The vice-chancellor of one of Australia's elite research universities has criticised what he sees as the spread of funding around "average" institutions to "make people feel good about themselves".

Ian Chubb, vice-chancellor of the country's highest-rated institution, the Australian National University (ANU), said more money should go to top universities.

Arguing that the present regime spreads funding too thinly, he said: "I see underfunding of research performance ... and a levelling-down as a consequence of partial funding, and I think that is banal.

"I don't think it is of benefit to Australia to have a university like the ANU so partially funded in order to make others feel good; I don't think that makes sense."

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Speaking to The Age newspaper, Professor Chubb decried what he saw as a misguided egalitarian push for a "one-size-fits-all" approach to university funding.

And he insisted that it was not to the benefit of either the sector or the country for every institution to attempt to move up the ladder of research excellence.

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He went on to warn that the current economic crisis could have "dire consequences" for Australia's universities, particularly if the impact of the funding regime deterred international students.

According to a recent study by the Reserve Bank of Australia, the country's earnings from overseas students have soared in recent years thanks to an influx of Chinese and Indian students.

The report said that, in 2007, international students spent A$12.1 billion (?5 billion) in Australia, with education "sales" increasing at a rate of 13 per cent a year for the past seven years, allowing for inflation.

Despite the risks associated with reliance on income from international students, Professor Chubb found cause for optimism in the figures, noting that the weak Australian dollar could tempt students to continue to travel from overseas to study in Australia.

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john.gill@tsleducation.com.