USP and the illusion of State ‘grants’

USP students and staff members with their placards in support of vice-chancellor Prof Pal Ahluwalia. Picture: FACEBOOK

Would a consumer ever take a loaf of bread from a shop but inform the shop-keeper “I am not going to pay you for this loaf of bread until you fix up your management?”

That is exactly what the public sees happening at The University of the South Pacific, the premier regional university.

One of the customers, the Fiji Government, who is also a minority shareholder in the shop, is telling the USP Council that will not pay its bill to USP for teaching Fiji Government sponsored students at USP until its “conditions” are met.

You know exactly what an ordinary shopkeeper would tell that customer anywhere in the Pacific.

The media is reporting that the Fiji Government is threatening the withholding of its “grant”.

But the public should be clear that the funds being withheld are NOT “grants”.

They are legally required payments for a service being delivered by USP.

USP Council would be entitled to sue the Fiji Government or tell its students to go elsewhere.

Fortunately, the other regional governments and donors to USP are all too aware of the importance of maintaining USP as the productive tertiary training institution it really is and its great use to the region (including Australia and New Zealand).

So how do you explain the mess at USP? One key problem is that the membership of USP Council does NOT represent proportionately the true shareholders of USP.

The Fiji Government has an unfair government representation, out of proportion to its contribution to USP’s Budget.

The Fiji Government is NOT the majority contributor to USP’s budget, even if the largest proportion of USP’s students are from Fiji.

The Fiji public must also ask why some representatives of the Fiji Government are interfering with the governance of USP, when there is a USP Council responsible for its management.

This question is especially important given that the Prime Minister of Fiji is on record saying that he will not interfere with the running of boards of public enterprises like Fiji Airways. So does this apply to USP?

Who pays for USP?

Firstly, the public should be clear about who exactly pays (and how much) towards the running of USP, and whether these groups are proportionately represented and influential on USP Council.

The funding of USP, as of most universities globally, has always been a complex and changing affair.

It involves a mix of taxpayer subsidies (because tertiary education is usually considered a public good) and private market demand.

USP’s funding formula is made more complex because instead of just one government, USP has had 12 regional governments, as well as a number of significant donors, including Australia, NZ, Japan, Canada, the European Union and others.

The formula for funds made available to USP often did not reflect the changing numbers of students, nor the vastly different costs of programmes and levels.

I note that the current formula does take into account the differential costs of programmes but there are still fundamental faults.

In the early years of USP, the regional governments and donors paid for the bulk of the capital and recurrent costs.

Private student fees were but a small proportion of total revenues.

But not any more because as with most universities the world over, USP’s funding has also gradually moved towards market principles, with the consumers bearing a heavier burden.

The graph shows the sources of USP’s total revenue in 2019, amounting to a total of $177 million (somewhat less than in previous years).

But while some representatives of one Government (Fiji) loom large in the media over the mess at USP, few members of the Fiji public understand that total government contributions from all the member governments have now declined to a mere 21 per cent of total USP revenue or $38m altogether.

The Fiji Government’s share is even less.
But private students’ fees contribute a massive $80 million – more than twice that of all the governments together.

They are effectively the largest shareholder in the corporate entity called USP. But they have little say.

Sharing of government contributions

Governments’ total contributions, now only 21 per cent of total revenue, are decided every three years by the University Grants Committee.

But each government’s share of this portion by the member governments, is through two complicated formulae.

One half is via the student grant or general grant, which is divided up among governments in proportion to their students enrolled.

The second half is now called the campus grant. This is divided up among governments in proportion to the amounts USP spends on salaries in the respective territories.

This second half is a crazy political “concoction” supposed to reflect the economic benefits each government receives by hosting USP facilities.

Fiji, Samoa, Vanuatu and Solomons usually pay a heavier proportion of this component because of the size of the facilities in their territories (there is another story to be told here).

But what each government gets from USP is astonishing as the following Table shows.

Fiji does contribute the most, some $34 million in 2019.

But Fiji also has some 9930 equivalent full time Fijian students at USP, effectively and crudely, costing them an average of only $3471.

I suspect that this is way cheaper than what their students at FNU and Fiji University cost.

ALL the member countries, except for tiny Niue and Marshall Islands, get an absolute bargain from USP.

If any regional member government were to send their students to an overseas university, you can guess yourself how much it would cost their taxpayers.

Of course, all these low average unit costs are subsidized by private students fees and donors’ contributions, as well as some independent incomes (consultancy fees, book centre, residential fees)
earned by USP units and staff (some $30m in 2019).

Then, what is often forgotten is that while donors to USP contribute almost as much ($30 million) to USP revenues as member governments, in previous years they contributed even more, while financing the bulk of building construction at USP since its inception in 1968.

Of course the donors in Australia, NZ, Canada and US have had the great hidden benefit of obtaining tens of thousands of former USP graduates, at no cost to their own education budgets.

Unfortunately, while donors have a couple of representatives on USP Council, they probably decline to assert themselves because of political sensitivity to being “outsiders”.

But the unfortunate result is then a dereliction of duty to the Pacific peoples who deserve good governance at USP Council and the help of strong, neutral, objective and knowledgeable voices which
donor representatives can be, as they are usually senior Australian and New Zealand academics.

Who manages USP?

USP is supposed to be managed by USP Council which has representatives of Member Governments (around 19), Students (2), Staff (2) Donors (2) and an assorted five who are labelled “co-opted”.

Then there are the USP senior management who “attend” the meetings.

But if USP were a normal corporate entity, would the above representation of “directors” to the governing board, represent the “shareholders”? I suggest no.

The public should be asking: why is one board member of USP Council, a minority member at that, interfering with the internal management of USP, which is properly the domain of the USP Council?

It is quite clear that the Fiji Government reps are usually the most dominant in USP Council, extending to pressure from the Fiji Government for academic censorship of staff and students.

In turn, the USP management, staff and student representatives to USP Council have usually been those sympathetic to the directions given by the previous VC.

USP Council has sadly not had the benefit of independent voices from within USP as used to be the case.

The public would have noted the completely opposite stance taken by the PM of Fiji who has declined to interfere with the Fiji Airways decisions on staff laid off because of COVID-19.

So why does the PM allows one of his ministers to interfere with the governance at USP while he himself says nothing?

It is fortunate for USP that the smaller government representatives are taking an independent approach to the governance of USP and not giving in to these few Fiji Government representatives.

But still, there is a mess that has been inherited by the current ViceC.

What is the USP mess?

For decades, USP quietly operated, turning out qualified graduates and contributing to the wider intellectual life of the region, with little public rancour.

Academic censorship began under the current government , with staff (including myself) being pressured to leave because of concerns over Fiji Government funding.

It is a tragedy that there have been so many accusations and counter-accusations flying around in the media, and even more in the social media and blogs, without the public being informed accurately of what the problems are.

Even this premier university has gone into secrecy mode, deliberately denying the public access to USP policy documents (which USP management now calls “internal” as one just did recently to me in an email communication).

The VC (Pal Ahluwalia) made a formal complaint to USP Council with many serious allegations about appointments, promotions and emoluments.

This has not been made “public” but the blogs have had a field day.

Those of us who know the inner workings of USP think that most of these allegations have substance.

But one Fiji Government representative who was the Chairman of the Audit and Risk Committee commissioned an outside, supposedly independent, investigation (by BDO Auckland) of the Ahluwalia

He produced a report which has not been officially released to the public, although the social media have been circulating it.

Those of us who know the inner workings of USP over the recent years feel that the BDO Report fudged most of its conclusions on the Ahluwalia allegations.

The BDO Report did, however reluctantly, admit to a few “substantiated” and “partially substantiated” allegations.

I won’t go into the details of the Ahluwalia allegations or the BDO Report findings, but suggest that any intelligent person who reads USP Financial Statements to USP Council ought to be asking how it is that the administration became so totally top-heavy and emoluments escalated.

These Financial Statements (on the USP website) reveal that the number of senior management staff who received more than $300,000 went from 0 in 2008, to five in 2017 and then to 11 in 2018.

There was controversy about the renewal of a few selected senior contracts at the end of the previous VC’s tenure when it had been agreed that the new VC would be consulted (because these senior staff
would be part of his Senior Management Team – quite a reasonable thing to agree I would think).

I won’t go into the shocking approval of multiple responsibility allowances to some senior managers.

I won’t even go into all the glossy public relations reports released by USP, including a whitewashed “history” of “USP@50” which glosses over the many fundamental problems currently faced by USP.

These include the mirage of healthily growing enrolments when a large partover the last five years has been due to the inclusion of a large “Pacific TAFE” technical training program.

Or the declining quality of students and staff, the stagnant quality of research and public policy output, increasing legitimate competition from national universities in Fiji, Samoa and Solomon Islands; and Fiji government censorship of academic staff and students.

There is also the frequent resurrection of the false bogey of “Fiji hogging all the benefi ts” of USP.

This was recently even repeated by a senior Fiji academic who should know better given his eighties experience (another story sometime).

A better USP Council There is an urgent need to ensure that USP Council better reflects the real shareholders or financiers of USP.

They deserve a quality, vibrant university that serves the region independently and fearlessly, as it has been until the censorship years of the Bainimarama Government.

First, the majority of USP Council should comprise representatives who hold themselves accountable to the private students and parents of the region who contribute the most to USP’s revenues.

I would suggest to all political parties in the region that they announce policies to strengthen “people’s representatives” to USP Council.

Their primary brief must be to fight for the interests of parents and students who contribute more to USP than the governments do (even though all that the governments do is contribute taxpayers’ money).

Second, Government representatives should represent both Government and major opposition parties and not just the ruling party (which has an incentive to stifle independent thinking at the university).

Third, donor representatives must be specifically requested by USP Council to be more assertive in the governance of USP, so that USP is better accountable for the use of donor money.

Fourth, USP Council has to explicitly espouse a culture of openness and accountability to the Pacific public, which it has sadly lost in recent years. Fifth, USP Council needs to commission an independent “USP@50” review team made up of knowledgeable former USP academics and international education
experts to record where USP has come from and chart where it should be heading in the future, for the collective interests of the Pacific peoples.

  • Professor Wadan Narsey is an Adjunct Professor at James Cook University and a former Professor of Economics at the University of the South Pacific where he worked for more than 40 years. The views expressed are the author’s and not necessarily of this newspaper.

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