The late 1990s and early years of the new millennium therefore witnessed a collection of financial, managerial and academic failures across the university system– the most notable of these being the Melbourne University Private venture, which saw hundreds of millions of dollars invested in non-productive assets, in search of a ‘Harvard style’ private university that never delivered on planned outcomes. This was detailed in a book ("Off Course") written by former Victorian State Premier John Cain and co-author John Hewitt who explored problems with governance at the University of Melbourne, arguably the nation's most prestigious university.

The Melbourne Age newspaper reported in regard to the Melbourne University Private affair, and John Cain's book that:
"It (the Cain/Hewitt book) argues that the University of Melbourne has put the raising of money from private sources above its duty as a public university, that its most strenuous efforts in this endeavour have failed, that it refuses to admit the failures and reports them inadequately."

A number of universities and research centres/institutes were also plagued with financial and academic scandals arising from poor governance; lack of management experience; lack of strategic planning capability and direction. Many of these were reported in the Australian media, including:

1. The ABC's 2000 4 Corners program which looked at the public float of the Melbourne IT company from the University of Melbourne
2. The ABC's 2003 4 Corners program which looked at issues of academic impropriety at the University of New South Wales
3. The ABC's 2005 Latelineprogram which examined inappropriate conduct in the Cooperative Research Centre for Photonics

One of the underlying governance problems for Australian Universities is that, as a legacy of their establishment, legislative control of universities resides with the states, but funding is derived from the Australian Federal Government. This means that whenever there is no consensus between state and Federal governments in regard to directions, universities are subsequently left in an ambivalent position with potentially conflicting objectives. Moreover, despite having a Federal funding system, the legislative process for universities can vary from state to state and hence, nationally, there is no uniformity of governance.

The Australian University system is the international student ‘fee-paying’ market – in the order of $5,000,000,000 per annum by 2004. Australia’s share of the international student market is disproportionately high by international standards.

The Australian Department of Foreign Affairs and Trade estimated that the Australian higher education sector accounted for some 12% of all education in countries with an English speaking base in 2004. This extraordinary success was essentially the product of three factors:

1. Early penetration of Australian universities into the emerging Asian market for education
2. The good international reputation established by the traditional universities
3. Opportunistic fortune

The opportunistic elements of the success led to an over-confidence in fast-money schemes based upon fee-paying international students. It also led to numerous accusations of declining educational standards in Australian universities and a culture of ‘fee-for-degree’.

The Australian Broadcasting Commission's (ABC's) flagship current affairs television program '4 Corners' highlighted this problem in 2005, stating:
"And as foreign students have flooded in, universities have become mired in allegations about falling standards, soft marking, plagiarism and backdoor immigration..."

This was particularly evident in postgraduate coursework programs (particularly Master’s coursework degrees) which had significant appeal to the burgeoning Asian markets.

Governance

With a larger proportion of university turnover derived from non-Government funds, the role of university vice chancellors moved from one of academic administration to strategic management. However, university governance structures remained largely unchanged from their 19th Century origins. All Australian universities have a governance system composed of a vice-chancellor (chief executive officer); chancellor (non-executive head) and university council (governing body). However, unlike a corporate entity board, the university council members have neither financial nor vested specific interests in the performance of the organization (although the state government is represented in each university council, representing the state government legislative role in the system).