Higher Education
Dr Coral Dow
In other years the $5.7 billion commitment to higher
education, innovation and research would be a Budget centrepiece but in 2009-10
it is overshadowed by larger commitments in other portfolios and by the debate
on appropriate debt levels, budget deficits and the economic outlook. It should
be noted that less than half of the additional funding ($2.2 billion) will
provide additional recurrent funding for university teaching, learning and
research. The remainder will fund education and research infrastructure
(including infrastructure in the vocational education and training sector)
through funding from the Education Investment Fund (EIF) ($2.1 billion) and the
Super Science measure in the Innovation, Industry, Science and Research portfolio
($1.1 billion).[1]
This brief focuses on the teaching and learning components
of the budget measures as university research functions have moved to the
Innovation, Industry, Science and Research portfolio. Significant changes to
student income support are addressed in the Welfare payments section of this
Budget review.
In contrast to some of the larger budget commitments, the
higher education budget is accompanied by significant structural change and
policy initiatives which implement the government’s response to the
recommendations in the Review of Australian Higher Education chaired by
Professor Denise Bradley.[2] The policy reform is based on a number of key principles including:
- the importance of quality university education to the community
and the individual
- broadening access to higher education (especially groups
traditionally under represented), and
- basing access on merit not the ability to pay.
The Government has adopted 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 for people from
low socio-economic status (SES) backgrounds. The budget measures are targeted
at realising these reforms through increased funding to student places, student
income support, scholarships, institutional performance targets, and a new
quality and regulatory agency.
Demand-driven funding
The Government has accepted the Bradley review’s
recommendation to introduce an uncapped student demand-driven system for the
funding of university undergraduate places. 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. Over
enrolments have been penalised and universities have resorted to uncapped
overseas and domestic full fee places to meet demand and provide revenue.[3]
A student-centred (or student demand) system where funding
follows the student is widely referred to as a ‘voucher’ system. All eligible
students would receive an entitlement to a Commonwealth subsidised place and
universities would decide their own entry standards, enrolment targets and
discipline mixes. Proponents argue there are significant advantages to
individuals and institutions. A demand driven system is predicted to increase
participation because students will have a better chance of gaining their
first-preference course and thus a greater incentive to enrol. In recent years
unmet demand has been falling but in 2008, 61 per cent of applicants did not
receive a first preference offer. Academic Andrew Norton in his submission to
the Bradley review argued that this has costs for both individuals and the
community: ‘About a quarter of students who do receive an offer of a university
place reject it. This is an under-studied group, but presumably disappointment
at the offer actually received is a factor. The academic and career potential
of these applicants is lost or delayed’.[4]
Proponents claim the deregulation of student places will give
universities greater flexibility, incentives to expand and produce a more
competitive system.[5] The Bradley review argued:
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.[6]
A significant issue with deregulation is the lack of
protection to low demand universities leading to a furthering of the divide
between elite universities and others, sometimes referred to as ‘third tier’
universities. The impact may be particularly hard on regional universities,
some of which are now struggling to fill places. Australian Catholic University
vice-chancellor Professor Greg Craven said vouchers would encourage predatory
recruitment: ‘Every university will eye off its neighbour to figure out what it
might want. There are a lot of quite vulnerable universities that it wouldn’t
take much to knock off balance–I’m talking particularly about the regionals’.[7] Professor Bradley is reported as acknowledging this possibility for both regional
and ‘third tier’ providers:
We know some of these recommendations will be quite difficult
for newer institutions. But it is 20 years since they were formed. Either they
are viable in a more competitive arena, or they’re not. There will be winners
and losers if a deregulated system is put in place. But why would you force
students to go to places that are losing. We need to shift our mind away from
protecting institutions to protecting students.[8]
However Melbourne University academic, Simon Marginson,
predicts elite universities will not take places from those universities
currently in less demand. Instead he predicts elite universities will look to
their large overseas enrolments to maintain funding, and that ‘less renowned
universities would take up most of the increase in domestic student load’.[9]
A further criticism is that concentration on high demand and
lucrative courses may result in a more ‘homogenised’ system producing a
mismatch between what students demand and what the economy needs. This could be
further exacerbated by 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.
Other issues of a student demand-driven system involve the
appropriate way to measure a student’s ability to undertake and complete a
degree and the possibility that universities may lower standards and entry
scores to attract students and meet performance targets.
The student-centred system is estimated to cost $490.6
million over the next four years to fund a target of an additional 50 000
places by 2013.[10] However the new system will not be introduced until 2012. As an interim measure
universities will be permitted to over enrol by ten per cent from 2010 with
payments for over enrolments made in the relevant year and adjustments for
under enrolments made in the following year. The Government estimates over
enrolments will cost $36.4 million in 2010 and $74.3 million in 2011. The next
two years will provide evidence of the likely effects of the student demand
system. A major factor in how the system will operate is the Government’s
reluctance to allow fee deregulation. Combined with no increase in funding per
student place and historically imbalanced funding per discipline, universities
will continue to rely on funding from overseas student fees and may focus on those
courses which are less expensive to provide.[11]
Non funded Government commitments include two reviews: a
review of the regional loading component of the Commonwealth Grants Scheme
which provides extra funding towards the added costs of regional provision and
a review of base funding for teaching and learning. Although the Government did
not accept the Bradley review recommendation to increase the base funding for
teaching and learning by 10 per cent from 2010, it has promised an independent
review of base funding and discipline clusters costs which will report in 2011.[12]
Some of the impacts of the ‘voucher’ system will be
addressed through the Government’s new ‘mission-based compacts’. Little detail
is available on the compacts other than they 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’.[13] Targets will relate to quality, attainment and participation by students from
under-represented groups. Consultations on the compacts will take place in 2009
and will include the issue of appropriate indicators to measure an
institution’s performance.
The Government has funded a number of measures to assist in
the implementation of the new system. These measures include $402 million in
structural adjustment funding, $206.4 million for institutional performance
targets, and $436.9 million to support increased participation for low
socio-economic status students and $57 million for a new regulatory and quality
assurance body: the Tertiary Education Quality and Standards Agency (TEQSA).
Structural Adjustment Fund
Sixty-four million dollars in the existing Diversity and
Structural Adjustment Fund will be redirected to establish the Structural
Adjustment Fund at a cost of $202.1 million. A further $200 million will be
added for capital components and will be funded by Round 3 (2009–10)
allocations from the EIF. Funding will be available to institutions, both
regional and metropolitan, to ‘develop diverse missions’, ‘consider their
strategic direction’ and focus on ‘achieving long-term sustainability’.[14] No further details are provided, but the Government is encouraging
collaborative efforts, including those between universities and vocational
education and training providers, and through possible mergers. Two million dollars
is allocated to a feasibility study for a possible merger of regional
providers, Charles Sturt University and Southern Cross University.
Performance funding
Three hundred and twenty-three million dollars will be
redirected from the existing Learning and Teaching Performance Fund to fund new
performance targets agreed to in compacts. Performance funding of $206.4
million over two years will commence with the new system in 2012. In 2011
transitional payments will be made for agreeing to the first year of
institutional targets but will be paid in 2012. The remaining funds from the
existing Learning and Teaching Performance Fund will be directed to conditional
funding under the revised indexation scheme (discussed below). The Government
states that unlike the previous Teaching and Performance Fund, the new
performance funding ‘will not be distributed on the basis of relative
performance to allow all institutions to be rewarded for achieving
improvements’.[15] TEQSA will assess if targets have been achieved.
Equity funding
Four hundred and thirty-seven million dollars over four
years (calculated as a percentage of teaching and learning grants) will reward
universities that attract more students from low SES backgrounds, that assist
those students once enrolled and to fund partnerships with schools and VET
providers that will encourage retention of low SES students in pre-tertiary
education. This is an important measure in the Government’s aim to boost
participation of low SES students to 20 per cent of enrolments by 2020.[16] Academic Trevor Gale welcomes the new financial loading for achieving equity
targets but suggests that there should also be direct penalties. He fears
universities in high demand may meet their equity targets by:
Expanding their overall student intake and in the process
effectively shift the “equity load” from their neighbouring institutions. Such
a strategy would potentially enable them to meet their institutional equity
targets, at least in the short term, but it is unlikely to do much for the
sector’s target as a whole. And it will place affected neighbouring
institutions in the position of having to attract and enrol other potentially
less-prepared students in a context where the current demand for higher
education is not that much greater than the current supply. In effect, the hard
work of encouraging Australians currently uninterested in attending university
will be left to these less well-positioned institutions.[17]
New indexation arrangements
A major concern of the higher education sector has been the
indexation formula used for teaching and research grants and student payments.
The present formula was introduced in 1997 and, despite a review in 2005, has
remained unchanged. Universities have lobbied for a new index in which the
salary component of the index is changed from the present safety net adjustment
to the Labour Force Index (Education), previously known as the Wage Cost Index
(Education).[18]
In its submission to the Bradley review Universities
Australia argued that ‘since 1989 the gap between actual and CPI-adjusted base
funding has grown to around $1.6 billion and for wage-cost adjusted funding
around $3.1 billion’.[19] Another estimate suggested that the wage component of the indexation formula
had cost almost $3 billion in Commonwealth funding between 1997 and 2003.[20]
The Bradley review recommended that the ‘Government maintain
the future value of increased base funding for higher education by an
indexation formula that is based on 90 per cent of the Labour Price Index
(Professional) plus the Consumer Price Index with weightings of 75 per cent and
25 per cent respectively’ and estimated this would cost $1.14 billion over the
first four years.[21] The Government has promised the Safety Net Adjustment (SNA) index will be replaced
with a wage price index discounted by 10 per cent that is comparable to the
Labour Price Index (Professional). However the Government has committed less
than Bradley estimated—$578 million over four years—to fund the revised
indexation, largely because the new indexation will be implemented from 2012.
Conclusion
The budget has been widely welcomed by the higher education sector.
In particular the sector has welcomed:
- the Government’s support for a majority of the Bradley review’s
recommendations
- commitment to an improved indexation rate
- significant infrastructure spending from the EIF
- reform of student income support, and
- the move to full funding of research (funded from the innovation,
Industry, Science and Research portfolio).[22]
These measures will
assist in improving the balance between public and private funding of the sector
which since 1996 has seen a decrease in public funding and an increase in
revenue from student fees.[23]
However concerns have been raised: some regarding funding
commitments and others related to the structural reform of the sector.
Criticisms centre on the Government’s rejection of the 10 per cent increase in
the base funding rate of student places recommended by the Bradley review, the
failure to fully fund the reforms at the rates recommended by the review—some
estimate that the funding commitment is as low as 30 per cent of the figure
recommended in the review—and the delayed start to increased funding until 2012.
As Simon Marginson describes it the ‘budget is a feast of deferred
gratification’.[24]
The budget has stimulated discussion of the policy reform
issues and the ability to meet long-term targets. Demographer, Bob Birrell,
claims Australia would need an additional 20 universities to meet the
participation targets recommended by the review.[25] Professor Bradley is reported as rejecting this view and instead recommends
collaboration between providers to solve infrastructure and program delivery
needs.[26] The review recommended ‘a more coherent approach to tertiary education
provision’ including ‘flexible and collaborative delivery arrangements in
partnerships with other providers such as TAFE’.[27] The Government has made no such commitment other than in encouraging funding
for collaboration through the Structural Adjustment Fund. The student demand
centred system will not be extended to TAFEs despite a number of them offering
degree courses and a significant number providing degrees as third party
providers to universities.[28]
Although there has been little support for Bob Birrell’s
claim for new universities there is an acknowledged need for infrastructure
expansion. To date the EIF has been viewed as the source for funds but the Budget
has thrown some doubt on the EIF’s ability to fund the expected demands. The
2008 budget promise to transfer $2.5 billion to the EIF will not occur if the
proposals in the Nation-building Funds Amendment Bill 2009 are legislated. The Nation-building
Funds Amendment Bill seeks to prevent the $2.5 billion transfer and proposes using
it instead to help fund the Clean Energy Initiative announced in the 2009–10
Budget.[29]
At 31 March 2009, the amount in the EIF was $6.5 billion. Four
billion dollars of EIF funding has been committed in the 2009–10 budget and in
the nation-building package announced by the Prime Minister on 12 December
2008. The EIF balance will be $2.4 billion plus investment earnings.[30] Dr Glenn Withers of Universities Australia criticised the decision to divert
funds from the EIF to the Clean Energy Initiative saying the sector would need
extra infrastructure funds to meet the expansion in student numbers. He is
reported as saying that little of the money for the Clean Energy Initiative
would go towards universities, vocational education and training or research
institutes.[31]
[1]. Australian Government,
‘Summary of measures’, Universities, innovation and education revolution,
Commonwealth of Australia, Canberra, May 2009, p.19
[2]. Review of Australian Higher
Education, Final report, (Professor Bradley, Chairperson), Department of
Education, Employment and Workplace Relations, Canberra, December 2008, viewed
14 May 2009, http://www.deewr.gov.au/HigherEducation/Review/Pages/
ReviewofAustralianHigherEducationReport.aspx
For a list of the 46 recommendations made by the Bradley review and the
government’s response see: Transforming Australia’s higher education system,
Canberra, 2009, Appendix 3, Bradley recommendations table, pp 57–65, viewed 14
May 2009, http://www.deewr.gov.au/HigherEducation/Documents/PDF/Additional%20Report%20-%20Transforming%20Aus%20Higher%20ED_webaw.pdf
[3]. In 2008 the government
announced the phasing out of domestic full fee places at public universities
from 2009. Overseas enrolments are not capped. In 2007 15 per cent of total
university revenue was from fee paying overseas students.
[4]. A Norton, Submission no. 91,
Review of Australian Higher Education, p. 5, viewed 18 May 2009, http://www.deewr.gov.au/HigherEducation/Review/Documents/Submissions2008/091ANorton.pdf
[5]. A Trounson and B Lane, ‘Vouchers can boost numbers’, The Australian, 17 December, 2008, viewed 18 May 2009, http://parlinfo.aph.gov.au/parlInfo/search/display/
display.w3p;query=Id%3A%22media%2Fpressclp%2FM9ES6%22
[6]. Review of Australian Higher
Education, Final report, p. 156.
[7]. J Ross, ‘It’s not just a matter of
entitlement’, Campus review, 22
December 2008, viewed 18 May 2009, http://www.campusreview.com.au/pages/section/article.php?s=News&idArticle=6159
[8]. J Ross,
[9]. A Trounson and B Lane,
‘Euphoria recedes after reality check’, The Australian, 20 May 2009.
[10]. Australian Government, Budget
measures: budget paper no.2: 2009–10, Commonwealth of Australia, Canberra,
2009, p. 144; J Gillard (Minister for Education), Student demand to drive
university funding, media release, Canberra, 12 May 2009.
[11]. For an analysis of per student
funding rates see: A Norton, ‘The gap between us’, The Australian, 20
May 2009.
[12]. Australian Government, Student
centred funding system, Canberra, 2009, viewed 20 May 2009, http://www.deewr.gov.au/HigherEducation/Documents/PDF/
Pages%20from%20A09-303%20Budget%20Fact%20Sheets-3_webaw.pdf
[13]. Transforming Australia’s
higher education system, p. 47.
[14]. Transforming Australia’s
higher education system, p. 40.
[15]. Transforming Australia’s
higher education system, p. 33.
[16]. Since 1996 the rate has
remained unchanged on 15 per cent.
[17]. T Gale, ‘Walking the talk’, Campus
review, 18 May 2009, viewed 19 May 2009, http://www.campusreview.com.au/pages/section/article.php?s=Comment&idArticle=7296
[18]. See: Australian
Vice-Chancellors Committee (AVCC),
Laying the Foundations: AVCC
submission to the
Review of the Indexation of University Funding,
AVCC, Canberra, 2004, viewed 20 May 2009,
http://www.universitiesaustralia.edu.au/documents/
publications/policy/submissions/IndexationSubmission.pdf
[19]. Universities Australia, Universities
Australia submission to Review of Australian Higher Education, Universities
Australia, Canberra, July 2008, p. 16, viewed 21 May 2009,
http://www.universitiesaustralia.edu.au/documents/publications/policy/
submissions/Bradley-Submission-July2008.pdf
[20]. Group of Eight, Position
paper on the indexation of university grants, Group of Eight, Canberra,
December 2004.
[21]. Review of Australian Higher
Education, Final report, pp 153–154
[22]. Universities Australia, Universities
Australia applauds Federal Budget for higher education, research and innovation media release, Canberra, 12 May 2009, viewed 20 May 2009,
http://www.universitiesaustralia.edu.au/documents/news/
media_releases/2009/uniaus_media_05_09.pdf Group of Eight, Visionary road taken to university reform, media
release, Canberra, 12 May 2009, viewed 20 May 2009, http://www.go8.edu.au/index.php?option=com_content&task=view&id=235&Itemid=180
[23]. See: ‘University revenue and
expenses by main source’ Universities Australia, Funding and
expenditurewebsite: http://www.universitiesaustralia.edu.au/content.asp?page=/publications/stats/fexp.htm
[24]. S Marginson, ‘A touch of the
blues’, The Australian, 20 May 2009, viewed 20 May 2009 http://parlinfo.aph.gov.au/parlInfo/search/display/
display.w3p;query=Id%3A%22media%2Fpressclp%2F80MT6%22;
see also: A Trounson and B Lane, ‘Euphoria recedes after reality check’, The
Australian, 20 May 2009, viewed 20 May 2009,
http://parlinfo/parlInfo/download/media/pressclp/
8ZLT6/upload_binary/8zlt60.pdf;fileType=application/pdf#search=%22australian%22 ; A Norton, ‘The gap between us’, The Australian, 20 May 2009, viewed 20
May 2009
http://parlinfo.aph.gov.au/parlInfo/search/display/
display.w3p;query=Id%3A%22media%2Fpressclp%2FYZLT6%22 ; J Ross, ‘The Pollyanna principle’, Campus review, 18 May 2009; A
Norton, ‘A 5/10 budget for undergraduate teaching’, Andrew Norton website,
viewed 20 May 2009, http://andrewnorton.info/2009/05/a-510-budget-for-undergraduate-teaching/
[25]. B Birrell and D Edwards, ‘The
Bradley Review and access to higher education in Australia’, Australian universities
review, vol. 51, no. 1, 2009, pp 4–13.
[26]. A Trounson, ‘Flexibility, not
bricks and mortar, the key’, The Australian, 11 March 2009.
[27]. Review of Australian Higher
Education, Final report, recommendation 16, Chapter 3.7.
[28]. For example: In 2007, 286
Charles Sturt University students were enrolled in nursing at Holmesglen TAFE.
See also: J Ross, ‘No place for TAFE in student-centred higher ed?’, Campus
review, 18 May 2009.
[29]. A Albanese, ‘Second reading
speech: Nation-building Funds Amendment Bill 2009’, House of Representatives, Debates (Proof), 12 May 2009, viewed 22 May 2009, and Nation-building Funds
Amendment Bill 2009, Explanatory Memorandum, p. 2, viewed 21 May 2009, http://parlinfo.aph.gov.au/parlInfo/download/legislation/
ems/r4115_ems_95f1d64f-f2d5-494d-951a-86552f1dd6df/upload_pdf/329304.pdf;fileType=application%2Fpdf#search=%22nation-building%20funds%20amendment%20bill%202009%22
[30]. Of the $4.1 billion, the 2009–10
Budget proposes spending of $2.985 billion over the four years 2009–10 to 2012–13,
see Transforming Australia’s Higher education system, p. 50.
[31]. A Symonds, ‘Education fund
faces shortfall’, Australian financial review, 20 May 2009, p. 10.
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