An investigation on allocative efficiency and implications of new funding plans for the Australian universities

In 2013 and 2014, the Australian Federal Government introduced the Gonski reforms and fee deregulation measures to reform the prevailing financing provisions for education sectors in Australia. The central proposition of the proposed new measures was to reduce the funding of public universities by the Federal Government. One likely consequence of the proposed measures was thus decreased government funding. In the given context, public universities were pressured into designing new strategies to cope with decreasing government funding. This paper examines the productive efficiency of public universities as a potential strategy. Using a concept of cost efficiency in production economics, cross-sectional data, correlation analysis, and regression analysis, this study explores the scope of allocative efficiency for public universities. Finally, this study recommends the intensive use of non-teaching staff in order to cope with any budgetary challenges.