Sydney¡¯s Darling Harbour is a cross between a wharf, a theme park, an aquarium and a food mall. It also contains a convention centre so cavernous that you feel you need to take a bus even to go to the toilet. Here, amid the sunshine of early autumn, Australia¡¯s annual ÖйúAƬ Congress took place from 26 to March.

I¡¯d been to the congress four years ago and remembered something rather upbeat, if not self-congratulatory. A recently elected Labor government, with Julia Gillard as its new education minister, was thinking its way towards a major review of ÖйúAƬ. The prospect was of public reinvestment in universities after a decade of fiscal constraint. And the 2009 Review of Australian ÖйúAƬ, led by Denise Bradley, laid a blueprint for driving up the Australian graduate-level population - to 40 per cent of 25- to 34-year-olds by 2025 - and for much better connections between universities and further education.

Four years on, that optimism was harder to find. Two very recent events hung over the congress¡¯ debates: an election in Australia¡¯s bellwether state of Queensland, and redundancies at two Australian institutions (the University of Sydney and the Australian National University) based around performance, particularly research performance.

State elections often come and go with little comment in Australia. From my primary school lessons I remember that one Australian state government survived unchanged for 33 years! But in Queensland on 24 March, the ruling Labor Party lost by a historically massive margin.

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From 51 seats out of a 89-member Parliament (Queensland has no upper house), Labor dropped to seven seats, a negative swing of 15.2 per cent. All four of Australia¡¯s largest states are now in right-wing hands. The writing is clearly on the wall for the national Labor government, which already clings to power by only a heartbeat or two.

After four years of relative plenty, then, Australian ÖйúAƬ is starting to batten down for coming storms. With an ostensible theme of ¡°innovation and competition¡±, the congress¡¯ mood became more one of ¡°collaboration and partnership¡±. How could the sector defend itself better? Find more friends to the right of the political spectrum, particularly with industry - yet still hold to the time-honoured concerns of a public sector dedicated to quality, equity and student affordability?

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Suddenly the Australian debate was sounding more like the British one. But the fear was not so much about the loss of excellence as of turning the clock back on widening participation and social inclusion. Uncapped undergraduate domestic entry, as at present, may come under challenge. And with a likely deregulation of fees comes the fear of retreat from equity priorities and a fees ¡°arms race¡± among those at the top of the pile.

Just four months ago, the delivery of a Base Funding Review, chaired by Jane Lomax-Smith, had been an occasion for hope that government contributions would continue at a high, if not even higher, level. Far from accepting the UK¡¯s recent student-takes-all approach through rejigged loans, Lomax-Smith recommended a uniform 60:40 split in the contributions expected from the state and from the student (via income-contingent loans) for undergraduate education. Now, any response to the review by a struggling government looks like being more negative. Perhaps there won¡¯t even be a government response, and Australia will never come up with its own distinctive answer to Lord Browne¡¯s dilemmas.

Framing a surprising number of presentations at the congress was the recognition of a new challenge: how ¡°Generation Z¡± students, born since 1995 and so now just starting to enter universities, can gain best value from their educational experience. Indeed, the challenge may be how we might communicate effectively with Z-ers at all. Another Australian-in-exile, Martin Bean, vice-chancellor of The Open University, seductively explained ¡°Why Technology is the Way Forward¡±, both for intergenerational connection and greater social inclusion. ¡°We cannot stop the commoditisation of knowledge,¡± Bean advised, ¡°but we can educate.¡±

A further common theme was family. Once, we considered 18-year-old university entrants to be autonomous individuals in their own right and with their own rights. Family was to be discounted, if not ignored as a bit of an embarrassment. Now family is back: many presentations at the congress recognised that families make decisions and fund studies, that parents are the most influential source of student advice (particularly for international students), and that social inclusion is often most effectively tackled through family and peer networks rather than mandatory state palliative intervention with individuals.

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Another really heartening and repeated concern was over institutional cross-subsidy, and how possible but also how fair it can be in future. As in the UK, Australian institutions used the last decade¡¯s boom in international students to subsidise research growth, as well as to subsidise domestic students sitting in the same classroom. Now, as greater competition, government policy changes and a surging Australian dollar all threaten the continuity of international student flows (and their high fee levels), this topic is out in the open. The international goose may no longer lay the golden eggs as in the past, so what is the way forward?

From the congress, my impression is that the ¡°lucky¡± country - lucky enough even to avoid recession in recent years - is now becoming decidedly nervous. Some of the nastier medicine of the US, the UK and Europe seems to be on the way Down Under.