Abstract
Performance measurement systems (PMSs) are a global phenomenon emanating from new public management (NPM) reforms. While they are now prolific and entrenched, they have attracted criticism based on their design and the manner in which they are applied. The purpose of this article is to explore the history of accounting for research in the Australian higher education sector (HES). It focuses on how successive Australian governments have steered research within the sector through the introduction of PMSs, in line with NPM reforms. Relying on publicly available online policy documents and scholarly literature, the study traces the development of performance measures within the Australian HES from the mid-1980s to 2015. It contributes to literature in management accounting aspects of NPM through the means of management accounting techniques such as PMSs. It also contributes to accounting history literature through an examination of three decades of accounting for research in the Australian HES.
Keywords
Introduction
The period from the late 1970s to the mid-1990s witnessed the trend by many, predominantly Western, governments to undertake administrative reform of their respective public sectors. Underpinned by a philosophy of ‘managerialism’ (Guthrie and Parker, 1990), and with a strong focus on improving public sector performance, many of the reform measures adopted under the guise of new public management (NPM; Hood, 1991, 1995) incorporated management practices traditionally found in the domain of the private sector (Dudley, 1999; Dudley and Vidovich, 1995).
These reforms shifted the approach of public sector operations from ‘administration’ to ‘management’ (Jackson and Lapsley, 2003; Parker and Guthrie, 1993), with traditional collegial public sector administration giving way to a more corporate style of management (Bobe and Taylor, 2010). Private sector business values, such as competition and cost effectiveness (Considine, 2006; Hood, 1991; Parker and Guthrie, 1993) and operational rationality (Skalen, 2004), became guiding management principles. Key determinants for the allocation of public resources were re-oriented away from principles of equity and social justice to those based on the pursuit of greater efficiency in the management of the public sector (Parker and Gould, 1999).
This fostered a more competitive environment with an emphasis on managing for results (Boxall, 1998; Skalen, 2004). One of the key outcomes of NPM reforms was an increased focus on performance and the transparency of that performance (Boxall, 1998). It is against this background that performance measurement systems (PMSs) became a key element of public sector management reforms and continued as an important technology in the ongoing management of the broader public sector.
The introduction of PMSs was based on the managerialist philosophy that the management practices of the private sector are generic in scope and thus directly transferable to the public sector (Dixon et al., 1998). Governments wanted PMSs that would mobilize effective and efficient public service delivery at a minimal cost. Governments, like the private sector, began to insist on the development of PMSs as a way of measuring progress in public organizations (Hughes, 2003). With the international trend of NPM reforms, several countries have promoted initiatives to stimulate the use of PMSs in their respective public sector organizations, including hospitals, educational organizations and police services (see Cavalluzzo and Ittner, 2004; Helden, 2005; Thiel and Leeuw, 2002).
Within the higher education sector (HES), many elements of NPM reform, including strengthening institutional leadership, establishing governing boards, enhancing quality, improving accounting and accountability and implementing PMSs, are evident (Sporn, 2003). These reform measures were adopted due to the rise of a global student market for education and research, the ‘massification’ of higher education, the rising costs of expanded higher education systems, and the pressure for management efficiency in the face of widened access and reduced resources (Currie, 1998). Education and research reforms and policies, influenced by NPM rhetoric, were aimed at increasing the competitiveness of national knowledge and research innovation. Demands for a heightened emphasis on accounting and accountability were inevitable, with evidence of a turn away from the academic, or elite, self-governance and culture of universities to ‘more transparent and numerical forms of public evaluation and democratic holding-to-account’ (Kogan and Hanney, 2000: 10). While the HES encompasses both teaching and research, the focus of this article is on how research is accounted for in universities.
The Australian HES, the focus of this study, has been shaped by successive governments’ changing research priorities and, most importantly, changing funding models and performance measures (Neumann and Guthrie, 2002, 2004). While these reforms have improved the quality and international standing of Australian research, they have also led to several unintended consequences in the form of discouraging emerging research and young researchers, and dysfunctional effects in the form of gaming (Martin-Sardesai, 2016; Martin-Sardesai et al., 2015).
The objective of this article is to explore the history of accounting for research in the Australian HES, focusing on the way successive Australian governments have steered research within the sector through the introduction of PMSs in line with NPM reforms. It tracks the processes of institutionalization of the sector through the introduction of performance measures and funding models via various government policies and reforms, beginning with the Dawkins reforms in 1987 through to the establishment of a formal research assessment exercise in the form of Excellence in Research for Australia (ERA) in 2010. In so doing, the article responds to calls for well-documented research on policy changes in the HES (Broadbent and Guthrie, 2008). This review contributes to the literature on NPM by focusing on the management accounting aspects of NPM through the means of specific management accounting techniques such as PMSs within the HES. Despite continual criticism of performance measurement, there has been a proliferation of performance indicators and the use of PMSs within the Australian HES (Johnsen, 2005). Notwithstanding cautionary observations from academic policy-makers, and other commentators over key elements of the NPM, such as the implementation of performance-related measures, our historical review reveals that NPM through the use of PMSs has continued to make progress with distinct benefits and unintended outcomes. It contributes to accounting history research, through an examination of three decades of accounting for research in the Australian HES, and, relatedly, to research on the rationale behind the expansion of PMSs into the HES.
The article is structured as follows. The next section briefly outlines the background of the Australian HES. The third section provides a brief literature review of PMSs. The fourth section identifies the research methods by which the study was conducted, and the fifth section details the relevant policy and accounting changes introduced within the Australian HES by the different Australian governments from 1987 to 2017. The sixth section offers reflections on the processes of change in the Australian HES and impact on the sector. The final section concludes the article by outlining contributions and limitations and suggests opportunities for further research.
The Australian HES
The Australian HES includes non-university and university higher education providers. Private non-university higher education providers comprise over 130 institutions, and university higher education providers comprise 41 universities (39 public and 2 private; Norton and Cakitaki, 2016). Non-university higher education providers enrolled approximately 47,500 full-time students in 2011, while university higher education providers educated more than a million students, produced 250,000 graduates and employed more than 100,000 staff (Larkins, 2011; Norton, 2013). Highly significant economically, the education services export sector reported a total export income of AUD$21.8 billion in 2016 (ABS, 2017) and was ranked third after coal and iron ore (DFAT, 2012).
However, in addition to earning high revenues, the Australian HES represents a major financial outlay for the Government. Student numbers, both domestic and international, have more than doubled over the last 20 years, with tuition, research and student income support programmes costing about AUD$15.7 billion in 2015–2016 (Norton and Cakitaki, 2016). Australian universities spent AUD$10.2 billion on research in 2016, and although they have not been ranked in the top 50 in the world for research, they have improved their standing over time (Norton and Cakitaki, 2016).
University research and research training, which contribute to new knowledge and the development of a high-level skill base, have become the elements upon which Australian governments, business and the community have established their enterprises (Larkins, 2011). The economic and social significance of Australian universities has resulted in large investments by governments in Australia. The Australian Federal (also referred to as Commonwealth) Government has a significant policy responsibility for the Australian HES and is the primary source of public funding for Australian universities. State governments have the power to legislate the establishment and governance of new universities but do not fund those (Dawkins, 1988). Nevertheless, Federal government policies and frameworks have been established to strategically align universities with government policies and steer them towards ‘research excellence’. The focus of this article is on the relevant research policies developed by successive Australian Federal governments, the predominant funder of universities.
PMSs
The global transformation of the nature and structure of the HES accelerated rapidly towards the end of the twentieth century (Coffield and Williamson, 1997). These developments must be viewed as a part of a wide range of interconnected factors, including NPM reforms, and economic and political pressures. Irrespective of the interpretive frame through which these changes are understood, be it post-industrialism, globalization, late capitalism, neo-liberalism or postmodernity, the HES has been subject to considerable social, economic, structural and cultural changes during a short period of time. Public sector universities are increasingly run like corporations (Schramm, 2008), with university PMSs emerging as an important technology in the exercise of management control and government oversight (Angluin and Scapens, 2000; Broadbent and Laughlin, 2013).
Higher education research is an important source of knowledge generation, occupying a critical position in promoting a nation’s prosperity and its citizens’ well-being in the knowledge-based era (Abbott and Doucouliagos, 2004). Research provides for the economic development of the nation and strategically positions the national economy in the internationally competitive knowledge economy. Whether it is explicitly acknowledged, or only implicit in policy, the international competitiveness of higher education research is an essential condition for the competitiveness of the national innovation system (Martin-Sardesai and Guthrie, 2018).
Consequently, the research performance and research quality of the HES are important to governments, and their interest in research performance extends to the cost of undertaking research, outputs produced from research and the quality of research (Broadbent, 2016). In line with NPM, the role of Government has been confined to setting up policy frameworks, enabling individual institutions to move towards increased managerial autonomy (Agyemang and Broadbent, 2015). Thus, the development of performance indicators and/or PMSs appropriate to the higher education funding arrangements has gained prominence. The significance of performance measurement in public services can be seen from two different perspectives, in particular. First, there has been considerable effort expended on the development of performance measures, by the government, regulatory bodies and by researchers into the development of performance indicators (Johnsen, 2005; Lapsley, 2008). A second perspective is the manner in which new techniques, notably benchmarking, have been adopted by public service organizations and how comparability can prove elusive (Bowerman et al., 2001).
Ferreira and Otley (2009) defined PMS as the set of,
evolving formal and informal mechanisms, processes, systems, and networks used by organizations for conveying the key objectives and goals elicited by management, for assisting the strategic process and ongoing management through analysis, planning, measurement, control, rewarding, and broadly managing performance, and for supporting and facilitating organizational learning and change. (p. 264)
PMSs are designed to assist management in the implementation and monitoring of strategies, to provide feedback for learning, and the provision of information to be used interactively to refine and formulate a strategy (Berry et al., 2009). They are important as they enable an organization to determine how well it is progressing towards its predetermined goals, to identify areas of strength and weakness and to make decisions on future initiatives, with the ultimate goal of improving organizational performance (Otley, 2016).
People within organizations respond to PMSs in fairly predictable ways, and hence the definition and design of PMS are continuously evolving, employing formal and informal, financial and non-financial, information systems to set objectives and work towards meeting those objectives (Agyemang and Broadbent, 2015; Lau and Martin-Sardesai, 2012; Otley, 2012, 2016). PMSs are thus dynamic, requiring managers to continually assess environmental conditions and modify PMSs to bring about desired organizational changes (Broadbent, 2011; Otley, 2012, 2016).
The influence of PMSs within public sector organizations has arguably gained prominence with the enactment of regulatory frameworks that were established to reinforce control at ‘arm’s length’, as opposed to a more detailed ‘hands-on’ regulation of public services (e.g. Evans et al., 2011; Laughlin, 2011; Woods and Grubnic, 2008). In many countries, governments have reduced their direct supervision and control of universities (Teichler, 2004) and have turned to target-setting and performance-based funding mechanisms to shape and guide the future direction and activities of universities. For instance, quality assessments, performance measures and accrual financial reporting are some of the requirements European governments have attached to university funding (Kennedy, 2003).
PMSs in the form of research assessment exercises represent one way in which governments have sought to exercise control over universities in the research space. Governments have resorted to such evaluations to stimulate research activity, to allocate resources based on the merit of the research being undertaken and to demonstrate that investment in research is effective and delivers public benefits (Abramo et al., 2011). National research assessment exercises are widespread across many countries (Adler, 2010), including the Research Excellence Framework (REF) in the United Kingdom (Higher Education Funding Council for England (HEFCE), 2010), Performance Based Research Funding (PBRF) in New Zealand (Tertiary Education Advisory Commission (TEAC), 2003, 2006) and ERA in Australia (Martin-Sardesai et al., 2017a). Other countries including Spain, Hong Kong, Sweden and Demark also conduct various types of research evaluation exercises (Hicks, 2012). Irrespective of the ‘label’ or scope of these assessment exercises, they are all designed to measure and assess research performance in their respective HESs (Hicks, 2012; Whittington, 2000).
National research assessment exercises as PMSs offer the possibility of measuring research outputs across different public sector universities (McSweeny, 2004). In the United Kingdom, research assessment exercises have been undertaken since 1980 and have been instrumental in shaping the HES (Broadbent, 2016; Evans, 2014; Martin-Sardesai et al., 2017a). The literature on the effects of research assessment exercises has generally acknowledged its contribution to the United Kingdom’s research quality, identifying it as an effective measure to allocate funding in a non-egalitarian way (Butler, 2010) and perceiving reputational benefits in global reputation rankings (Otley, 2010).
Quantification and calculative practices are at the heart of NPM (Hood, 1991). The shift of focus from bureaucratic procedures to a managerial emphasis in which results are of paramount importance has accentuated PMSs in the Australian HES. Some authors depict these different developments in PMSs as myths (Modell, 2004). Modell (2004) claims that considerable research is necessary to demonstrate the nature of the ‘new wave’ performance measurement models. In essence, the ‘mythical’ status accorded to performance measurement by Modell alleges that it fails to achieve its purpose. There have been other unintended effects. Over time, research assessment exercises have become more labour intensive, burdensome and intrusive (Hicks, 2012). At the institutional level, the funding implications of the research assessment exercise are important, since achieving a good rating in the United Kingdom assessment exercise can affect university funding for several years (Agyemang and Broadbent, 2015). Lucas (2006, 2009) demonstrated that there has been an intensification in the management and organization of research activities within universities in response to successive assessment exercises. These exercises encourage a more strategic evaluation of academics’ careers, modify their publication behaviour and create pressure for higher productivity (Butler, 2010; Hicks, 2012), significantly limiting researchers’ autonomy (Elton, 2000; Martin and Whitley, 2010; Tapper and Salter, 2003). Many academics view these research assessment exercises as a major source of anxiety and uncertainty (McCarthy et al., 2017; Martin and Whitley, 2010; Yokoyama, 2006), as they are put under pressure not only ‘to lift their publication output’, but ‘to tailor it to fit the types of publications most valued’ (Parker, 2008: 383).
A review of literature on the changing policies of the Australian HES, and the various funding models implemented over the years, including ERA 2010 (Martin-Sardesai and Guthrie, 2018), suggests that they have had an impact on universities’ functioning as corporate businesses employing performance measures (Parker, 2011, 2012), including the use of calculative practices and performance indicators. It has been proposed that for universities performance measures driven by economic and commercial criteria also inhibit the conduct of long-term, basic research in favour of the short-term goals of funding agencies (Marginson and Considine, 2000). Therefore, a historical review of the development of the performance measures developed in response to the various Australian Government’s HES research policies, focusing on the rationale behind the development of PMSs to account for University research performance, is considered timely.
Research methods
Data for the study consisted of publicly available online documents and studies related to relevant Australian higher education policy. These included government policy documents and reports, and scholarly literature. Government reports included Dawkins (1987, 1988), Department of Education Science and Training (DEST, 2002, 2004), Department of Industry Innovation Science Research and Tertiary Education (DIISR, 2009, 2011), Department of Foreign Affairs and Trade (DFAT, 2012) and scholarly research that provided analysis and reflections on HES policy changes, including Hoare (1995) and Larkins (2011).
The study also draws on authoritative prior research on the Australian higher education policy undertaken by organizations such as the Organization for Economic Co-operation and Development (OECD). Research by Slaughter and Leslie (1997) and Marginson and Considine (2000) also provided useful insights for our study. These documents and studies provided an overview of various policies implemented in Australia relating to accounting for research and the performance measurement of research conducted within the Australian HES.
An analysis of HES policy could be approached through alternate or multiple lenses, focusing, for example, on political, governmental, educational, chronological or managerial dimensions. This study takes an accounting perspective, drawing out the systems designed to require Australian universities to provide an account of their research. In particular, we identify these systems as PMSs, both for the universities and, by extension, for the academics who conduct the research. To that end, we thematically managed and analysed the data collected from the sources mentioned above, using NVivo Version 10. Following Braun and Clarke (2006), we employed a six-phase process, entailing (1) data familiarization, (2) generating initial codes, (3) searching for themes, (4) reviewing themes, (5) defining and naming themes and (6) producing the paper. Initial codes were developed based on the various reforms and policies introduced within the Australian HES, taking first a chronological approach to understanding the development and sequencing of various HES policies, then identifying the rationale behind those policies, the systems necessitated by the policies and the research-focused requirements consequently imposed on universities. In addition, we searched for evidence of NPM emphases such as a corporate, business-oriented approach, competition and performance, alongside the development of research funding models and their financial management implications.
This analysis enabled the authors to become familiar with the changing landscape of the Australian HES over the period. Following the categories identified above, initial codes were developed based on the various reforms and policies introduced within the Australian HES. They provided a starting point from where further exploration followed. These codes were seen as tentative and were reworked as the analysis continued. In searching for and reviewing themes, the authors were convinced that categorizing the policies chronologically under the respective governments that introduced them would be an effective way of providing a narrative for the findings. At the same time, since the essence of this article is to make sense of the various policies by the different governments and to identify the means by which research was accounted for, we did not want to compromise the richness and multidimensionality of the history of research on PMSs in the Australian HES.
Thus, the chronological approach, including the identification of various themes, enabled the construction of a narrative that emphasizes the development of Australian HES policies as government intentions were adopted and activated at the university level. As a result, the next section of the article provides an audit trail (Creswell and Miller, 2000), making key decisions taken throughout the research process transparent and enabling readers to determine the validity of the findings (Creswell and Miller, 2000), as the accounting for research thread is woven through the narrative.
The rationale for PMSs in the Australian HES (1987–2017)
The findings outline the changing landscape of the Australian HES with the introduction of the various policies that emerged from various government reviews and policy papers. Prior to the reforms of the 1980s, the Australian HES had been essentially an elite system organized around the binary divide between research universities and ‘applied’ institutions or colleges – Colleges of Advanced Education (CAE) in Australia (Dudley, 1999). The 1980’s reforms reconstituted universities as ‘enterprise’ universities, with an entrepreneurial and market orientation (Marginson and Considine, 2000). In the following subsections, the transformation of the Australian HES is outlined in detail, from 1987 to 2017, under the successive governments.
The Dawkins reforms of 1988 and 1989 marked the explicit articulation of Australian HES into the economy, with the principal objective of higher education identified as servicing Australia’s economic competitiveness. It was the Dawkins reforms in which the contribution of higher education to Australia’s international competitiveness became central.
1987–1996: labour reforms
Dawkins reforms
The Hawke Labor Government was re-elected for a third term in 1987. Consistent with emerging trends in other countries, the re-election heralded a change in the socio-economic landscape of Australia, including a significant restructuring of the administration of government, and the re-organization and amalgamation of existing government departments. Within the Australian HES, the Dawkins reforms of 1987–1989 marked a shift in government–university relations with the Government nationally focused on the creation of quasi-markets and the corporatization of universities (Marginson and Considine, 2000). The foundations of a change in the Australian HES were the 1987 Green Paper 1 and the 1988 White Paper (Dawkins, 1988). 2 This review process, more commonly referred to as the ‘Dawkins Review’, was deemed necessary by the Government to promote growth in the Australian HES and to develop a long-term strategy for managing it (Dawkins, 1987, 1988).
A significant change emanating from the Dawkins reforms was the abolition of the existing binary system and the establishment of a Unified National System (UNS) of education. The introduction of the UNS required the Australian HES to consist only of universities and hence demanded that existing CAEs amalgamate with existing universities (Coaldrake and Stedman, 1999; Geodegebuure and Vught, 1996; Mahony, 1993; Slaughter and Leslie, 1997). These reforms established a new model of federal governance underpinned by the approach that ‘only government policy should direct the major allocations within higher education and all else should follow the dictates of good management’ (Marginson and Considine, 2000: 35). The Dawkins Review also clarified and defined the relationships between the Commonwealth Government, state governments and the Australian HES. The UNS was implemented on 1 January 1989 (Smart, 1997). With the establishment of a UNS, a Relative Funding Model was introduced in 1990 (Miller and Pincus, 1997). A research component of this model, referred to as the Research Quantum, aimed to support research activities other than those linked to postgraduate/higher degree research training (Ramsden, 1999).
The Dawkins Review Committee took the view that the introduction of an arrangement such as the UNS would involve a review of current management processes to make university structures more effective and efficient (Dawkins, 1987). Another objective of the Dawkins reforms was to prescribe a review of institutional management, including organizational structure, ensuring that there were adequate systems of accountability, streamlining the decision-making process and developing performance measures (Dawkins, 1987). To do this, the Dawkins reforms granted institutions greater autonomy in setting their course and research agendas, and greater control over their resources (Dawkins, 1987; Marginson, 1995, 1997).
The Dawkins (1988) White Paper also foreshadowed the introduction of accountability mechanisms and the development of performance indicators appropriate to the new higher education funding arrangements and the profiling process. Research, in particular, was to be funded increasingly through competitive grants schemes with the ‘goal of maximising the research potential of the Australian HES and achieving a closer alignment with broader national objectives’ (Smith, 1989: 1). The research role of the Australian HES was re-organized and research funding was to be allocated based on competitive principles. The Australian Research Council (ARC) was established as one of the four constituent councils of the National Board of Employment, Education, and Training. The role of the ARC was to provide both research funding and research policy advice, with a major responsibility for research, carried out in the Australian HES. The ARC became responsible for various research support schemes and moved research funding mechanisms away from indirect funding (i.e. through the core funding of the HES) to direct and competitive funding of individual research projects and/or researchers (ARC, 2016). Thus, research came to be accounted for and funded accordingly.
Karpin Committee and Hoare Review
The 1988 White Paper strongly advocated smaller and more business-like governing bodies or boards for Australian universities. However, as universities are constituted under state legislation, the Commonwealth was unable to either require or directly enforce such reform. In 1992, a Task Force Committee was established under the chairmanship and direction of David Karpin 3 to advise the Government on measures that could be used to strengthen the management and development of business leadership within Australian enterprises (Karpin, 1995). The recommendations of the Karpin Committee were overtaken by the subsequent Hoare Review. The Higher Education Management Review (Hoare, 1995) was established to review the governance, organizational effectiveness, financial management and accountability of publicly funded higher education institutions.
The Hoare Review recommended that universities adopt contemporary approaches to governance, managerial capacities and workplace practices, to enable them to respond to the changes taking place in the Australian HES (Hoare, 1995). Australia entered into a phase of tightly controlled government–institutional relations geared towards the corporatization of university governance and the exclusion of the academic voice (Gable, 2013). In the research space, there was a streamlining of different sources of funding, where the Commonwealth budget re-allocated from the universities to the ARC was AUD$5 million in 1988, AUD$20 million in 1989, AUD$40 million in 1990 and AUD$65 million in 1991 and 1992. The total amount of money added to the competitive research pool was significant with the budget for the ARC going from AUD$95.8 million in 1989 to AUD$140 million in 1991, and bringing the total funding for research to over AUD$230 million (Croucher et al., 2013). Universities’ abilities to meet research targets with a focus on priority areas as identified by the ARC took precedence in the distribution of the Research Quantum (Miller and Pincus, 1997). Performance indicators were developed to measure research performance of universities quantitatively through the use of a Composite Index (Anderson et al., 1996; Vidovich and Currie, 1998) and were used by the ARC to allocate funding for university research through the use of a funding formula via Research Quantum (Ramsden, 1999). As the competitive funding systems were accounting for research in some form or the other, governments were releasing more funds to the ARC for research in Australian universities.
Research quality management in the Australian HES
The Labor Government’s reforms of the Australian HES had several effects. The reforms set in train several long-term trends, which included enhanced national and international competition for students and research income, accountability for government funding and some movement towards performance-based funding (Meek, 2002). This made universities more accountable for the research funds they received. Furthermore, to protect the sector from any negative impact of the changes, the Government focused on quality assurance (Meek and Wood, 1998; Vidovich and Porter, 1997). There were three rounds of quality audits between 1993 and 1995, with the promise of additional funding acting as an incentive to institutions to conform with the Government’s priorities (Gallagher, 2003). Thereafter, from 1996, quality audits were incorporated into institutions’ reporting obligations (Gallagher, 2003: 30).
It was during this period that the Australian HES was reconceptualized, principally in terms of its contribution to economic restructuring and national economic competitiveness, with a focus on students’ completion of their studies, greater equity in the system and the constitution of education as a private rather than a public or collective good. It devolved responsibilities to individual institutions for responsibility for their spending and administration, and also for achieving the ‘agreed priorities’ that were to be negotiated between the Government and individual institutions via institutional profiles (Dawkins, 1988). Within these reforms, the freedom of institutions was limited and checked by the Commonwealth’s national goals and priorities, the profiling process and the terms of accountability required of the Australian HES by the Government. These policies and reforms constituted a case more of ‘steering at a distance’ (Ball, 1994: 54, 66), than of autonomy and independence.
Policy during this period was concerned with the longer term growth of the HES by encouraging international students, injecting more research funds and the development of management strategies for achieving these. These focused on PMSs designed to maintain autonomy at the level of individual universities while fostering a competitive environment in which funding would be allocated based on success in achieving research objectives. The Research Quantum was replaced by the Institutional Grants Scheme and other funding models through (1) project-based funding and (2) performance-based block research grants driven by formulae. Their use contributed strongly to universities’ ability to compete for a share of funding.
1997–2006: coalition reforms – Howard Government
In March 1996, the Labor Government was defeated, and a Liberal/National Government was elected under the leadership of Prime Minister Howard. The Howard Government maintained the economic direction of higher education policy and continued the broad patterns of reform and governance initiated under the previous Labor Government.
In 1999, the Kemp (1999) discussion paper on higher education research and research training was released. Its emphasis was the integration of higher education research into Australia’s ‘national innovation system’. The research was conceptualized principally as a basis for innovation-based economic growth and increasing the international economic competitiveness of Australian business.
Also, the Federal Government released several policy statements: Backing Australia’s Ability: An Innovation Action Plan for the Future (Howard, 2001a), Investing for Growth (Howard, 1997), Innovation – Unlocking the Future (Miles, 2000) and A Chance to Change (Batterham, 2000). Many of the recommended actions from these reports were directly reflected in the 2001 government policy statement, an important outcome of which was an injection of AUD$2.9 billion into the Australian HES in the form of ARC competitive grants, contributions to research infrastructure, financial support research and development activity (Larkins, 2011), compared to AUD$230 million a decade before.
Coalition policies 2001–2006
Dr Brendan Nelson set in train a number of reforms. They covered teaching, quality, workplace productivity, governance, student financing and research, as articulated in Higher Education at the Crossroads (Nelson, 2002), Setting Firm Foundations: Financing Australian Higher Education (Department of Education Science and Training (DEST), 2002) and Meeting the Challenges: The Governance and Management of Universities (DEST, 2002).
In 2004, the Government released its policy response to various reviews, comments and ministerial statements from 2001 to 2004 (Howard, 2004), announcing a further AUD$5.3 billion science and innovation package to complement the earlier AUD$2.9 billion package. When combined with other science- and innovation-related programmes, a 10-year commitment of around AUD$52 billion was projected. This increased investment was designed to build a strong, secure future for Australia by empowering researchers to address challenges related to the environment, agriculture, mineral resource development, emerging technologies and industries, and social well-being issues (Larkins, 2011).
The metrics that had been used to link research quality processes to performance-based funding have been identified as lacking ‘rigorous assessment or research quality and an inability to generate robust data to meet accountability and international benchmarking needs’ (Harman, 2009: 153). By 2004, a review of the reforms initiated by Kemp in 1999 stated that while the key principles of knowledge and innovation were supported, several stakeholders believed that there was a need to strengthen drivers for excellence through research quality (Department of Education Science and Training (DEST), 2004).
Since its establishment in 1987, through to 2001, the role of the ARC, along with other government agencies, was to provide both research funding and research policy advice for research carried out in the Australian HES (Harman and Meek, 1988). In 2001, the ARC became an independent body under its own legislation, the Australian Research Council Act 2001, and was given a broader range of advisory functions and administrative responsibility for the assessment of grant applications (ARC, 2012). The competitive nature of the research grant systems with an increased focus on research quality and the influential sections of the science community urged more rigorous assessment in the hope that a new quality assessment mechanism could lead to increased research funding (Harman, 2009). Reflecting on the transparency to be tied to research funding, the need for research assessment of the quality and impact of publicly funded research was acknowledged with the proposal for a research quality framework (RQF; Larkins, 2011).
The RQF
The proposal to establish an assessment system similar to the United Kingdom’s REF was first foreshadowed in the January 2000 Backing Australia’s Ability statement (Howard, 2001b). This was followed in March 2005 by an issues paper entitled Assessing the Quality and Impact of Research in Australia (Nelson, 2005). When releasing the issues paper, Nelson (2005) stated that the RQF was one of the highest priorities for the Australian Government.
The main rationale for introducing the assessment exercise was that it would allow for an assessment of the quality of research arising from investment of public money (Shewan and Coats, 2006). It was stated that it would enable the academic sector to assess its success, chart its future strategy, develop a funding model and introduce incentives to individuals and universities to improve research performance. The Government’s commitment to implementing the RQF was announced in November 2006 (Bishop, 2006), coinciding, according to Harman (2009), with the emergency of global university ranking systems.
Comparable to the models of the United Kingdom’s REF and the New Zealand’s PBRF research assessment exercises, the RQF would assess both the quality and the impact of research on individuals and was to become a mechanism for the distribution of non-grant research infrastructure funding.
Under the 2006 RQF, universities would submit evidence portfolios for research groups of the four best research outputs of staff over the preceding six years. A total of 13 discipline-based Expert Assessment Panels (including at least 50% international experts) would evaluate and rate both the quality and impact of the research work. These ratings would inform the distribution of research infrastructure funds. The exercise would be undertaken on a six-year cycle, subject to the evaluation of the first round. The Expert Advisory Group (EAG, 2006) also claimed that the RQF, in ‘recognising and rewarding high quality and high impact research’ would ‘encourage greater investment from Australia’s business community’ (p. 11).
It was anticipated that the deadline for institutional RQF submissions would be 30 April 2008. Consequently, throughout 2007, with the policy focus for the Government on the implementation of the RQF, universities embarked on significant internal exercises to determine research groupings, creating staff research productivity profiles as required. The process was expensive as well as disruptive to normal research activities for the researchers involved (Larkins, 2011).
Consistent with the policy direction of previous Labor governments, the Coalition Government continued the orientation of the HES towards a competitive approach and increased research funding. As the funding was increasingly tied to research outputs, an assessment regime focusing on research quality was proposed. The Government thus imposed a PMS on universities, requiring them to account for their research outputs. This, in turn, necessitated the development of PMSs within universities as they positioned themselves for the RQF.
2007–2010: labour reforms
2007 was an election year, and the Australian Labor Party committed itself to an education ‘revolution’, although specific higher education commitments were absent from its policy agenda. The Labor Government was elected in November 2007, and the higher education policy was yet again subject to major review.
In January 2008, a review of the National Innovation System was chaired by Dr Terry Cutler, an industry consultant. The central term of reference for the review panel was to identify gaps and weaknesses in the innovation system and develop proposals to address them. Among recommendations was prioritizing research on agriculture, food security, climate and health. The Cutler Review called for an additional AUD$2.2 billion annually for university research. It also called on governments to restore spending on research to 0.75 per cent of GDP by 2010, compared to its current 0.55 per cent (Cutler, 2008). In the longer term, the review recommended public spending on research to be increased to 0.9 per cent of GDP, consistent with the most research-intensive OECD nations (Cutler, 2008).
In 2008, the Bradley Review (Bradley et al., 2008) recommended a massive expansion in the level of domestic training by Australian universities. In its 2009–2010 budget, the Labor Government announced an AUD$5.7 billion investment over four years for reforms to the Australian HES. The Government’s increasing investment in the research proposed a reform agenda for higher education and research that would transform the scale, potential and quality of the nation’s universities (Department of Industry Innovation Science Research and Tertiary Education (DIISR), 2009).
One of the first policy decisions of the Labor Government was to announce that the RQF exercise initiated by the previous Government was cancelled because it was fundamentally flawed, being ‘poorly designed, administratively expensive and relying on an impact measure that is unverifiable and ill defined’ (Carr, 2008). While there were many inadequacies in the manner in which the RQF exercise was crafted, it did provide a stimulus for universities to develop formal PMSs around accounting for research. This enabled them to construct their fields of research excellence, reassess research strengths and priorities relative to national and international benchmarks and evaluate the impact of outputs beyond peer-reviewed publication and citations (Larkins, 2011).
ERA
In 2008, the Labor Government introduced its research quality assessment scheme, ERA, to be implemented across the Australian universities. ERA was to replace the RQF, being proposed to set up internationally recognized research quality assurance processes using metrics or other agreed-upon quality measures appropriate to each research discipline. The establishment of the Tertiary Education Quality Standards Authority (TEQSA) under the Tertiary Education Quality and Standards Act, 2011, marked a move towards a more centralized regulation of Australian universities. ERA data were expected to play a role in monitoring the research standards administered by TEQSA (Gable, 2013).
The first ERA exercise was undertaken in 2010, the second in 2012, the third in 2015 and the next in 2018. These exercises required universities to collect data from individual researchers on their research activity aligned to eight discipline clusters. Data collected across the eight discipline clusters were allocated 2- and 4-digit Field of Research levels. The 4-digit code served as the Unit of Evaluation, although if there was insufficient research activity to meet the minimum threshold needed for analysis, the data were aggregated and then evaluated at the 2-digit level. Universities submitted data to ERA at the 6-digit level, and these were aggregated to form the 2-digit and 4-digit Units of Evaluation (ARC, 2009). As the ERA units of analysis were research fields, and it employed peer review informed by bibliometric measures, for many disciplines ERA as a PMS has been argued to be state of the art (Hicks, 2012). Inevitably, the ERA requirements necessitated the development of PMSs internal to each university in order to achieve and collate these metrics.
A new government was elected and was made up of members of the Liberal-National Coalition in 2013. The prime ministership of Malcolm Turnbull commenced in 2015. Since that time, there has been a shift in emphasis of the Federal government concerning research funding and the ERA.
Statements by the Minister of Education (Birmingham, 2016) and various Australian Government papers (e.g. Department of Education Training (DET), 2015; Watt, 2015) have highlighted a shift towards relevance and impact of university research and teaching. An inquiry by the Joint Select Committee on Trade and Investment Growth (JSCTIG) into Australia’s Future in Research and Innovation (JSCTIG, 2016) noted that, although Australia has world-class universities and research organizations, it is ranked last in the OECD in research–business collaboration. They also noted that strengthening the relationship between innovative businesses and research organizations will be crucial to Australia’s economic success in the coming decades.
As part of the National Innovation and Science Agenda, the Government committed to investing approximately AUD$3.5 billion in university research. It also aimed to introduce a national engagement and impact assessment, assessing non-academic impact as well as industry and end-user engagement (Cooper and Guthrie, 2017). The Government argues that the national evaluation will demonstrate how universities are translating their research into economic, social and environmental impacts (ARC, 2016).
Following the Watt review, the ARC (2016) and Department of Education and Training issued the National Innovation and Science Agenda – Engagement and Impact Assessment Consultation Paper in 2016. The purpose of the document was to seek the views of stakeholders on the framework for developing the national assessment of the engagement and impact of university research. It also aimed to provide an overview of the current Government’s policy rationale, parameters and key issues regarding university research engagement and impact (ARC, 2016).
Watt (2015) recommended changes to the distribution of research block grants, with research support grants to be based equally on Category 1 and Categories 2–4 research income. In addition, research training grants are to be based equally on student completions and research income. Publication points are no longer the key driver as in the past. It is now engagement, impact and research income that will most likely count for future government funding. Assessment of the economic, social and other benefits of university research through an impact and engagement evaluation framework will also influence future research funding. This evaluation is to take place at the same time as the 2018 ERA exercise (Burritt et al., 2017).
Reflections
The objective of this article was to explore the history of accounting for research in the Australian HES, in particular identifying how successive Australian governments have steered research within the sector through the introduction of PMSs in line with NPM reforms.
The research is consistent with studies that have found various changes in government research policy and PMS accounting for research in recent years have had a negative impact on academics, including increased academic workload and stress levels (e.g. Martin-Sardesai et al., 2017b, 2017c; Martin-Sardesai and Guthrie, 2018). These studies support the international literature on the impact of research assessment exercises on academics, including that published by Broadbent (2010, 2011, 2016) and Edgar and Geare (2010) on the experiences of academics in the United Kingdom and New Zealand. A particularly relevant observation by Martin-Sardesai et al. (2017a) is that by considering the concerns of academic staff, university management will hopefully make the necessary improvements in PMS. They need to take into consideration the overall performance (i.e. teaching, research and service) of academics, rather than an unbalanced focus on the research component, as defined by A* articles, of an academic’s work performance. It is interesting to note that the ERA has not made use of journal rankings since 2010, and while universities have continued to use them internally, it is the ARC’s firm view that this should stop (Cooper and Guthrie, 2017).
Broadbent (2016) presented a current review of the REF in the United Kingdom, based on her observations and work as a REF reviewer and a panel member. Her fundamental argument is the importance of impact in the sense that academic research should engage with practice and policy-making. In her discussion, Broadbent (2016) raises several issues that are worth considering:
the first issue to highlight is that research impact is significant and, in our context, this means that engagement with policy and practice is important. The second issue is that we should recognise that academics, accounting practitioners and accounting policymakers are all part of the same profession and do different but complementary things. The third important issue is that communication is foundational for impact, for the profession as a whole but particularly so for researchers. This is one reason why we now have the inclusion of impact measurement in the REF (Broadbent, 2016: 24) … The fourth issue is to stress the importance of accounting education in the context of impact. (p. 22)
The reason that the above well-articulated issues are important is that academia is now faced with a different PMS in the United Kingdom – the recent REF was based on impact and industry collaboration.
Over two decades of a focus on research ‘quality’ in Australia (Martin-Sardesai et al., 2017c) and the contemporary ERA, process for the Australian HES has moved universities and many academics to focus on the so-called ‘quality research’ (Martin-Sardesai et al., 2017a). This has come with significant unintended consequences, such as academic burnout, obsession with rankings and ratings, casualization and a dwindling emphasis on teaching quality and practice as well as industry engagement (McCarthy et al., 2017; Martin-Sardesai et al., 2017b).
Recognizing the importance of research in the Australian HES, and to effectively balance university needs with the public interest (Marginson, 2002), successive Australian governments have steered the system through numerous policies and reviews. This process established policy settings that ensured resources available to universities for research were increasingly oriented to serving the national interest, reflecting public demands for accountability regarding the use of public funds, and, increasingly, were allocated on a competitive basis. Relying on publicly available documents and scholarly literature, the study traced the development of performance measures since the Dawkins reforms in 1987 through to the formal implementation of ERA in 2010 and it subsequent iterations up to 2017.
The substantial reforms are interpreted as an implementation of the NPM philosophy (Considine, 2006). The reforms introduced over the years indicate an increased focus on the performance, with the underlying expectation that they will embrace a competitive operational culture (Schramm, 2008). Consistent with Vidovich and Currie (1998), the findings presented in this article outline the way successive Australian governments have employed PMSs to steer the Australian HES towards a public accounting for research performance. Systems requiring universities to be more responsive to the strategic imperatives of the Government have included PMSs in the form of explicit performance indicators, quality audits, educational profiles, research quantum, RQF and ERA. Tied as they are to the Government’s allocation of public funds to universities, these requirements are a powerful reminder of the control and accountability dimensions of PMSs (Angluin and Scapens, 2000).
The ARC funding body drove specific outcomes in line with national priorities, and the embedding of ERA systems into transforming universities into responsible agents that acted strategically and efficiently in meeting research targets. These systems’ implications are in line with the views of Evans et al. (2011), Laughlin (2011) and Woods and Grubnic (2008), who noted that the influence of PMSs has led to the enactment of regulatory frameworks from a distance, as opposed to a more detailed hands-on regulation of public services.
Broadbent (2011) and Otley (2012, 2016) in commenting on the United Kingdom’s REF identified PMSs as dynamic, requiring managers to assess contextual conditions and, where required continually, modify PMSs to bring about desired organizational changes. The Australian ERA can be seen as a significant PMS (Otley, 2010), the product of a progression of PMSs, powerfully influencing institutional reputation. Australia has continued its transformation journey with university PMSs aligned with the Government’s ERA, using it as a tool to exercise management control and demonstrate accountability (Angluin and Scapens, 2000). In aiming to achieve a good ranking in the ERA outcomes, it would be expected that university management would look for ways for improving future ERA research performance and will use PMSs to assist in monitoring, measuring, enhancing and reporting organizational performance.
With the introduction of major reforms through public policy change in the late 1980s under the banner of NPM and the use of performance measures, the Australian HES has moved to market-based, and in some cases quasi-market, operations (Guthrie and Neumann, 2007). However, it is worth considering that the stability of these reforms is in no way secure or guaranteed and may produce perverse effects. With financial incentives influencing the priorities of universities, many academics find that their initiatives are limited to those that are financially beneficial (Bessant, 2002). It has not been the aim of the article to critically evaluate the changes in the Australian HES with the advent of NPM and PMSs. Rather, the goal is to trace the PMS implications of the NPM reforms and to reflect on the progressions and processes of institutionalization over time.
It is questionable whether universities will be able to provide an environment that permits the academic freedom vital to high-quality research since the management requirements of ERA-influenced internal PMSs will likely determine the focus and conduct of academic research (Broadbent, 2016).
Conclusion
This research contributes to a deeper understanding of the changes in government policies that have resulted in a continuous endeavour to account for research over the last three decades. By providing the historical context of a succession of government reforms based on NPM, and focusing on the development of PMSs to account for research, the study demonstrates the relationship between government policy, institutional response and implementation. Irrespective of cautionary observations over key elements of the NPM, such as the dominance of calculative practice and performance (Lapsley, 2008), NPM through the use of PMSs has continued. The significance of PMSs within the HES from the perspective of the development of performance measures by government, regulatory bodies and by researchers into the development of performance indicators (Johnsen, 2005; Lapsley, 2008) cannot be underestimated. The adoption of benchmarking (Bowerman et al., 2001) via ratings awarded through research assessment exercises is not proven to be elusive. This accounting history research demonstrates that quantification which is at the heart of NPM and the development of PMSs are no longer myths as identified by Modell (2004).
PMSs have colonized vast segments of academia and increasingly regulate the conduct of research in the Australian HES, which is conducted with reference to ERA. This, in turn, has had an impact on PMSs adopted by universities, which increasingly regulate the conduct of academics. Despite sensitivity to the potentially detrimental effects of an excessive emphasis on PMSs, individual academics have been forced to behave in accordance with the rules of the game (Martin-Sardesai et al., 2017b). While it may be reasonable to believe that institutional incentives are required to increase research productivity, an overemphasis on PMSs may stifle innovation. Also, universities and academics may game the system in order to portray themselves as achievers of their performance targets (referred to as a dysfunctional effect of PMSs; see Martin-Sardesai, 2016; Martin-Sardesai et al., 2015, 2017a, 2017b).
By providing a detailed review of the various policies and reforms that have been introduced to steer research in the Australian HES, this article responds to the call for well-documented research on policy changes in the HES (Broadbent and Guthrie, 2008). The implementation of ERA as a formal research assessment exercise has increasingly influenced performance reviews and appointments at the university level, requiring individual academics to reconcile these strategies and their own research interests (Martin-Sardesai et al., 2017b).
In analysing the consequences of PMSs for the Australian ERA, the study adds to the literature on NPM and PMSs by providing valuable insights about the use of PMSs by governments. Just as the Government was making direct links between universities’ research performance and funding allocations, in the first instance, now universities themselves may draw direct links between research assessment and resource allocation. Thus, PMSs could both aid decision-making and lead to distortion, simultaneously producing benefits and dysfunctions. Organizational members might, for instance, game the system to increase their individual, organizational benefits, or to gain a good reputation, or there may be a loss of human capital (Martin-Sardesai and Guthrie, 2018).
Despite its many advantages, our research method has its limitations as a tool, as it relates to authors’ views and interpretations. Although insights from other researchers have been drawn, the interpretation of this study, from the viewpoint of PMSs as a means of accounting for research, is a limitation of this study.
In terms of future research, while research has considered the negative impacts of PMSs on the behaviour of individuals, there is little research considering the extent to which these negative impacts are due to the dysfunctions arising from the actions of organizations and individuals themselves. This is an important issue for universities to consider, as these effects may not only hinder the growth of research quality but could portray a ranking, which is not a true reflection of a university’s strength. It could also deprive well-performing universities of their research standing and funding. Given the significant economic and social implications of HES policy and the size of government investment in the sector, these important issues surrounding the potential dysfunctional effects of the ERA PMSs are worthy of further research.
Footnotes
Acknowledgements
We are grateful to Helen Irvine, Adjunct Professor of Accounting, QUT Business School, for providing stimulating comments and guidance during the final stages of revising this paper.
Funding
The author(s) received no financial support for the research, authorship and/or publication of this article.
