The likelihood of the Government deciding before the next general election on a new funding model for higher education has all but disappeared with the announcement of a working group to examine the issue.

Minister for Education Ruairí Quinn, who political sources believe will be reshuffled out of office in the autumn, announced the establishment of the working group yesterday as he published a major report on the sector’s performance.

The group is being asked to assess “the long-term funding requirements” of the higher education sector, “along with a set of funding options for consideration by the Minister”.

The Higher Education Authority (HEA) had already been working on a report into this issue of "sustainability". This was due to be published this autumn and it is understood it was leaning towards a recommendation for a student loan system similar to that in Australia.

Interim report

Mr Quinn said “any report on the HEA will be a contribution” to the working group. The group itself, however, has until the end of the year to produce an interim report and is due to report in full “no later than 31st December, 2015”, under its terms of reference.

As well as looking at funding, the group will examine the economic benefits of higher education and how to measure efficiencies in the sector.

“I think first and foremost we need to have a debate in this country about funding of third-level education. There are no easy answers here,” said Mr Quinn.

He noted the UK approach of massively increasing fees “on the basis that the market would solve all its problems . . . has crashed in flames”, while in the US student debt was now the second highest category of debt after the national debt.

Mr Quinn was speaking at the publication of the first Higher Education System Performance Report, setting targets for 2014-2016. The report is the culmination of a series of consultations between the HEA and the State’s universities, institutes of technology and other third-level colleges.

Future plans

Each institution has had to agree a “compact” with the authority outlining its plans for the future, and how it intends to differentiate itself from other institutions. For the first time, institutions will be held accountable to agreed targets in areas such as access for disadvantaged groups, drop-out rates, the quality of teaching and learning, and research and internationalisation.

In a move some believe may affect academic independence, the HEA will have the power to withhold up to 10 per cent of funding if institutions fail to meet their targets.

The headline figures in the report showed higher education was competing “very well internationally” and graduate employment had bounced back to pre-crisis levels.

Mr Quinn said the report provided a “good news story” and he praised the institutions for delivering “extraordinary productivity” at a difficult time.

However, “those kinds of productivity gains have a certain limit and I think we are probably getting close to what that limit might be”.

Among the major findings of the report were:

Half of 30- to 34-year-olds

have third-level qualifications, the highest level in Europe;

Irish universities are in the top 1 per cent of research institutions in the world across 18 academic disciplines;

75 per cent of Irish employers are satisfied with graduate skills.

The report can be accessed at education.ie and the HEA/ institution compacts at hea.ie.