The University of Melbourne’s humiliating backflip on the Victorian College of the Arts and the resignation of chief Melbourne Model spruiker Sharman Pretty might not be enough to save the icon from further financial strife, activists say.

Last night, the University released a response to its own review of the future of the VCA undertaken earlier this year by former Telstra chief Ziggy Switkowski. It endorsed the suspension of the controversial revenue-raising model at the VCA’s Southbank campus and an institutional split into two arms — a Music Conservatorium headed by Gary McPherson and a Southbank campus likely to be overseen by former Melbourne Arts Festival Svengali Kristy Edmunds.

But Save VCA coordinator Scott Dawkins, who has waged a relentless campaign to restore the institution on behalf of 13,000 members, told Crikey that without an immediate election year cash injection from new Federal Education Minister Simon Crean, the spiritual home of Victoria’s elite arts community would founder.

“By far and large our primary focus is to get everybody in the arts to email Simon Crean and encourage him to seal the deal. If we can solve our funding programs, everything will flow from that,” Dawkins said.

The VCA has been propped up by its parent to the tune of between $6 million and $20 million following changes to its funding model pushed by former education minister Brendan Nelson in 2003. Dean Pretty’s backing of the University of Melbourne Vice Chancellor Glyn Davis’ controversial Melbourne Model, that endorsed a growth in full-fee paying students to offset declines in taxpayer funding, was designed to claw back some of the shortfall.

Last night, Crean put out a press release welcoming a shift to a “sustainable” funding model. He singled out Labor’s new candidate for Melbourne, Lindsay Tanner substitute Cath Bowtell, as being key to the negotiation of a new strategy.

Crikey understands Bowtell has been a central player in talks between Victorian Arts Minister Peter Batchelor and Crean’s office to sort a solution to the problem, that until yesterday had the potential to strip votes from Labor in an election year.

Two weeks ago, Bowtell’s Greens opponent in Melbourne, Adam Bandt, was pictured alongside Oscar-winning lookalike and the celebrity face of the Save VCA campaign Adam Elliot in The Age. Bandt promised the Greens would lobby to turn the institution into a icon in the mould of the National Institute for Dramatic Arts. The move, favoured by VCA activists, would involve an extra $18 million in annual federal funds.

The ALP is also facing a strong challenge from the Greens at state level in the seats of Melbourne and Brunswick and the Liberal Party has been active in its attempts to extract political mileage from the fracas. Shadow Parliamentary Secretary for the Arts Heidi Victoria previously had the inside running, pledging $6 million to save the institution if Ted Baillieu was elected in November.

Last night at the opening of the Melbourne International Film Festival, Premier John Brumby appeared to substantially improve his re-election prospects by telling an audience of industry insiders that he “would not rest” until a “high level of studio-based training is maintained” at the VCA, an institution that was apparently “dear to my heart.”

Dawkins told Crikey that while he was happy with the end to the buck passing, and the prospect of fresh funds, the University’s review raises more questions than it answers.

“The language of economic rationalism pervades the document, and there is no indication that cut courses, including Music Theatre, Puppetry, Film & TV Documentaries and Drama, will be reinstated”, Dawkins said. And while there was commitment to studio-based training, music would continue to be counter-intuitively spread over two campuses.

There was also no suggestion of easing the burden of the VCA’s administration and rental costs, which have jumped by around $10 million following its formal merger with the University in 2006. The Switkowski recommendations could still be overturned, with a further review of the response to the discussion paper not due for release until 2011. Worryingly, the notorious Melbourne Model would be retained under McPherson’s oversight, Dawkins said.

Crikey understands the University’s response was to have been initially released in August, but was brought forward after members of its governing council were handed copies at their meeting on Monday night. Concerns over leaks prompted the University to go public prematurely.

The future for Sharman Pretty remains unclear. This morning on ABC 774 Melbourne, the deer-in-the-headlights audio of her interview with Jon Faine last year was again aired, with Pretty struggling to answer even basic questions about the organisation’s future.