The relationship between universities and governments has attracted considerable attention in the decade of the 1980's as governments have sought to use universities as instruments of economic policy. Consistent with the interest in the perceived capacity of universities to play a vital role in economic development and restructuring, the Minister for Employment, Education and Training in the Australian government released Higher Education: A Policy Discussion Paper in December 1987. The Discussion Paper proposed the most significant changes in the history of Australian higher education. The government sought to increase participation in higher education and to redirect the research effort in universities away from the basic to a more applied research effort directed at solving immediate economic needs. The proposals included the abolition of the binary system, the restructuring of research funding, review of management structures, and implementation of educational profiles, implementation of academic staff assessment and the definition of institutional roleand mission through the application of student load benchmarks. The study soughtto understand the process of higher education policy development especially with respect to the role of the universities in the policy development process.