Higher Education Support Amendment (Demand Driven Funding System and Other Measures) Bill 2011, Monday 12 September 2011
Senator RHIANNON (New South Wales) (21:04): I speak to the Higher Education Support Amendment (Demand Driven Funding System and Other Measures) Bill 2011 today as the Australian Greens spokesperson on higher education. It is recognised that the quality and reach of a country's higher education shapes its future. It builds a nation's social well-being and provides the next generation with the skills and knowledge which are vital to our economic development and our place within the competitive global economy. Yet in Australia, higher education has been approached not as an investment in future capacity but as a cost largely borne by the student and the sector itself.
The gap between increasing student numbers and diminishing public funding continues to grow. In 2009 there were over 1.1 million students enrolled in Australian universities, nearly 80 per cent more than just 13 years ago. Yet during this time public investment in higher education has gone backwards. The real value of operating grants has not increased since 1994 with the value per student place actually plunging in real terms by 30 per cent over that period. Public investment in our universities sat at a shameful 0.7 per cent of our GDP in 2007, well below the one per cent OECD average and just five places up from the bottom of the list of 35 rated OECD countries and partner countries. As a result, universities have turned to cutting spending and raising income. Diverting money to profit, making projects and chasing the corporate dollar has resulted in a growing dependence on overseas full fee paying students who prop up the sector and provide nearly 60 per cent of Australia's $16.5 billion of export income from education—the nation's third largest source of export income after coal and iron ore in 2008-09.
Meanwhile, student to staff ratios have blown out. Casualisation of the workforce has compromised quality for students and teachers. Academics must do more with less and university infrastructure has not kept up. Students on inadequate income support have struggled to juggle the demands of study and employment needed to survive. This is the state of our higher education, all while Australia has surfed the crest of a decades long mining boom. It is with many reservations that the Greens approach this bill—a market based, demand driven approach to improving access to quality higher education in Australia. This bill aims to implement the government's target of nearly doubling to 40 per cent the number of university educated people by 2025, with 20 per cent of undergraduates coming from disadvantaged backgrounds. It is an excellent goal but there are concerns that this approach could push our universities and the quality of our higher education over the edge.
There are two overarching concerns that the Greens have with this bill: that demand driven funding will become the first step towards a voucher system in Australia, and how the need for significant further investment in universities to support the sudden increase in student numbers will be met. The Greens' concerns are demonstrated in New Zealand's disastrous attempt to introduce pure demand driven tertiary education in the late 1980s. That demand driven model extended to the whole tertiary sector, including the polytechnics and over 220 private providers. The New Zealand government had no ability to steer or shape the courses being offered and quality control was absent. Not surprisingly, the whole thing blew out of control. A huge growth in student numbers brought unsustainable costs and rising student failure and attrition. The bulk of growth was at subdegree and diploma levels delivered by private institutions, and any public return on the qualifications gained were questionable.
An example of how badly wrong it went, as current New Zealand Deputy Prime Minister Bill English said when he was shadow minister for education, is demonstrated by the beginner computer course run by a large polytechnic in partnership with a software producer. Students were enrolled in shopping centres, libraries and through school fundraising committees who were paid a fee per enrolment gained. Students thus enrolled were actually handed a CD of four courses which equated to four enrolments with public demand driven funding attached. More than 20,000 people enrolled in this CD based course, costing a cool $15 million in public funding. The provider generated about a 90 per cent gross margin per enrolled student, with a grand total of three per cent of those students known to have finished the course. Not surprisingly, New Zealand learnt a lesson from that experiment and has been reining in its system for many years now.
Whilst I do believe that the government in drafting this bill has learnt from the New Zealand lesson, it does demonstrate the risks involved in travelling down this path and it provides a cautionary tale about quality, accountability and a firm governmental hand on the steering wheel to ensure qualifications are about real learning. And whilst I acknowledge that this bill is only a partial deregulation and does not in the strictest sense create a voucher system, I share the strong concerns raised by student groups and unions that the bill is moving the sector in that direction and that the dramatic increase in student numbers that this bill allows for will place further strain on resources such as classrooms, facilities, services and student amenities. I will address these concerns but first start with the aspects of this bill that the Greens support without contention.
The abolition of the student learning entitlement from next year makes sense. Few students exceed the SLE's seven-year limit to funded undergraduate study. Universities will save the extra cost of administering the scheme and the limit to updating qualifications will be removed. The strengthening of academic's and students' intellectual freedom by making that right an object of the act is vital. The requiring of providers to have policies that uphold the right to intellectual freedom as a condition of funding provides a necessary accountability mechanism.
I will now turn to the centrepiece of this bill: demand driven funding of higher education. From next year, the uncapping of public funded places for domestic undergraduates will ensure anyone with the ability is guaranteed a funded university place. Funding will be detached from each university course and will follow the student, allowing them to enrol in the course and university of their choice. Increased access for all is a positive thing and students are responding, with the 2009 estimate revised upwards to an extra 59,000 places by 2013 and an extra $1.2 billion in funding to cover it. However, the huge risk is that rapid, unfettered growth will lack the investment required to support the extra teachers and learning resources in a system already struggling with historic underfunding per student. This bill does not adequately address the chronic funding gap between the cost of delivering a course and the funding received to deliver it. Nor does it protect against the risk of further casualisation in higher education or the risk of fees becoming fully deregulated in the future. There is a real concern that any deregulation of higher education could eventually lead to a two-tier system in both funding and quality of teaching.
It is worth noting some of the problems with a full voucher system. As student demand changes from year to year, it is hard for universities to plan for a permanent workforce and for building resources. Research has shown that the middle to higher end of SES groups benefit from a voucher system rather than it helping the most disadvantaged students. Despite the rhetoric, a voucher system does not mean that students can study where they like, as institutions will still set course numbers. It can lead to poaching of students by larger universities and widen the divide between prestigious institutions and smaller or regionally based ones. It removes the government from its responsibility to create an accountable higher education system. A voucher system can separate teaching funding and research funding, which can reduce overall levels of research funding.
Given these risks and concerns, it would have been better timing to wait for a government response to the yet to be reported base funding review before debating this bill. That really would have been the responsible course of action for this government. The base funding of student places and a need for indexed basic grant amounts is a pivotal factor on which the quality and health of the sector does turn.
The whims of the marketplace and consumer demand are not a steady framework on which to build a sustainable future. The flow of students and thus funding to various universities can actually fall two ways. It could encourage specialisation in our universities as they develop excellence to attract and keep the student and their funding, and may drive innovation and constructive partnerships with industry to address skill shortages and meet the needs of a new low-carbon economy. Or it could compromise quality, providing homogenised courses across the board to cater to mass student trends, diverging from the needs of a healthy economy and society's wellbeing.
This could be exacerbated by a concentration of high-demand, low-cost courses such as law and commerce at the expense of high-cost courses needed in a modern economy, such as engineering and science. It may provide the opportunity for smaller and regional universities to play to their strengths—strengthening provision for their natural catchment of disadvantaged or isolated students, with the extra funding loads that go with those students subsidising other offerings. Already regional universities are planning to invigorate and enrich regional on-campus life as a selling point and are improving the quality of their distance education offerings for their isolated students. Alternatively, it could allow the bigger, better resourced universities to poach those students along with their chunk of extra equity funding, furthering the divide between the elite and the smaller universities—although this carries its own risk of an inability to fund extra infrastructure needs and staffing levels in high-demand courses.
How will universities plan for growth and ensure quality? Where is the government's plan to address skill shortages in this country—skills needed to participate as part of a globalised community? We need a much clearer picture from the government of the steps it plans to take to minimise these serious risks. For example, whilst the current proposal does not impose any set time or value on the student's learning entitlement, or voucher, it is possible that such limitations could be placed on a student's entitlement in the future. It is also possible that fees may be deregulated in the future, leaving a gap between the student's funding entitlement and the cost of the course. It is not clear how these potential risks are being addressed. The whole point of the bill is that it will remove the ability for universities to charge full fees and it will remove the learning entitlement. That a future government can change this is a moot point with any legislation.
Another issue is that the bill will allow the government to set a cap—a limit on maximum basic grant funding—for courses to rein in excessive course growth, designating them by disallowable legislative instrument. Any demand driven or non-designated course can be thus designated. For example, medicine is a designated course to avoid oversupply of graduates for too few placements. Previously, a government could cut funding by reducing places. The bill will ensure the imposition of a cap on maximum basic grant amounts must not be less than the amount for the previous year. Whilst such a change would be subject to parliamentary scrutiny, clear criteria is needed around triggers for changing demand driven courses to designated courses to either boost or limit demand. How will the government convince a university they must provide high-cost, low-student-demand courses such as engineering or science even when they are listed as national priority courses? We do need to hear an answer to that question. How will designating low-demand courses such as the classics and the arts ensure that universities will deliver them? These are important areas of scholarship and cultural learning that we cannot afford to lose through attrition of demand. Yet these courses will not be funded unless the places are actually filled by students.
This bill's mission based compacts are key to the government's ability to steer the demand driven model around these risks and to temper the vagaries of the marketplace. These three-year contracts between publicly funded universities and the government include funding details and negotiated performance, equity and quality targets. They are supposed to align each university's activities with their missions and with the government's goals for higher education and to ensure that quality and participation standards are met with performance funding attached to achieving those targets.
Given the imperative to ensure quality of provision in our higher education, it must be ensured that the performance indicators use objective and proven quality indicators and that the methods of collecting data are protected from manipulation by universities. The intention of compacts to negotiate performance targets based on an individual university's missions and goals must be upheld so that universities are held to their own real improvements and not to predetermined targets across the board that may not match their mission or that they already exceed. The success of the compacts is fraught and dependent on the government's and each university's diligence and good faith.
In the meantime, the higher education sector is facing a great unknown. Its major private income stream, international students, is dropping. It is facing a huge increase in student enrolments to a historically underfunded system without yet knowing if base funding will be increased to catch up to and meet actual costs of delivering this brave new world.
This bill is part of a 10-year package to repair and invigorate higher education in Australia. The extra funding and better student support is a good start, despite our reservations and concerns about any move towards a voucher system. We cannot afford to ignore the risks, and the Greens are committed to closely watching the effects of this legislation and whether it achieves its aim of rewarding any student entering into higher education with appropriate support and a quality experience. We call on the government to heed the concerns of student organisations about paving the way for a voucher system in higher education and the call from the sector for sustainable base funding levels. The challenges are many.