Speech - Australian Higher Education Congress

Delivered on 25 March 2009 regarding Higher Education and Bradley Review

One feature of the Education Revolution notable by its absence is any sense of interest or engagement in Higher Education.

A year ago Minister Gillard outsourced that engagement to Professor Denise Bradley. 

Professor Bradley's committee reported in December.  The Minister gave her long awaited response in a series of three speeches at the beginning of this month.  Unfortunately the speeches made no substantive commitments about funding or reform.  While Minister Gillard committed the Government to no extra funding at this stage, she demanded the sector increase its output quite substantially – an increase in graduates that one Vice Chancellor has described as requiring billions of dollars and the construction of several new universities to achieve.

But far from the promised education revolution, when it comes to the higher education sector we are seeing a funding famine.

The Opposition has taken a great deal of political heat for voting against the Government's February stimulus package.  It is worth thinking about the position of higher education in the Government's list of priorities, in the context of the stimulus package:

  • we have seen $23 billion committed to cash handouts – of which 80% of the first round was saved rather than spent;
  • $2 billion was committed to installing pink batts in ceilings around Australia;
  • and $1 billion committed to local councils around Australia – money which is able to be spent at the whim of Mayors around Australia on whatever local project is considered suitably worthy.

At a time when the Government is spreading largesse around every imaginable branch and department of Canberra like a contagious disease, the higher education sector has remained remarkably immune from infection.

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The Howard Government received a great deal of criticism in 1996/7 when it did not quarantine the University sector from the general cuts that it was making around the whole Government.  Thirteen years on, it is worth remembering that those decisions were made in the context of a $10 billion Budget deficit, and $96 billion of debt that took a decade to pay off.

Tough decisions had to be made in those early years, but the social dividend was returned through lower taxes and improved services once the Budget situation had been rectified.

In the last year of the Coalition Government a record 185,898 Australians were offered a university place.  The $1.9 billion “Releasing Our Potential” package introduced significant new funds into key areas.  A dramatic increase in the level of Commonwealth scholarships was designed to ensure that all of our best and brightest had every opportunity to achieve their potential. 

Similarly we increased the repayment threshold applying to when students must begin repaying their HECS HELP loans to just shy of $40,000 – making a world's best practice student contribution scheme even more accessible. 

Therefore between 1995 and 2006 we saw a 23% increase in numbers of students from low socio-economic backgrounds attending University – this at a time of essentially full employment.  Similarly we saw a 15% increase in students from rural areas, a 137% increase in students with a disability, and a 30% increase in indigenous students.

The final Budget of the Howard Government also included an investment of more than $6 billion in the Higher Education Endowment Fund – a forward thinking long term investment in the infrastructure of our Universities, designed to keep growing with future investment and keep improving our institutions into perpetuity.

—-

But that is ancient history now.  Kevin Rudd's Labor Government, bequeathed a $22 billion Budget surplus and the lowest unemployment rates since the 60s, is now approaching the half way point of its three year term.

Yet almost every policy that has been announced has amounted to this sector being asked to do more with less.

Turning our minds back to last year's Budget, you would remember the announcement of an $11 billion Education Investment Fund – or EIF.  Legislation was passed in December to bring the Fund officially into existence.  As a headline, an $11 billion Education Investment Fund was seen as good news.

The detail is, however, immensely disappointing.

First this is not new money – the first $6.2 billion in the fund was a direct transfer from the Higher Education Endowment Fund set up 12 months earlier.  This $6.2 billion from the HEEF was then topped up with $2.5 billion from the last Howard surplus.  The name was changed, and the guidelines for funding allocation were changed so that the money is now also available to the training and vocational education sector as well as universities.

By the time the legislation was introduced into the House, even the public servants who briefed the opposition on these details struggled to keep straight faces as they told us that the fund would only reach $11 billion if the Budget remained in surplus this year!  The final $2 billion announced for the EIF and University infrastructure was spent instead on pink batts.

The fact of the matter is that Labor's new $11 billion fund is actually an $8.7 billion fund, paid for entirely by the previous Government, which Universities must now share with Australia's TAFEs, RTOs and VET providers, and it has a new name.

Precious little else has happened in Higher Education.  We have seen the Government break their election promise on Voluntary Student Unionism.  I'm well aware that many providers would welcome the injection of extra funds into campus service activities, but it strikes me as more than passing strange that the only new funding mechanism being given to the sector is a new tax on students.

Meanwhile the sector has had a genuine growth market – full fee domestic places – removed entirely with virtually no compensation.

And that sums up the total list of achievements of the Rudd/Gillard education revolution as it applies to the higher education sector.  A new tax, reduced revenues, and an old fund renamed.  And twenty five reviews last year, plus a further review in February to make recommendations about which recommendations of the Bradley review should be taken seriously.

In recent months we have seen Prime Minister Rudd holding the Finance Minister by his ankles on the cabinet table and shaking him until all the money comes out, but not a penny has been scooped up by the Minister for Education to go to the University sector.

The Government seems to have written itself out of the game in relation to improving higher education for some time to come.

We await with interest what, if any, investment we see in the sector in May's Budget.  This Budget is crucial for our Universities, and it is in the context of this year's Budget that the Opposition will be framing our Higher Education policies for the next election.

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Turning to the Bradley review …

This speech has been introduced as the Opposition's response to the Bradley Review. 

In a speech I gave in December, in relation to this topic, I said that “what is far more important than the review itself is the response of the Rudd Government.”

 

I had hoped to be able to use this opportunity to inform the sector of our response to the detail and the breadth of Julia Gillard's vision for the future of higher education in Australia.

That will now have to wait until after the Budget, when the Government actually announces what it will do.  Instead, just as Minister Gillard announced some preliminary thoughts earlier this month, I will do the same.

As a starting point let me say that, without systematically going through every recommendation, the Opposition endorses the general thrust and tenor of the Bradley Review, and its goals.

The Bradley review was given the remit of advising the Government on how to develop a “diverse, globally focused and competitive higher education sector with quality, responsive institutions following clear distinctive missions to provide higher education opportunities to students throughout Australia”.[1]

Professor Bradley was asked for advice on “improving funding arrangements”,[2] “widening access to higher education”,[3] and “building an integrated relationship with vocational education and training.”[4]

Denise Bradley and her expert panel were provided with a wealth of information from which to make their recommendations.  Last year the sector responded with enthusiasm to the opportunity to have their say – 353 submissions were received from Universities, associations, student groups, academics, and other interested individuals. 

Public consultations around the country were well attended and points of view were vigorously pursued.

Since the release of Professor Bradley's report, if anything the sector has responded with increased vigour to the public debate!

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The headline in the Government's response was the signal that a kind of watered down vouchers, or “entitlement”, scheme.  This corresponds with the first part of Recommendation 29 of the Bradley Report -

“That the Australian Government introduce a demand-driven entitlement system for domestic higher education students, in which recognised providers are free to enrol as many eligible students as they wish in eligible higher education courses….”[5]

Of course the second part of that recommendation – “… and receive corresponding government subsidies for those students”[6] awaits the May Budget for consideration.

While the Government's adoption of the principle that funding should be driven by student demand is not necessarily the end of the story, we would say that it is an improvement on the current situation where too much of the existing framework is the arbitrary result of historical accident.

The Opposition supports increased flexibility for students and Universities, and a reduction in bureaucratic involvement from Canberra.  Decentralisation and deregulation may be words associated with Neoliberalism – apparently an evil as great as the enforced famines of the Soviet Union in the 20th Century – but if there was ever a poster-child for how the heavy hand of Government knows worst, then this may be it.

There can be no clearer demonstration of this than the example of Australia's shortage of doctors.  In the 1990s, governments of both complexions were complicit in implementing the advice of the bureaucracy that the number of commencing medical places should be cut back.[7]

The rationale for this cut was a belief in the bureaucracy that growing medical costs were the result of over-servicing, prompted by an excess of graduating doctors.  The enlightened central planners certainly managed to solve that problem, as demonstrated by the current crisis!

In the face of reality, the myth must finally be put to bed that the allocation of student places between courses and institutions can be better handled by central control.

It is counter-intuitive that the number of places in specific disciplines at specific institutions is still determined in this day and age by bureaucrats in Canberra, based on historical allocations. 

In my opinion a stronger Higher Education sector is one that is more independent, not less.

Today, Australia's 38 universities are competing not only against one another but against all other institutions of higher learning throughout the world to attract and then properly equip students with knowledge and skills to prepare them for productive life, be it in Newcastle or New York, Roma or Rome.

In such a truly open and global environment universities must be able to respond in a flexible way to ever-changing circumstances and needs. They must be free to specialise or diversify in a way that they feel will best build on their strengths and benefit their students.

Talking about building internationally competitive universities in Australia is one thing, but it seems like we're asking universities to compete while preventing them from responding to student demand. It is not unlike asking Olympic swimmers to take on the world's best in handcuffs.

 

So on the matter of place deregulation, we support the Government in principle, pending the detail of how this will be funded.

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One of the problems of the Government's unbudgeted response to the Bradley Review was that while the Minister was happy to endorse targets – 40% of Australians to have a degree, 20% of enrolments to be from Australians of low SES background, and so forth – there is no real plan to how we will get there.

Such aspirational goals will require a significant increase in engagement in higher learning from a section of the community that is currently underrepresented.  We already have generous scholarship schemes, and in HECS we have a repayment system that makes higher education genuinely accessible to all who are interested and of merit.

The key missing factor is inspiring young people from families in which nobody has ever studied at University to understand that the pursuit of a higher education degree will benefit their lives.

Last year I met with Deakin University's Vice Chancellor Sally Walker, who proposed one cut-through idea that is worth consideration.  To increase the interest in university study among low SES students, and encourage more to focus on finishing school and taking up a place, Deakin's Bradley submission suggested: “… that consideration be given to a bold new scholarship program which involves awarding scholarships to low SES students in mid secondary school, with funding available if and when the student starts university.  These scholarships should be very generous, covering the real cost of going to university.”[8]

Talking to high school students when they are already at upper secondary levels may well be too late for too many students to put in the focus and energy that will drive them towards the sort of engagement that will take them to University.

Early engagement is crucial.  In whatever form it takes, the Government must put in the work to ensure that there are sufficient interested and tertiary-ready students to fill the places that Universities will be required to create to meet new low-SES benchmarks.

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If the Government is serious about reform, then come Budget time we should see some consideration given to reforms suggested by Bradley in student income support – to ensure that sufficient support is going to those who need it.

We would also like to see a coherent response to the improvements to research funding as discussed in both the Bradley and Cutler reviews.

When opportunities for revenue growth have been substantially cut in the term of this Government, we need an adequate response in this Budget to Professor Bradley's recommendations of increased funding.  We look forward to seeing what is allowed to pass through Treasury.

One Bradley recommendation that has received very little media attention to date is Recommendation 39:

“That the Australian Government provide funds to match new philanthropic donations received in the sector as a means of stimulating an additional revenue stream from this source with the cost capped per institution, and in total at $200 million over three years.”[9]

In 2007, only 0.9% of revenue in Australian universities – or $155.1 million – came from donations and bequests.  The overwhelming majority of this benevolence is concentrated in seven institutions that receive over $15 million each.  This is a remarkably underdeveloped source of income by comparison with the international community, and one that needs attention.

The Allen Consulting Group's 2007 paper, “Philanthropy in Australia's higher education system”, suggested that “the Australian Government should consider a range of measures to support philanthropy in the higher education sector.  This includes more attractive tax incentives, matched funding programs, funding to support universities to build fundraising capacity as well as other innovative approaches to attract more philanthropic funds.”[10]

What level of support is feasible at this stage for such initiatives is again a matter for those occupying the Treasury benches.  However it is clear to the opposition that we can no longer rest on our laurels when it comes to encouraging a culture of philanthropy – the existence of which puts so many of our international competitors at a distinct advantage to us in Australia.

—–

It is fair to say that if the Education Minister had a blank cheque book, a surplus budget, and a genuine interest in higher education policy, then the Bradley review recommendations would provide a fruitful resource in how to spend public money quickly.

Unfortunately for Higher Education, the Government is fresh out of blank cheques, having instead prioritised the needs of local mayors and councils, the insulation industry, and $900 personal cheques.

Funding aside, the other challenge ahead for Government is to unshackle the Higher Education sector from what has become a noose of bureaucracy.

The Liberal Party has always been the Party of small government and personal responsibility.  I have been the first to admit that the previous Government could have gone much further in promoting this basic principle and philosophy. 

Unfortunately, under this new Government the window for reform in this area may have already closed.

Australians deserve a ‘fair go'. But we need to earn a ‘fair go' through our own efforts and determination. Ours should be a country of enterprise and energy. 

The debate over university funding is a complex one, but it boils down to a very simple question.  Should we force our higher education system to meet the needs of our students in a competitive global environment? Or should we force our students to meet the needs of our centrally-controlled higher education system? Sadly, in too many ways, we have chosen the latter.

 

It is of crucial importance that any changes to the Higher Education sector ensure that the taxpayers' enormous investment in the sector is fully realised, while at the same time universities be granted the much needed freedom and flexibility that will enable them to meet the needs of students and also compete effectively against the rest of the world.

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The tough decisions that arise out of the Bradley Review cannot be put off or the report buried in further committees and reviews, in working groups or inquiries. A ‘revolution' is meant to be swift and radical reform, therefore I am calling on the Government to get on with it.  We have already seen too much prevarication on this issue.  Any further delay in implementation past this year's May Budget would be a signal that the Government's lack of interest in this area has progressed from insulting to dangerous.

 


[1] “Review of Australian Higher Education Discussion Paper”, June 2008, Appendix A (Terms of Reference) p69

[2] Ibid, p69

[3] Ibid, p69

[4] Ibid, p70

[5] “Review of Australian Higher Education: Final Report” Bradley et al, 2008, p xxiii

[6] ibid

[7] This section taken extensively from Christopher Pyne's December speech to QUT Forum.

[8] “Submission to the Review of Australian Higher Education”, July 2008, Deakin University, p15

[9] Bradley et al op cit, p xxiv

[10] Allen Consulting Group, “Philanthropy in Australia's higher education system” 2007, p87

 

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Written and authorised by Hon Christopher Pyne MP, 429 Magill Road, St Morris SA 5068

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