Risk 10 identified, and I am quoting again from the Hansard:

…our ranking will plummet. An exodus, together with the fact that major organisational change always causes a ranking drop, could easily cause an initial drop by 200 places. Evidence of this is that the University of Adelaide right now has been undergoing internal mergers of faculties and schools over the last three years…and what this does is divert time and money from core business.

I am not sure I agree with that one either, with due respect to Professor Abbott. Flinders University underwent a significant reform of its schools some five or six years ago. It did see a ranking drop—not a ranking plummet, but a ranking drop. What it has seen since then is a ranking increase. In the last round of rankings, where university rankings for 2024 have been identified in recent times, Flinders University was not unique but it was unusual against other Australian universities in that its rankings have been increasing consistently over the time.

Flinders University is—as I have said before, I think it is ranked about 13th or thereabouts, give or take one or two, depending on the ranking authority—the 13th or so best university in Australia, according to things that it measures. It is on a really strong trajectory. It will be number 10 in Australia within a couple of years, if not thrown off course. It has every reason to be in a position to market itself as the best university from any measure, certainly outside of the Group of Eight, in Australia.

It has a capacity to invite international students from around the world, especially those who are not particularly wedded to the requirement to be in a top-100 university. It will be strongly placed to bring in all of those. Its research intensity is increasing dramatically. Its research outcomes and commercialisation of research and attraction of ARC grants has increased significantly in recent years—and Flinders has done that with significant disruption several years ago. There was a drop first and then an increase.

The merger is a much more significant realignment than that of Flinders, so the risk is greater. The risk highlighted by Professor Abbott here is one that must be addressed seriously and taken seriously, because if it was to plummet by 200 places as Professor Abbott suggests then that would be a serious concern. For the record, I do not think it will. I think there is enough certainty in relation to University of Adelaide's ranking. I am not suggesting that it is going to be in the top 100 and I do not think that they were even suggesting that necessarily, but I do believe that it will probably drop. I do not think it will drop by that much, unless there are significant staff leaving.

It is on that basis that Professor Abbott warns us; it is on that basis that Professor Abbott makes the claim. That risk is there. That risk is there if that many staff were to leave. It is a contested space, as I said before the break. If lots of staff leave then there is a real problem. It is the significant mitigation that the vice-chancellors and the transition council need to address. We are given some comfort by the vice-chancellors' response to our minority report highlighting the number of senior academic staff who have come on board to Adelaide University since the announcement of the heads of agreement, or at least since the news of the merger has been on board, and the confidence that they have given us that that will potentially continue.

That was Risk 10. Risk 11:

…the government has not read the business case and has not had it independently evaluated. This is an extraordinary oversight and the lack of independent review raises a big red flag. Federal and state governments review commercial-in-confidence proposals every day. I sit on various governmental and professional panels myself and review confidential commercial-in-confidence documents all the time.

I see no reason why staff have not been invited to review the business case. Those that come forward can sign a non-disclosure agreement, as is best practice. Governments always set up independent panels to review commercial-in-confidence grant proposals and business cases, as they should when public money is spent. There has been a failure of process.

I agree and have made statements on that. One of the recommendations in the minority report that the Hon. Jing Lee and I put forward went specifically to the failures of the government's process in relation to this. I spent some time earlier talking about that. I am not going to repeat myself.

In relation to risk, Professor Abbott continues:

Risk 12: difference in university cultures leads to compromise. If one were merging universities with a similar ranking and staff profiles, one might expect a good alignment, but UniSA and Uni Adelaide are not aligned, as explained earlier. Their missions and ethos are different.

I talked about students entering the university before. In fact, students going to UniSA and students going to Adelaide Uni are not that different in terms of their preparedness to deal with the complexity of university curriculum. Indeed, there are some courses where UniSA's ATAR entry ranking is higher than Adelaide Uni's, which might surprise some people. I think it is important to bear in mind that UniSA is a really well-regarded teaching institution. It has very high levels of graduate and student satisfaction. By any standard, it is a world-class university.

The difference, as best I can summarise it, if I was to say that there is one key difference, is that Adelaide Uni has a higher intensity of research than UniSA does. There is a higher volume of research. There is a higher volume of high-quality research. That is not to underplay the important research UniSA does. There is just less of it, and indeed it is less of a focus for the university.

The risk Professor Abbott is talking about here is not in relation to the preparation of students—we dealt with that earlier—but in relation to the expectations of staff. He says:

…their staff profiles will be quite different…when two quite different management teams sit down together to negotiate details of the merged university they will be at loggerheads. Decisions reached will be compromises, rather than meeting the intended aims of the merger.

That is a risk, I think, but it is not necessarily a necessity. It just highlights the significant body of work that the institutions have ahead of them to come together. If you have two law schools with different approaches to the practice of law, coming together is going to be a risk. If you have two schools of education, where one is very practical and hands-on focused and the other has more of a research mindset, then bringing that together will be a complexity, a risk—not one that is insoluble.

Certainly, we had before the committee examples in cancer research, where there are people who are already working together across the institutions and felt that they could do so better if they were integrated. There were examples no doubt of people in different schools in the two different institutions who would have a harder time than those who came forward, and many of them may not have felt comfortable coming to our committee. It would be foolhardy to progress in this venture without taking those concerns seriously.

I just highlight to the government, and the vice-chancellors have heard it from me direct, that this has to be a focus. Bringing these people together in the spirit of collaboration and working well together is a challenge, and it is one that everyone must be focused collaboratively to do.

Professor Abbott continues:

Risk 13: the new university act for the merged university is being rushed. Many observers and staff have been calling for improved governance and an overhaul of the university act. It would be a huge mistake for this to be a rush job that is not co-created in full consultation with staff. We need at least a year to critically review the act, with robust debate that includes staff and the oversight of an independent panel or commission.

I am not going to agree with Professor Abbott on all of that. I do recognise that he is not the only person calling for new governance. The union has called for new governance. I think that the Greens in the Legislative Council have put forward proposals for different governance, and no doubt the Liberal team will turn its mind to those tomorrow.

I don't necessarily agree that it is the consideration of the detail in the bill that needs to be delayed a year. The truth is that evidence we had from TEQSA backs up the information in the transition plan that was released in July by the vice-chancellors. This is in relation to timing.

For the new university to start its work on 1 January 2026—that means international students being able to enrol in the university from 1 January 2026, that means the university having authority given them to advertise for international students by the fact of it being a university, which requires TEQSA accreditation, and the fact of it being a university capable of enrolling international students, which requires CRICOS authorisation/accreditation—that new university must have its house in order well in advance of 2026. This is accepted.

The average pathway for an international student who is going to come to Australia means that they have made their decision potentially 18 months in advance. We need the new university to be advertising, and it must be an accredited institution before it can advertise. We need that to be done by the middle of next year if it is to open its doors on 1 January 2026. We accept that, and we have always accepted that.

The time line outlined in the transition plan highlights that TEQSA accreditation by 1 July next year would need legislation passed in this place in the first quarter of next year. That has not been challenged in any serious way up until the last few weeks of the committee. The government's preference has always been to sort it out by the end of this year, but the vice-chancellors have been clear that it was necessary by the first quarter of next year. They have always said the earlier the better, but by the first quarter of next year. They are able to provide some preliminary information to TEQSA to start the review process that they have to do.

TEQSA came to the committee and they said that, to formally consider the matter, they needed as much information as possible to be after legislation has passed. They would prefer it to be this year. That was a defining piece of evidence for me. It was new, it was novel. They acknowledged that it was quite possible they would be able to get the job done if the legislation passed early next year, and they would continue to work with the university. They made it clear that, to have confidence in the 1 July start date, then the legislation passing this calendar year would make that a lot easier. We accept their evidence; they are the national regulator. It was slightly different to what was in the transition plan. It did not deny what was in the transition plan, but it was a different weighting. So we are dealing with that this week and we are prepared to deal with it.

On the detail of the bill, concerns were raised by Professor Abbott, the union and others. They would like a majority-elected council that will deliver the positive outcomes required. We have had a look at university councils before and how they have been evolving around the country. My view is that a skills base is really important for university councils and people with skin in the game, if you will, in relation to decisions that the council may take, such as representatives of staff bodies, staff unions, student bodies or student unions.

There is certainly a role for them and there has been a position on them ever since the draft legislation came out. They must be heard at the table, but to have a majority in that position I do not think provides the governance reform that would lead to the outcomes that are in South Australia's interests. Therefore, the opposition is unlikely to support significant reform along that way, but I certainly respect the backgrounds of those putting it forward.

It may have been Professor Abbott or it may have been another witness who talked about examples overseas of universities running quite successfully with boards dominated by people who are lecturers or who work or study in universities, and there may well be examples of that. I would note that they do not comprise the majority of successful universities around the world.

I refer to Risk 14 identified by Professor Abbott—and there are 16 in total that he went through with the committee, so there are just a couple more to go through to give due airing to these esteemed views—which provides:

Risk 14: alternatives have not been analysed. A good feasibility study not only looks at the target merger but also benchmarks it against other viable alternatives. The fact that this has not been done is extraordinary. It means there is nothing to gauge it in terms of cost benefit. Could there be lower cost alternatives without the enormous opportunity cost of an unprecedented merger? Due to all the previous risks I have mentioned added together, there is a high chance such a large structural change will outweigh the benefits. We need a further year to properly analyse this.

Notwithstanding the comment about a year, which I do not necessarily agree with, I do think that one of the failings of process throughout this whole university merger process put in place by the government is that we do not have a relative comparison between the different options.

We had Treasury tasked with the endeavour of negotiating with the universities a package that the councils would be comfortable with and that would enable the government's determined position of facilitating a merger to go through. We had the Department of Industry, Innovation and Science tasked with the bill and not asked for their policy advice. At no point was the counterfactual given serious policy analysis by government, and there was not just one counterfactual. It is not just a matter of standing still in the status quo, or the merger proposal as is. There are other options.

One of the significant things that has happened through this process was an acceptance, in response partly to the way that federal funding has changed over the last couple of years, that there is a place for state governments to invest proactively in research in our universities, especially in those areas of state strategic interest.

Up until now, state government investment in universities has been on an ad hoc basis. We have various projects that are supported. I recall, when I was education minister, there being a tender that went out for a research project worth half a million dollars, particularly focused on supporting students who do not engage successfully with their high schooling, and finding out what happens to them and how better we could engage them going forward.

These sorts of one-off or occasional relationships between the government and the universities are modest in scale in South Australia, certainly modest in comparison with other states. This perpetual research fund would see that relationship change so that state government would have a continual investment in university research that would enable research teams within universities to turn their attention more critically and in a more focused way to areas of identified state strategic interest, because the research funds at Adelaide University, and the one that we proposed to set up at Flinders University, are constrained to an agreed set of state strategic interest topics of research.

The committee that will determine this is to be made up of three members appointed by the Treasurer and two members appointed by the University of Adelaide. We may do something similar at Flinders; we will have a look at that detail in due course. That committee will be working from a list that is agreed between the university and the government for state strategic interest. I have talked about the three areas that we highlighted in particular and that we focused on at Flinders: agtech research, AUKUS and defence, and health science. There will be potentially other ones at Adelaide University.

Having state government investment in research is novel. Here is the counterfactual: what about if we did that investment in research without necessarily having the merger take place? If it was decided that it is a public good to have these investment funds—a $200 million research fund and a $120 million equity fund to have extra research capability supported by state government and to have extra access for young people, or older people looking for new jobs, supported by the equity fund—no government department did any work on what that might look like without having to go through the opportunity cost and the significant cost and upheaval of having a merger. That is extraordinary.

Professor Abbott describes it as extraordinary and I agree with him. That sort of work should have been done. That that sort of work was not done by the cabinet highlights the risk that this government has indeed created in undermining confidence in the signature project.

We would hope, certainly, that the risk of not doing this fund at Flinders will be mitigated by the election of a Speirs Liberal government in March 2026. But the opportunity that may be lost through a different approach with less transition costs at UniSA and Adelaide University we will never know, and that is a shame. With Risk 15 put forward by Professor Abbott, he says:

…not following best practices. Manchester's description of its merger, tabled as evidence…cites critical factors to Manchester's success. I quote:

Universities similar in research standing…

Internal support from staff and students…

Contiguous campuses;

Both Vice-Chancellors retiring…

The proposed Adelaide merger ticks none of these boxes…

Some of that is debatable, but they are certainly risks worth looking at. In the last risk he identifies, Risk 16, he says that:

…80 per cent of mergers fail, and the reason is people aren't boxes. There are many well-known massive corporate merger debacles that we have all heard about…

He goes on to say that these:

…resulted in the loss of billions of dollars. Given our uni merger is unprecedented, what is it that emboldens South Australia to think it can execute this flawlessly based on a rushed through six-month study?

Certainly, those risks are worth considering. I seek leave to continue my remarks.

Leave granted; debate adjourned.

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