Glyn Davis, vice-chancellor of the University of Melbourne, has on his shelves a copy of Microcosmographia Academica, the classic university satire, written by the University of Cambridge scholar Francis Cornford in the early years of last century. The book introduced the world to such concepts as “the Dangerous Precedent”.

The Principle of the Dangerous Precedent is that you should not now do an admittedly right action for fear you, or your equally timid successors, should not have the courage to do right in some future case ... Every public action which is not customary either is wrong, or, if it is right, is a dangerous precedent. It follows that nothing should ever be done for the first time.

Davis mentions the book when I ask him why, at a time when the higher education sector is more stressed than ever before, he is trying to introduce radical change. “There are always arguments for doing nothing,” he says. True, higher education is badly underfunded by government. True, academics are already under strain. True, the future is risky and unclear. All the more reason, Davis seems to suggest, to be bold. Davis does not look like a radical. He is a smooth and credible manager, the political scientist from central casting. His list of academic publications is rich with words like “governance”, and his curriculum vitae includes stints as the most senior public servant in the same post-Bjelke Petersen Queensland that produced Kevin Rudd. Grey-haired and wonkish, Davis even resembles the PM.

Yet as vice-chancellor of the University of Melbourne since 2005, Davis has introduced changes that will, over time, transform the way Australians are educated. Other universities are changing as a result. Some are moving in the opposite direction, seeking to gain ground at Melbourne’s expense. But the locus of change – the excitement and the distress, the risks and the opportunities, the fear and the hope – is here in Parkville, in this hotchpotch academic community on the northern edge of the city. This is the home of what has become known as the Melbourne Model of university education.

The appointment of a reforming vice-chancellor was no accident. The University Council contacted Davis in late 2003, when he was vice-chancellor of Griffith University, and asked him to apply for the post. They wanted someone who would change things, and they gave Davis a mandate to do so. The Council’s members came from across the party-political spectrum, but they shared a belief that it was time for a new wave of reform.

There were overseas precedents. European universities were engaged in the Bologna Process, designed to create internationally comparable degrees. In the American system, colleges of arts and sciences are flanked by specialist graduate schools, as at Harvard. Yet Harvard is a rich institution, and Australian universities were starved of resources and hobbled by regulation. What could be done?

Davis says today that he came to the job with only a “nebulous idea” that it should be possible to lift the standard of higher education in this country, and that the University of Melbourne was well placed to do it. “If you have worked anywhere else, in the US in particular, then you know that the quality of student experience can be much better and richer than it is in Australia.”

In July 2005, just six months after taking up his post, he issued a discussion paper, Growing Esteem, its title drawn from the university motto, Postera crescam laude – “To grow in the esteem of future generations”. The current provost, John Dewar, remembers reading Growing Esteem in 2005, when he was working at Griffith University. “I was excited, very excited,” he says. Another academic recalls, “It was clear right then that nothing would be quite the same again.”

Government funding had fallen, the report observed, while student numbers had grown. Only one-fifth of the university’s income came from the Commonwealth teaching grant; the rest came from student fees and competitive ?research grants. In all cases, there were shortfalls. The Commonwealth grants did not cover the cost of teaching. ?Research grants did not cover the cost of research. Universities had responded by lowering costs and nearly doubling class sizes, and by commercialising education, research and professional advice. Of necessity, education had become an export industry. There had been a shift in course content from “liberal” to “professional”, and in university governance from “collegial” to “managerial”.

“In one generation the nation has gone from free tertiary education to among the most highly priced courses found anywhere in the OECD,” the paper said.

Universities are expected to satisfy both the invisible hand of uncertain markets and the long arm of micro-managing governments. In the words of one vice-chancellor, it is as though government has simultaneously “floated the dollar and fixed the exchange rate”.

Universities had to respond to this situation, Growing Esteem argued, rather than carrying on as though things were as they might wish them to be. So it was that the Growing Esteem agenda contained both idealism and pragmatism. There was a vision of what excellent education should be – young people gaining a broad, general education before specialising. But the Melbourne Model was also based on a recognition that in a highly regulated yet underfunded sector, the area that was both least regulated and potentially most lucrative was postgraduate programs. There the university had more freedom to charge fees, and hence more freedom to pursue an independent vision of excellence.

Against the current, the University of Melbourne decided to pursue not quantity, but quality. It decided to stop growing, and to move from being dominated by undergraduate programs towards having half of all students in postgraduate courses by 2015. Professional degrees – including those favoured middle-class destinations of law, medicine, engineering and education – would be removed from the undergraduate sector. Instead, all undergraduates would complete three years of a broad educational program. Hundreds of specialist undergraduate degrees would be reduced to a handful of “new generation” degrees. Students would be forced to do a portion of their studies outside their chosen field. This was promoted as “breadth”: science students would have to study arts, and humanities students would have to do science.

In the original Melbourne Model vision, there were to be only two undergraduate degrees: arts and science, as is the case in the leading American institutions. But dropping commerce from the undergraduate curriculum would have had massive financial implications, as it brings in many overseas students. Commerce was retained. The Curriculum Commission, under the leadership of Peter McPhee, then wrestled with dozens of options. Engineering resisted change at first. Particularly hotly fought was the battle over medicine. Could a doctor really graduate only after specialising at postgraduate level? The undergraduate degree of biomedicine was allowed in, despite its substantial crossover with science. Every decision was debated and contested. Chairing the Curriculum Commission was, Peter McPhee says, the hardest thing he has ever done, but also “the most rewarding”.

So then there were six. The new generation degrees, it was announced, would be arts, biomedicine, commerce, environments, music and science. It was an enormous change. Today the academics who made the key decisions recall the sense of risk they felt at the time. They expected that bright students would shun the university, at least for a while. They knew they were playing with the reputation and future of one of the country’s most important institutions. And yet they were convinced that the risk had to be taken. The alternative was a descent into the mediocre.

Davis refuses, as some others do, to see the shift from two undergraduate degrees to six as a compromise. “That implies that we had some Platonic vision, and we didn’t,” he says. But the former dean of arts, historian Stuart Macintyre, believes the decision to have six degrees was a fatal mistake. With six, breadth is no longer inherent. It has to be mandated.

So the university introduced compulsory “breadth” subjects. These were conceived in academic excitement. Students would study topics such as “vision” or “climate change”, with contributions from across the university – science, medicine, economics, geology and arts. But soon, surveys of student satisfaction showed that breadth was a problem. Students thought the units lacked coherence and depth. Some were avoiding breadth altogether by choosing subjects in different faculties that were close to their specialities. An arts student majoring in psychology could take an economics unit in “managing people and organisations” and count it as breadth, even though it was entirely concerned with psychology.

Another former dean of arts, Belinda Probert, now a deputy vice-chancellor at La Trobe University, supports the ideas behind the Melbourne Model, but says the concept of breadth was “inadequately thought through”. The great American universities, she says, are “prepared to tell students what they think they need to know as educated citizens. No Australian university is prepared to do this … Australian families are not used to this idea at all and tend to be very vocationally and practically oriented.”

Arts academics had initially been enthusiastic about the Melbourne Model. It implicitly acknowledged, after all, the importance of the humanities. Once the changes began to be implemented, however, the excitement in the arts faculty quickly dissipated. The new generation of students forced to take humanities subjects did not gravitate to the old core of history, politics and literature, but instead took up new topics such as “global studies”. Languages were enormously popular. Humanities staff who were passionate about specialist subjects found themselves teaching massive classes of undergraduates who were never going to become serious arts students. And because the university was strapped for cash, there was a lack of administrative support. Tutors were casuals, who could not be expected to carry the administrative load. Life in the lecture halls got harder.

The new undergraduate degrees were introduced in 2008, while the old ones were progressively “taught out”. Preparation had begun on the graduate programs. Law and education were the ?agships, introduced early. The bulk will not be introduced until next year. Meanwhile, Davis had gained important concessions from the Howard government, including a vital decision to allow the transfer of Commonwealth-supported places from the undergraduate program to postgraduate education, and to extend income support to postgraduate students.

When the federal government changed at the end of 2007, Davis’ influence increased. The Bradley review of higher education’s recommendations were heavily influenced by a submission from the University of Melbourne. Picked up was a Melbourne proposal for a market-oriented system in which students would be given a Commonwealth-supported “learning entitlement”, which they could spend wherever they wished. Universities would be free to enrol as many students as they wished. As a result of the Bradley findings, from 2012 funding of undergraduate tertiary education will become a numbers game, with some universities preparing to enrol as many students as they can.

But not all of the University of Melbourne’s agenda was adopted. It remains unclear how the federal government plans to fund postgraduate education and research. The minister for education, Julia Gillard, seems intent on extending tertiary education to more people, setting targets for the enrolment of students from poor backgrounds. In its internal documents, the University of Melbourne admits it will struggle to meet these targets.

The enthusiasts for the Melbourne Model insist that it will be a force for equity and social mobility. Its critics argue the opposite – that it will entrench privilege. Currently, undergraduate entry to university is ruled by the tertiary-entrance score (ENTER) received in Year 12. Yet ENTER is a poor indicator of academic success. Students from private schools routinely get higher ENTER scores, yet do no better at university than lower-scoring students from the public system.

Those who argue that the Melbourne Model will improve equity say that the university will take the “best of the best” – that it will be intellectually elite, but socially broad. Selection into the graduate schools will be based not on Year 12 results, but on tertiary performance, plus tests administered by the university, and a personal statement or portfolio of work. In theory, a student from Victoria University who got an ENTER of 65 might, if she excels as an undergraduate, qualify for a place studying law in Melbourne’s graduate program ahead of a University of Melbourne student who got an ENTER of 85 but did less well in undergraduate studies. This means she might well ‘bump’ a student whose parents spent tens of thousands of dollars on private-school education so that their child would study law at Melbourne.

The university’s marketing documents portray students making a smooth transition from undergraduate degree to graduate school. It is true that, if you read carefully, the documents make clear that there are no guarantees, and that no preference is given to Melbourne undergraduates, but the fact is hardly emphasised. There are surely many parents who believe getting into Melbourne will naturally lead to law or medicine or engineering. In fact, except for a small group of high achievers who will be given an assured place, there are no guarantees. An undergraduate who loses their way, as so many do, may well find that graduate school is closed to them.

The crunch will come next year, when the ?rst “new generation” undergraduates seek entry to the graduate schools. Will Melbourne really allow its own undergraduates to be displaced by the bright kids of the western suburbs? If it doesn’t, it fails to deliver on its equity promise. If it does, it risks creating a vast number of angry middle-class parents and students.

Peter McPhee says, with passion, that Melbourne “will not compromise on equity”. Davis believes the problem will not arise, because undergraduate intake is based on modelling of how many students will want to enter graduate school. But, he acknowledges, some will likely be disappointed. Meanwhile the details of how the selection process will work are still being sorted out.

All this assumes, of course, that poor students will want to pursue graduate studies at Melbourne. But will they? Its graduate schools will be expensive, and largely funded through fees. How likely is it that a bright child from a poor family will choose to prolong their education, racking up debt, and forsaking years of earning power? Union activist and university librarian Melanie Lazarow argues that lengthening the amount of time it takes to get a professional degree makes sense only in the framework of free universal education. Otherwise, privilege will be entrenched. A lawyer emerging from the Melbourne Law School is likely to have a HECS debt the size of a small mortgage. Thus they will be less likely to choose to work in a poorly paid field such as community-service law. There was talk in the early days of the Melbourne Model of rebating fees for students who went into public-interest law. Today the dean, Michael Crommelin, says the scheme “remains a firm aspiration for the Melbourne Law School. But the successful implementation of such a scheme will require substantial support.”

The University of Melbourne wants to be public spirited. It has special access programs and scholarships, and it talks about using bequests and philanthropy to help make graduate school possible for less well-off students. Yet, as Christina Buckridge, the university’s manager of corporate affairs, adds: “Unfortunately our current endowment is only around $1.2 billion plus, as opposed to Harvard’s $35 billion plus!” Nobody really seems to believe that the Melbourne Model will transform the university from what it has always been – an institution dominated, like most universities, by the children of the middle class. Meanwhile, the model’s critics fear it will lead to one system of expensive postgraduate professional education for the rich, and poorly funded undergraduate training for everyone else.

Already, the rest of the sector is changing in reaction to what Melbourne has done. Some, including the University of Western Australia, are considering following Melbourne’s example. Others, such as Monash and La Trobe, have benefited from the uncertainty at Melbourne and are holding firm to their commitment to specialist undergraduate education. Monash University’s dean of law, Arie Freiberg, says he has seen a huge increase in first preferences for his course, and he has no doubt this is from students who might once have gone to Melbourne but who don’t wish to spend more time and money on their qualifications. “As a former member of the faculty at Melbourne, I don’t wish them ill. But I am very grateful to them,” he says.

The vice-chancellor of La Trobe University, Paul Johnson, believes the changes at Melbourne have provoked a ?new focus on curriculum across the sector. Parents and ?children are moving from an obsessive preoccupation with ENTER scores towards greater curiosity about the particular ?strengths of different universities. This is a good thing, he ?believes, and a lasting change. And he hints that La Trobe might try quite a different model: a university degree that starts with focus and speciality, and ends with breadth. ?Whatever the success or otherwise of the Melbourne Model, from now on tertiary education in Australia will be more diverse.

The Melbourne Model has dominated the public debate about the changes at the university. This is natural enough: teaching and learning are where university and community most interact. But the changes to curriculum are not the only elements of the Growing Esteem agenda.

Davis and his backers are part of the same Zeitgeist of market-oriented public-sector reform that drove the Hawke and Keating governments, and now the Rudd government. It is no coincidence that Rudd chose Davis to chair the 2020 Summit in 2008. This is how they do things, Rudd and Davis. They issue papers. They commission reports. They communicate visions. This is consultation. But it can also be co-option. Two years into the Melbourne Model’s implementation there is a disconnect, or perhaps many disconnects, in Parkville. Among the university’s senior management there is an engaging sense of excitement and invigoration. These people know they are leading change. It has become their mission. But talk to the staff who work at what is fondly called the chalkface of teaching (although nobody uses chalk anymore) and there is less excitement, more fear. There are pockets of contentment, it is true – in commerce, for example, in its new iconic building. But overall the mood ranges from cynicism through to sullenness and depression.

Alongside the new curriculum, Davis introduced “responsible divisional management”. This theory, central to public-sector reform from Keating onwards, holds that financial decisions should be made, and responsibility borne, by those nearest to the people and services involved. In practice, this means deans have become financial managers, responsible for their own budgets. A department that goes into deficit will no longer be bailed out by the university.

As a result, being a dean at Melbourne these days can be a lonely and thankless task. The dean of law, James Hathaway, resigned late last year after staff opposed his ideas for a restructure. One of the reasons the arts faculty is a particularly unhappy place is that, as Mark Considine, the dean of arts, tells me, a deficit was “discovered” in his faculty’s budget in late 2006. “There has been a lot of finger pointing over that which I am not inclined to get into,” he says. But how can a deficit be suddenly “discovered”? The dean of arts in the period before the “discovery” was Stuart Macintyre. He insists there was no deficit. “In every year from when I became dean until I finished, the faculty achieved a surplus and maintained substantial reserves,” he tells me. The budget documents were public, he says, part of a system of accountability that has been lost under responsible divisional management. Others argue that for many years, arts had expanded in an unplanned and unsustainable fashion, with staff allowed to introduce units reflecting their own interests. All this was predicated on continuing growth in fees from overseas students. When the growth in overseas student fees flattened out, arts hit the wall.

There are deep scars from the disputes that followed. Macintyre and Probert, who replaced him as dean, were once friends, but no longer speak. The present dean, Considine, had to oversee a slashing of staff. A ruthless metric was imposed, whereby those who were not sufficiently “research active”, which is defined by number of publications, were the first to go, with, some say, insufficient attention paid to whether they were needed for teaching at a time when old degrees were being taught out and new ones introduced.

You could argue all day in a Lygon Street coffee shop about the extent to which the cuts in staff were caused by the Melbourne Model. Many in arts have come to believe that the model was always about cost cutting. Davis insists that the deficit pre-dated and had nothing to do with his reforms.

Whatever the case, the changes to be wrought by responsible divisional management have barely begun. One hears mutterings about deans who are thinking of outsourcing administration and radically changing the way they hire and contract staff. A third aspect of Davis’ program was the idea of “knowledge transfer”, or, as it has now been rebranded, “knowledge exchange”. All universities talk about interaction with the community, but this aspiration is not reflected in the way they are funded or assessed. A lecturer who publishes a paper in an obscure specialist journal does more for her career prospects and the funding of her institution than a public intellectual who is constantly in the opinion pages of the nation’s newspapers. Growing Esteem aspired to change that. It proposed that knowledge transfer between academics and the community be measured and rewarded in an equivalent way to teaching and research.

Many staff I spoke to say they support the ideas behind the Melbourne Model, but they dislike the implementation. They see Davis as a remote figure. There is talk of his team of high-level corporate advisers, “big brains” who either never knew, or have forgotten, what it is like to face a lecture hall of 300 young people, and to deal with the administration and stress those students bring.

When I told members of the university’s management team about the depression and cynicism I had encountered, one responded that this was only to be expected. In line with “change-management theory”, staff were feeling exactly as one would expect at this stage of implementation. This was said with an air of cheerfulness. It would be unlikely to comfort the chalkface staff.

There are other disconnects. Fine new buildings are going up on campus. Lovely new spaces for students are being created as part of the commitment to improving the educational experience. There are lounges where they can relax, and collaborative study spaces with polished tables and new computers. Yet elsewhere on campus, you can feel the lack of money. The library is under stress. Staff are not replaced. Some undergraduate units over the summer just past were taught entirely by postgraduate students on casual contracts. There are buildings in need of paint and plaster.

What neither Davis nor the University Council foresaw was the Global Financial Crisis, which hit the university’s investments at the very time income was needed to ease the transition. Davis admits that if he had seen the GFC coming, he would have slowed the implementation of the Melbourne Model. But both Davis and Considine are keen to emphasise that arts no longer has a deficit and is hiring again, including in disciplines worst hit by the cuts, such as philosophy.

But the pain and distrust in the arts faculty remain. Macintyre’s area, history, remains a particular focus of dissatisfaction. Staff who initially supported Growing Esteem have grown cynical. Davis has lost their trust.

During an hour-long interview conducted at the end of my research, Davis became agitated only once. I told him that there were some who pronounced the Melbourne Model already broken, and who were expecting him to exit soon, with as much grace as he could muster. He responded with irritation. “Who says that? Nobody has put that view to me.” Before I could remark that they were hardly likely to, he continued, “On what evidence do they base this?”

He had a point. There is a lot of gossip around Parkville, and not all of it is true. There are people who say they have heard, on good authority, that the new graduate programs are not meeting their targets, and that surveys of students show widespread dissatisfaction. But what are the targets and the enrolments for the new graduate programs? What is the data on student satisfaction? Such information is surprisingly hard to get. Some of it is available on the University of Melbourne’s website, but it’s protected by password and available only to staff – hence the plain brown envelopes passed to me in cafes by various academics. Other information, such as the targets and enrolments for the graduate programs, is not available at all. On request, Davis agreed to release this data. It shows that the new graduate programs are exceeding their targets. The numbers involved are small. The main rollout of graduate programs does not begin until 2011. But while the figures are not rock-solid evidence of success, there is no evidence of failure.

The professional law degree, the Juris Doctor, will take in about 180 students this year. The new humanities-based graduate programs have both exceeded their modest targets. Meanwhile, the graduate degree in education has attracted students who are prepared to pay full fees to become qualified teachers – something the university had not expected or budgeted for. So much for modelling. In law and education the corridors are abuzz with academics talking about the joys of teaching students who are older and more focused, and who have made mature vocational decisions rather than being driven blindly by their ENTER score.

What about the undergraduates? Surveys of students show that in second semester last year – 18 months after the introduction of the Melbourne Model – almost 80% of undergraduates were satisfied with the quality of learning in their subjects, and nearly 79% thought the subjects were well taught. These figures were a modest improvement on 2007, the year before the Melbourne Model was introduced. As well, the number of low-rating undergraduate subjects is dropping, with the graphs showing a steep decline in unsatisfactory subjects since the introduction of the Melbourne Model. Although the breadth subjects remain the problem children, about two-thirds of students proclaim themselves satisfied, and the figures are improving.

These figures dispel the most destructive rumours surrounding the Melbourne Model. They may not prove its success, but it does seem that the misgivings of the critics are not shared by most students. The question is why these promising statistics are not better known. The failure, if there is one, may be one of communication. “We never see Davis. We don’t know what he is thinking. We don’t know if he understands what is going on for us,” one academic told me. And another, more plaintively, explained, “We are in the goldfish bowl. We don’t know what is happening in the ocean. We don’t know if our experiment is working.”

Davis himself insists that it is still too soon to know whether or not the Melbourne Model has worked. He has just begun his second five-year term. He dismisses rumours that he will leave to work for Rudd as a senior adviser, or that he will himself enter politics. His present job, he says, turning around a big and influential institution, is everything he could wish for. He will see it through.

He chose to be interviewed for this article in one of the plush new student lounges. Afterwards, my walk back to Grattan Street took me past the old John Medley Building, now home to the disaffected historians. Once a proud landmark, today it is old and seedy. Plaster falls off the walls. I remember that it was here, 20 years ago, that the sub-dean of arts, the notorious Dinny O’Hearn, had his office.

O’Hearn would launch out of these doors in jeans and scuffed leather jacket and head for the pub, where he would carouse with just about everyone who mattered in intellectual Melbourne. For many people he epitomised what it was to have a broad and liberal education. What would O’Hearn make of the Melbourne Model? Certainly his life would be different now. He would be performance managed and judged against metrics, his publication record and his teaching effectiveness measured. I doubt his trips to the pub would be counted as knowledge transfer. How would O’Hearn and the smoothly managerial Davis get on? I cannot imagine the encounter.

Universities have changed. They are managerial, professional, constrained. Yet, it seems, questing. Seeking new futures. Facing this moment for the very first time, and willing to risk the Dangerous Precedent.

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