University of Tasmania's vice-chanchellor has said the institution would not be able to operate, provide its breadth of courses or have its regional campuses remain viable without revenue from property investments.
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Vice-Chancellor Rufus Black with other university representatives appeared before a Legislative Council committee last week for an inquiry into the provisions of the university's governing act.
Professor Black said universities needed to find revenue sources to operate due to a gap left in funding from the federal government - and one of those sources was property.
Accommodation services are provided separate to the university's property business.
Professor Black said prices for student accommodation were set at 80 per cent or less to the market value.
He said rent increases were 3 per cent per annum or in line with the Consumer Price Index - whichever was less.
Certain submissions to the committee as part of the inquiry have criticised the university's corporate focus and accused it of operating more like a business than an educational institution.
Commercial endeavour is not listed as one of the university's eight functions under its governing act.
University chancellor Alison Watkins said she did not see commercial activities as being a function of the university.
"Rather they are a means to an end," she said.
"The university has finite resources - we have some sources of other income each year.
"We also have some assets."
Professor Black said there were elements of the act which allowed the university to do commercial things in order to fulfill its functions.
"Commercial activity is not a function, it's not a purpose of the university," he said.
"It's a significant challenge for universities around the country and indeed around the world to be able to fulfil their functions and they need other sources of income."
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