Current Issues
Higher Education Funding Policy
E-Brief: Online Only issued December 2000; updated 2 July
2003
Dr Kim Jackson,
Analysis and Policy
Social Policy Group
Key Sites
This brief contains background information on Commonwealth
higher education funding policy, as well as providing links to
relevant documents and sites on the Internet.
Department of Education, Science and Training
The most important sites on this subject are those of the
Department of Education, Science
and Training (DEST) and, in particular, the Higher Education
pages. The following list summarises the higher education
information available from the DEST site:
- the structure and functions of the Higher Education
Group, with senior staff contacts
- the Programmes
page contains an alphabetical list of links to higher education
schemes, activities, initiatives, guidelines and programmes
- the Courses page has
links to universities, guides and other information for
students
- the Scholarships
page, with information on fellowships, awards and scholarships
available for students in Australia
- the Universities page
has a brief description of the sector and the funding
framework
- the Statistics page
contains links statistical sources on higher education
- the Research
page has descriptions of the funding programmes for higher
education research
- the HECS page contains
information on the Higher Education Contribution Scheme
- the Publications page
provides access to the reports and publications of the Higher
Education Division and related bodies (most of which can be
downloaded)
- the Higher
Education Quality page provides information on quality
assurance and accreditation procedures for the sector
The single most useful source of information on current
Commonwealth funding policy is the Higher
Education Report for the 2003 to 2005 Triennium.
The Australian Vice-Chancellors Committee
The Australian
Vice-Chancellors' Committee (AVCC) site provides access to:
Recent
Developments
The 2003 04
Budget Announcements
The Government announced major changes to the higher education
funding system in the 2003 04 Budget. Documents detailing these
policies can be obtained from the DEST site, Our Universities:
backing Australia's future. This provides a
summary of the reforms, a
policy paper, fact
sheets and other information. The major funding decisions are
described below. It should be noted that most of these proposals
will require the approval of Parliament, as new legislation will be
required.
From 2005 Commonwealth operating grants for universities will be
based on a new
funding formula based on student numbers and discipline mix.
Funds per student place will be increased by 2.5 per cent in 2005,
5.0 per cent in 2006 and 7.5 per cent in 2007. These increases will
be conditional on institutions complying with the Commonwealth's
model for institutional governance ('National
Governance Protocols') and workplace
relations policies. Around 25000 marginally funded places will
be converted to fully funded places in the three years to 2006 07.
An additional
1400 places will be provided in 2007. The total additional cost
of these measures will be $139 million in 2004 05, $252 million in
2005 06 and $384 million in 2006 07.
From 2004 the Government is providing $122.6 million over four
years to incorporate a regional
loading into the Commonwealth Grants Scheme. Students attending
regional campuses will attract additional payments for the
institution depending upon the location and size of the campus.
From 2005, institutions in receipt of Commonwealth supported
places will determine their own student contribution level for each
course they offer within ranges set by the Commonwealth. Currently
there are three HECS bands, each with a fixed rate of student
contribution. From 2005 these fixed rates will be replaced by
ranges. The top of these ranges will be 30 per cent higher than
the projected level of HECS for each band for 2005 under current
arrangements. The bottom of each range will be $0. Institutions
will be able to set the student contribution at any point within
these ranges. In addition, a fourth band will be established called
National
Priorities, which will consist of education and nursing
courses. The range for this band will be from $0 to the current
level of HECS for Band 1 ($3854).
The minimum repayment threshold for HECS will be raised to
$30 000 by removing the two bottom repayment bands. This means
that those with a HECS debt will start paying 4 per cent of their
income when they reach $30 000, whereas they now pay 3 per
cent when their income reaches $24 365. In addition, the
maximum rate of repayment will be raised to 8 per cent where income
exceeds $60 000 (the top rate is currently 6 per cent where
incomes exceeds $43 859). The Government has also reduced the
discounts for upfront payments (from 25 to 20 per cent) and
voluntary repayments (from 15 to 10 per cent).
Domestic students paying full fees for undergraduate courses
will have access to an income contingent loan scheme (FEE-HELP).
Loans will also be available for students who wish to study
overseas (OS-HELP).
There will be a scholarship scheme to assist low SES and indigenous
students with higher education costs (the Commonwealth
Education Costs Scholarship), and one to assist students from
rural and isolated areas who have to move in order to study (the
Commonwealth
Accommodation Scholarship).
Reactions to the Policy
Statement
On 26 June 2003 the Senate referred the budget decisions to the
Employment,
Workplace Relations and Education References Committee. The
terms of reference and other information can be obtained from
this page. The committee is due to report by 30 October
2003.
The AVCC has issued a
media release and a paper,
Excellence and Equity: foundations for the future of Australia's
universities (pdf file) in response to the Government's policy
statement. The AVCC strongly endorsed the thrust of the policies,
while identifying some weaknesses. These included the lack of
effective indexation, the tying of funding to major changes in
governance and workplace relations, the increased capacity for
Government intervention in university decisions and autonomy, and
the need for stronger equity initiatives.
The Group of
Eight, an association of Australia's major research
universities, stated that the
reform package provided Australia with a once in a generation
opportunity to create an internationally competitive higher
education sector. The Group's submissions for the Higher Education
Review and the Budget can be obtained from this page.
The National Tertiary
Education Union has strongly criticised the package. Media
releases on the subject can be obtained from this page. The
NTEU also has a page of
documentation relating to the Higher Education Review.
The Council of
Australian Postgraduate Associations (CAPA) has opposed the
increases in fees, interest rates and industrial relations
measures. Media releases on these subjects can be obtained from
this
page.
The National Union of Students has
announced a campaign to oppose the package.
The Review of Higher
Education
The Budget decisions were informed by a review of
higher education policy, which was announced by the Minister
for Education, Science and Training, the Hon. Dr Brendan Nelson, in
April 2002. The review carried out 49 forums in all capital cities
between 13 August and 25 September 2002. Seven issues
papers were published and a total of 728 submissions
were received. The papers were as follows:
Media releases associated with the review can be obtained from
this
page.
The Productivity
Commission Report
In December 2002 the Productivity Commission released its
research report,
University Resourcing: Australia in an international
context (pdf file). The report was requested by the
Government as an input into the Review of
Higher Education. It compared 11 Australian universities with
26 universities from nine other countries. Its major conclusions
were as follows:
- graduation rates for Australian medium-duration first degree
courses in 1999 were in the middle of the range among the OECD
countries examined.
- the ratio of students to teaching staff was higher in Australia
in 1999 than in Canada and the United States, the only other
countries for which there were comparable data.
- salaries for Australian academics in 2001 measured on a
Purchasing Power Parity basis were comparable to those in a number
of other countries, although lower than in Singapore and the United
States.
- the total expenditure (public and private) on tertiary
education in Australia was around 1.5 per cent of Gross Domestic
Product in 1999. This was lower than in the United States, New
Zealand, Sweden and Canada, but higher than in the United Kingdom
and some other European countries.
- university tuition fees in public universities are
regulated in all countries except New Zealand. However, public
university students in Sweden do not pay tuition fees, and
first-time undergraduates do not pay tuition fees in Ireland.
- demand (through student places) is regulated in all countries
except New Zealand and some states of the United States.
- the Australian universities studied generally received the
largest share of their revenue from government. For over a third of
the overseas universities studied, revenue from other sources
including gifts, donations, investments and commercial activities
accounted for a greater proportion of revenue than from either
government or students.
- the Australian universities studied typically received a
greater share of their revenue from students than did universities
in other countries.
Background
Constitutional
Position
Under the Constitution
the provision of educational services (including universities) is a
responsibility of State Governments. Section
107 provides that the States will retain those powers that they
had before the establishment of the Commonwealth, unless the
Constitution exclusively vested the power in the Commonwealth. As
the Constitution does not exclusively vest the power to make laws
regarding education with the Commonwealth, this power remains with
the States. However section
51 of the Constitution, which lists those matters for which the
Commonwealth may make laws, does refer to the provision of
'benefits to students' (s. 51xxiiiA). This amendment to the
Constitution was inserted in 1946 to enable the Commonwealth to
continue to provide welfare benefits, including income support for
students. Under s. 51xxxix the Commonwealth can also make laws with
regard to 'matters incidental to the execution of any power' vested
by the Constitution. The extent to which the 'benefits to students'
head of power and the 'matters incidental' provision could be used
as a basis for broad Commonwealth actions in the education area is
a matter for debate.
Under section
96 of the Constitution the Commonwealth can grant financial
assistance to a State on such terms and conditions as the
Parliament thinks fit. This has been the traditional vehicle for
Commonwealth assistance for educational activities conducted by the
States. Grants to the States for universities commenced in 1951 and
for schools in 1964. However, since the passage of the Higher
Education Funding Act 1988 the Commonwealth has provided
financial assistance directly to universities rather than through
the States. The constitutionality of this arrangement has not been
tested in the courts, although it would presumably be justified on
the basis of the Commonwealth's appropriations power
(s.
81).
The Commonwealth also has power to make laws with regard to
'trading or financial corporations' (s. 51xx). As universities are
generally corporate bodies then it might be argued that this
corporations power could be used as a basis for Commonwealth
legislation concerning their activities.
The Mills Committee
In March 1950 the Menzies Government appointed a committee (the
Mills Committee) to report on the finances of universities. It
recommended that the Commonwealth Government contribute towards the
universities' recurrent expenditure. This was accepted and
subsequent States Grants (Universities) Acts of 1951,
1953, 1955, 1956 and 1957 provided financial assistance to the
States for the running expenses of universities, on the condition
that the level of university income from State grants and fees was
maintained at certain levels. The Mills Committee, on the basis of
weighted student numbers, allocated each university a 'first level'
grant for which they could qualify by receiving a minimum income of
State grants and fees. Universities could also qualify for a
'second level' Commonwealth grant equivalent to 1 for every 3 of
State grants and fees above the set minimum income.
The Murray Committee
Continuing concern over the condition of the universities led
Prime Minister Menzies to establish the Murray Committee in
December 1956 to report on the sector. In response to the
committee's recommendations, the Government announced the
establishment of permanent Australian Universities Commission
(AUC), greatly increased recurrent grants and the introduction of
capital funding. The function of the Commission was to inquire into
and make recommendations on financial assistance to the States for
universities. The additional recurrent assistance for universities
had the effect of altering the ratio of Commonwealth grants to
State grants and fees from 1:3 to 1: 1.85. Other recommendations
led to the introduction of triennial funding and the provision of
capital grants on a 1:1 basis with State funding.
Australian Universities
Commission
The creation of a permanent body to oversee the distribution of
grants to universities resulted in a more sophisticated approach to
recurrent funding. The method of assessment used by the Commission
involved the estimation of the fixed elements of expenditure on the
teaching and research components of total expenditure for each
major faculty and the marginal expenditures (that is, the extra
expenditure involved in enrolling an additional student) in major
faculty groups. The remaining items of expenditure covering central
administration, the library and the maintenance of physical
facilities were assessed in terms of a fixed component and a
component varying with expenditure on teaching and research.
The AUC developed a formula incorporating these factors and this
continued to be used in the 1970s and early 1980s by the AUC's
successor, the Tertiary Education Commission. The precise nature of
this formula was not disclosed in the reports of these bodies and
it was not until 1993 that it was published.
The Martin Committee
In August 1961, at the request of the AUC, the Government
established the Committee on the Future of Tertiary Education in
Australia (Martin Committee). The Committee was asked to consider
the pattern of tertiary education in Australia in relation to the
needs and resources of the country. At that time the tertiary
sector consisted of four main types of institutions: universities,
institutes of technology or technical colleges, teachers' colleges,
and specialist institutions (generally agricultural or paramedical
colleges). The Martin Committee considered that technical education
was undervalued. It recommended an increase in financial support
for colleges, the separation of recreational and trade courses from
those concerned with general education and the technologies and the
establishment of standards recognised throughout the country. In
response, the Commonwealth agreed to support financially a new
system of colleges of advanced education (CAEs) parallel to the
universities, although they were to remain primarily a State
responsibility. The States Grants (Advanced Education) Act
1966 introduced capital and recurrent grants for CAEs,
while the States Grants (Teachers Colleges) Act
1967 provided capital and equipment grants for these
institutions. In 1971 the Australian Advanced Education Commission
was established to advise the Commonwealth and promote the
development of the sector.
The 1973 Higher
Education Agreement with the States
In March 1973 the Prime Minister wrote to the State Premiers
proposing that the Commonwealth assume full financial
responsibility for universities, colleges of advanced education and
teachers' colleges. This would occur in conjunction with the
abolition of tuition fees. At the Premiers Conference and Loan
Council Meeting of 28 29 June 1973 the States accepted the
Commonwealth proposal. There was no detailed published agreement
beyond the Statement by the Prime Minister attached to the
Proceedings of the Conference. This statement simply noted that the
States had accepted the Commonwealth offer to take over full
financial responsibility from 1 January 1974 and that an amount
equivalent to the additional grants for tertiary education would be
deducted from the general purpose funds provided by the
Commonwealth to the States.
The agreement did not entail any changes to the relative
constitutional responsibilities of the States and the Commonwealth
regarding universities and other higher education institutions.
However, the Commonwealth's assumption of funding responsibility
gave it a dominant position in the development of higher education
policy. Through the conditions it attached to university grants it
was able to determine the nature and characteristics of the system
most notably with the establishment of the Unified National System
(UNS) and the introduction of the Higher Education Contribution
Scheme (HECS) in 1989.
Government
Guidelines and the Establishment of the TEC
Commonwealth assistance for the university and advanced
education sectors after 1974 continued in the form of triennial
grants under States Grants legislation, with the level and
distribution of grants based on recommendations by the University
and Advanced Education Commissions. However, in May 1975 the
Government announced that it would merge the two commissions.
Another major change occurred with the 1975 Budget, when the
Government stated that 1976 would be a year outside the normal
triennial round and issued guidelines to the Commissions
stipulating the funds available for the sectors.
These developments continued with the Fraser Government. In June
1977 the two higher education commissions (as well as the Technical
and Further Education Commission) were abolished and replaced by
the Tertiary Education Commission (TEC), with subsidiary Councils
for the three tertiary education sectors. While the TEC, like its
predecessors, advised the Government on matters relating to
tertiary education and administered programmes of financial
assistance, its recommendations were constrained by government
guidelines setting out broad policy objectives and financial
limits.
The TEC continued the approach developed by the AUC for
assessing the general recurrent grant for each university. This
involved consideration of the following factors:
- the total student load, expressed as broad planning ranges
- the distribution of students across disciplines and the size of
each faculty
- the provision required for research and the necessary
administrative and other services
In the advanced education sector TEC determined the total number
of students and their mix in terms of institution and fields and
levels of study after consultation with State authorities. The
allocation of funds to institutions was generally in accordance
with the recommendations of these authorities.
Most recurrent funds for institutions in both sectors continued
to be provided in the form of 'block grants' for general purposes
(i.e. subdivision of the allocation remained the responsibility of
the institution itself), while capital grants were provided for
specific building projects (whose priority was determined by the
TEC).
The National Board of
Employment, Education and Training
In April 1988 the Minister for Employment, Education and
Training (Mr Dawkins) introduced legislation to rationalise the
advisory structures in his portfolio. The TEC and the Schools
Commission were abolished and replaced by the National Board of
Employment, Education and Training (NBEET). The new arrangements
were established by the Employment, Education and Training Act
1988. Their essential features were as follows:
- a National Board to report directly to the Minister on all
related employment, education and training issues taking into
account any written directions or guidelines from the Minister on
the Government's broad social, economic and budgetary policies
- four Advisory Councils reporting to the Board (the Schools
Council, Higher Education Council, Employment and Skills Formation
Council and the Australian Research Council)
The new Board would not make annual recommendations on the
allocation of grants to institutions and would have no
responsibility for programme delivery. These tasks became the
responsibility of the Department. Only the Australian Research
Council (ARC), with its specialist role of recommending grants for
research projects, retained a direct role in higher education
funding processes. NBEET was later abolished.
The Shift to
Departmental Administration of Grants
Since the Commonwealth assumed responsibility for funding higher
education in 1974, responsibility for the allocation and
administration of grants gradually shifted from statutory
commissions representing the sector to the Minister and the
Department. While this development has often been criticised by
stakeholders in the sector, it has nevertheless continued under
both Labor and Coalition governments as they try to ensure that
higher education policy and funding requirements remain consistent
with their overall social and economic objectives. Ministerial
authority was ultimately entrenched with the passage of the
Higher Education Funding Act 1988, which enabled the
establishment of the Unified National System and this legislation
remains the basis for Commonwealth involvement in the sector.
The Unified National
System
The Unified National System (UNS) was introduced in 1989
following the publication of the White Paper Higher Education A
Policy Statement in July 1988. The distinction between the
universities and colleges of advanced education was abolished. All
institutions could become members of the UNS if they met certain
size criteria (a minimum of 2000 equivalent full-time student
units, or EFTSU). Membership of the UNS was necessary if an
institution was to be eligible for the full range of Commonwealth
grants. Non-members would be funded on a contract basis for
teaching purposes only. This led to a significant reduction in the
number of institutions through amalgamations: from 75 Commonwealth
funded separate institutions in 1989 to 36 members of the UNS and 8
non-members in 1991.
The White Paper also introduced significant changes in funding
procedures:
- an analysis of the relative funding of institutions and an
adjustment package to remove any inequities
- a single operating grant to replace the existing general
recurrent, equipment and minor works and special research
grants
- additional operating grants for enrolment growth to be
allocated on a competitive basis, with regard to institutional
capacities in key disciplines of national priority, as well as
relative rates of student participation and demand in States and
regions
- a shift of research funds from general infrastructure funding
to competitive research schemes
- introduction of the 'education profile' process whereby
institutions develop a profile which defines their broad mission
and responsibilities, with specified areas of activities and goals.
The profile is negotiated with the Commonwealth and becomes the
basis on which it receives funding.
The Higher Education Funding
Act 1988
The statutory basis for the Unified National System was the
Higher
Education Funding Act 1988. The Act provided grants of
financial assistance to higher education institutions, and
established the Higher Education Contribution Scheme (HECS). The
Minister's Second Reading Speech can be obtained
here. The Act remains the basis for Commonwealth funding of
higher education institutions.
The Act represented a fundamental change in Commonwealth funding
policies. It made institutional funding a direct Ministerial
responsibility and established a structure to ensure that
institutions were responsive to policy guidelines (the 'education
profiles' process). Under this process, individual institutions
negotiate agreements with the Department which form the basis for
their funding.
Section 14 of the Higher Education Funding Act
requires higher education institutions to submit education profiles
in an approved form as determined by the Minister after
consultation with the institution. Whereas the States Grants
(Tertiary Education Assistance) Acts had stipulated specific
operating grants for individual universities, the Higher
Education Funding Act 1988 simply provided that an institution
should receive 'such amount as the Minister determines having
regard to the education profile of the institution' (s.
15), and set global maxima for this discretionary funding.
The new system was also open to the charge that it could be
subject to political manipulation and a lack of accountability.
Unlike Commonwealth funding for schools, which is governed by known
formulae and public processes, grants for higher education
institutions were to be determined largely in confidential
negotiations without the benefit of fixed arithmetic criteria. To
safeguard against possible abuse of this process the Senate amended
the Employment, Education and Training Act 1988 to require
the Higher Education Council to report annually on the operation of
the education profiles process after consulting with institutions.
All of these reports can be accessed from this
page. However, the Employment, Education and Training
Amendment Act 2000 removed this reporting requirement when it
abolished the Council.
The Relative Funding Model
The White Paper on Higher Education had made it clear that there
would be a new method for allocating grants to institutions that
would remove the funding inequities that had arisen over time. It
foreshadowed an analysis to identify those institutions that were
significantly over-funded or under-funded under current
arrangements, followed by phased adjustments to the level of
funding.
The analysis of the relative funding position of institutions
was finalised in August 1990. The report, Assessment of the
Relative Funding Position of Australia's Higher Education
Institutions, compared the actual operating grants received by
institutions with notional allocations derived from a Relative
Funding Model. The Model was a simple matrix comparing relative
teaching costs across disciplines and course levels. The
application of the model revealed a huge variation in grants per
student across institutions, from 20 per cent above the model
allocation (Northern Territory University) to 22 per cent below
(University College of Southern Queensland).
The model was applied to the funding process by means of an
'adjustment package' negotiated with each university. These
packages contained a mixture of funding and student load
increases/decreases (depending upon whether an institution was over
or under funded according to the model) that would bring each
institution to within a specified bandwidth of the model's funding
level by 1994. The bandwidth was set at plus or minus three per
cent. Two institutions that remained outside the bandwidth in 1995,
the Northern Territory University and University of Tasmania, were
accepted as special cases.
The model was designed for a once-only application to
redistribute recurrent funding between institutions. Since this
base level was established, approved funding for growth has been
added as appropriate. Once growth has been allocated it becomes
part of the 'base' for the following year of the rolling
triennium.
HECS and Tuition Fees
With the abolition of tuition fees in 1974, higher education
institutions became almost wholly dependent on the Commonwealth for
their operating expenditure. Funding legislation prevented
institutions that received grants from charging tuition fees, and
the Higher Education Funding Act 1988 in its original form
continued this prohibition. However, student charges of various
kinds reappeared throughout the 1980s:
- from 1980 overseas students were required to pay annual charges
(the Overseas Student Charge). These were initially equivalent to
about 40 per cent of the cost of their courses.
- from 1986 institutions were permitted to offer full fee places
to overseas students.
- in 1987 and 1988 Australian students were required to pay an
annual charge of $250 (the Higher Education Administration
Charge).
- from 1989 institutions could charge regulated fees for certain
types of postgraduate courses. This market was progressively
deregulated so that by 1994 universities were able to charge fees
for most postgraduate courses and to determine the level of fees
they charged.
- from 1989 Australian undergraduates were required to make a
contribution through the Higher Education Contribution Scheme
(HECS).
HECS was established by the Higher Education Funding Act
1988. Under
section 38, financial assistance is granted to higher education
institutions on the condition that institutions comply with the
requirements of the HECS. The scheme requires students to make a
financial contribution towards the cost of their course. Students
can pay up-front and receive a discount, or they can elect to have
the Commonwealth pay the contribution for them and repay the debt
through the tax system as their income reaches certain levels. A
detailed brief on HECS prepared by the Parliamentary Library is
available at this
page.
The Higher Education Budget Statement of 9
August 1996 announced that universities would be able to charge
full cost fees for Australian undergraduates from 1998 onwards.
This only applied to students above the target number of
Commonwealth-funded places, with the number of fee-paying
Australian undergraduates being initially limited to 25 per cent of
the total enrolment of Australian undergraduates in any one
course.
Because of these developments, the university sector is now more
reliant on student contributions than it was in the years before
the Second World War, when the system was quite small and the
Commonwealth was not involved. This is illustrated in the table
below.
Table 1: University
Income by Source, 1939 2001
|
1939
%
|
1951
%
|
1961
%
|
1971
%
|
1981
%
|
1987
%
|
1991
%
|
1994
%
|
1996
%
|
1998
%
|
2001 %
|
HECS
|
|
|
|
|
|
|
11.7
|
12.8
|
11.6
|
17.2
|
17.4
|
Student Fees and Charges
|
31.7
|
16.7
|
8.6
|
10.4
|
0.0
|
2.3
|
9.8
|
10.8
|
13.4
|
16.0
|
19.8
|
Commonwealth (excl. HECS)
|
0.0
|
20.5
|
43.9
|
43.0
|
89.3
|
82.9
|
61.7
|
60.1
|
56.7
|
50.8
|
43.8
|
State Governments
|
44.9
|
43.7
|
36.3
|
35.7
|
0.8
|
1.0
|
5.1
|
1.9
|
1.4
|
1.1
|
1.7
|
Other (a)
|
23.3
|
19.0
|
11.2
|
10.8
|
9.9
|
13.7
|
11.7
|
14.4
|
16.9
|
14.9
|
17.5
|
(a) 'Other' includes donations and bequests, investment income,
other research grants and contracts.
Sources: Selected Higher Education Statistics 1992;
Selected Higher Education Finance Statistics (annual);
National Report on Australia's Higher Education Sector,
1993, p. 75.
The 1996 Higher Education
Budget Statement
The Higher Education Budget Statement of 9 August 1996
introduced some major changes to funding arrangements for higher
education. These were as follows:
- reductions in operating grants equivalent to 1 per cent in
1997, a further 3 per cent in 1998, and a further 1 per cent in
1999 (a cumulative 4.9 per cent reduction by 1999). It should be
noted that these reductions were to the forward estimates, rather
than to the current grants, and that the 1997 operating grants were
actually higher than those for 1996. The estimated reductions to
outlays were $23.4 million in 1996 97, $118.5 million in 1997 98,
$215.5 million in 1998 99 and $266.2 million in 1999 00. The
reductions were applied through a fixed proportional reduction to
the forward estimates of the operating grant of each
institution.
- introduction of an increased, differential rate of HECS
contribution to apply to students undertaking new courses after 1
January 1997.
- lower repayment thresholds for HECS. The new repayment levels
were applied to all those with an existing HECS debt as well as new
students. The reductions to Commonwealth outlays from this change
were estimated at $229.9 million in 1997 98, $269.7 million in 1998
99 and $317.8 million in 1999 00.
- removal of the prohibition on tuition fees for Australian
undergraduate students. This only applied to students above the
target number of Commonwealth-funded places, with the number of
fee-paying Australian undergraduates being limited to 25 per cent
of the total enrolment of Australian undergraduates in any one
course.
- end of the Discretionary Funding Programme. The Quality
Assurance Programme and the National Priority (Reserve) Fund were
merged into the Discretionary Funding Programme in December 1995
following decisions in the 1995 96 Budget. This was justified on
the basis that the objectives of the programmes supporting quality
and innovation across the higher education sector had converged in
recent years. Funding for the former programmes totalled $116.4
million in 1995, which the former Government reduced to $100.8
million in 1996 with further reductions projected for the remainder
of the triennium. The 1996 97 Budget ended the programme (for an
estimated saving of $84.6 million in 1996 97).
Abolition of
NBEET
The Coalition Government's 1996 Higher Education Election Policy
stated that it would wind up the National Board of Employment,
Education and Training (NBEET), while maintaining the Higher
Education Council as an independent body reporting directly to the
Minister. The Australian Research Council (ARC) was also to be
restructured as an independent body.
In June 1996 the new Government introduced the Employment,
Education and Training Bill 1996 to abolish NBEET. Background on
this legislation can be obtained from the Bills
Digest. The Bill was also the subject of a Senate Committee
report and ultimately lapsed with the Parliament. Although the Bill
was not passed, from mid-1996 the Board and three Councils wound up
their activities in accordance with a request from the Minister.
The Higher Education Council and the Australian Research Council
continued to operate, with the Board's activities being confined to
supporting these Councils. Appointments to the Board and Councils
(with the exception of the ARC) were not made as positions fell
vacant.
In March 1999 the Government again introduced legislation to
abolish NBEET and its Councils, with the exception of the Australian Research Council, stating
that its preference was for advice to flow directly to the
minister, rather than being filtered through NBEET. The Employment,
Education and Training Amendment Act (No.10 of 2000) received
assent on 15 March 2000.
The Annual Reports and other publications of NBEET are available
from this
page.
The West Review and
Proposed Reforms to the System
The Government established a major independent review of higher
education policy with the focus set on the future of the sector
over the next 10 to 20 years. The review was chaired by Mr Roderick
West and in April 1998 published its final report, Learning for
Life. The report's recommendations included the following:
- public funding to be directed through the student rather than
the institution via the medium of a lifetime individual entitlement
of public funding for post secondary education
- greater flexibility for institutions to set tuition fees and to
determine student numbers
- student access to income contingent loans
The Report of the review, submissions, media releases and other
documents can be accessed from this page.
The review process culminated in a
Cabinet submission, which included the following proposals:
- abolition of current controls over the number of places a
university can offer, allowing students greater choice over where
they study
- a universal tuition subsidy which follows the student to
accredited higher education courses offered by quality-assured
public and private providers
- student fees for tuition set by providers
- a universal loans scheme to help students pay tuition costs,
with a real rate of interest and repayable through the tax system
on an income contingent basis
Dr Kemp's former higher education adviser, Mr Andrew Norton, has
stated that the Minister 'thought the funding and regulatory system
so bad it needed to be almost entirely scrapped, but regrettably,
when he put his proposal to Cabinet they decided against any
structural changes'. The Norton article is available in the Autumn
2000 issue of Policy, the journal of the Centre for Independent Studies, which
also contains a number of other articles arguing for a more
deregulated system.
On 18 October 1999 Dr Kemp issued a media release 'Higher
Education Funding', in which he re-affirmed that the structure
of tertiary education would remain unchanged.
Research
Funding Reforms
In December 1999 the Government released Knowledge
and Innovation: a policy statement on research and research
training. The main features of this White Paper
were:
- an enhanced role for the Australian Research Council (ARC)
- performance based funding for research and research training in
universities
- a new quality verification framework
- a collaborative research programme for rural and regional
communities
The Minister issued a
media release on the White Paper on 21 December 1999.
The
AVCC has responded to the statement, arguing 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.
The White Paper was informed by several reviews of DETYA
research programmes and processes, namely:
The White paper decisions were implemented by the
Australian Research Council Act 2001 and the
Australian Research Council (Consequential and Transitional
Provisions) Act 2001. The legislation was the subject of a
report from the Senate Employment, Workplace Relations, Small
Business and Education Legislation Committee in November 2000.
In January 2001 the Government announced its innovation policy,
Backing Australia's
Ability. This contained a large number of funding
initiatives relating to research programmes, including:
Descriptions of current DEST higher education research
programmes can be obtained from this
page.
Industrial Relations and Funding
On 9 November 1999 the Minister issued guidelines for the
Workplace Reform Programme. The programme provided up to $259
million over three years to fund pay rises for university staff if
the universities implemented significant reforms in workplace
relations arrangements, management and administration. Guidelines,
grants and media releases relating to the programme can be obtained
from
this page.
The Australian Higher
Education Industrial Association was established in 1990 by
higher education institutions to protect their industrial relations
interests at State and Federal levels. Its web site provides access
to a number of DETYA documents on the Workplace Reform
Programme.
The
Financial Situation of Universities
The Commonwealth monitors the financial situation of
universities through assessments of their audited financial
statements. Since 1997 it has contracted the accounting firm
Deloitte Touche Tohmatsu to analyse these statements.
The initial report Financial
Analysis of Universities' Financial Statements, 1993
1996 is available as a separate publication. The
results of subsequent analyses have been reported in the section on
'Prudential Assurance' in the annual higher education triennial
funding reports. These are available from this page.
Financial data for the universities is also reported in the
annual Selected Higher Education Finance Statistics, the
most recent of which relates to 2001 and is available online from
this
page. It provides a breakdown of revenue and expenditure for
each higher education institution.
On 18 September 2002 the Senate referred an
inquiry into the financial state of universities to the Senate
Employment, Workplace Relations and Education References
Committee.
Quality Assurance
Framework
In December 1999 the
Minister announced the establishment of a new quality assurance
framework for the higher education sector. The Australian University Quality
Agency was established in March 2000 as an independent body to
audit institutions and issue public reports. The Commonwealth,
States and Territories consider the reports of the Agency in
determining the accreditation status of higher education
institutions and their eligibility for public funding.
Information about the framework and links to relevant reports
can be obtained from this
page. A history of
the Commonwealth role in this area is also available.
Statistics, Papers and
Other Sites of Interest
Funding
Statistics
The Higher
Education Report for the 2003 to 2005 Triennium has
many tables giving funding levels for individual programs for the
current triennium.
The
funding tables provided by the Australian Vice-Chancellors'
Committee (AVCC) are particularly useful because they present
figures for the period 1982 to 2005 adjusted for cost factors.
There are also a number of tables which contain per student funding
figures. This permits a more accurate assessment of the actual
resources available to higher education institutions and funding
trends over time. The AVCC publication,
Key Statistics on Higher Education (November 2002) reproduces
some of this data. The following table summarises the AVCC's table
showing Commonwealth resources for higher education since 1983, in
constant prices.
Table 2: Commonwealth
Resources available to Higher Education Institutions, 1983 2005
(2003 prices)
Type of grant
|
1983
$m
|
1988
$m
|
1996
$m
|
2000
$m
|
2001
$m
|
2002
$m
|
2003
$m
|
2004
$m
|
2005
$m
|
Operating Grants
|
3496
|
3878
|
5623
|
5576
|
5629
|
5706
|
5685
|
5694
|
5704
|
Research Programmes
|
89
|
121
|
440
|
479
|
474
|
563
|
690
|
755
|
829
|
Capital Programme
|
59
|
117
|
42
|
42
|
42
|
42
|
42
|
42
|
42
|
Total
|
3644
|
4116
|
6105
|
6098
|
6144
|
6311
|
6417
|
6491
|
6576
|
Source: AVCC,
Funding Tables, Table 1. Operating grants include the capital
roll-in, Research Training Scheme, and the Institutional Grants
Scheme (excluding small grants). Research programmes includes ARC
grants.
DEST, Selected Higher Education Finance Statistics
contains a breakdown of revenue and expenditure for each higher
education institution. The most recent issue, relating to 2001, can
be downloaded from this page.
DEST, Selected Higher Education Research Expenditure
Statistics contains a breakdown of research expenditure, by
institution, field of research, type of activity, source of funds
and socioeconomic objectives. The most recent issue, relating to
2000, can be downloaded from this page.
Other data in this area is available from the Australian Bureau of
Statistics, Research and Experimental Development Australia
1998 Higher Education Organisations (April 2000), although
this is not available free online.
Appendix A of Statement
6 of Part 3 of Budget Strategy and Outlook 2003 04
(Budget Paper No.1) contains expense estimates by function. This
provides a figure for the Commonwealth's total higher education
expenses for each year, 2001 02 to 2006 07. Budget papers for
earlier years can be downloaded from this page.
Course Costs
The actual unit costs of higher education courses vary according
to the institution, discipline and the level of the course. The
Relative Funding Model provided one method of calculating these
costs. The paper by Sally Borthwick, Overview of
Student Costs and Government Funding in Post-compulsory Education
and Training (October 1999) revisited this approach
to derive notional teaching unit costs for 1997.
An indication of the relative costs of courses can also be
obtained from the annual
HECS
and Fees Manual published by DEST. This contains indicative
minimum course fees for fee-paying overseas students. Institutions
are required to charge fees designed to recover the full economic
costs of a course with regard to teaching services, administration
and capital facilities, including overheads and common services
such as libraries. The indicative minimum course fees approximate
these costs for three broad ranges of courses. The following table
provides these figures for the 1995 2003 period.
Table 3: Course Costs, 1995
2003 (approximate)
Categories of On Campus
Courses
|
Type of Cost
|
1995
$
|
1996
$
|
1997
$
|
1998
$
|
1999
$
|
2000
$
|
2001
$
|
2002 $
|
2003 $
|
Law, Economics, Business,
Humanities, Maths, Social Science, Education, Computing,
Architecture, Design, Nursing Arts, Science (non laboratory
based)
|
Recurrent
|
6 540
|
6 630
|
6 800
|
6 930
|
7 030
|
7 140
|
7 270
|
7 420
|
7 580
|
Capital
|
1 250
|
1 270
|
1 310
|
1 330
|
1 350
|
1 380
|
1 400
|
1 430
|
1 460
|
Total
|
7 790
|
7 900
|
8 110
|
8 260
|
8 380
|
8 520
|
8 670
|
8 850
|
9 040
|
Science (laboratory based),
Paramedical, Engineering, Pharmacy, Agriculture
|
Recurrent
|
9 860
|
9 990
|
10 260
|
10 450
|
10 610
|
10 770
|
10 960
|
11 200
|
11 440
|
Capital
|
1 770
|
1 10
|
1 850
|
1 890
|
1 920
|
1 950
|
1 990
|
2 030
|
2 070
|
Total
|
11 630
|
11 800
|
12 110
|
12 340
|
12 530
|
12 720
|
12 950
|
13 230
|
13 510
|
Medicine, Dentistry, Veterinary
Science
|
Recurrent
|
13 630
|
13 810
|
14 190
|
14 440
|
14 670
|
14 900
|
15 160
|
15 490
|
15 830
|
Capital
|
2 400
|
2 440
|
2 510
|
2 550
|
2 600
|
2 640
|
2 680
|
2 740
|
2 800
|
Total
|
16 030
|
16 250
|
16 700
|
16 990
|
17 270
|
17 540
|
17 840
|
18 230
|
18 630
|
Source: DEST, HECS and Fees Manual (annual). It should
be noted that the annual increases in these figures are reflections
of movements in the Higher Education Cost Adjustment Factors index
maintained by DETYA and not the result of annual surveys.
Other Papers
Bob Lenahan, Gerald Burke and Hing Tong Ma,
Selected Asian Economies and Australia: an overview of educational
expenditure and participation (1998). This report was
commissioned by DEST. Countries examined were China, Hong Kong,
Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea,
Taiwan, Thailand and Vietnam.
Tom Karmel,
Financing Higher Education in Australia (1998). This is a DEST
paper prepared for an international conference. It contains a brief
history of funding and a discussion of the current pressures on
funding structures.
Paul W. Miller and Jonathon J. Pincus,
Funding Higher Education Performance and Diversity (December
1997). The proceedings of a conference to discuss university
financing.
Ken Back, Dorothy Davis and Alan Olsen,
Comparative Costs of Higher Education Courses for International
Students in Australia, New Zealand, the United Kingdom, Canada and
the United States (September 1997). This report looks at
tuition fee costs, living costs and total costs in the five
destination countries.
Phil Aungles, Tom Karmel and Tim Wu, Demographic
and Social Change: implications for education funding (May
2000). A DEST paper containing funding projections for the next
twenty years.
Sally Borthwick, Overview of
Student Costs and Government Funding in Post-compulsory Education
and Training (October 1999). Covers government
funding, unit costs, the cost to individuals and public subsidies
to students.
Overseas Sites
The Department for
Education and Skills administers education policy in the United
Kingdom. In January 2003 the Government released the White Paper,
The
Future of Higher Education. The Higher Education Funding Council of
England is the body responsible for the distribution of grants
to higher education institutions in England. There are similar
bodies in Wales
and Scotland. Universities UK represents
the interests of institutions.
The United States Department of
Education does not directly fund American colleges
and universities. Its focus is on promoting excellence in education
by collecting and
sharing information and on helping families pay for
college.
The New Zealand Ministry of
Education site has a
Tertiary Education page with links to policy
documents and other information. The Government is currently
undertaking significant
higher education reforms.
In Canada education is the responsibility of the provinces and
territories. The
Council of Ministers of Education has a page on post-secondary education
with links to research documents and other publications.
The OECD Education
page provides access to reports, reviews and other documents.
Comparative statistics can be obtained from
this OECD page.
The International
Comparative Higher Education Finance and Accessibility Project
is a three year, Ford Foundation-financed project to study the
worldwide shift in higher education costs from taxpayers to
students. The project is directed by D. Bruce Johnstone at the
State University of New York at Buffalo. The site compares tuition
fees and other student costs in various countries, including
Australia.
For copyright reasons some linked items are only
available to Members of Parliament.
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