What use is a graduate programme?

Recently when thinking about developments in university education Bill Kaye-Blake asked What’s the point of academic research? Is it to be 'critic and conscience of society' or is it to 'advance knowledge and understanding'? Or both? Whatever the answer, the results of research are certainly one of the two major outputs of universities. The second main output of a university relates to the results of teaching, both undergraduate and graduate, students of the institution. With regard to teaching I wish to ask, What use is a graduate programme?

What does a university department need to be be serious? Can a department live without a graduate programme? If a department within a university didn't have such a programme what effect would it have on that department? How would the department hold current staff and how would it attract new staff? What effect would it have on students?

In terms of student numbers obviously you would lose all your graduate students, but if you are planning to do away with a grad programme I guess it would be because it didn't have many students to begin with so it wouldn't be a great loss, as far as the bean-counters are concerned. One may argue that a small but high quality programme is worth keeping on grounds of quality rather than quantity. Can graduates of the programme get good jobs in good places, can they succeed in good overseas Ph.D. programmes?

But what effect would the closure of a graduate programme have on undergraduate student numbers? If you can't do a graduate degree at a given university you have to ask, Why do an undergraduate degree there? Given that you are going to have to move to another university for grad school why not just move to the second university for your undergrad degree as well? Importantly in New Zealand, unlike for example the U.S., an undergrad degree in the subject you want to do grad work in is normally assumed so there is a more direct link between undergraduate degrees and graduate degrees in the New Zealand system. This means moving universities is more difficult since your undergrad training may not integrate easily into the grad programme you are moving to. This gives students an incentive to do their undergrad and grad work at the same university. For some subjects this may not matter much since an undergraduate degree is the terminal degree, e.g. engineering,  but for others, e.g. clinical psychology or economics, where an advantaged degree is necessary for employment it matters more.

So if you only teach undergrads you have to teach in such a way as to have your students be able to move to any other university in the country for their graduate work. This is not a simple issue to deal with given the differences in what is assumed about students backgrounds in different graduate programmes. Knowing that student have to leave their current institution to do graduate work gives other institutions an incentive to head-hunt the best of the local students thereby damaging the local undergraduate programme.

Thus there are push factors making students want to leave an institution without a postgrad programme and there will be pull factors as well as other universities try to attract good undergraduate students. If this results in a falloff in undergraduate students, certainly it will not help undergraduate numbers, it could be to the point where the undergraduate programme is also seen by management as unsustainable.

Knowing this can a move by university administrators  to close a department's graduate programme just be seen as a signal that they want an excuse to close the department itself?