History of performance measurement systems in the ... Paper_AH...Sydney, NSW 2000, Tel: 02 9324 5752, Email: [email protected]. Acknowledgements We are grateful to Helen Irvine,

1

History of performance measurement systems in the Australian

higher education sector

Author Details

Dr Ann Martin-Sardesai

School of Business and Law, Central Queensland University, Sydney, Australia

Professor James Guthrie

Department of Accounting and Corporate Governance, Macquarie University, Sydney,

Australia

Associate Professor Stuart Tooley

School of Accountancy, Queensland University of Technology, Brisbane, Australia

Dr Sally Chaplin

School of Business and Law, Central Queensland University, Brisbane, Australia

Corresponding Author

Ann Sardesai, School of Business and Law, Central Queensland University, 400 Kent Street,

Sydney, NSW 2000, Tel: 02 9324 5752, Email: [email protected].

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.

mailto:[email protected]

For Peer Review

History of research performance measurement systems in

the Australian higher education sector

Journal: Accounting History

Manuscript ID ACH-16-0105.R4

Manuscript Type: Research Article

Keywords: Australian higher education sector, New public maagement, Performance measurement systems, Accounting history, Research performance measures

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

paper 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.

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Accounting History

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History of research performance measurement systems in the

Australian higher education sector

1. 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,

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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

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“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 paper 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, 2016).

The objective of this paper is to explore the history of accounting for research in the

Australian HES (AHES), 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 paper 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

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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 PMS 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 paper is structured as follows. The next section briefly outlines the background of

the Australian HES. Section 3 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 paper by outlining contributions and

limitations and suggests opportunities for further research.

2. The Australian higher education sector

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

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AUD$21.8 billion in 2016 (ABS, 2017), and was ranked third after coal and iron ore

(DFAT, 2017).

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 programs costing about AUD$15.7 billion in 2015–2016 (Norton, 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 & 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 AHES 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). Accordingly, 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

paper is on the relevant research policies developed by successive Australian Federal

governments, the predominant funder of universities.

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3. Performance measurement systems

The global transformation of the nature and structure of the HES accelerated rapidly

towards the end of the 20th 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 (Abott 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 (Guthrie et al., 2017).

Consequently, the research performance and research quality of the HES is 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

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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 performance measurement systems

(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

(Lapsley, 2008; Johnsen, 2005). A second perspective is the manner in which new

techniques, notably benchmarking has been adopted by public service organisations

and how comparability can prove elusive (Bowerman et al., 2001).

Ferreira and Otley, (2009: 264) 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.

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).

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People within organizations respond to PMSs in fairly predictable ways, 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

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(UK) (HEFCE, 2010), Performance Based Research Funding (PBRF) in New Zealand

(NZ) (TEAC, 2003, 2006), and ERA in Australia (Martin-Sardesai et al., 2016). 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

UK, research assessment exercises have been undertaken since 1980 and have been

instrumental in shaping the HES (Broadbent, 2016; Evans, 2014; Martin-Sardesai et al.,

2017). The literature on the effects of research assessment exercises has generally

acknowledged its contribution to UK 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 AHES. 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 match

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

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important, since achieving a good rating in the UK assessment exercise can affect

university funding for several years (Agyemang and Broadbent, 2015). Lucas (2006)

demonstrated that there has been an intensification in the management and organization

of research activities within universities in response to successive assessment exercises

(Lucas, 2009). 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 (Martin and

Whitley, 2010; McCarthy et al., 2016; 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, 2017), 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 are 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.

4. Research Methods

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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 (2002, 2004), Department

of Industry Innovation Science Research and Tertiary Education (2009, 2011),

Department of Foreign Affairs and Trade (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 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)

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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. Additionally, 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 paper 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 multi-dimensionality of the history

of research 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

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a result, the next section of the paper 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.

5. The Rationale for PMSs in the Australian Higher Education

Sector (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 sub-sections, 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: Labor 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-

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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 Paper1 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,

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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 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 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 (Dawkins, 1988).

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 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 AHES. The ARC became responsible for various research support

schemes and moved research-funding mechanisms away from indirect funding (that is,

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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 either to require or directly

enforce such reform. In 1992, a Task Force Committee was established under the

chairmanship and direction of David Karpin3 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 $5 million in 1988, $20 million in 1989, $40 million in 1990, and $65 million in

1991 and 1992. The total amount of money added to the competitive research pool was

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significant with the budget for the ARC going from $95.8 million in 1989 to $140

million in 1991, and bringing the total funding for research to over $230 million

(Croucher et al., 2013). Universities’ ability 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.

Further, 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).

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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 completion, 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

maintaining 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

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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 discussion paper on higher education research and research training

was released (Kemp, 1999). Its emphasis was the integration of higher education

research into Australia’s ‘national innovation system’ (Kemp, 1999). 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 (DEST, 2002) and Meeting the Challenges:

The Governance and Management of Universities (DEST, 2002).

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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 programs, a

ten-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 there was a need to strengthen drivers for excellence

through research quality (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 AHES (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

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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 (Larkins, 2011).

The Research Quality Framework (RQF)

The proposal to establish an assessment system similar to the UK’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 research quality framework 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 Research Quality Framework (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 UK’s REF and the NZ’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.

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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. Thirteen

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 also claimed that the RQF, in “recognising and rewarding high quality

and high impact research” would ”encourage greater investment from Australia’s

business community” (EAG, 2006: 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: Labor Reforms

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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. Also governments to restore spending on research to

0.75% of GDP by 2010, compared to its current 0.55% (Cutler, 2008). In the longer

term, the review recommended public spending on research to be increased to 0.9% 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 (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

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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).

Excellence in Research for Australia

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 was 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

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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., Watt, 2015; DET, 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 into Australia’s Future in Research

and Innovation (Parliament of Australia, 2016), noted that:

“Australia has world-class universities and research organisations but is ranked

last in the OECD in research-business collaboration. Strengthening the

relationship between our innovative businesses and our research organisations

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 $3.5 billion in university research. It also aims 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).

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Following the Watt review, the Australian Research Council (ARC) and Department of

Education and Training issued the National Innovation and Science Agenda –

Engagement and Impact Assessment Consultation Paper in 2016 (ARC, 2016).The

purpose of the document:

“… is to seek the views of stakeholders on the framework for developing the

national assessment of the engagement and impact of university research. It

provides an overview of the current Government’s policy rationale, parameters

and key issues regarding university research engagement and impact.”

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).

6. Reflections

The objective of this paper 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

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impact on academics, including increased academic workload and stress levels

(e.g.,Martin-Sardesai and Guthrie, 2017; Martin-Sardesai et al., 2017a; Martin-Sardesai

et al., 2017b). 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 UK 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 UK, 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: 22) 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

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(p. 24) … The fourth issue is to stress the importance of accounting education in the

context of impact”.

The reason the above well-articulated issues are important is that academia is now faced

with a different PMS in the UK – 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 Excellence in Research for Australia (ERA) process for

the Australian Higher Education Sector has moved universities and many academics to

focus on 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, casualisation and a dwindling emphasis on teaching quality and

practice as well as industry engagement (Martin-Sardesai et al., 2017a; McCarthy et al.,

2016).

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.

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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 they will embrace a competitive

operational culture (Schramm, 2008). Consistent with Vidovich and Currie (1998), the

findings presented in this paper 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 UK 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

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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 paper 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).

7. Conclusion

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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 (Lapsley, 2008; Johnsen, 2005) 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 reveals 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., 2016). 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

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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 paper 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., 2017a).

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, 2017).

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. Setting the context is an

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attempt to provide a multi-dimensional approach, but as in all studies of this kind, that

has its limitations.

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.

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DIISR (Department of Industry Innovation Science Research and Tertiary Education) (2009) Transforming Australia's Higher Education System. Canberra, ACT: Australian Government Publishing Service.

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Hood C (1995) The "New Public Management" in the 1980s: Variations on a Theme. Accounting Organizations and Society 20(2/3): 93-109.

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Martin-Sardesai A, Irvine H, Tooley S and Guthrie J. (2017b) Organizational change in an Australian university: responses to a research assessment exercise. The British Accounting Review 49(4): 399-412.

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Schramm C (2008) Reinvigorating universities in an entrepreneurial age In: Weber LE and Duderstadt JJ (eds) The Globalization of Higher Education Economica. Geneva: Glion Colloquium Series No.5, pp. 15-26.

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Vidovich VL and Currie J (1998) Changing Accountability and Autonomy at the "Coalface" of Academic Work in Australia, Thousand Oaks, CA: Sage Publications Inc.

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1 A green paper is an official document prepared by the Australian Government and tends to be a statement, of propositions put before the whole sector for discussion, rather than policy already determined. It is produced early in the policy-making process, while ministerial proposals are still being

formulated. 2 A white paper is a means of presenting government policy preferences prior to the introduction of legislation. Publication of a white paper serves to test the climate of public opinion regarding a controversial policy issue and enables the Government to gauge its probable impact. 3 Great attention was paid to the task force committee’s report led by David Karpin, Group Executive of

Conzinc Riotinto of Australia Ltd, because it was the most critical of Australian managers. It was also an extensive and wide-ranging report as it contained numerous recommendations that aimed at improving

management and business leadership.

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