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This paper examines why the development of a world class university system represents a rational, even inevitable, policy approach for Australia in response to world university rankings. It assembles evidence questioning the value of policies which direct undue emphasis on the concentration of resources and the development of elite universities, especially in smaller nations. Several recent policy initiatives have enhanced Australia's ability to maintain a strong university system and this has meaningful implications for the international promotion of Australian higher education. The "system" approach necessitates that Australia continue to pay close attention to world university rankings but develop more sophisticated means of classifying and benchmarking universities to ensure the required diversity of institutional missions to achieve all that is expected of the system. (Contains 1 table.)