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Facing budgetary challenges, successive Australian Governments have chosen to proportionally reduce public expenditure on universities relative to levels of activity in both teaching and research. The question asked in this paper is whether Australia’s universities increased their efficiency in a manner consistent with the demands of government to provide productivity “dividends” or efficiencies?

Using archival data for 37 Australian universities from 2007 to 2013, this paper examines changes in productivity of university groups and individual institutions using the data envelopment analysis technique.

Results show a statistically significant system-wide (or technological) productivity improvement of 15.2 per cent from 2007 to 2013, but there was little average individual institutional change in efficiency. Productivity improvements were clearly observable for the Group of 8 institutions with an improvement of 25.1 per cent.

Universities, like other public sector bodies, can both improve individually and as an overall system. The system has improved greatly in terms of productivity at higher levels than may be anticipated.

Using data contemporaneous with a period of great change in university funding and sector competition, this study reveals how some universities benefited, whereas others struggled to maintain their relative position.