The comments came on Thursday in a spirited debate among five vice-chancellors over the merits - or otherwise - of the demand-driven system and the policy morass that is higher education in Australia in 2016.

The only point of general agreement: that the university sector is chronically underfunded.

Dr Spence, whose university sits with the research-intensive Group of Eight or "sandstone" universities, argued that the universities' heavy reliance on full-fee-paying international students was the result of a broken funding system that was putting significant downward pressure on quality - even, apparently, at his prestigious institution.

"If we teach medicine the way the Australian Medical Council requires, repeated studies have shown that you lose $20,000 per student, per year. And we're required to take 350 of them. You cross-subsidise that with the mass teaching of inexpensive subjects, one person teaching 500 kids in a history class; with dodgy masters courses and with international student fees. That's why the international student intake is dramatically increasing."

Dr Spence diagnosed four major systemic problems.

"A downward pressure on the quality of teaching in inexpensive subjects; significant under-funding of research; the over-reliance on the international student market with a double concentration risk that Australia is dependent on particular markets and students coming into particular disciplines; and the inability of universities to do anything about what stops people from under-represented groups from coming to uni," citing high costs of living and the meagre remit of Youth Allowance.

Professor Greg Craven, vice-chancellor of the Australian Catholic University was blunt in his riposte to Dr Spence.

"I always love hearing the Group of Eight talking about equity, it's like hearing Donald Trump talk about quality hairstyles," Professor Craven said.

He launched a stout defence of the demand-driven system, saying it had vastly increased opportunity for participation in higher education without affecting quality.

"This idea that quality necessarily falls when you have more people - why? Unis have developed incredibly sophisticated systems to deal with growth."

He called the debate around students with low ATARs getting into uni "hysterics" and was dismissive of the "phony debate about attrition rates", saying there had been no change since the demand-driven system was introduced.

He was joined by Professor Caroline McMillen, the vice-chancellor of the University of Newcastle, who argued strongly that removing barriers to participate in higher education was crucial for Australia's future.

"Hillary Clinton said that talent is everywhere, opportunity is not. Why would we bar talent from entering university when Australia is looking at a pretty complex, dire future?"

She said it should be called an "ability-driven system" rather than demand-driven, pointing to the example of medical schools opening up non-ATAR pathways to entry a generation ago.

"You see no outcry about the quality of Australian doctors, [because] it's very impressive. The argument that because you changed the score the quality would plummet has demonstrably been proved wrong."

Professor Frances Shannon, acting vice-chancellor of the University of Canberra said given the changing economy Australia needed to educate more of the population to higher skill levels, but didn't believe student enrolment - and the burden of FEE-HELP loans on the public purse - would continue to grow.

"There is a natural top-out to this, demand will curve off. It won't keep costing us more and more," she said.

"That's true, if you trust greedy vice-chancellors," Dr Spence replied, "and given that we don't trust greedy vice-chancellors in relation to fee deregulation, there's no reason we should trust greedy vice-chancellors in relation to demand-driven system."

The vice-chancellors were speaking at panel discussion hosted by the Committee for Economic Development of Australia, an independent public policy group.