It¡¯s hard to pick one thing to focus on as the biggest issue for ÖйúAƬ in Australia right now. There¡¯s a lot going on.

The Abbott/Turnbull Liberal coalition government that displaced the Rudd/Gillard/Rudd Labor government in 2014 introduced the notion of fee deregulation in its first budget legislation, which, if implemented, would completely transform the funding of ÖйúAƬ by allowing universities to set their own fees. At the same time, however, the government proposed reducing its funding contribution by 20 per cent and expanding the demand-driven system for participation in ÖйúAƬ to include private providers and to support more sub-bachelor places within the scheme.

This policy direction was quite a surprise. It turns out that many people don¡¯t like surprises, particularly those in opposition and on the non-party aligned independent cross benches in parliament. So much was their collective dislike of surprise that the major ÖйúAƬ reform agenda faltered and stalled in the upper house.

A little over a year later and Tony Abbott was unseated by Malcolm Turnbull (who had previously unseated him) and the subsequent reshuffle afforded an opportunity to ¡°review¡± the situation. All policy options were back on the table. But the new new PM is a man of both thought and action and has placed innovation centre stage in his policy agenda. So now the national research direction is set to point at near-market research, aligning to priorities and will establish a stable orbit around the innovation star.

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That¡¯s all fine. However, while we are rushing towards a new set of reforms, the first set of reforms hasn¡¯t gone away. The 20 per cent cut in funding is still in the Treasury¡¯s forward estimates. And we know how treasuries like to hang on to those forward estimates. The mechanism to make such a cut is as yet unlegislated and the new new minister has given himself a year to ascertain what happens next. But the intent remains on the books. There is no way that the sector could weather a cut of such magnitude in the absence of deregulation, and so we find ourselves in a circular quandary.

Another election could possibly resolve the impasse, but in the absence of that, some reform of cost distribution between the commonwealth and the end user student is probably on the cards. However, the experiment of deregulation that was conducted with private providers in the vocational education sector is unlikely to be repeated for universities. Preservation of the demand-driven system (ie, find a place for every able student) has emerged as a key constant in the debate ¨C as has a desire to widen participation and pathways to university for non-traditional entrants.

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This will have to be reconciled with affordability on both the government¡¯s and the individual¡¯s ledgers. The former will have to reconcile the return it makes on investment in public education that leverages into Australia¡¯s single largest export service sector ¨C international education. The latter (the end user) will doubtless have to weigh up the value of a degree and, increasingly, end user focus is on universities¡¯ graduate employability statistics ¨C perhaps heralding a greater shift to scrutiny of outcomes than has hitherto been the case in a market where pricing was not an issue.

In parallel with these considerations, recent reports are quantifying the extent to which teaching income subsidises research costs in the sector. That¡¯s never been a secret in any ÖйúAƬ system, but the attention that it has garnered at a political level indicates that at least some consideration is likely being given to greater mechanistic separation of the two sides of the university funding coin. Any such move would, of course, bring the concept of autonomy barrelling on to the playing field in an already crowded arena of debate. The hotly anticipated innovation statement will soon be released and it is highly likely that research funding mechanisms, including the block grant, will shift to align to a more industry engaged, impact-focused agenda.

There has also been considerable speculation that publications and citations, the global currency of university performance metrics, will be devalued in the new regime. Time will tell.

Experience has taught me that it is very difficult to pivot a university sector to meet a new national agenda. It¡¯s not impossible, however, and, when herding, cats do tend to follow the cat food. From a sectoral perspective the quantum of change and the pace of re-direction is causing fracture. Different groups within the sector have very different perspectives on what they believe should happen next. At the heart of such anxiety is the fact that what¡¯s missing in all this is a clear articulation of what is wanted from the sector and how the sector can be sustainably resourced.

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Innovation in universities is not in short supply in Australia. Certainty certainly is.

David Lloyd is vice-chancellor of the University of South Australia.