Without substantial increases to funding and changes to the way that higher education was structured and overseen by governments, we would see a reduction in the quality of students’ education and research outputs, both of which are critical to Australia’s future economic success and social progress in a hyper-competitive global economy.

Chronic underfunding of the Australian higher education system is finally delivering that tipping point. This means that the quality of higher education and research outputs are at grave risk.

How did we get to this point?

A new era in Australian higher education was marked by the 2008 Review of Higher Education led by Denise Bradley. The Review report articulated the threat posed to higher education quality by inadequate funding and investment. The review found:

There are now clear signs that the quality of the educational experience is declining; the established mechanisms for assuring quality nationally need updating; and student-to-staff ratios are unacceptably high.

The review’s recommendations were intended as a package, but the cost was too high. Higher education got a regulator, targets, a promise (since delivered) that student places would be made available to all comers capable of success, and additional funds for access and equity. But there was insufficient change to base funding, (that is, to the funding received per student place) and for many universities, the reliance on income streams from international student enrolments became more important.

In 2009, higher education was shocked by a series of attacks on international students and a number of other incidents that had sudden impacts on those international enrolments – particularly from India – and repercussions for university budgets. This, coupled with the impacts of the global financial crisis and a strengthening Australian dollar, exposed to everyone the risks of Australia’s reliance on – and complacency about – the international education market and the extent to which it subsidises our own sector.

In 2010 the federal government legislated for the automatic indexation of the Commonwealth Grant Scheme (CGS). Before this important policy change, the sector had been suffering a steady decrease in the effective real-dollar value of the largest individual funding source, occasionally alleviated by one-off increases. But the core issue, that the level of CGS base funding was too low, was not addressed.

In part as a response to these complaints, the government in 2011 conducted a new review, this time investigating the principles behind, and the required levels of, Higher Education Base Funding. The review’s primary finding was blunt:

Put simply, despite productivity gains and allowing for institutional decisions about priorities, the costs have not just risen, but also the nature of the institutions has changed during the decades on either side of the millennium.

In other words, universities were struggling to make ends meet with returns failing to match the cost of education provision.

The review considered that sufficient base funding should be provided for universities to undertake their

fundamental roles of teaching and learning informed by scholarship and a base capability in research.

Despite this finding, the fundamental problem of inadequate base funding was not rectified.

Unfortunately the gains made under the first years of Labor, including indexation, were largely nullified in 2013, with the announcement of cuts and future efficiency dividends to higher education, ostensibly to help meet the increased funding demands of the school sector.

The sector saw the cuts for what they were – steps taking funding back to 2009 levels. With no promise from the Coalition that public funding for universities would increase, it became plain the tipping point had arrived.

It remains the case that Australia trails almost all other advanced economies when it comes to public investment in higher education and research. That is a risky strategy at a time when Australia is and will be heavily reliant on a highly skilled workforce and innovation to enhance lagging productivity and to secure our nation’s economic future. Alongside returns to the individual, higher education and research delivers massive returns to the nation. Better levels of public investment should be our goal.

The current situation is this: the Coalition government has presented universities with a new possibility to assist in better funding our universities through the deregulation of domestic student fees.

The offer will be made more viable and far less risky by moderating the 20% cut in per student funding, (serving to reduce the upward pressure on student fees), changes to HELP design to make loans more affordable and a support package to address the risk of market failures given the sweeping nature of the proposed reforms.

While many may not consider this an ideal solution, in the absence of political will to maintain government support at the levels needed, it is the best offer universities have available.

This piece originally appeared in The Conversation.