OPINION: The federal government's announcement that it will fund the Gonski school reforms through a cut of $2.3 billion to universities is one of the most bizarre announcements in recent times. 

The logic of trying to improve the quality of school education - a laudable goal - by harming the quality of university education would escape most people, particularly parents aspiring for their children to go on to university.  The education system is a seamless whole.  Who teaches the teachers?  Universities.  Who needs top teachers as the key driver of quality?  Our schools.  It's a virtuous circle. 

Cutting in one area has second-order effects on the other. 

David Gonski made a similar point in his statement over the weekend. '' I fervently believe in and will continue to advocate that increases be made in funding the university sector,'' he said. 

One can only assume a level of cynicism in that the government has so overtly and deliberately linked the two agendas - based, presumably, on the belief that the community cares about the quality of school education but not about the quality of universities.  With more students each year attending universities under the government's own agenda, I doubt it. 

The government's claim that it has hugely increased funding to universities, and that despite these cuts growth will continue only at a slower rate, is smoke and mirrors.  The introduction of the demand-led system has created some 150,000 extra student places since 2007, and numbers will increase even if there is no rise in new enrolments because of the pipeline of students flowing through the system.  While the volume of funding has increased significantly, the level of real funding per student, taking into account inflation, has been essentially flat. 

This is despite the fact that many of these new students need additional help and resources - a point recognised by the Gonski reforms in terms of schools but ignored, it would seem, when it comes to universities.  And it is despite inquiry after inquiry pointing out that government funding of universities is low by international standards and inadequate in light of needs.  As a percentage of gross domestic product, Australia is only 25th out of 29 advanced economies in terms of public investment in universities. 

Every university in the country has been struggling to maintain quality while coping with burgeoning numbers - finding efficiencies wherever they can.  So we are already providing the government with a productivity dividend. 

The so-called efficiency dividend of 2 per cent in 2014 and 1.25 per cent in 2015 announced on the weekend will take $900 million out of the sector over two years and further reduce the money available to support each student.  These cuts come on top of the $1 billion hit to research and other funding announced in December. 

At my university, the University of NSW, we're still struggling to understand what the efficiency dividend will mean, but it will be significant.  There are only a limited number of ways we can respond to cuts of this magnitude - by increasing class sizes, reducing the investment in technology and other key infrastructure, or a combination of both.  This will directly affect the quality of the student experience but also our international reputation.  A fall in rankings creates the risk of reducing international student demand.  Given that the higher education sector contributes over $10 billion annually to the nation's export earnings, it would only take a small fall in international student numbers to wipe out the annual savings that this announcement envisages. 

At UNSW, as would be the case at every university, we have already made offers to students for 2014 and already committed to major capital works.  Research projects take from three years to decades.  This stop-start funding shows a fundamental misunderstanding of how a university works.  We need stable funding over at least a three-year cycle. 

All this is not to argue against universities becoming more efficient.  But there are better, less damaging ways to save money in this sector.  The government should put a partial brake on the ever-expanding student numbers by setting academic standards that need to be met before students are given a place.  It should also cut the excessive red tape that is burdening universities with unnecessary compliance costs. 

Universities were blind-sided with this recent announcement.  There was no consultation, to my knowledge, other than a few hours' notice before the first media releases landed.  Government by media release usually leads to tears, and has shades of the mining tax. 

An additional concern is the danger of further cuts.  Given that the Gonski model is assumed to be based on an escalating funding stream, where will the future funding for school reform be found?  One can only hope it is not our universities.  Australia can't afford it, and our students deserve better. 

Fred Hilmer is Vice-Chancellor of UNSW and Chairman of the Group of Eight.