Is State Funding Enough? The Future of University in Malta

A shift toward patenting could provide Malta’s universities with a dual benefit: contributing to market innovation while reinforcing the social value of research

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By Lina Klesper LL.M, International Legal Assistant, PKF Malta

Universities across Europe are continuously evaluating how best to finance their work. The question of whether they should rely on state funding alone or partner with private enterprises is particularly relevant for Malta, where Finance Minister Clyde Caruana recently urged the University of Malta to “pull up its socks, roll up its sleeves, and generate income”.

This statement sparked a strong response from academics and student organizations, who argue that state funding is not a mere handout but an essential investment in the country's future. The question now is whether Malta—and indeed other European nations—should continue to rely heavily on state funding, or whether universities should increasingly team up with the private sector to share the financial burden. For Malta, a small country facing talent shortages and brain drain, the balance between public funding and private sector partnerships may be key to retaining local talent and advancing national innovation.

According to a 2019 report by the European Tertiary Education Register (ETER), European universities rely heavily on state funding, with the majority receiving about two-thirds of their revenue from the state. Only a few countries, notably the UK and Ireland, have shifted to a model primarily based on student fees and private funding. While this state-supported structure alleviates the immediate financial burden on students, it creates dependency, potentially limiting a university’s ability to expand or innovate independently.

The University of Malta has faced growing financial pressure in recent years, with its deficit expanding to over €5 million in 2022. Although state contributions have risen slightly in nominal terms, they have not kept pace with increasing costs, especially with rising academic salaries.  As a result, student organizations in Malta are calling for more robust public funding, framing it as essential to the country’s long-term competitiveness. Their argument is clear: investing in education is key to addressing Malta’s brain drain, boosting innovation, and retaining skilled workers. For student organizations, public funding is an investment in Malta’s future workforce and leadership, not a financial burden.

However, the suggestion that universities should generate their own income is not without merit. While third-party funding still accounts for only a small share of most universities' budgets, many European countries have implemented successful models of public-private partnerships (PPPs) to alleviate the pressure on state budgets while enhancing research and teaching capabilities. These partnerships can bring universities closer to industry needs, ensuring that research is applied and impactful. They also provide universities with additional revenue streams, which can be used to upgrade facilities, expand programs, and improve student services.

Yet, relying too heavily on private sector funding can come with risks. Universities might feel pressured to prioritize research that aligns with commercial interests over basic, fundamental research. There is also the risk that certain academic fields, especially in the humanities and social sciences, might receive less attention due to their lower appeal to private investors. The core mission of universities—to provide education for the public good—must remain intact, even when partnerships with the private sector are involved.

Sweden offers an example of how public funding and private collaboration can coexist effectively in higher education. Swedish universities are largely state-funded, providing free education to both domestic and EU students. This commitment to free education reflects the belief that higher education is a public good that should be accessible to all, regardless of socio-economic background. However, Swedish universities are also highly integrated into the private sector when it comes to research and innovation.

In Sweden, public universities collaborate extensively with industry, particularly in fields such as technology, engineering, and life sciences. These collaborations are not only financially beneficial but also ensure that research has a direct impact on society. For instance, partnerships between Swedish universities and companies such as Ericsson and Volvo have led to groundbreaking research and development in telecommunications and automotive technologies. The Swedish model demonstrates that while the state should play the primary role in funding education, strategic partnerships with the private sector can enhance a university’s research capabilities without compromising its core mission.

One rising trend across Europe is the increase in patent applications filed by universities. Recent data from the European Patent Office (EPO) reveals that European universities were responsible for over 10% of patent applications filed from Europe in 2019. This growth, up from around 6% in 2000, illustrates how universities are increasingly positioning themselves not just as academic institutions, but as hubs of invention and innovation.

With Sweden’s unique education system focussed on innovation, it comes as no surprise that Lund University in Sweden ranked at the top for academic patenting in Sweden. Lund University has transformed numerous research projects into patents, start-ups, and limited companies. Between 2000 and 2020, Lund submitted over 2,000 patent applications, while startups linked to the university created a combined turnover of over 6.7 billion SEK in 2022. This commercialization of research has had far-reaching impacts, generating tax revenue, employment, and fostering a culture of innovation that drives market value while aligning with societal needs.

Adding a European perspective, the recent Draghi report on European competitiveness, emphasizes the need for connected innovation clusters across countries and sectors, spanning both private industry and universities. The Draghi report identifies a lack of synergy in European academic and industry sectors as a key obstacle in Europe’s innovation pipeline. According to EPO President António Campinos, patents, collaborations and university start-ups should be leveraged in order to turn research into commercial success. The recent creation of the Unitary Patent in the EU marks a critical step in addressing these challenges, complementing other EU initiatives to promote industry-academia collaboration and provide financial support for science-based startups.

To address Malta’s university funding challenges, increased state support is essential but may need to be complemented by strategic partnerships. Drawing lessons from Sweden and recent EPO findings, the University of Malta could enhance revenue and social impact by fostering ties with industries that align with Malta’s priorities, such as healthcare, technology, and environmental science, and leveraging a patenting framework. A shift toward patenting could provide Malta’s universities with a dual benefit: contributing to market innovation while reinforcing the social value of research.

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