Policy Exchange Speech: Freeing universities to compete in a global education market

Freeing universities to compete in a global education market Address to The Policy Exchange United Kingdom Monday 28 April 2014 **CHECK AGAINST DELIVERY** The Policy Exchange’s mission is ‘to develop and promote new policy ideas which deliver better public services, a stronger society and a more dynamic economy’. The Policy Exchange is thus an ideal venue for us to reflect jointly on the commitment of both Britain and Australia to the best higher education policies for our countries. Australia and Britain have much in common. We should not underestimate the benefits of that shared heritage. It underpins our relationship in good times and bad, and it has seen us through when united in crisis at home or abroad. It encourages fairness and a sense of comfort when we face each other in competition, either on the cricket field or in the global trade environment. Very few nations have such a collaboration to rely on. As Leader of the Australian House of Representatives, I am reminded every day of the principles of Westminster-style Parliamentary democracy that we share. We share also a distinguished record of active service and cooperation in conflict zones around the world. I was part of the Anzac Day or Gallipoli Day (as you call them) commemorations here in London on Friday and I assure you the camaraderie at the RAF Club has not wavered over time. We are now in the lead up to the Centenary of Anzac in 2015. Ninety-nine years have passed since Australian, New Zealand and British troops mounted a fateful assault on the Gallipoli Peninsula, one which was to deliver so much suffering for little gain. Under Australia’s new Coalition Government, in which I have the great privilege of being Minister for Education, our commitment to our special relationship with Britain continues. Australia and Britain are like-minded on almost every global issue. We see eye to eye on international security. We are partners in dialogue when multilateral cooperation is discussed, such as on the G20 agenda. We have profound people-to-people links. There are frequent high-level visits in each direction. This has been particularly so under the government of Prime Minister David Cameron and through the obvious commitment of the Foreign Secretary, William Hague. It would be remiss of me not to mention the cricket, even in passing, where the most recent Ashes series in Australia saw a welcome return to normality. Australia and Britain share much more than this of course – we have an extensive and mutually valuable economic relationship. Trade between us totals some $22 billion a year. Closer to my portfolio responsibilities however is our extraordinary relationship in education. Australia’s oldest universities were largely founded by people educated in the great universities of Britain. Very many Australians have studied in British universities, and significant numbers of British students in Australian universities. More students come to study in Australia from Britain than from any other European country. In many ways, our universities look to each other, as well as to the US and elsewhere, to develop ideas for the future, including on teaching and learning and on research. I wonder how many in our broader communities realize the extent of this educational exchange and the benefits it brings. For both Britain and Australia, our education systems, as well as being crucial for our own social and economic vitality, are sources of export income from abroad. As education is Australia’s fourth largest export industry, and our largest services export, this is education as an economic driver. Education policy is, in many ways, economic policy. It affects productivity, participation, the standard of living and the vital parts of our society both in its physical health and intellectual sophistication. For Australia, education produces export income of $15 billion, and supports 100,000 jobs in the Australian economy. There are enormous spinoff benefits for our domestic economy – in travel, housing, retail and investment - and Australia’s Coalition Government is its biggest supporter. You of course are no stranger to this phenomenon of education as an export industry. Your export income from education services was estimated in 2011 to be �17.5 billion a year. Worldwide, Australia and Britain have the highest percentage of international students among their tertiary enrolments. Britain is second only to the United States in the volume of international higher education. Australia and Britain also share in other educational pursuits of vital importance. We have an enormously productive collaborative research agenda. Britain is an important partner for Australian research. Over the past five years Britain has consistently been placed second highest (behind the USA) by number of collaborations with Australian researchers on Australian Research Council funded projects. In 2013, there were over 1000 ARC funded projects involving collaboration with British researchers. Our joint focus is wide and deep – we are engaged in fields as diverse as astronomy and space sciences, psychology, pure mathematics, biochemistry and cell biology, and, as you might expect, in law. Universities Australia lists 380 active, formal links between Australian and British institutions. These links continue to increase. For example, the recently formed Monash-Warwick alliance is looking to meet demand for graduates who are equipped with a genuinely global education. It also intends to foster significant collaborative research links. There is much more on multi-lateral levels. Australia co-chairs, with the British Council, the Roundtable on the Integrity of International Education, which has members in New Zealand, Canada, Ireland and the US. In March 2012, Australia and Britain, with Ireland and New Zealand, released the London Statement, a framework for the ethical recruitment of international students. We have much of which to be proud in the domestic performance and international competitiveness of our education systems. Our nations have fully mature education sectors with immense capacity and capability. We share a relentless focus on quality and on much needed reform, matters close to the hearts of all in this room. Challenges, of course, abound. As ‘education nations’ we simultaneously offer education services to our citizens from cradle to grave, while at the same time coping with the white-water experience of providing education services to more than 150 other nations. Between us we are educating more than half a million students from other countries. And soon, we may have to choose to provide many of those services online, through the advent of Massive Online Open Courses and digital expansion generally. Between growth in MOOCs and the escalating demand from our own students to be able to study when and where they want on a digital platform, we have our work cut out. We must look to how to deliver educational services and how to protect education quality in this rapidly changing context. The Australian Coalition Government is acutely conscious of these developments. We will not waver in the face of mounting challenges. Our answer will be, above all, to set our universities free. The challenges of which I speak call for diversity in our institutions, for flexibility, quality, and innovation in domestic and global education. If we are to remain competitive with other nations – in particular those nations in Asia who are developing their own higher education systems at a breathtaking pace – then we must get on with reform. In coming years, we must focus on the development of a higher education system with the resilience and diversity to meet demand and a laser like focus on quality. We must go on producing the graduates we need to keep our economies and global position secure and advancing. In so doing, we must ensure that the quality of education offered in our countries is at least as good as – indeed better than – that offered elsewhere. Competition is here. It is fierce, and it is challenging. There is much at stake. My goal for Australia is that we must work to make Australia’s higher education system the best in the world, and strive towards making some of our universities the very best in the world. Universities Australia, the peak body for all Australian universities, recently launched a campaign titled Keep it Clever. It was blunt – conveying the message to people watching their nightly dose of television that Australia must not be left behind in the face of intensifying global competition in education. I entirely agree with Universities Australia that Australia must not be left behind. That intensifying global competition can be readily seen in the rise of Asian universities, as well as in the rise of school performance in various Asian countries. Britain has 31 universities ranked in the world top 200 – with 11 in the top 100 – in the prestigious 2013 Academic Ranking of World Universities. Australia has seven in the top 200. In other words, Australia has not yet secured a spot for its entire Group of Eight – the equivalent to your Russell Group – in the top 200. Five years ago, there were no Chinese universities in the world’s top 200 universities as measured in the Academic Ranking of World Universities. Today there are five. The very creation of that ranking, based at Shanghai Jiao Tong University, was to work out the difference between Chinese universities and the world’s best. Its purpose? To help leading Chinese universities become among the best in the world. Through Project 985 and other Chinese Government policies, it is bringing this about. It’s no surprise that China’s investment in world-class education and research facilities is increasing in line with the country’s impressive economic growth. China is already Australia’s most important international education partner in the volume of international student enrolments. After the US and the UK, China is also our third largest research collaboration partner, when measured through joint publications. In the next several years we will see an enormous expansion and investment in China’s education and research system. This is already underway. China has established approximately 70 joint institutions and programs outside its borders. For example, Zhejiang University and Imperial College London are forming a partnership to enhance academic collaboration that could include a campus of Zhejiang University in London. Japan is one of the major ‘global knowledge superpowers’ because of a large public and private investment in research and development, producing an impressive six per cent of global scientific output. Japan is also at or near the top of international assessments of student learning for reading, maths and science. Japan along with China may become emerging competitors for Australia’s – and dare I say Britain’s – international students. Both countries have ambitious growth targets, for Japan - 300,000 international students by 2020 and for China 500,000 by 2020. In the Republic of Korea, education is highly respected and has been a key pillar of economic recovery and rapid development. The total expenditure on education in South Korea is 7.6 per cent of GDP, the third highest in the OECD. As universities in South Korea improve their capacity, quality and international networks, a higher proportion of student demand will be met domestically. There are other indicators. In the most recent Times Higher Education world university rankings, released in October 2013, Australia’s top universities lost ground and Asian universities were on the rise. Seven Australian universities in the top 300 went backwards from the previous year. The National University of Singapore overtook Australia’s top ranked university. I know that rankings are an impractical science but dropping in global rankings is a warning that we cannot afford to ignore. There are significant gains being made by Asian universities, and Australian higher education institutions need to be at the top of their game to compete in the region. In the Times Higher Education 2014 World Reputation rankings, Australian universities have just one, the University of Melbourne, in the top 50 compared with three last year. Universities in Asia held eight spots in the top 50, including universities from Japan, Korea, Singapore and China. We are at risk of being left behind. We need a renewed ambition. And it must be bold. As I have said, my view is that Australia must aspire to have no less than the world’s best higher education system, with several of our universities ranked among the very best in the world. The others must be thriving in other ways – providing tertiary education at a high standard with a competitive approach that means students win out. Because if students win as a result of universities competing for their attention, then Australia’s education brand wins. The Vice Chancellor of the University of Melbourne, Professor Glyn Davis, said this week: Competition between universities is good. It keeps you focussed on your students. We have much to learn about universities competing for students and focussing on our students. Not least, we have much to learn about this from our friends in the United States. They have developed a diverse array of institutions encouraging prospective students to pick and choose their futures and where they are going to study, immerse themselves in enriching extra-curricular activities, and make life-long friends. Students routinely chase a range of options as to where they study, whether that’s at home or in a place known as college. Going to college is a rite of passage for American high school graduates. And it is a gift that keeps on giving. The competitive nature of American tertiary education breeds the sort of focus on competition for students that Glyn Davis referred to. It breeds loyalty and devotion to one’s alma mater – and we know that American colleges leave us for dead when it comes to attracting philanthropic support from their graduates. Another Australian Vice Chancellor, Professor Warren Bebbington of the University of Adelaide, wrote last week in The Times Higher Education supplement, and I quote: higher education in Australia could be transformed into the most dynamic system in the world. It (could) have the rich variety of the US university landscape but without the crippling debts that American students suffer. This should be the focus of a fundamental community-wide debate. He opined that: the debate has been largely contained thus far, and has taken place in terms incomprehensible to the average person. Even worse, some of the most influential academic voices seem intent on preventing Australians ever benefitting from what is proposed. In the US, nearly half of all students do not go from high school to a public university of the Australian type, but instead attend teaching-only undergraduate colleges offering only Bachelor degrees. Without research programmes, these colleges do a first-class job of teaching: through small classes and an intense extra-curricular programme. Students have an unforgettable, utterly life-changing educational experience. He continued that: this huge array of highly-individual undergraduate colleges is one of the glories of American higher education. Such colleges do not exist in Australia. Ours has been a highly constrained system of universities with limited scope for universities to shape their own offerings to students. Until 2012, Australian universities could not determine how many undergraduate places they would offer overall or in individual subjects, nor how much they could charge for their courses. While I have borrowed the term, ‘Moscow on the Molonglo’ (referring to the river that runs through Canberra) is an apt description of how we have regulated higher education in Australia. To give credit where it is due, the previous Australian Labor Government, following a review led by Professor Denise Bradley, gave public universities the freedom to determine how many Commonwealth-supported undergraduate degree places they would offer. This is the so-called ‘demand-driven system’. The demand driven system did away with the concept of capping places on a Canberra-knows-best basis. It also saw a major expansion in publicly-funded undergraduate degree places in Australia. Last year, the equivalent of 577,000 full time students had their tuition fees subsidised by the Australian Government, an increase of more than 100,000 on 2009. They are subsidised both by government paying on average over half the cost of their tuition, the price of which remains set by government, and also through Australia’s income-contingent loan scheme. On coming to office last year, I commissioned a review of the demand-driven system by respected Australian education figures Dr David Kemp and Andrew Norton. We have recently published their report. Kemp and Norton found that the uncapping of funded places was a significant net positive. But not without failings. The system prompted a rush to tertiary education by the less well prepared – who, at a rate of almost 24 per cent, subsequently dropped out of university study. To tackle this and generally to expand opportunities for students, Kemp and Norton have recommended extending the demand driven system from Bachelor’s degrees to higher education diplomas, advanced diplomas and associate degrees. To promote competition and also to support all Australian students studying for higher education diplomas and undergraduate degrees, they urged that Commonwealth supported places be extended to private universities and non-university higher education providers. Non-university higher education providers include many public Technical and Further Education (TAFE) institutes, and private educational institutions, some not-for-profit and some for-profit. Publicly-funded places would only be offered to such providers and courses that are approved by the Tertiary Education Quality and Standards Agency (TEQSA). While expanding opportunity, quality must be upheld. Kemp and Norton concluded that making changes to the demand driven system will expand opportunities for students, lead to further innovation in courses and modes of delivery, and boost the quality of teaching and graduates. We need all of that. I am considering the Government’s response to Kemp-Norton in the context of the coming Federal Budget, alongside input from our National Commission of Audit Both the Kemp-Norton review and the work of the Commission of Audit have provided extensive opportunity for consultation across and beyond the higher education sector. The Kemp-Norton report has stimulated valuable discussion of options for the future of higher education in Australia. I will not pre-empt the budget today, otherwise the Treasurer may have something to say. Even though I am in London, since the days of the telegraph there has been nowhere to hide and I am sure Joe Hockey will find me. But I repeat what I have said before: ours is a deregulatory government. I can assure you unreservedly that the Coalition government will continue to take steps to set higher education providers free, provide them with more autonomy, and challenge them to map out their futures according to their strengths. We are already embarked on some of that, stripping away burdensome regulation and excessive reporting requirements. Accountability for public and private funds is entirely appropriate. But accountability should be about protecting quality and safeguarding public trust, not about exercising command and control from the centre. This is the basic philosophical difference between the current Australian Government and that which it replaced. Labor sees an innovation and says ‘regulate it’, the Coalition sees an opportunity and says ‘seize it’. The onus is also on us to trust educators to know their work — to leave them the space to achieve excellence by working in partnership with their students, communities, staff, and other institutions. Government investment alone is not enough to ensure a well-functioning higher education sector. The reviewers made a number of suggestions to address fiscal sustainability concerns. In striving for a fiscally sustainable system, and in trying simply to keep up with demand for public education in particular, we have sometimes lost sight of the need for a relentless focus on autonomy, quality and opportunity. While I am making no announcements today, let me make it perfectly clear – the recommendations of the Kemp-Norton Review with respect to expanding the demand driven system to diplomas and extending the Commonwealth Grants Scheme to students of all higher education providers have much to recommend them. Respect for the autonomy of universities, and a commitment to quality and deregulation, are at the heart of the approach I have taken to supporting our higher education institutions. This respect runs strongly through the traditions of my political party. Most in this room will recognize the name of Sir Robert Menzies, Australia’s longest-serving Prime Minister, from 1939 to 1941 and again from 1949 to 1966. Menzies was a great friend of Britain. It is my view that Sir Robert Menzies is also the founding father of modern higher education in Australia. When giving the inaugural Wallace Wurth Memorial Lecture at the University of New South Wales in 1964, Sir Robert quoted ‘with warm approval’ these words which still ring true: 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. When Menzies first became Prime Minister in 1939, there were six universities in Australia and some 14,000 higher education students in a population of seven million. By the time he retired after his second, post-war term as Prime Minister in 1966 there were 16 universities and more than 91,000 higher education students. Among many other achievements he initiated block grants for state-funded universities, and introduced national, or what we call Commonwealth, scholarships. Sir Robert Menzies laid the foundations for the university system we have today in Australia. In the late 1980s, the introduction of income contingent loans under the Higher Education Contribution Scheme allowed students, regardless of their economic resources, to contribute to the cost of their higher education. This provided a legacy of sustainable access in the Australian university system. It is a legacy the Coalition Government will uphold. But by no means has all the innovation in Australian higher education come from government. In an address to the Universities Australia conference recently, I remarked that the building of the international education industry in Australia, the work largely of its universities, is living proof that what begins modestly in Australia can become an exemplar for the world. Our universities began their forward march into international education with modest exchange arrangements known as the Colombo Plan, an exchange scheme initiated and supported by government. They went on to create an industry that, at its peak, was delivering up to $19 billion in export income to our economy. There have been challenges and difficulties along the road but we have expanded education to become our fourth largest export industry after iron ore, coal and gold. In many ways we have shown how it is done. It has been an outstanding achievement, one that almost certainly owes its success to the freedom universities were given to chart their own course internationally – perhaps, as I have observed before, because nobody in Canberra at the time fully understood where it would lead. Australia’s new Coalition government has revived the Colombo Plan – aided by its universities – in the form of the New Colombo Plan, a signature initiative. The new plan will provide opportunities for young Australians to study and undertake internships and mentorships in countries across the region. Like its predecessor it will offer a transformational education experience for students – this time Australian students studying abroad in the Asia-Pacific region - and will contribute to a permanent deepening of Australia’s engagement with our region. This year sees the pilot phase of the New Colombo Plan, with students going on short-term mobility grants or more substantial scholarships to Indonesia, Japan, Singapore and Hong Kong. Next year, the Plan will expand to other countries, including – as confirmed on Prime Minister Abbott’s recent visit to North Asia – to mainland China and South Korea. To make student mobility to Australia easier, the Government is improving visa settings so that more high quality scholars who want to come and study in Australia can do so. This morning I met with your Secretary of State for Education Michael Gove and will meet this evening with your Minister for Higher Education David Willets, whom I met for the first time in Canberra recently. I know from our discussions that Britain is embarked on its own ambitious program to meet the challenges at all levels of education – with vigour and determination. Australia is with you. We may be fierce competitors not only at the Adelaide Oval and Lords, but we know how to share the load. We have adopted and grown countless characteristics of your education system. You have adopted aspects of ours – most particularly, our student loans scheme. It is my hope that if in the future I am invited back to address you, I will have much to share on how Australia is engaged in transformative innovation in education. It is our ambition to make a good system great. The Australian Coalition Government will continue to place education at the heart of our society, our economy and our democracy. We want the freest, most diverse and most rigorous university system in the world. In other words, we want the best. If in this there is competition as well as collaboration between Britain and Australia, then that is all for the better. Our citizens expect us to aspire for the very best educational opportunities for them. Our economy needs this, and our democracy will be enriched by it.