Higher education reform summit: next steps in the evolution of Australian higher education

12 Nov 2014 Speech

Higher Education Reform Summit

Next steps in the evolution of Australian higher education

Sofitel Melbourne
25 Collins Pl, Melbourne

Wednesday 12 November 2014



Good morning. It is a pleasure to be here today.

I acknowledge:

  • Senator the Hon Kim Carr, Shadow Minister for Higher Education, Research, Innovation and Industry
  • Professor Ian Chubb AC, Australia’s Chief Scientist
  • The many vice chancellors and other university leaders present.

This Higher Education Reform Summit could not have been held at a better time.

The Government has proposed historic reforms to allow our higher education system to become the best in the world. All higher education peak bodies back the reforms with amendments. The Senate Education Committee has endorsed the reforms.

The Australian Financial Review, the host of this conference, has editorialised in favour of the reforms.

The title of this conference is Driving the university revolution. The Government’ s reforms are the inevitable next step in the reform of Australia’s higher education system.

Deregulation of the higher education system will deliver the policy continuity the higher education sector needs in order to preserve the demand driven system of student funding.

Spreading more opportunities to students

Towards the end of last year I asked David Kemp and Andrew Norton to review the demand driven system. I acknowledge that Andrew is here today.

After examination of evidence contained in over 80 submissions, the reviewers recommended retaining the current system. They also recommended extending it to include both non-university higher education institutions and the full range of undergraduate higher education qualifications.

The Commission of Audit, that invited and received public submissions on all areas of government expenditure including higher education, recommended fee deregulation.

Earlier this year, the Government decided to maintain the demand driven system of student funding and expand it to benefit more students.

We retained our world renowned HECS system. Students don’t have to pay a cent – anything – until they earn more than $50 000.

We removed the highly inequitable VET FEE HELP and FEE HELP loan fee. The average student borrowing to study under VET FEE HELP will benefit by around $1,600.

Through our reforms, students will be able to study the course of their choice, at the institution of their choice, with Australian Government support.

Through our reforms, less well prepared students will be able to choose a course that will prepare them for continuing their studies. This will encourage them to take up study in the first place and give them a better chance of completing their studies.

We also ensured that students from disadvantaged backgrounds will have unprecedented access to Commonwealth Scholarships.

In response to this, Dr Michael Spence, the Vice Chancellor of the University of Sydney, recently announced that a third of their undergraduates would benefit from scholarships, should the Reform Bill pass the Parliament.

We ensured students would also benefit from new information about the quality of courses and institutions, through the delivery of our Quality Indicators for Learning and Teaching, or QILT.

To spread all of these opportunities to students, there is consensus across Australia’s higher education system that further reform to higher education is needed.

Unprecedented as it is, this consensus should have been enough to sway anyone who doubted whether all this is necessary.

But as sure as night followed day, we instead faced a storm of what can only be described as populist opportunism from those who – in their heart of hearts – know reform needs to be done, and done soon.

We are all for debate, but blatant populism has no place in a debate such as this and should be called for what it is. It is deception.

Reform is necessary to ensure Australian universities can compete with the best in the world and that Australia’s higher education system does not decline into mediocrity. This is crucial to ensure that the quality of education we offer our students and the quality of research we undertake is not only maintained but improved – that they outpace the intensifying global competition in higher education and research.

Instead of embracing necessary reform, Labor – looking to the past, not the future – is choosing to stand in the way of more than 80 000 extra students going to university each year.

Stand in the way of extra university scholarships for Australian students who might be the first in their family to ever receive such support.

Stand in the way of unprecedented support right across the higher education sector for reform.

Stand in the way of funding for the Future Fellowships programme and for the National Collaborative Research Infrastructure Strategy, that supports world-class research.

Not only are Labor are standing in the way of this vital reform – but they have no credible policy alternative to offer.

Meanwhile, Labor’s higher education legacy is $6.6 billion worth of funding cuts proposed over their last term in office.

Defining stages of Australia’s higher education history

Whatever our opponents believe – and in the complete absence of alternative policy that appears to be a misty eyed nostalgia about a Whitlamite agenda repudiated by the Hawke government in 1988 – it is worth reflecting on how far higher education in Australia has come; and on how we can move to the next chapter in Australia’s higher education story.

Successive Commonwealth governments from both sides of politics have made investments and policy changes to allow our higher education system to grow and to keep pace with the rest of the world.


When Sir Robert Menzies first became Prime Minister in 1939, Australia had six universities and 14 236 higher education students. When he retired in 1966, there were sixteen universities and 91 272 higher education students.

Without question, and as indeed Gough Whitlam acknowledged, Menzies was the father of modern higher education in Australia. He initiated the first inquiry into university funding and introduced block grants for state-funded universities.

Menzies pioneered Commonwealth Scholarships for undergraduate and postgraduate students and promoted educational opportunities for non-school leavers – including mature age scholarships.

Menzies brought in taxation allowances for education expenses, established an Australian Universities Commission, increased Commonwealth recurrent funding and provided funding for infrastructure and research.

Menzies both greatly increased the number of students going to university, and stood firmly for the autonomy of universities.


We have all been saddened by the recent death of former Prime Minister

Gough Whitlam.

Whitlam shared with Menzies an ambitious vision for Australia – that all Australians who wanted and were equipped to participate in higher education could do so. But while the abolition of university fees in 1974 was combined with continuing growth in the overall numbers of university students, the mix of students did not change. And, as Prime Ministers Hawke and Keating have both pointed out, it did not bring in ‘free’ education.

Paul Keating once said:

there is no such thing….as “free” education, somebody has to pay. In systems with no charges those somebodies are all taxpayers. This is a pretty important point: a “free” higher education system is one paid for by the taxes of all, the majority of whom haven't had the privilege of a university education. Ask yourself if you think that is a fair thing.

Bob Hawke also said:

There is no such thing as free education, it’s a question of who pays and how it’s paid for.

Fraser, Hawke, Keating, and Dawkins

While the Fraser Government, with the distinguished Education Minister Sir John Carrick, tried to maintain a fee-free system in the face of major fiscal constraints, it fell to the Hawke Government in the 1980s to confront the increasingly unavoidable reality.

Bob Hawke, Paul Keating, and Education Minister John Dawkins recognised the importance of sharing costs between taxpayers and students. They recognised that, with growing numbers of students going to university, a student contribution to the cost was both financially essential and fair to taxpayers and students alike.

They also introduced the world's first income contingent loan scheme for higher education students.

HECS allows students to pay back a contribution to the costs of their education, once they can afford it, without imposing any up-front costs.


Under former Prime Minister John Howard, the Coalition Government made unprecedented investments in research.

Howard was also the first Prime Minister to come to grips with the achievements and potential of Australian international education.

Under his leadership, the number of international students in Australia almost tripled from around 135 000 in 1996 to over 370 000 in 2007, by which time international education had become one of Australia’s largest exports – now its third largest export after coal and iron ore.

The Rudd-Gillard-Rudd Government

The Rudd Government initiated a Review of Australian Higher Education led by Professor Denise Bradley in March 2008.

In Opposition, the Coalition made it clear that we supported reform of the higher education sector while seeking some improvements related to income support for regional students.

So strong was our support to see the reforms passed through the 42nd Parliament, that I negotiated some alternative arrangements for regional students with the then Minister for Education, Julia Gillard, in order to get an amended reform package through the Senate.

While the agreement reached with former Prime Minister Gillard was not perfect, putting politics aside and negotiating in order to get the demand driven system introduced in Australia was the right thing to do.

We got the negotiations done because we both understood the higher education sector needed reforming.

Where we are now?

The uncapping of Commonwealth supported places initiated under Labor resulted in 20 per cent growth in the number of Commonwealth supported commencing undergraduates from 2010 to 2013.

While this growth in university participation is good for Australia, it is putting a strain on our ability to afford to support so many students.

As the number of students keeps growing, the cost to taxpayers rises with it. Currently, taxpayers pay $6 of every $10 on average for the $4 in every $10 that students pay – and the taxpayers lend the students those $4 upfront as well.

Over the four years from 2014-15, the Government is spending $48 billion on higher education, including $37 billion on teaching and learning, and $11 billion on research.

The previous government tried to deal with the growing cost to tax payers by just making cuts. They made no attempt to help universities raise more funds, in spite of knowing that more revenue was needed.

By contrast, this Government is determined to strengthen Australia’s higher education system – to make it higher in quality, more accessible, and more sustainable.

Our reforms will complete the deregulation story. As Scott Bowman, Vice-Chancellor of Central Queensland University, said to the Senate Committee:

The last government half deregulated the system, and now I think we need to do the rest of the work and fully deregulate.

Freedom and autonomy for universities

Australia will never have the diversity of choices for students and the quality of courses that we need for students without fee deregulation.

Deregulation will give higher education institutions the freedom to make decisions on what scholarships they provide and what support services they offer.

Deregulation will result in Australia’s higher education institutions being able to play to their strengths and compete with the best universities in Europe and North America and the fast developing institutions in Asia. This will have huge benefits for students.

Through deregulation Australian higher education institutions will be able to embrace new technologies and make their higher education courses more widely available to

Australian and international students, and offer more scholarships than ever.

Dr Andrew Leigh, Labor’s Shadow Assistant Treasurer, has effectively repudiated the position of his own political party when he said that deregulation of HECS will:

allow universities to set a market price for each of their offered degrees, most probably by taking into consideration the lifetime earnings benefit that a particular degree confers… There is no reason to think that it will adversely affect poorer students. There is no evidence that students from poorer backgrounds receive a smaller earnings boost from attending prestigious universities than those from more privileged backgrounds.

Regional Universities Network Chair, Professor Peter Lee, has said:

..universities may no longer be complacent about teaching performance, but we’re probably not as smart and creative in challenging modern, technologically-savvy students as we should be. To that extent, the deregulation reforms should play a critical role in making universities look closely at what we teach and how we teach it, and that can only be a good thing.

Quality is at the centre of the reform package. Our higher education system will continue to be protected through the Tertiary Education Quality and Standards Agency.

Maintaining world leading research

The Government’s changes to higher education will also safeguard our strong, competitive research system, a lynchpin of quality.

World-class research requires world-class facilities and talented researchers. Yet Labor left us in a state where there was not a single dollar set aside for the National Collaborative Research Infrastructure Strategy beyond 30 June next year.

There was no provision for any new awards for the Future Fellowships programme that supports mid-career researchers to undertake world‑class research in Australia.

As part of the higher education reform package, the Government will invest $11 billion over four years in research in Australian universities, including $139 million for the Future Fellowships scheme and $150 million in 2015-16 to continue the National Collaborative Research Infrastructure Strategy.

The need for change

Most universities and non-university providers alike agree that change is needed.

Despite populism, scaremongering, deception, and the uncertainty surrounding the higher education reforms created by the Opposition, I am pleased to see preliminary university applications for the 2015 academic year right on trend.

Students have not been put off by the scare campaign about the cost of degrees skyrocketing.

The interchangeable Labor and National Tertiary Education Union scare campaign is a dud, as it should be. Students are still lining up for the benefits and satisfaction of a tertiary education.

Labor’s scurrilous claims have also been refuted through evidence presented to the Senate Committee, and through the words and deeds of our higher education sector.

The Senate Committee majority report stated that it:

……sees no compelling evidence supporting assertions that fees will rise so dramatically that large swathes of the population will opt out of higher

education. The career advantages gained through higher education will continue to motivate people to pursue degrees, much as they have done since deregulation began three decades ago.

The Higher Education and Research Reform Amendment Bill 2014

As you would be aware, the Reform Bill has not yet come to a vote. Great reform takes time.

I hope the Opposition and indeed the Senate cross benchers listen closely to the voices of Australian higher education leaders who are calling for these reforms.

Universities Australia, the Regional Universities Network, the Innovative Research Universities, the Australian Technology Network, the Group of Eight, TAFE Directors Australia, the Australian Council for Private Education and Training, the Council of Private Higher Education plus individual universities, non-university higher education providers and even David Gonski have all outlined the need for reform and the dire consequences of simply doing nothing.
These reforms are the result of extensive national discussion and consultation. I would again like to thank the Legislation and Financing Working Group, chaired by Professor John Dewar, and the Quality, Deregulation and Information Working Group, chaired by Professor Peter Shergold, who will be speaking later this morning, for their advice.

Higher education leaders agree that the Government’s reforms are inevitable and part of the evolutionary reform of Australia’s higher education system.

Mr Michael Gallagher, Executive Director of the Group of Eight, said:

..the 2014 Higher Education Budget reforms are necessary. They are logical, coherent, sustainable, equitable and inevitable.

Mr Gallagher went on to say:

..my guess is that the detractors of micro-economic reform in Australia's higher education industry will find themselves on the wrong side of history in resisting efficiency improvement and innovation..

[they will be,] curiously, supporting socially regressive subsidies from general taxpayers to more advantaged segments of the community.

Professor Greg Craven, Vice Chancellor of the Australian Catholic University, said recently:

A vote against the Pyne package is not a vote for free education and happy students. It is a vote for failing institutions, random cuts, a declining student experience and embarrassingly weak national research.

Professor Margaret Gardner, Vice Chancellor of Monash University, said:

When we look back on apparently golden ages of Australian higher education, let us all be clear that fewer disadvantaged students and a lower proportion of disadvantaged students got into higher education in those days, when it was free, than they do today.

The current government reforms…. represent the only proposal on the table that will allow universities to ensure Australian higher education can support high quality education and research …

Without the Government’s reforms:

  • An estimated 80 000 students per year will miss out on Commonwealth support from 2018.
  • Disadvantaged higher education students will not receive assistance to access a place at university or a Commonwealth Scholarship to support their living costs and study needs.
  • More than 100 000 students will still face loan fees for FEE-HELP and VET FEE-HELP loans.
  • The jobs of over 1,500 technical and support staff and work of up to 30,000 researchers would be impacted by the cessation of vital research infrastructure funding.
  • Australian Research Council Future Fellowships will be unable to be funded, risking that many of our top researchers will head overseas.
  • Australian universities would, in the judgement of Universities Australia, be condemned to inevitable decline and our $15 billion international education industry would be at risk.


We should be proud of the evolution in higher education in Australia.

We can continue to evolve. I urge the Senate not to ignore the needs of students and the needs of the nation. Do not ignore the cries of Australia’s higher education leaders. Do not stand in the way.

I am hopeful the crossbenchers, to whom Labor has hand delivered an opportunity, will agree to the reforms. I am open to negotiation and they know that. I want an outcome that is good for students and good for universities.

As Minister for Education, I will do whatever is necessary to secure the future of Australian higher education. I will do everything in my power – whatever it takes –

to ensure that Australia is not left behind and that we have the best higher education system in the world, with all the benefits that this will have for students.