Australia should tax corporate profits to bankroll a “sovereign wealth education fund” that frees universities from the “morphine drip” of international education dependence and a domestic loan scheme that has been squeezed dry, according to political leader-turned-vice-chancellor Bill Shorten.

The former federal opposition leader said the fund, financed by a 1 per cent tax on corporate profits, could raise some A$5 billion (£2.7 billion) a year. It would represent a “new deal” for a tertiary education funding system that relied too heavily on students to underwrite the supply of “sovereign” skills.

In a speech to the National Press Club, the University of Canberra vice-chancellor fleshed out his earlier proposal for a “national skills bursary” backed by industry and government. He said proceeds from a levy on the profits of larger businesses would be bolstered through investment. The money would be overseen by a board with representatives from tertiary education, industry and government – including opposition nominees to “force” the main political parties to work together – and spent on courses and research aligned with national priorities.

Shorten likened the idea to Norway’s pension fund. “Every country in the world wishes they had a Norwegian sovereign wealth fund,” he told the Press Club.

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He said Australia’s income-contingent student loan could no longer underwrite the higher education needs of a country with a goal for 80 per cent of its citizenry to be tertiary qualified, and where students’ contribution to the costs of their learning had ballooned from about 10 per cent to more than half.

Meanwhile, the “rancorous debate about immigration” was undermining a “reverse Colombo Plan” that paid for universities’ libraries, student well-being services, information technology, software-licensing, security, laboratory equipment – “you name it”.

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“The reliance on international student revenue as the magic bullet for funding is no longer a sustainable strategy,” Shorten said. “[And] the accumulation of [domestic] student debt is a very, very poor foundation for the future of Australia’s higher education system and our economic sovereignty.

“If a particular skill…is deemed a national priority, then the nation should share the risk of developing [it]. A sovereign wealth education fund is about a country investing in some of its citizens so that all of its citizens benefit from their skills and knowledge in a febrile, unpredictable world.”

Shorten predicted a cynical reaction to a former politician’s proposal for a new tax. But while he had been “laughed at” plenty of times previously, his concept of a National Disability Insurance Scheme had changed Australian society, and adaptations of his proposals to tighten wealthy people’s tax breaks were now under active consideration.

He said his idea differed from the international education levy proposed by the Australian Universities Accord. “The money would come from those who benefit most from a highly skilled, well-educated population – business and corporations.”

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In return, universities would need to “step up” and “put our own house in order” by improving teaching quality, ensuring “rigorous” assessment in an age of artificial intelligence, treating staff better – “especially our casuals and part-timers” – and specialising their missions.

“If universities seek changes in the funding model, we must address the efficiency and the quality of how we educate,” Shorten said. “Unless we admit that some of our methods of education need modernising and some of what we do is inefficient, universities will not build a solid majority for more support.”

He criticised universities’ “sense of victimhood” at being misunderstood by politicians, and said they had cultivated a “learned helplessness about the practical way that politics operates in this country”.

“The nation has not got time to waste as universities and government meet sometimes in an atmosphere of mutual grievance,” he said. “My contribution to higher education may well be that of translator-in-chief, trying to help each understand the other. We share common values and common interests of serving the nation.”

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john.ross@timeshighereducation.com