Government financial assistance in higher education: an empirical analysis of efficiency in Australian universities

Government financial assistance (GFA) plays an important role in higher education to facilitate the process of teaching, learning and research of staff and students. However, very little is known about efficiency of using GFA in higher education. This paper aims to investigate efficiency of using GFA in Australian universities in the context of substantial variation in public funding distribution. The stochastic frontier input requirement model was developed to measure efficiency of using GFA for 2009–2016. The findings reveal that the overall efficiency of using GFA on average at 0.956, implying a high level of efficiency in using public funding. However, bigger is not better in the performance of universities through using GFA. In addition, contextual factors potentially influence temporary transient efficiency (0.974), other than long-term managerial efficiency (0.982) decomposed from the overall efficiency index of GFA. Some suggestions are made for more appropriate solutions to funding distribution in Australian universities.