LABOR SENATOR’S DISSENTING REPORT
Introduction
1.1
Australia’s higher education sector rightfully has an international
reputation founded on the quality of the institutions and the courses they
provide. In economic terms it is Australia’s largest non-resource export
industry, earning in excess of $15 billion annually. But the future prosperity
of the sector is not a given – it depends on our ability to maintain standards.
It is reasonable, therefore, to proceed cautiously when amending the regulatory
architecture surrounding this sector.
1.2
The Senate would be well advised to recall the failures of the years
before 2009 when unsustainable volumes of international students led to genuine
questions about the quality of an Australian education and the soundness of
providers in the market. This, coupled with other issues, caused overseas media
and students to question the quality of an Australian education. It is,
consequently, appropriate that the Senate proceeds cautiously on considering
the TEQSA Amendment Bill, cognisant of the stakes involved and the risks that
have increased proportionately following the release of the government’s higher
education package in May.
1.3
When the bill was introduced in February, without prior notice and
without consultation with stakeholders, the government argued that the purpose
of the legislation was to implement the recommendations of the Review of
Higher Education Regulation report (2013) by Professors Valerie Braithwaite
and Kwong Lee Dow. That is still the official explanation of why the bill is
necessary. But the government has also announced, as part of the 2014-15
budget, a major overhaul of the higher education sector that it must have been
planning when the bill was introduced. Consequently the legislation cannot
sensibly be discussed in isolation from those proposed changes. If they are
implemented, the environment in which TEQSA has to perform its function of
regulator will change completely from that in which the Braithwaite-Lee Dow
recommendations were originally formulated. At the very least, that should be
grounds for caution about possible unintended consequences should the bill
become law, and for consideration of possible amendments to avoid those
consequences.
1.4
The Braithwaite-Lee Dow recommendations were intended to make TEQSA more
user-friendly: they were a response to objections raised by universities about
unnecessarily detailed, expensive and time-consuming demands for information.
These objections were urged particularly strongly by Group of Eight (Go8)
universities, which argued that because of their adherence to high standards
and long tradition of self-assessment they should not be constrained by an
unduly intrusive regulator. However even among the Go8 hostility to TEQSA’s
methods was not universal. For example, the vice-chancellor of the Australian
National University and Go8 chairman, Professor Ian Young, publicly defended
TEQSA in an opinion article in The Australian’s Higher Education
Supplement (30/10/2013), comparing it favourably with its predecessor, the
Australian Universities Quality Agency (AUQA):
I have been through three AUQA audits and now one TEQSA
re-accreditation All have been stressful but all have been useful for the
institutions involved ... The most onerous of these, one of the first TEQSA
re-accreditations of an Australian university, was actually less onerous than
an AUQA audit ... I agree TEQSA needs to get its balance between intervention and
risk correct. If, however, we overreact now and strip TEQSA of any real power,
I suspect we will ultimately regret what might be a short-term victory for some
... The job of TEQSA is to safeguard the international quality of Australian
higher education.
1.5
A strong case can be made, even without regard to the radical
restructure of higher education set out in the budget that it would be better
to allow the evolving operational culture of TEQSA, rather than legislation, to
respond to the stakeholders’ objections. As Professors Braithwaite and Lee Dow
cautioned in their report:
It is easy to recommend apparently straightforward amendments
to the legislation which appear agreed by everyone. But this is worryingly
simplistic. Patching individual pieces of legislation can fix functional irritations,
but will not necessarily change the way in which legislation is being applied
and why.[1]
1.6
TEQSA’s initial tendency to treat established universities in the same
way as it treats non-university providers was not a consequence of legislative
prescription. That tendency can be expected to fade as the agency’s operational
culture matures, and remarks such as Professor Young’s suggest that this has
already begun to happen. Changing the legislation while ignoring the culture,
however, would be exactly the kind of 'worryingly simplistic' reaction that
Professors Braithwaite and Lee Dow have warned against.
1.7
The bill alters TEQSA’s structure and purpose in fundamental ways. It
substantially diminishes the agency’s quality-assessment role, other than in
assessing institutions against the 'threshold standards', i.e. those concerned
with provider registration and course accreditation, in the Higher Education
Standards Framework. It allows greater delegation of authority to TEQSA’s
senior staff, gives the minister the power to reduce the number of
commissioners, and extends the minister’s power to issue directives to the
agency. All of these changes raise disturbing questions that the government has
not fully answered.
Quality Assessment
1.8
The bill repeals section 60 of the existing act, which gives TEQSA power
to assess institutions, or the sector more broadly, against non-threshold
standards in the Higher Education Standards Framework, namely: learning and
teaching standards, research standards, and information standards. The minister
justifies this change on the grounds that it will streamline the agency’s
operations by focusing them on provider registration and course accreditation
as core functions. Yet section 60 only states that TEQSA “may review any aspect
of an entity’s operations ...'. It does not state that TEQSA must conduct
comprehensive quality assessment of all institutions beyond the threshold
level. In line with the perception that TEQSA has begun to move beyond a
one-size-fits-all approach to institutions that characterised its initial
operations, it is not obvious that the section needs to be repealed, especially
since weakening the agency in this way might prevent it from dealing with
unforeseen problems arising in new providers that have passed the threshold
stage.
1.9
As the National Tertiary Education Union stated in its submission to the
committee:
the push to reduce regulatory burden is being conflated with
deregulation – and in doing so [is] removing an entire mechanism that addresses
quality in the sector...[2]
1.10
By seeking to repeal section 60 of the TEQSA Act the government is
treating quality assessment as a matter of process, rather than as essentially
concerned with outcomes, i.e. with measuring the performance of institutions
and the sector against the compacts – the standards, including the
non-threshold standards – that secure the reputation on which the higher
education sector depends.
1.11
Fears that adherence to the compacts will be eroded by the loss of
TEQSA's quality-assessment function have been magnified enormously by the
higher education changes announced in the budget. The government intends to
create an open market by allowing private providers of all kinds to obtain the
public subsidies previously available only to universities. In the minister's
words:
For the first time in Australian history, students studying
at any registered higher education provider will have their place directly
supported by the Australian Government. This includes higher education students
at public and private universities, TAFEs and private education colleges. It
also includes all accredited higher education diplomas and advanced diplomas as
well as associate degrees and degrees.[3]
1.12
This will substantially increase the number of providers and,
potentially, greatly increase the risk of quality-assurance issues arising
along with them. The argument that these issues can be dealt with effectively
by a regulator limited to dealing with threshold standards is an extremely
dubious one, not least because under the budget proposals TEQSA will lose 41
per cent of its funding. It will be asked to scrutinise more institutions with
fewer resources, while being deprived of the power to extend that scrutiny
beyond the initial stages. And in that context, a provision in the bill for
TEQSA to extend registration periods beyond seven years is especially
problematic.
1.13
As RMIT University argued in its submission to the committee, this
provision 'could present a real risk in ensuring consistency in the approach
to, and assessment of, a provider’s ability to meet the Higher Education
Standards Framework'. The conclusion that the government actually wants weak
regulation to facilitate the entry of new providers into the market is
difficult to avoid.
1.14
The potential for a lowering of standards already exists. When TEQSA was
created the registration lists of the previous state-based regulators were
transferred to it, and it still has not completed reassessment of all the
providers on those lists. Indeed, only 40 out of 170 have been assessed.
Representatives of the private-provider peak bodies testified to the committee
that lax state regulation had generated quality-control problems only in VET,
and not in higher-education, institutions. But since TEQSA's reassessment is
incomplete there is very little evidence to corroborate the representatives'
assurance - we are being asked to take it on faith. The example of the expanded
VET market in Victoria, which has resulted in traditional public TAFE providers
struggling to compete with a flood of new private providers - many of which
offer only briefly fashionable lifestyle courses - in the face of rising costsÂ
should be a warning to the government about the need for a strong regulator.
There is no indication, however, that it has heeded the warning.
1.15
In the context of the proposed restructure, the risk of dodgy,
fly-by-night operators once again appearing in the market and tainting the
reputation of other institutions cannot be ignored. In their evidence the
private-provider representatives described the existence of dodgy operators
such as Greenwich University or the University of Asia as 'an historic problem',
implying that it is no longer of concern. But the history is hardly an ancient
one; and in any case the relevant questions are: what risks will be generated
in the government's proposed new higher-education framework, and how can we be
confident that a substantially diminished regulator will be able to deal with
them?
1.16
Already some private providers appear to be leaping over the threshold,
as it were. The Australian's Higher Education Supplement
(11/6/14) has reported instances of providers buying other providers that
already have registration. How will a regulator focusing only on registration
and course accreditation deal with them? Evidence presented to the committee in
support of the bill's removal of TEQSA's quality-assessment function did not go
beyond confident assertions that concentrating on an institution's compliance
with threshold standards would still allow sufficient oversight of quality. In
the circumstances, however, confidence that this will be so surely requires
more than assertion.
1.17
The majority report argues that removal of TEQSA's quality assessment
function 'is necessary to reduce the administrative burden imposed on
higher-education providers in participating in TEQSA's assessment reviews ...'
This implicitly acknowledges the NTEU's observation, cited earlier, that the
change effectively conflates the need to reduce burdensome regulation with an
agenda for deregulation. But it cannot be true that the only way to reduce an
administrative burden is to remove a central reason for the regular's
existence. The implications of this change have not been thought through.
Ministerial Directions
1.18
The same judgment may be made of other changes to the regulator in the
bill. Under the present Act, the minister may issue directions to TEQSA, by
legislative instrument, 'to protect the integrity of the higher-education
sector'. But the bill redefines the minister’s power, allowing directions to be
issued to TEQSA 'in relation to the performance of its functions and the
exercise of its powers'. The explanatory memorandum to the bill states that
this change 'broadens the scope and reduces the ambiguity of the minister’s
powers'; on the contrary, however, ambiguity is surely increased. Under what
circumstances is it envisaged that the minister might issue a direction? Does a
direction 'in relation to the performance of [TEQSA’s] powers' mean that the
minister can instruct the agency how to interpret its roles and
responsibilities under the Act? And what protection is there against the
politicisation of TEQSA’s decisions by ministerial direction, given that the
minister’s power of direction is not a disallowable instrument? Thus far, the
only answers to these questions have been blithe and unsatisfactory assurances
that nothing sinister is intended or likely to happen. The majority report
states that 'the committee affirms it is persuaded that it is not the intention
of the provisions in the bill regarding ministerial directions to TEQSA to compromise
the independence of TEQSA'. Whether or not that is so, the problem is that the
proposed redefinition of the minister’s powers have the potential to allow a
minister to compromise TEQSA’s independence.
Delegations
1.19
The bill would also allow TEQSA to delegate its functions or powers to
“a person who holds any office or appointment under a law of the Commonwealth”.
That might be seen as the innocuous secondment of officers from other
Commonwealth agencies or departments to ease staffing or resource problems. But
since the power of delegation is so broad it raises the possibility of a
blurring of roles that should not be blurred: an immigration officer, for
example, might bring concerns to the process of assessment that ought not to be
TEQSA’s concerns.
Commissioners
1.20
The bill reduces the number of TEQSA’s commissioners and separates the
roles of chief commissioner and chief executive officer, which are now held by
one person. This supposedly applies a corporate model to TEQSA’s operation,
allowing greater efficiency. But in business corporations a CEO is appointed by
the company’s board, whereas under the bill’s new model for TEQSA the CEO will
be appointed by the minister. As Dr Julie Wells, the University Secretary and Vice
President of RMIT University, noted in her evidence, the commissioners’ role is
not clearly defined in the legislation and there is a real risk if the
relationship between the commissioners and the CEO is not understood.[4]
Dr Wells’ comment raises the disturbing question of whether the commissioners
will effectively be reduced to the status of mere ciphers, especially given the
change in the minister’s power to issue directives. He will appoint the CEO; if
he issues a directive will it therefore be to the CEO, sidelining the
commissioners?
1.21
The number of commissioners will not be reduced by attrition but by
spilling all the existing positions. The sacking of a board by legislation sets
a disturbing precedent that goes beyond the regulation of higher-education
regulation. Does this raise the prospect that all Human Rights commissioners,
for example, might be dismissed in this way? Or the Fair Work Australia
commissioners, perhaps?
1.22
Labor Senators are concerned that the legislation may well be premature.
The Senate should be cautious about reshaping the powers of TEQSA at a time
when the number and scope of higher-education providers is likely to expand
rapidly.
Recommendation 1
1.23
Labor Senators recommend that TEQSA's discretionary power to conduct
assessments of non-threshold standards should not be removed.
Recommendation 2
1.24
Labor Senators recommend that an upper limit should be placed on TEQSA's
ability to extend registration periods.
Recommendation 3
1.25
Labor Senators recommend that the number of commissioners, their role,
their relationship with the Chief Executive Officer and the grounds on which
they may be dismissed should be clearly identified.
Recommendation 4
1.1
Labor Senators recommend that the minister's power to issue directions
to TEQSA should become a disallowable instrument.
Senator Sue Lines
Deputy Chair, Legislation
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