Abstract
Commitment to profiles and performance indicators marks a radical change in the Australian Commonwealth Government's approach to funding higher education institutions. This approach results from the Commonwealth conceiving its role as a ‘quasi‐consumer’, seeking contracts with institutional suppliers of teaching and research services for which it is prepared to pay. This reconceptualisation of the Commonwealth's role has neatly overcome a major difficulty in federal‐state relations in education and has given policy makers greater power over the behaviour of institutions without having to become involved in their decision‐making.

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