Bills Digest 147 2010–11
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.
Social Policy Section
21 June 2011
Date introduced: 26 May 2011
House: House of Representatives
Portfolio: Education, Employment and Workplace Relations
Commencement: Sections 1 to 3 and Schedules 1 and 3 on Royal Assent; Schedule 2 on 1 January 2012.
Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill's home page, or through http://www.aph.gov.au/bills/. When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.
The main purpose of the Bill is to implement a new system for the funding of undergraduate places at universities eligible for funding of Commonwealth Supported Places under the Higher Education Support Act 2003 (the Act). The new system will remove Commonwealth imposed ‘caps’ on the number of student places and instead allow universities to provide places according to student demand.
The Bill will also abolish the Student Learning Entitlement (SLE); introduce requirements for higher education providers to have policies in place to protect academic freedom in learning, teaching and research; and require higher education providers to enter into mission based compacts with the Government.
The Rudd Government undertook a wide ranging review of higher education which was chaired by Professor Denise Bradley. The Review of Australian Higher Education, the ‘Bradley review’, reported in 2008 and the Government responded to the review in the 2009–10 Budget. The Government accepted a substantial number of the Review’s recommendations, including deregulating the allocation of university places through a demand-driven entitlement system for domestic students; changing the indexation formula of university funding; increasing targeted places to improve participation rates of low socio-economic status students; and, establishing a new Tertiary Education Quality and Standards Agency (TEQSA).
The reforms are underpinned by two key targets recommended by the Bradley review. First, a national target of at least 40 per cent of 25 to 34-year-olds having attained a qualification at bachelor level or above by 2025 (Bradley recommended achieving the target by 2020). Second, that by 2020, 20 per cent of university enrolments at undergraduate level are people from low socio‑economic status (SES) backgrounds.
The reforms have been partially implemented through a number of measures announced, legislated for and implemented since 2009. These include increased funding (although as yet there has been no increase to base funding which is under review), the new indexation formula for funding, allowing universities to over enrol in 2010 and 2011 as a lead up to the demand driven system in 2012, reforms to student income support and consultation on mission based compacts.
In 2009, the Government committed to implementing the deregulated ‘uncapped’ system in 2012.
The estimated costs of the move to a student demand driven system have varied since the Government allowed universities to enrol above the existing cap by ten per cent in 2010 and 2011 as a lead-in to the new system. The demand for places has been strong, particularly in 2010 during the economic downturn, and the Government has significantly revised the number of places funded under the Commonwealth Grants Scheme. In 2009, it estimated 458 000 undergraduate Commonwealth supported places would be funded by 2012. This target has almost been met in 2011 and the 2011–12 Budget now estimates 517 000 places for 2013 and has announced increased funding by $1.2 billion over four years, primarily to fund the student demand-driven system.
The Explanatory Memorandum states ‘the cost of the demand driven funding system ... from 2010 to 2015 is estimated to be $3.97 billion’. In Senate estimates hearings the Department of Education, Employment and Workplace Relations (DEEWR) provided further information regarding the differing costs of $3.97 billion and $1.2 billion.
The Government accepted the Bradley review’s recommendation to ‘introduce a demand-driven entitlement system for domestic higher education students, in which recognised providers are free to enrol as many eligible students as they wish in eligible higher education courses and receive corresponding government subsidies for those students’. This is a major policy change to the allocation and funding of student places which to date have been funded through agreements with universities on a set or capped number of places within broad disciplines called ‘funding clusters’. Before 2010 universities were penalised for over enrolling and resorted to uncapped overseas and domestic full fee places to meet demand and provide revenue. However the Government is phasing out domestic full fee undergraduate places and there is a slowing of demand from overseas students. The take up of places in the student demand system will be vital to the sustainability of some universities.
Under the new system eligible students will receive an entitlement to a Commonwealth supported place and universities will decide their own entry standards, enrolment targets and discipline mixes. Proponents claim the deregulation of student places will give universities greater flexibility, incentives to expand and produce a more competitive system. The Bradley review considered that:
A demand-driven system could see a shift of students and funding toward those institutions that wish to grow and that can attract increased numbers of students. This is precisely what is intended: to allow funding to shift between institutions in response to student demand and to create a system in which each institution’s funding is determined dynamically by the quality of its performance rather than by an historically-based system of centrally-planned student load allocations.
However a number of issues and possible problems arising from a demand driven system have been raised since the system was proposed in 2009. These include:
- a lack of protection to low demand universities leading to a furthering of the divide between elite universities and others that may threaten the viability of some universities and campuses
- a concentration on high demand courses that may result in a more ‘homogenised’ system producing a mismatch between what students demand and what the economy needs
- universities concentrating on high demand/low cost courses, for example law and commerce at the expense of high cost courses such as engineering and science
- private providers moving into low cost high profit disciplines leaving universities with less capacity to cross‐subsidise from such disciplines
- an inability to respond to shifts in demand when enrolment pipelines are long and academic positions are tenured
- universities lowering standards and entry scores to attract students and meet performance targets
- an inability to fund and meet infrastructure needs and staffing levels in high demand courses and at high demand institutions, and
- the Government’s preparedness and ability to fund and manage the risk of higher than estimated demand.
The Bill addresses some of these issues largely by provisions allowing the Minister to limit increases in student places through specifying a university’s ‘maximum basic grant amount’ in funding agreements and by declaring a discipline a ‘designated course of study’ with allocated places. The Government justifies such powers on the need to ‘respond to national imperatives’ and achieving policy objectives.
The Howard Government introduced the SLE as part of a package of reforms in the Higher Education Support Bill 2003. The SLE limits access to a Commonwealth Supported Place to, in most cases, the equivalent of seven years of full-time study. The then Minister’s second reading speech stated:
A Commonwealth learning entitlement will be introduced. It will be for five years or whatever is the minimum period of time for a vocational qualification—and for courses that are five years or longer, an additional year will be added. Beyond that period of time, if students wish to continue doing undergraduate degrees, they can continue to do so, but they will be able to access a loan from the Commonwealth government.
The stated aim of the SLE was ‘to improve retention in universities and reduce the number of students dropping out’. At the time, the then Department of Education, Science and Training (DEST) reported that the SLE would ‘provide greater opportunities for more students to gain access to a Commonwealth supported place as new entrants occupy places freed by students who have used their SLE’.
Stakeholders were opposed the SLE on a number of grounds, principally:
- Equity issues: learning entitlements were a threat to life-long learning; there would be a discriminatory effect on low-SES level and mature aged students; the policy discriminated against those who had changed their study or career preferences through the course of their studies.
- Micro-management: Universities argued that the administration of the SLE imposed costly burdens to their administrative systems and imposed overly bureaucratic restrictions.
During debate on the Higher Education Support Bill 2003 the four independent Senators negotiated an increase to the student learning entitlement from 5 years to 7 years, with more time for longer courses, and for an appeal mechanism. The legislation took effect in 2005 and universities have continued to criticise the SLE on the grounds of administrative burden.
In 2006 the Australian Vice Chancellors’ Committee commissioned Phillips KPA to review university reporting requirements. The report criticised the SLE both for the reporting burden it placed on universities and for being ineffective in its stated aim of spreading Commonwealth support for university students more equitably. It concluded that the ‘SLE does not provide additional funding for institutions or support for students. It is unlikely to yield significant savings to the Commonwealth given that few students will exceed their SLE’. The report also noted a ‘trial’ by the University of Western Australia whereby it established that of its 16 000 students enrolled in 2005, only five would have exceeded their SLE (had the scheme been operational then). In response to the report the then Minister, the Hon. Julie Bishop, stated: ‘As a result of the AVCC’s report on red tape, I have agreed to consider the abolition of the Student Learning Entitlement which measures a student’s consumption of commonwealth supported education’. However the SLE remained in place.
The Government’s policy to abolish the SLE meets the Bradley Review’s recommendation to introduce a demand-driven entitlement system that sets ‘no time or dollar limit on the entitlement’. The Government has released figures showing less than 0.2 per cent of currently enrolled students have used more than six years of their entitlement. This supports the arguments proposed in 2005 that very few students were exceeding such limits.
There appears to be overwhelming support from stakeholders to abolish the SLE. The Group of Eight’s media release is representative of the sector’s views. It states:
Australia does not have a systemic problem of excessively long study periods that is found in some other countries. As the Gillard Government moves to remove limits on student access to higher education it is sensible to reduce the regulatory burden associated with the former capped system. The SLE is a very complex mechanism. Its removal would reduce administrative costs.
Medical students are the group most often affected by the existing SLE provisions, particularly when they move from a science degree to medicine. The Australian Medical Association and the Australian Medical Students Association are urging Parliament to pass the provisions abolishing the SLE.
The opposition wants to retain the SLE on the grounds that ‘there is a perfectly sensible policy rationale for retaining the SLEs and limiting the time students can spend at university courtesy of Australian taxpayers’. They reportedly want amendments to the Bill that would maintain the SLE and extend it to eight years.
As part of the Government’s higher education reforms providers will be required to enter into ‘mission-based compacts’. According to DEEWR ‘mission-based compacts will be three-year agreements that show how each university’s mission contributes to the Government’s goals for higher education, and include details of major higher education and research funding and performance targets’. The compacts will be in two parts: one for teaching and one research and they will define ‘targets for improvement and reform which will trigger reward payments’. Targets will relate to quality, attainment and participation by students from under-represented groups.
Consultations on the compacts addressed the issue of appropriate performance indicators and the final compact template. As a transitional arrangement prior to commencement of the first compacts, higher education institutions negotiated an interim compact agreement for the 2010 calendar year.
Academic freedom is at present ensured through the National Protocols for Higher Education Approval Processes agreed to by the Ministerial Council on Education, Employment, Training and Youth Affairs (MCEETYA) in 2007. Protocol A3 states a university must have ‘a clearly articulated higher education purpose that includes a commitment to and support for free intellectual inquiry in the institution’s academic endeavours’. The National Protocols provide the basis for the draft Provider Standards being considered as part of the regulatory framework under the Tertiary Education Quality and Standards Agency so the provision for academic freedom will continue.
The Bill provides for the strengthening of the commitment to intellectual freedom through making free intellectual inquiry an object of the Act. Furthermore a condition of funding will be that providers have policies that uphold academic freedom. The Bill proposes the commitment to intellectual freedom will relate to learning, teaching and research. By including ‘learning’ the commitment ensures students’ access to intellectual freedom is included. This may avoid concerns from Liberal Students' organisations that academic freedom has not been extended to students and led to the Senate Standing Committee on Education, Employment and Workplace Relations undertaking an inquiry in 2008 into academic bias in universities and schools. The Committee concluded:
Universities are autonomous institutions. They have soundly working grievance mechanisms established to deal with complaints from students. According to submissions, there are many appeals about marks and complaints about a range of matters, which indicates that students are not reluctant to complain. Yet there is scant evidence presented to the committee of complaints made about biased teaching. It appears that students pass up opportunities to complain to academic staff ... This inquiry has been mainly an intellectual exercise for the committee. Its report is a record of impressions and assessment of an issue which is relatively remote from policy control or interference from Canberra. Nothing has emerged from the inquiry which invites the reconsideration of current policy, apart from issues to do with effective monitoring of teaching quality ... the committee has not identified any tangible systemic problem of bias. ... In undertaking this inquiry the committee makes clear the limits of the role of governments in relation to academic programs and the intellectual concerns of universities.
Despite the Committee’s conclusions the Opposition are reported as wanting ‘provisions in the Bill protecting academic freedom of staff to be extended to students, reflecting the long-held concerns in the Coalition that university teaching is biased towards the Left’.
The following section provides a brief overview of the key provisions of the Bill. For more detailed information refer to the Explanatory Memorandum.
Schedule 1—Amendments relating to demand driven funding system
Proposed new subsection 30-10(1) allows the Minister to allocate a specified number of Commonwealth supported places before the commencement of a calendar year to certain providers in respect of designated courses of study. Under proposed subsection 30-10(5), such an allocation is not a legislative instrument.
Proposed new subsection 30-12 deals with ‘designated courses of study’ declaring them to be non- research post-graduate courses, courses in medicine and ‘courses of study specified by the Minister under subsection (2)’. Proposed 30-12(2) makes any courses of study specified by the Minister under subsection (2) a legislative instrument and thus disallowable by Parliament.
The effect of these amendments is to remove non-research post-graduate places, medical places and any courses specified by the Minister, from the student demand system and by doing so allow the Government to respond to national priorities such as ensuring graduates in areas of skills shortages or restricting risk and expenditure in courses deemed to be growing unsustainably.
Medical places will be removed from the deregulated system in order to ensure adequate clinical training places and internships. This is supported by the Australian Medical Students Association which states ‘given the current crisis in providing adequate clinical training for medical students, it is absolutely essential that medicine remains exempt from the move to demand-driven funding’.
The Government may review the status of Commonwealth funded non-research post-graduate courses as designated courses of study after the Base Funding Review reports later in 2011.
Proposed new subsection 30-27 deals with maximum basic grant amounts in funding agreements for Commonwealth Grants Scheme (CGS) grants under Part 2-2 of the Act. It allows the funding agreement to specify maximum basic grant amounts payable to providers for designated courses of study and non-designated courses of study. However the Government has stated it will not be setting any maximum basic grant amounts for non-designated courses of study for the 2012 year and this is provided for in item 35.
Proposed new section 33-5 deals with calculating the basic grant amounts in funding agreements which at present are calculated by looking at the costs of capped places for each funding cluster. New provisions will calculate the basic grant amount from the sum of the amounts for designated and non-designated courses. Details of the various calculations are provided in the Explanatory Memorandum.
Schedule 2 contains a number of amendments which have the effect of abolishing the SLE. It will repeal Part 3-1 of the Act and amend other provisions of the Act to remove SLE from the Act.
The Amendments will have the effect that from 1 January 2012, eligibility for a Commonwealth supported place will no longer depend on a student having sufficient SLE to cover their study. A person who has used some or all of their SLE will not be impaired in their capacity to be a Commonwealth supported student in the future.
Item 9 deals with amendments to Division 36 of the Act. The Explanatory Memorandum states:
With the abolition of SLE and the consequential removal of concepts that were dependent on or influenced by SLE, Division 36 is being restructured to focus instead on methodologies for refunding student contribution amounts. This previously was achieved through provisions dealing with the re‑crediting of SLE. The concept of re‑crediting SLE will no longer have any relevance.
It also confirms that ‘savings and transitional provisions will preserve the operation of the former provisions of HESA, including any rights and obligations in relation to any reviewable decision under HESA in respect of a year prior to 2012’.
Schedule 3 deals with mission based compacts and academic freedom.
Item 1 amends paragraph 2-1(a) of the Act to add a new object of the Act—‘promotes and protects free intellectual inquiry in learning, teaching and research’.
Item 2 adds the compact and academic freedom requirements to section 19-1 of the Act that sets out the quality and accountability requirements of the Act. By being included as quality and accountability requirements, compliance with these requirements will be a condition of funding under Parts 2-2, 2‑3 and 2-4 of the Act.
Proposed subsections 19-110(1) and (2) make Commonwealth funding dependent on a provider entering into a mission based compact with the Commonwealth, or the Minister on behalf of the Commonwealth.
Proposed subsection 19-110(3) states what must be included in the compact but notes that ‘a mission based compact may include other matters’. The Explanatory Memorandum states ‘any such matters would depend upon the outcome of discussions between the Commonwealth and the provider concerned’.
Proposed section 19-115 deals with academic freedom. It requires providers receiving funding to ‘have a policy that upholds free intellectual inquiry in relation to learning, teaching and research’.
Proposed subsection 19-110 (4) requires a copy of each mission based compact to be published on the Department’s website within 28 days after the making of the compact. The same requirement relates to funding agreements in proposed section 30-28.
Item 4 proposes the repeal of subsection 30-25(4) of the Act which required funding agreements to be tabled in Parliament (but not disallowable) within 15 sitting days. Funding agreements and mission based compacts will, as a result of proposed subsection 19-110 (4) and proposed section 30-28, be more readily available to the public and stakeholders.
The Bill is the final piece of legislation in the Government’s implementation of higher education reforms announced in 2009. It meets the commitment to introduce an uncapped student demand driven system in 2012 in order to increase the participation rate and meet the national target of at least 40 per cent of 25 to 34-year-olds having attained a qualification at bachelor level or above by 2025.
Despite being a deregulated system there are provisions allowing the Minister to regulate student places and funding by specifying a university’s ‘maximum basic grant amount’ in funding agreements and by declaring a discipline a ‘designated course of study’ with allocated places. The Government justifies such powers as necessary in achieving outcomes and responding to national needs. To some degree they are responding to perceived problems that might arise in a deregulated system. There are still issues of funding and capital investment not addressed in the Bill. As Universities Australia notes: ‘The new legislation still provides Government with the capacity to manage costs, though universities look to appropriate recognition of responsible investment in additional staff and facilities in any move away from an uncapped system’.
Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2709.
. Review of Australian Higher Education, Final report, (Professor Bradley, Chairperson), Department of Education, Employment and Workplace Relations, Canberra, December 2008, viewed 21 June 2011, http://www.deewr.gov.au/HigherEducation/Review/Pages/ReviewofAustralianHigherEducationReport.aspx
See Australian Government, ‘Summary of measures’, Universities, innovation and education revolution, Commonwealth of Australia, Canberra, May 2009, viewed 21 June 2011, http://www.aph.gov.au/budget/2009-10/content/glossy/education/download/education_overview.pdf
See also Australian Government, , ‘Outcome 3’, Portfolio budget statements 2009–10: budget related paper no. 1.5: Education, Employment and Workplace Relations Portfolio, Commonwealth of Australia, Canberra, 2009, viewed 20 June 2011, http://home.deewr.gov.au/Budget/budgetstatements.htm
. See: Higher Education Support Amendment (2009 Budget Measures) Act 2009; Higher Education Support Amendment (Indexation) Act 2010; Social Security and Other Legislation Amendment (Income Support for Students) Act 2010; Tertiary Education Quality and Standards Agency (TEQSA) Bill 2011 which is before Parliament. For Mission Based Compacts see: http://www.deewr.gov.au/HigherEducation/Policy/Pages/Compacts.aspx
. See Australian Government, ‘Summary of measures’, Universities, innovation and education revolution, op. cit., p. 3.
. In 2009, universities were overenrolled 5.7 per cent over their target load; in 2010, they were 9.9 per cent overenrolled against their target load and in 2011 they are projected to be 13.9 per cent. Senate Standing Committee on Education, Employment and Workplace Relations, Estimates, Transcripts of evidence, p. 72, 1 June 2011, viewed 14 June 2011, http://www.aph.gov.au/hansard/senate/commttee/s86.pdf
. Australian Government, Portfolio budget statements 2009–10: budget related paper no. 1.5: Education, Employment and Workplace Relations Portfolio, op. cit., p. 109.
. Explanatory Memorandum, Higher Education Support Amendment (Demand Driven Funding System and Other Measures) Bill 2011, p. 3.
. DEEWR state ‘the $1.2 billion is the additional expenditure over the forward estimates associated with the demand‑driven system. The $3.97 billion, which is also referred to, is the total additional cost associated with the uncapping of places. So it includes the two years of 10 per cent over enrolment, and then it includes the following years into the forward estimates’, Senate Standing Committee on Education, Employment and Workplace Relations, Estimates, Transcripts of evidence, p. 80, 1 June 2011, viewed 14 June 2011, http://www.aph.gov.au/hansard/senate/commttee/s86.pdf
. Review of Australian Higher Education, Final report, (Professor Bradley, Chairperson), Department of Education, Employment and Workplace Relations, Canberra, December 2008, Recommendation 29, p. xxiii, http://www.deewr.gov.au/HigherEducation/Review/Pages/ReviewofAustralianHigherEducationReport.aspx
. Review of Australian Higher Education, Final report, p. 156.
. Some of these are discussed in: J Ross, ‘It’s not just a matter of entitlement’, Campus Review, 22 December 2008, http://www.campusreview.com.au/pages/section/article.php?s=News&idArticle=6159; J Ross, ‘Expansion agenda exceeds government’s expectations’, Campus Review, 15 June 2010; S Woodward, ‘NZ to Australia: Beware bums on seats’, Campus Review, 14 March 2011; S Parker, ‘Markets and missions’ Campus Review, 31 August 2010; S Parker, Demand‐Driven Funding: Markets and Missions, Paper delivered to the 5th Universities Governance and Regulations Forum, Sydney, 17 August 2010, http://www.canberra.edu.au/blogs/vc/files/2010/08/Parker-on-Demand-Driven-Funding-_2_.pdf
. Group of Eight, Cut red tape when you can, media release, 2 June 2011, viewed 10 June 2011, http://www.go8.edu.au/media/go8-media-releases/2011/cut-red-tape-when-you-can, see also: Australian Technology Network, Higher Education Support Amendment Bill, media release, 1 June 2011, viewed 10 June 2011, http://www.atn.edu.au/newsroom/Docs/2011/June_1_ATN_Media_Release_Demand_Driven_Funding_Bill.pdf; Innovative Research Universities, Higher Education Support Amendment (Demand driven system and other changes [sic]) Bill 2011, media release, 1 June 2011, viewed 10 June 2011, http://www.iru.edu.au/media/19310/iru%20media%20release%2006%202011%20-%20demand%20driven%20funding%20bill%20should%20be%20supported.pdf; Universities Australia, Australia’s universities support demand driven funding legislation, media release, 2 June 2011, viewed 10 June 2011, http://www.universitiesaustralia.edu.au/page/media-centre/2011-media-releases/australia-s-universities-support-demand-driven-funding-legislation/.
. A Trounson, ‘Too much study hurts taxpayers’, op. cit.
. Transforming Australia’s higher education system, op. cit., p. 47.
. A Trounson, ‘Too much study hurts taxpayers’, op. cit.
. Explanatory Memorandum, Higher Education Support Amendment (Demand Driven Funding System and Other Measures) Bill 2011, p. 20
. Universities Australia, Australia’s universities support demand driven funding legislation, op. cit.
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