Evidence is forwarded of a will for rationalisation of higher education, research and technology transfer processes; but the actions which have taken place in all three structures have, in contrast, produced irrationality and inefficiency. Tertiary education institutions are proposed as the spine for reconstruction, but pre-requisite is a logical hierarchy of missions appropriate to the various educational sectors. This done, research institutions may usefully coalesce with the universities, while development and advisory agencies may beneficially integrate into the polytechnic sector from which their information flow is sourced. There is strong mutually supportive efficiencies from education, research and extension emanating from a single resource base; but that base needs to be tiered according to the aptitude and requirement (science, technology, skills), and integrated with the industry. These proposals are not founded only as coping strategies in the face of funding withdrawals, but as optimisation movements bringing benefits of sharing of common human and physical resource for the three sectors; education, research, and technology transfer. An optimisation lost by their separation, and by competition amongst organisations within each sector (but especially education) striving for similar goals and for limited resources when the national requirement is for diversity. © 1998 Elsevier Science B.V. All rights reserved.