Bills Digest No. 195  1999-2000Higher Education Funding Amendment Bill (No. 1) 2000

Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details

Passage History

Higher Education Funding Amendment Bill (No. 1) 2000

Date Introduced: 21 June 2000

House: House of Representatives

Portfolio: Education, Training and Youth Affairs

Commencement: On Royal Assent.

Purpose

To amend the Higher Education Funding Act 1988 to:

• adjust grants for funding year 2001 for price movements;
• set the maximum grants available for funding year 2002;
• vary the maxima for operating grants for 1999-2001 to reflect revised estimates for the Higher Education Contribution Scheme; and
• provide additional funding for measures announced in the 2000-01 Budget concerning research programs and university places for students on bonded medical scholarships.

Background

The Higher Education Funding System

Higher education grants are legislated for calendar years within a rolling triennium framework. While there are over twenty types of grants, about 88 per cent of funding is devoted to one program - the operating grants for higher education institutions. There are two sources of funds for this program: the Commonwealth and higher education students. The latter contribute through the Higher Education Contribution Scheme (HECS). Students who elect to defer their HECS payment have it paid by the Commonwealth, which recoups the money through the tax system when the students' income reaches a certain level. Both the Commonwealth's payments on behalf of students and the students' repayments are made through the Higher Education Reserve. The Reserve can receive and repay funds from Consolidated Revenue as the need arises.

HECS was introduced in 1989 with a single rate of payment for all subjects. It was modified significantly in 1997 with the introduction of differential rates of payment for various subject groupings and the lowering of the repayment threshold. The scheme has played an important role in enabling the expansion of higher education in an era when governments have been reluctant to commit significant additional resources to the sector. This relative importance of HECS in the funding mix will increase as the 1997 changes work their way through the system.⁽¹⁾

Detailed information on higher education programs and their funding is available in the Higher Education Report for the 2000 to 2002 Triennium (March 2000). This is a non-statutory, annual report that provides the only comprehensive source of information on the Commonwealth's higher education programs and their funding. However, funding figures in this report are expressed in specific price levels that are indexed for movements in costs and may thus differ from the amounts ultimately legislated.⁽²⁾

Higher Education Funding Trends

The following two tables give a broad picture of higher education funding trends.

Table 1: Commonwealth Funding for Higher Education per Equivalent Full-Time Student Units (EFTSU), Selected Years⁽³⁾

Note that monetary amounts are given in constant 2000 price levels and that one EFTSU is broadly equivalent to one full-time student undertaking a normal subject load. Institutions receive operating grants on the basis of planned EFTSU, or student load. Planned and actual EFTSU figures do not include full-fee paying students.

Table 1 indicates that total funds available have remained steady since 1996 although this conceals the relative roles of the Commonwealth grants and student contributions. Table 2 shows that HECS receipts will have increased by 113 per cent from 1996 to 2002 and that this will enable a decrease in Commonwealth funds of 12 per cent over the same period.

Table 2: HECS and Commonwealth Funding, Selected Years⁽⁴⁾

Note that monetary amounts are given in constant 2000 price levels.

The growing difference between planned and actual student load (or EFTSU) from 1996 to 1999 is largely the result of measures taken in the 1996 Higher Education Budget Statement⁽⁵⁾ to encourage institutions to enrol extra students. From January 1998 universities were paid the equivalent of the minimum up-front HECS payment for each HECS-only undergraduate student enrolled above target level. While this has enabled institutions with low marginal costs to offer additional places without charging fees, it has also placed pressure on university resources. This is indicated by the reduction in funding per actual EFTSU shown in Table 1. This decline also helps explain why the Australian Vice-Chancellors' Committee (AVCC) and the universities have been pressing for a better financial deal from the Commonwealth.⁽⁶⁾

Research Funding and Policy

In December 1999 the Government released Knowledge and Innovation: A policy statement on research and research training. The main features of the White Paper were:

• an enhanced role for the Australian Research Council (ARC)⁽⁷⁾
• performance based funding for research and research training in universities
• a new quality verification framework, and
• a collaborative research program for rural and regional communities.

The AVCC has stated that the policy statement is flawed because of the Government's refusal to accept the need for major additional investment in Australia's research base. It argues that the White Paper's OECD data is outdated and that Australia's higher education research and development expenditure (HERD) is falling.⁽⁸⁾ The most recent Australian Bureau of Statistics data shows a marginal improvement in the HERD/GDP ratio from from 0.43 (1996) to 0.44 (1998). Figures for other countries in 1998 were 0.56 (Finland), 0.41 (Germany), 0.39 (US), 0.38 (France) and 0.35 (Canada).⁽⁹⁾

Commonwealth funding for higher education research programs since 1996 is given in the following table.

Table 3: Higher Education Research Programs, 1996 to 2002⁽¹⁰⁾ (constant 2000 prices)

(a) These programs are not funded under the Higher Education Funding Act 1988, but from annual appropriations on a financial year basis.

As part of the White Paper reforms, the ARC acquired responsibility for application-based research programs, some of which were formerly administered by the Department. The Bill will provide additional funding for two of these programs.

The Research Infrastructure Equipment and Facilities (RIEF) Scheme⁽¹¹⁾

The RIEF Scheme funds large items of research infrastructure for collaborative use by universities, research organisations and industry, who contribute at least 25 per cent of the cost of equipment and facilities acquired through the scheme. The minimum grant under the scheme is $100,000 and funding is normally for one year only. The 2000-01 Budget announced additional annual funding of around $4.0 million for 2001 and 2002. The Bill will provide this funding.

The Strategic Partnerships with Industry - Research and Training (SPIRT) Scheme⁽¹²⁾

The SPIRT Scheme supports collaborative research projects undertaken by universities and industry and provides awards and fellowships for research and training in industrial settings. The minimum level of funding provided for a project is $20,000 per year. Applicants can seek funding for:

• a collaborative research project
• the salary of an Australian Postdoctoral Research Fellow who will be a Chief Investigator, and/or
• the stipend of an Australian Postgraduate Award (Industry) who will undertake a research project under appropriate supervision.

The 2000-01 Budget announced that the Government would maintain the current funding level of the program on an ongoing basis. The Bill provides an additional $12.8 million for 2002 to meet this commitment.

Regional Health Package

Rural General Practice⁽¹³⁾

There are considerable differences between regions in the ratio of general practitioners (GPs) to population:

• 123 GPs per 100 000 population in capital cities
• 108 GPs per 100 000 in other metropolitan areas
• 111 GPs per 100 000 in large rural centres
• 94 GPs per 100 000 in small rural centres
• 77 GPs per 100 000 in other rural areas, and
• 66 GPs per 100 000 in remote centres and other remote areas.

While the reasons for patient presentation are generally similar between metropolitan and rural areas, the characteristics of rural general practice differ in a number of ways:

• there is more procedural work undertaken
• most rural general practitioners are associated with their local hospitals
• the average hours worked per week by rural practitioners is higher
• the proportion of general practitioners on call, and the number of hours on call, is much higher
• there is a lower proportion of female general practitioners in rural areas
• there is a higher proportion of small practices in rural areas, and
• the turnover of general practitioners is higher in rural areas.

Over the last decade, the use of temporary resident doctors has increased substantially, particularly in Queensland, the Northern Territory and Western Australia, where the shortage of general practitioners is most felt. The following table illustrates the variations in the distribution of temporary resident doctors.

Table 4:Temporary resident doctor general practitioners 1997-1998

General practitioner and other medical practitioner patient encounters per capita also differ considerably between regions, reflecting difficulties in accessing services and the use of alternate health services. In addition, the rate of bulk billing is considerably lower in rural areas of Australia. This is illustrated in the following table:

Table 5: Patient encounters per head of population, 1998-99⁽¹⁴⁾

Budget Measures

The 2000-01 Budget introduced a range of measures to improve access to health and aged care services in regional and rural areas. Part of the package was $32.4 million over four years for the creation of 100 bonded scholarships of $20,000 per annum for students who made a commitment to practice in rural areas. The DETYA component of this measure comprises the cost of the additional medical student places: $1.4 million in 2000-01, $2.9 million (2001-02), $4.5 million (2002-03) and $6.0 (2003-04). In terms of the calendar year funding provided by the Bill, the cost will be $1.446 million in 2001 and $2.891 million in 2002.

Main Provisions

Items 1-3 of Schedule 1 amend section 17 of the Higher Education Funding Act 1988 (the Act) to insert new levels of maximum grants for operating purposes for the years 1999, 2000 and 2001. Operating purposes is defined in section 3 of the Act and includes the general teaching purposes and general research purposes of the institution, the provision of courses of continuing education, and the purchase of equipment and minor building projects associated with general teaching and research purposes. Item 4 sets the maximum aggregate funding level for 2002. The amendments include funding for additional medical student places.

Items 5 and 6 amend section 20 to insert new levels of maximum grants for superannuation expenses for 2001 and 2002.

Items 7 and 8 deal with grants to open learning institutions and maximum funding levels for 2001 and 2002.

Items 9-11 amend subsection 23C to insert new levels of maximum grants for special research assistance and research centres for 1999, 2000 and 2001. Item 12 includes an additional $12.8 million in on-going funding for SPIRT in 2002.

Items 13 and 14 amend section 24 which provides for grants payable to teaching hospitals attached to higher education institutions.

Items 15 and 16 amend subsection 27A to insert new levels of maximum grants for special capital projects for 2000 and 2001.

Items 17 and 18 amend subsection 27D to insert new levels of maximum grants for international marketing and promotion of Australian education and training services for 2000 and 2001.

Item 19 amends the definition of 'year to which this Chapter applies' so that the funding years are defined in section 17 of the Act.

Item 20 amends the name of Bachelor College in Table A of subsection 4(1). Institutions listed in Table A are able to receive operating grants under section 15 of the Act. These grants are provided on a triennial basis and include components for capital projects and research activity. The new name of Bachelor College is Bachelor Institute of Indigenous Tertiary Education.

Endnotes

1. More information on HECS is available from the Parliamentary Library e-brief at http://www.aph.gov.au/library/intguide/SP/HECS.htm
2. The Higher Education Funding Report for the 2000-2002 Triennium can be accessed at http://www.deet.gov.au/highered/he_report/2000_2002/html/1_1.htm
3. This table is derived from the statistics presented by the Australian Vice-Chancellors' Committee at http://www.avcc.edu.au/avcc/other/budget.htm
4. This table is derived from the statistics presented by the Australian Vice-Chancellors' Committee at http://www.avcc.edu.au/avcc/other/budget.htm
5. The 1996 Higher Education Budget Statement is available at http://www.deet.gov.au/publications/budget/budget96/budget_statement/hedst.htm
6. For example, see the AVCC's Ten Point Plan for Australian Universities at http://www.avcc.edu.au/tenpoint.doc
7. The ARC's web site is at http://www.arc.gov.au/default.htm
8. AVCC, "Research reforms just re-arrangements without additional funding" (11 January 2000). Full text available at http://www.avcc.edu.au/avcc/mediarel/2000/2000mr01.htm
9. ABS, 1998 Research and Experimental Development Higher Education Organisations (April 2000).
10. This table is derived from the statistics presented by the Australian Vice-Chancellors' Committee at http://www.avcc.edu.au/avcc/other/budget.htm
11. Information about the scheme, including guidelines, grant conditions and selection round reports, is available at http://www.arc.gov.au/grants/grants_rief.htm
12. Information about this scheme is available at http://www.arc.gov.au/grants/grants_spirt.htm
13. The section was provided by Greg Lewis of the Social Policy Group.
14. Information provided by the Labour Force Unit, Australian Institute of Health and Welfare, 22 June 2000.

Contact Officer and Copyright Details

Kim Jackson and Rosemary Bell
26 June 2000
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

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ISSN 1328-8091
© Commonwealth of Australia 2000

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Published by the Department of the Parliamentary Library, 2000.

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