Embracing the New Freedom: Towards the world’s best higher education system

Embracing the New Freedom:

Towards the world’s best higher education system

** Check against delivery **

2015 Universities Australia
Higher Education Conference

Great Hall, Parliament House, Canberra

Wednesday 11 March 2015

Acknowledgements

Thank you very much, Sandra.

It is a pleasure to be with you again to address your conference dinner. I would like to acknowledge my colleague, the Assistant Minister for Education and Training, Senator Simon Birmingham.

Sandra, as the outgoing Chair you have presided over some very interesting times. I would like to pay tribute to your ability to galvanise the sector in support of universities’ common objectives. I think the degree of concordance in the sector has astonished many.

I would also like to congratulate Professor Barney Glover on his appointment as the next Chair of Universities Australia. Barney, you will be a great asset to Universities Australia. I look forward to working with you in your new role.

Like Sandra, you will be ably supported by Belinda Robinson, Chief Executive Officer of Universities Australia, who has also worked tirelessly and astutely to ensure that the voice of Australian universities continues to be heard.

I would like to thank Universities Australia and so many people here tonight for the outstanding contributions you have made to debate on higher education reform over the last year. It has not always been easy, but you have done extremely well. Thank you.

Introduction

It really is a pleasure to be back with you tonight.

At this dinner a year ago, drawing on the guiding principles expounded and implemented by Sir Robert Menzies, I discussed the direction of the present government under seven headings.

Tonight I would like to report against each of these seven headings or principles.

They are:

1. Acknowledging that universities are so important for Australia
2. The importance of the autonomy of universities – the frontier of freedom
3. The importance of quality
4. The crucial role of universities in creating opportunity
5. The importance of research
6. The need for deep international engagement, and
7. The vital challenge of adequately resourcing our universities.

In reporting under these seven headings, I will of course especially discuss the Government’s higher education reforms. Those reforms responded to a number of challenges, including:

• Finding a way to maintain the demand-driven system in the face of increasing cost
• As recommended by Bradley and Kemp-Norton, the importance of expanding the demand-driven system to higher education diplomas and associate degrees and to students in TAFEs, colleges and private universities
• The importance of fixing funding cliffs for two vitally important research programmes
• Making sure Australia is not left behind in intensifying global competition, and
• The need to do all of this in a way that is fair to students and fair to taxpayers.

It is sometimes asked why the Coalition did not say before the 2013 election that it would embark on so significant a reform package. The answer is one that may bring back painful, or at least mixed, memories for university leaders.

You will recall that one Saturday in April 2013, the previous Government announced cuts to higher education and students amounting to $2.8 billion. The Coalition took the view that it would be necessary for it reluctantly to ‘bank’ those cuts – other than one cut we could not possibly accept, which was Labor’s cap on tax deductibility of self-education expenses.

We and Labor both went into the 2013 election expecting to secure over $2 billion in savings. Frankly, this would have enabled me to argue before last year’s Budget that, banking Labor’s cuts, higher education should be treated lightly in the Budget.

But all of this changed when, late in 2013, Labor decided to block its own savings, and the Senate therefore failed to pass Labor’s cuts.

This created a new context for the 2014 Budget and for higher education. It was unavoidable – as it would have been under a Labor Government – that higher education would have to make its contribution, along with almost every other area of public expenditure, to overall budget repair. And we had been left with the problem that Future Fellows and NCRIS were unfunded.

We could simply have done what Labor did in April-May 2013 and have a Budget just of cuts in higher education and research.

Instead, we took the view that it was better in every way to have a package of reforms. We have taken seriously our sacred trust to serve the national interest as best we could in changing circumstances.

In shaping our response to changed and challenging circumstances in the early months of last year, we consulted as widely as Budget processes permit – especially, of course, through the Kemp-Norton review of the demand driven system and through the Commission of Audit.

Many people here tonight made submissions calling for major reform, including but not only for fee flexibility, and I deliberately sought to encourage discussion through a series of speeches.

Since the 2014 Budget we have worked with UA and others to shape the reform package further, and we continue to do so.

These reforms are the logical next step in the development of higher education in Australia. I emphasised last year that the Menzies Governments and subsequent Australian governments, both Coalition and Labor, have sought massively to expand opportunities for Australians to go to university.

The Hawke Government realised that the Whitlamite dream of so-called ‘free education’ could not provide quality education when a rapidly growing proportion of the population were going to university. That Government strongly argued an equity point, that the nation could not fairly put all the cost on taxpayers, most of whom did not gain the personal benefits that came from it.

The Hawke Government did not indicate before the 1987 election that it would reintroduce university fees and create HECS. In fact, the Labor Party’s policy statement for the 1987 election said ‘We are opposed to tertiary tuition fees’.[1]

When it did so under Education Minister John Dawkins in 1988, the Coalition Opposition advocated a different approach to university funding – interestingly, ‘a consumer driven system where the institutions have to respond flexibly; not to some central authority handing out dollars for bids from institutions but something that addresses itself to the real needs of the consumers [ - the students - ] themselves’[2].

Importantly, the Coalition did not vote against the Dawkins legislation in the Senate.[3]

Speaking for the Coalition, Senator Baden Teague told that Senate in December 1988 that the Coalition would not vote against the legislation because – I quote – ‘it is a Budget Bill and we respect the ability of an elected government in the House of Representatives to determine a Budget and its financial provision for higher education’.[4]

After the 2007 election, in which it had not spoken of introducing a demand-driven system, Julia Gillard on advice from Denise Bradley’s review set about doing so. As Shadow Minister for Education, I negotiated with the Labor Government so that we could support the Government’s initiative. We did not seek to block Labor’s major higher education reform after our concerns for regional students were addressed.

Now, of course, the Opposition take neither approach, neither constructively engaging nor recognising the responsibility of good government.

Alarmingly, the Opposition Leader today began the process of softening up Australia for re-capping undergraduate places. Dressed up in the language of ‘quality’ and ‘targets’, he flagged a plan to end the demand-driven system. This would destroy Julia Gillard’s great achievement, which Chris Bowen has written ‘was a major reform of which Labor can be proud and must protect and defend’.[5] Instead of protecting it, Labor’s plan to re-cap places would disproportionately lock out students from disadvantaged backgrounds and those in regional and outer metropolitan areas.

Meanwhile, we continue to work very constructively with cross-bench Senators to consider the best form of higher education reform, and the Reform Bill currently in the Parliament already reflects significant input from various Senators. I continue to stand ready, including to consider sensible ideas that come from others who wish to make a constructive contribution.

The importance of universities

In all of this over the last year, we have never forgotten the first of the principles I spoke of last year:

Why universities are so important for Australia, in teaching and in research, both for ensuring a civilised society and a competitive economy, and so why this Government is committed to being the friend of universities.

Universities are the engines of social and economic development, drivers of innovation and creators of the knowledge industries this nation needs.

Through universities, aspirations are raised, opportunities created and lives transformed.

The role of universities in creating social mobility is well illustrated by those who are the ‘first in their family’.

The generational increase in the numbers of first in family students spills over to their extended families and to whole communities, and has deepened our economy and society immeasurably.

But we know the current system is not sustainable, a fact that Universities Australia clearly highlighted in its Keep it Clever campaign. As the campaign said:

global competition is intensifying and we risk being left behind[6].

Our universities are constrained by an outdated funding system which leaves them operating with one arm tied behind their back.

Our students have even more at stake. They now come from a wider cross section of the community, with different aspirations, different educational and social backgrounds and attracted to different kinds of institution and teaching style.

Through the reforms, students stand to benefit from a fairer system, a more responsive system.

Students benefit when taxpayer support follows them if they choose to undertake their higher education at a TAFE or private college. Students benefit when universities and colleges can offer them a pathway course if they need it.

Students benefit if they can get a scholarship to help them with living or other costs. And students benefit when research is strong, and research infrastructure or other funding is no longer under a cloud.

As Belinda Robinson has said:

opting for the status quo is neither an answer nor a solution to the need for a strong and sustainable higher education system that gives our students the best possible education.[7]

The Opposition is rejecting advice of prominent Labor stalwarts such as Gareth Evans, John Dawkins, Maxine McKew, and others – to either support reform or at least engage in constructive discussion to help find a solution for our higher education system.

Indeed, the former Labor Education Minister, John Dawkins has cautioned that:

…. the ALP ought to engage with the Government to negotiate the further reform of higher education[8].

When every higher education peak body supports the reforms with amendments, surely it is time for constructive parties to help to shape those reforms.

University autonomy

I turn now to our second principle: the importance of the autonomy of universities, which, in effect, is what the Government’s reforms are all about.

Last year I said that freedom and autonomy would be the hallmarks of this Government’s approach to universities. I urged each of each of you to grasp your destiny into your own hands.

The Murray Committee, one of the first of over thirty reviews of higher education in Australia, said:

Universities…are accorded a high degree of autonomy and self-determination on the ground that the particular services which they render, both to their country and to mankind in general, cannot be rendered without such freedom.

Our own Prime Minister, the Hon Tony Abbott, has said:

We are deregulating higher education – because universities, of all institutions, should be capable of running themselves.[9]

An important step in university autonomy and student opportunity was the creation by the previous Government of the move to a demand driven funding system for bachelor degrees.

In her autobiography, My Story, the former Prime Minister, the Honourable Julia Gillard, recognises this as a singular achievement. She said:

I am particularly proud of our decision to unchain Australian universities, to enable them to define their own mission and educate more students. ... Universities could offer more places if they wanted to and government funding was made available per student enrolled[10].

Along with many significant Labor people, we believe that the time has come to take the next steps in unchaining universities.

As you know, this Government wants to go a logical step further by uncapping places for higher education diplomas and associate degrees and supporting higher education students enrolled at TAFEs and private universities and colleges. This was recommended by both the Bradley and Kemp-Norton reviews.

Universities should be able to put a real value on their degrees – one that reflects the actual cost of teaching and plays into students’ decisions about what and where to study.

Allowing institutions to determine how much they charge students is not a novel idea. It has been raised in countless submissions to reviews of higher education stretching back at least to the 1990s.

Professor Peter Karmel was a strong advocate of place and fee deregulation, as was Max Corden in his famous treatise, Australian Universities: Moscow on the Molonglo.

The truth is that fee flexibility is the only way that Australia will be able to achieve a world class higher education system – one that both caters to the growing and increasingly diverse student population and is characterised by excellence in teaching and research.

There has been a sustained, baseless and irresponsible scare campaign about the fees that universities could charge in a deregulated environment.

The fees already announced by La Trobe, UWA and QUT and ACU’s announcement today[11] prove that the scare campaign on fees is simply false. You have already shown that you set charges responsibly for domestic postgraduate students and I have no doubt that you will act responsibly and fairly towards domestic undergraduate students.

Quality of teaching and research

Our third principle is the importance of quality, both in teaching and in research.

It is right that coverage of the key issue of quality follows from discussion of autonomy.

Last year, I quoted Ross Williams and colleagues who identified that two things more than any others were necessary for a truly world-class higher education system – for institutions to have autonomy and resources.[12]

The Government reforms and the freedom they provide universities will help ensure quality, both in teaching and research. Indeed, they are essential to our goal for Australia to develop the best higher education system in the world.

‘Quality’ needs to be the signature of Australia’s higher education system. If we are to outpace the intensifying global competition in higher education and research, we need Australian universities to have the freedom to aspire to compete at the top level globally.

‘Quality’ also means all our higher education providers being the best for their group of students, the professions and industries with which they work, their local communities of engagement and the research that plays to and builds on their unique strengths.

We will not get the best from our higher education sector while it is characterised by a monochrome character enforced by over-regulation and central planning.

Quality will be served by student choice and by students being empowered with timely and relevant information on all providers and courses.

The new Quality Indicators for Learning and Teaching – or QILT – will put the performance of each higher education institution in front of prospective students and their families, and employers.

Creating opportunity for individuals from all parts of our community

This leads to the core of the fourth principle - the crucial role of universities in creating opportunity for individuals from all parts of our community.

The reform package is an equity package in fundamental ways:

1. It preserves the demand driven system.
2. It extends Commonwealth support to more students.
3. It creates the largest scholarship scheme Australia has ever seen.
4. It abolishes unfair loan fees that hit some of our most disadvantaged students.
5. It shifts some of the cost of education away from the taxpayer who has never gone to university and shouldn’t have to foot so much of the bill for those who do and who gain the benefit.

In their review of higher education funding arrangements, Dr Kemp and

Mr Norton recommended preserving the demand driven system.

They said:

… universities have responded well to the greater freedom conferred by the demand driven system in relation to course offerings, modes of delivery and admissions. Access has improved for students from all categories. Greater competition for student enrolments, and the opportunity for greater responsiveness to student demand, has driven innovation and lifted quality. In light of the benefits of the demand driven system, there is no persuasive case for the reintroduction of caps. [13]

This last statement is highly significant. There is a lot at stake.

Anyone who listened to the hearings of the Senate committees on the Government’s legislation last week cannot have failed to pick up where Senator Carr and the Labor Party look to be heading.

We have unashamedly suggested shifting a very moderate proportion of the cost of teaching and learning toward those who benefit from higher education, the graduates.

If the Senate rejects this, the system still needs to be made affordable. There are only two other choices – capping the demand driven system, which is socially regressive; or reducing research funding, which has bad economic consequences.

The Government’s colours are on the flagpole – pro opportunity, pro fairness and pro research.

Senator Carr was sounding a lot like he wanted to halt growing opportunity. I would have expected that he would have been proud of the previous Government’s legacy and not wanted to disown it.

Reinstating caps on university places amounts to nothing less than closing the door in the face of countless Australians with dreams of getting a degree and improving their lives.

Commonwealth scholarships

The new Commonwealth Scholarship Scheme will benefit students from disadvantaged backgrounds, including many from rural and regional Australia.

Higher education institutions will be required to allocate one dollar in every five dollars of additional revenue they raise from student contributions to this new scheme.

Responding to concerns raised during consultation with the sector last year, the Government will also establish a Scholarship Fund under the Higher Education Participation Programme.

This new fund addresses concerns that some providers may raise limited additional revenue in a deregulated market and therefore have a limited pool of funding for scholarships.

Abolishing loan fees

Another important fairness and equity measure in the Government’s reform package is the abolition of loan fees for students who access student loans.

We are removing the 20 per cent loan fee on VET FEE-HELP loans, and the 25 per cent loan fee on FEE-HELP, so that all students who take out a loan are treated in the same way.

More than 130,000 students will benefit from this measure each year. This will put money back into the pockets of students.

And after considering feedback from some Senators, universities, students and parents on the original reform package, HECS will remain indexed based on the CPI.

And interest rate charges for the primary carers of a child under five will be frozen - a wholly new benefit to graduates caring for young children.

Australia’s HECS system will continue to be the envy of the world and a pillar of opportunity and fairness in higher education. It was already a system of envy to the world. This package now makes it fairer and more supportive of students – an even better loan scheme than before.

Fairer sharing of the costs

Which brings me to the fairness of our higher education system for taxpayers.

We think it’s time to shift the balance on who bears the cost associated with higher education.

It is fair that individuals who benefit from their higher education should be asked to pay a bit more of the cost associated with that education.

I know that many of you do not welcome any reduction in the public share, the CGS. But please consider the alternative. The system has increased threefold since John Dawkins. He contributed to that.

As I have said already – it looks to us like Labor would opt to end the demand driven system.

Talented potential students from less good schools and poorer postcodes who might do very well at university are the ones who will miss out. That is neither fair nor good for the nation’s workforce.

The importance of research

Now I turn to the fifth principle, the importance of research, be it in science or the humanities or other disciplines.

Whether it is in science, the humanities, or other disciplines, it is through research that we address the world’s most pressing problems, with benefits for individuals, the community and the economy. All this contributing to Australia’s global standing.

We also understand that access to state of the art facilities is a key requirement for conducting world-class research and is the foundation of technological and process innovation.

We want to save NCRIS and Future Fellows. We found a fair way to fund them. But even more importantly, the Government’s reform proposal is the one that actually preserves research funding in general.

I leave you with this question: if Labor and the Greens succeed and the Senate rejects the Government’s reform package so that there is no credible way of sustaining the burgeoning cost of teaching and learning, where would Labor find the revenue to secure NCRIS or Future Fellows? Revenue they failed to find in government themselves.

The need for deep international engagement

Principle six is the need for deep international engagement for our universities.

This Government places the highest value on the need for deep international engagement - a principle guiding our approach to higher education.

One of the first actions of this Government was to establish the New Colombo Plan, which builds relationships between the countries of our region through the candour and enthusiasm of our students.

I am pleased to report that in 2015, 69 scholarships and over 3000 mobility grants have been awarded. This takes students to study or pursue internships at 32 locations across the Indo‑Pacific region.

National strategy for international education

Last year I foreshadowed that the Government would be responding to the report prepared by the International Education Advisory Council - Australia – Educating Globally, chaired by Michael Chaney AO.

Senator Bridget McKenzie outlined the Government’s response at the Australian International Education Conference, last October.

The next step is a genuinely all sector National Strategy for international education and research engagement on all levels.

I hardly feel the need to say that the Government’s reforms really are an essential support for the future competitiveness of our fine international education offering.

Adequately resourcing universities

And lastly, principle seven is the vital challenge of adequately resourcing our universities, through both public and private means.

The Higher Education and Research Reform Bill is vital for Australia. It provides necessary reform to keep our universities, TAFEs and colleges competitive. It increases support and opportunity for students, while sustaining the system that educates them.

It will put to bed the roller coaster ride of surge and savings. If evidence of this is needed, look no further than the $6.6 billion of cuts to higher education and research that Labor announced between 2011 and 2013.

If the Senate fails to pass the Bill:

• An estimated 80,000 students will miss out on Commonwealth support each year by 2018.
• Around 50,000 higher education students and 80,000 vocational education and training students will still face unfair HELP loan fees.
• Thousands of disadvantaged higher education students will not receive Commonwealth Scholarship support from universities or through a new government fund within the Higher Education Participation Programme.
• Primary carers of a child under five years will continue to see the size of their HECS debt grow, even though they may not be earning enough to make HECS repayments.
• Australian universities would, in the judgement of Universities Australia, be condemned to inevitable decline and our $16 billion education services export industry would be at risk.
• As Belinda said today, campuses may well close.

The voices of Australian higher education leaders are calling for these reforms. They agree with Sandra Harding and Belinda Robinson that the status quo is not an option.

There is no credible alternative to reform. I want to acknowledge that our reforms are better for your input. And I want to praise Universities Australia for clearly articulating the imperative for reform.

I could not say more often that I remain open to sensible suggestions and engagement from the Senate or from the sector. There are features of the Government’s package that are not up for grabs. But we will make further changes if well-argued and sensible.

The alternative to passing the Government’s reform Bill is more years of inequitable and unpredictable cuts and, when they get the chance, Labor either ending the demand driven system or cutting research funding again.

There really is no credible alternative to the Government’s package.

It will provide our universities with autonomy and our students with opportunity.

As I said last year, I urge all across our universities to embrace the new freedom which our higher education system and our country need and which we are determined to provide.

[ends]