At the LH Martin Institute's executive seminar series,University of Melbourne's Graduate School of Education, Professor Frans Van Vught praised new policy initiatives being introduced to the sector.

Within an international context of increasing homogeneity in higher education, the Australian Government's attempts to recognise and nurture diversity are making international policy makers take note, he said.

Professor Van Vught believes economically successful countries must have a diverse higher education system, citing benefits such as greater social mobility, the ability to meet better diverse labour market demands and increased institutional effectiveness.

Australia, like all other Western industrialised nations, simply can't afford to have a large number of research-intensive, internationally competitive institutions. Instead, it will flourish with a range of institutions focusing on various areas of strength, such as regional engagement and learning and teaching.

I am encouraged to see new policy initiatives being discussed here in Australia that have the potential to support this kind of diversity. If mission-based compacts, for example, become related to performance in a wide-range of areas (not just research), with corresponding financial incentives for each type of institution, they could become a very powerful vehicle to encourage true diversity, he said.

However, Professor Van Vught warns of two major challenges Australia faces in developing a truly diverse higher education system.

The first being that the Government shy away from creating different funding conditions for different categories of institution because they are wary of making a negative impact on institutional autonomy.

He said that by acknowledging the various areas of specialty within the system and funding these accordingly would be a huge step towards supporting a truly diverse, healthy higher education system.

The second challenge was that senior managers in Universities must be able to honestly appraise their institution's strengths and weaknesses, and be realistic about its abilities.

Frans Van Vught finished an 8 year term as President and Rector Magnificus of the Twente University of Technology in the Netherlands in 2005. He was the founding director of the Center for Higher Education Policy Studies (CHEPS) and is currently one of the European Commission's top advisors on innovation, higher education and research.

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