Bills Digest no. 178 2006–07
Higher Education Legislation Amendment (2007 Budget
Measures) Bill 2007
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
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revise maximum funding amounts in sections
30-5, 41-45 and 46-40
provide for a new Diversity and Structural
revise the Commonwealth Grant Scheme (CGS)
funding clusters and Commonwealth contribution amounts
set the maximum student contribution amount for
accounting, administration, economics and commerce at the same
amount as law, dentistry, medicine and veterinary science
provide for a transitional fund to compensate
higher education providers for the change in funding for students
in accounting, administration, economics and commerce
provide for three year funding agreements
provide for new CGS adjustment mechanisms from
the 2009 grant year
remove restrictions on the proportion of
domestic undergraduate fee-paying places
enable the expansion of the Commonwealth
Scholarships programme, and
provide an additional grant to higher education
providers who deliver courses in teacher education.
The Bill also amends the Australian
Research Council Act 2001 to update annual caps on funding and
add the financial years 2009-2010 and 2010-2011.
In April 2002 the Minister for Education,
Science and Training, the Hon. Dr. Brendan Nelson, announced that a
review of higher education policy would be undertaken over the
remainder of the year. The review culminated in the higher
education policy package, Backing Australia s Future,
which was announced as part of the 2003-04 Budget. The Government s
reform package was introduced with the passage of the Higher
Education Support Act 2003 (HESA). The legislation introduced
major funding changes in 2005, including the Commonwealth Grants
Scheme (CGS). Some
of those changes are amended by the 2007-2008 Budget measures for
which the Bill provides.
The Explanatory Memorandum states that in
relation to the Higher Education Support Act 2003, the
The estimated financial impact of these
measures on the Higher Education Loan Programme (HELP) over the
forward estimates period (2007-08 to 2010-11) is $5.989 million on
the fiscal balance, expenses amount to $55.238 million and headline
cash is -$204.068 million.
In relation to the Australian Research
Council Act 2001, the Bill:
Item 1 amends the level of
maximum grants under the Commonwealth Grants Scheme (CGS) for the
As listed in the Explanatory Memorandum the
increased funding will
Provide universities with full funding for
over-enrolments from the current one per cent of over-enrolments to
five per cent.
Provide for increased funding for Commonwealth
supported places in certain disciplines.
Provide $6.6 million for 60 additional
dentistry and oral health places for the new Charles Sturt
University Dental School.
Provide for 500 additional engineering
Reflect changed funding for medical places at
the University of Notre Dame Australia due to a delay in the
commencement of its Sydney medical school.
Item 2 amends the maximum
payments for Other Grants for the years 2008-2010.
The 2007-08 Budget measures funded under Item
Increase the funding of Australia s Learned
Academies by $8 million over four years.
Provide $208.6 million over four years, of
which $67 million is new funding, for a new Diversity and
Structural Adjustment Fund to assist universities, particularly
regional and smaller metropolitan universities, to specialise and
provide for local labour market needs.
Provide a transfer of funds to the new National
Disability Coordination Officer Programme.
Provide transitional funding to compensate
higher education providers for the lower accounting cluster student
contribution amount for pre-2008 students.
Provide an additional $77 million over four
years to supplement costs of providing the practical teaching
component in teacher education courses.
Item 3 amends the maximum
payments for Commonwealth Scholarships for the years 2008-2010.
The increased funding will
Provide $91.4 million over four years to
increase the number of Commonwealth Scholarships from around 8,500
to 12,000 per year.
Provide $27.7 million annually for up to 1,000
new Indigenous Access Scholarships which will enable Indigenous
students, particularly those moving from rural and remote areas, to
receive a one-off payment of $4,000 to take up a university or an
approved enabling course.
Provide an additional year of funding for 700
Commonwealth Education Costs Scholarships and 210 Commonwealth
Accommodation Scholarships for Indigenous students undertaking an
approved higher education enabling course.
University student places are funded through
the Commonwealth Grants Scheme (CGS). Under the CGS the Government
funds each higher education provider for an agreed number of
Commonwealth supported places (previously called HECS places) in
particular disciplines. The disciplines are currently grouped in
twelve funding clusters with both the Commonwealth and the student
contribution amounts varying across the clusters.
Items 1 and
2 reduces the number of funding clusters from 12 to 7 and
increases the funding for mathematics and statistics by $2729 per
place, allied health by $1889, engineering, science and surveying
by $684, clinical psychology by $2729, education by $109, nursing
by $109, behavioural science and social studies by $840, and
medicine, dentistry, and veterinary science by $1081. The significant increase
in funding for mathematics and statistics meets the findings of the
Review of Mathematical Sciences Research. Accounting, administration, economics
and commerce disciplines will be moved to the law cluster and their
CGS funding reduced by $1029 per place. Changes to the funding
clusters and the reduced Commonwealth funding for accounting,
administration, economics and commerce require amendments to the
maximum student contribution amounts which are dealt with in
Schedule 7. For this reason Schedule 7 is to follow to assist the
Schedule 7 sets the maximum
student contribution amounts (previously HECS fees) for places in a
unit of study. Item 2 substitutes a new
table in section 93-10 to reflect the reduction of funding
clusters from twelve to seven. Item 2 also sets
the new maximum student contribution in accounting, administration,
economics and commerce disciplines to align them with the law
discipline. This will bring them into the highest level alongside
dentistry, medicine and veterinary science where the maximum
student contribution will be $8,499. Student contribution rates are
based on graduates potential earnings, and the Government s
decision is based on the higher salaries and competitive nature of
the labour market for the business disciplines.
The increased student contributions for
accounting, administration, economics and commerce will bring
approximately thirteen per cent of HECS-HELP liable places into the
top contribution band. The Minister has stated that universities do not have to
increase the student contribution for these disciplines, but
considering that all universities, except the University of
Tasmania, took the opportunity of increasing HECS by the maximum
twenty-five per cent in 2005 it could be expected that commencing
students in accounting, administration, economics and commerce will
have an increased HELP (previously HECS) debt. As students studying prior to
2008 will be able to continue under the existing arrangements until
the end of 2012. There will be a transition fund to compensate
universities for students who continue under the existing
Schedule 3 provides for three
year CGS funding agreements which will be introduced from January
2009. Item 11 of Part 2 repeals subsection 30-25(1) and substitutes
a new subsection to enable the Minister to enter into such
agreements. The Government states that such agreements will reduce
administrative costs, provide greater scope for universities to
plan ahead and contain improved requirements for university
governance, financial accountability, quality and data reporting
. However there
will be scope for higher education providers to renegotiate
Commonwealth supported places on an annual basis .
Amendments in Schedule 4
allow more flexibility for universities in enrolling students in
Commonwealth supported places. Universities will now be able to
over-enrol Commonwealth supported places by five per cent
(previously one per cent) and receive CGS funding for the
over-enrolments. Further, the amendments will remove the penalties
for over-enrolments above the five per cent and will allow
universities to receive the full amount of student contributions
from all Commonwealth supported students they enrol. In 2005 the
Government agreed to fund 409,393 Commonwealth supported places,
thus the amendment will provide for about 20,000 fully funded
over-enrolments and help further reduce the unmet demand for
university places which has declined from a peak of 36,100 in 2004
to 13,200 in 2007.
Current arrangements on under-enrolments will
continue with funding reduced for under-enrolments beyond the first
one per cent of funding. However there will be no CGS funding
reductions for under-enrolments beyond five per cent of
Item 1 repeals section 36-35
thus removing the cap on the number of domestic full-fee places
universities can offer, which until now has been capped at 35 per
cent of course enrolments (and 25 per cent for medicine). This amendment in
conjunction with those in Schedule 4 which relax
penalties on over-enrolments allows universities greater
flexibility in meeting student demand. While universities will be
required to deliver specified Commonwealth supported places in
nursing, teaching, medicine and engineering they will now be
allowed to adjust student numbers and course mixes to meet student
demands and employer needs.  Included in this mix will be the ability to offer
an uncapped proportion of domestic full-fee places. The Minister s
press release states universities will still be required to offer
their Commonwealth funded places before offering full-fee places.
 However such a
requirement will apply to the agreed number of Commonwealth
supported places within a cluster. This would allow for example a
university to offer all the Commonwealth funded places in the law
cluster to accounting, administration, economics and commerce and
create a full-fee only law course.
The effect of both removing the cap on
full-fee places and creating greater flexibility in the course mix
has the potential for universities with high demand courses to ask
for fewer Commonwealth-supported places and replace them with
full-fee places, particularly in courses where revenue from
full-fee places is higher than that from Commonwealth
Department of Education, Science and Training (DEST) estimates that
this measure may increase the number of full-fee places by twenty
However the University of Technology Sydney s Vice-Chancellor, Ross
Milbourne, predicts the number of domestic full-fee places might
actually fall due to the expansion in commonwealth-supported offers
and the fact universities can move commonwealth-supported places to
high-demand areas. 
Item 1 amends the table in
subsection 41-10(1) to add a new table item 12 to
provide grants from the proposed transition fund. The fund of $83
million will provide grants to compensate higher education
providers for the estimated 40,500 accounting, administration,
economics and commerce students enrolled before 2008 who will
continue under the existing HECS arrangements until 2012.
Schedule 8 deals with the
proposed new scholarships which will enable recipients to receive
direct payments of certain Commonwealth scholarships such as the
new Indigenous Access Scholarships for an approved enabling
Schedule 9 amends
the Australian Research Council Act 2001 to update annual
caps on funding and add the financial years 2009-2010 and
Schedules 10 and
11 deal with Other Grants under Part 2-3 of the HESA. The
proposed new section 41-10 (1) inserts new table items 8A, allowing
grants to assist with cost of providing the practical component of
teacher education, and 9A providing grants to support diversity and
Since the 2003 higher education reforms which
introduced the Commonwealth Grants Scheme, the Government has
encouraged the sector to move from a one-size-fits-all model
through policies aimed at greater diversity and flexibility. In
2005 the then Minister for Education, Science and Training stressed
the need for a diverse range of higher education institutions
servicing different communities and varied requirements . Similarly the current
Minister in a wide-ranging speech on the need for diversity called
for the development of a diversified higher education sector, made
up of universities which differ from each other in terms of
mission, discipline mix, course offerings, modes of delivery,
management and in academic structure.  The 2007-2008 Budget which increases
funding by $1.7 billion over four years to the higher education
sector is strategically directed to implement such change. Critics
of the measures have interpreted moves to diversity and
specialisation as pushing the sector to a more privatised,
stratified and less equitable one.
The proposed changes to the CGS and the
removal of the cap on domestic full-fee places will encourage
competition for students and an associated development of different
course offerings. There is a perceived benefit to universities such
as those in the Group of Eight whose courses are in high demand and
which attract the majority of full-fee paying students at public
universities although the uptake in full-fee places will be
constrained at some universities by the a lack of facilities and a
shortfall in infrastructure funding. The one size fits all model will be
further eroded by the increased student contribution rates for
accounting, administration, economics and commerce that are
predicted to soften the demand for those disciplines at regional
universities and attract students to full-fee places at market
leading institutions . Regional universities will need to devise course mixes
that are both attractive to students and meet regional needs.
Provisions in the Bill to fund the Charles Sturt University Dental
School will further assist that university meet local needs. Other
regional universities will need to access the proposed Diversity
and Structural Adjustment Fund to assist with implementing changes
and avoiding under enrolment of their agreed Commonwealth supported
. For further
background see Kim Jackson, Higher Education Support Bill 2003 ,
Bills Digest, no. 56, Department of the Parliamentary
Library, Canberra, 2003-04.
. J. Bishop
(Minister for Education, Science and Training), Major funding
boost for Learned Academies, media release, 8 May 2007.
. J. Bishop
(Minister for Education, Science and Training), Expanding
education support for Indigenous young people, media release,
8 May 2007.
from 2005 liability status data for, Students 2005: Selected
higher education statistics, DEST 2007, Table 3.5.3.
reports suggest that most universities would increase student
contribution amounts in accounting administration, economics and
commerce. See: Catherine Armitage, Cash welcome but it s no bonanza
, The Australian, 16 May 2007 and Catherine Armitage,
Business faculties brace for pain , The Australian, 30 May
Realising our potential allowing more responsive
universities Budget Measures 2007-2008, Budget Paper no. 2, p.
departmental officer, pers. comm. 28 May 2007.
Report on applications for undergraduate university
courses, April 2007.
 J. Bishop
(Minister for Education, Science and Training), Greater
flexibility for universities, media release, 8 May 2007.
 The policy
to permit universities to charge fees for domestic undergraduate
students was introduced in the 1996 97 Budget and implemented in
1998 when 829 undergraduate students accepted fee paying places.
Senator the Hon. Amanda Vanstone (Minister for Education, Training
and Youth Affairs), Higher Education Budget Statement, 9
discussion in Senate, Senate Standing Committee on Employment,
Workplace Relations and Education, Estimates Hearings, 31
Senate Standing Committee on Employment, Workplace Relations and
Education, Estimates Hearings, 31 May 2007. In 2005
approximately three per cent of domestic undergraduate students
were full-fee paying students.
Senate Standing Committee on Employment, Workplace Relations and
Education, Estimates Hearings, 31 May 2007.
Macnamara, Go8 looks to home front for fee kick , The
Australian, 30 May 2007.
 J. Mather,
Business schools still reeling over budget bombshell , Campus
Review 22 May 2007; C. Armitage, Business faculties brace for
pain , The Australian, 30 May 2007.
 In 2005
Central Queensland University and Charles Darwin University had
more than five per cent of their Commonwealth supported places
unfilled. Senate, Senate Standing Committee on Employment,
Workplace Relations and Education, Estimates Hearings, 31
May 2007. See also: L. Macnamara and C. Armitage, Regional campuses
need more cash , The Australian, 30 May 2007.
8 June 2007
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