James Griffiths and
Marilyn Harrington, Social Policy
Government policies to increase participation in higher and vocational education and training have had mixed results. Three main areas of concern have emerged: containing the cost to government, ensuring quality education and reducing student debt.
Increasing access to tertiary education
The tertiary education sector comprises higher
education (university) and vocational education and training (VET). It is a
diverse sector, including public and private universities, state and territory government
technical and further education (TAFE) institutes and private VET providers.
Since 2007, significant government efforts have
been made to increase participation in the tertiary education sector. In higher
education, this has been through the creation of an uncapped demand-driven
system for bachelor-degree places. This means, in part, that the Government no
longer places limits on the number of undergraduate students public
universities can enrol. In VET, this has been through the introduction of
contestable funding (where public and private providers compete for funds), and
by expanding student loans to the VET sector through the VET
The graph below shows the number of new higher
education students has increased steadily since the uncapped demand-driven
system was progressively implemented from 2009.
The spikes in new VET students shown in the graph may
be partly explained by the progressive implementation of VET reforms from 2009
to 2012. However, since 2012, the number of new VET students has noticeably
fallen. Peter Noonan from the Mitchell Institute has attributed
the fall to declining funding, VET competition with universities, increased
training fees and ‘a rationalisation of programs—particularly at TAFEs—that had
moved some courses further away than many students were prepared to travel’.
Figure 1: Commencing domestic students in tertiary
education, 2007 to 2014
commencing students are mostly domestic students. Source: Parliamentary
Library, using data from the Department of Education and Training (Higher Education Data Collections) and National
Centre for Vocational Education Research (Government-funded students and courses) online
Containing the cost of tertiary education
Costs to government
The increases in the number of government-supported
higher education and VET students have been accompanied by significant increases
in government expenditure. In higher education, the Review of the Demand Driven Funding System reported that uncapping bachelor places had
increased the cost to government from $4.1 billion in 2009 to $6.1 billion
in 2013. The Review estimated that the cost would reach $7.2 billion by
2016–17. In VET, the most recent VET
FEE-HELP statistical report shows that the
value of loans increased from $25.6 million in 2009 to $1.8 billion
In an attempt to contain costs, the Government
changes to higher education in the 2014–15 Budget, including an average
20 per cent reduction in student subsidies. Although these measures have
not been legislated, their projected savings continue
to appear in the budget forward estimates.
The Government’s recent discussion paper, Driving Innovation, Fairness and Excellence in Australian Higher Education reconsiders
the 2014–15 budget proposals and presents other options for reform. These options
include reductions in government subsidies, changes to the Higher Education
Loan Program (HELP) and limited fee deregulation for ‘flagship courses’, whereby
institutions could be given the freedom to set fees for ‘a small cohort
of their students enrolled in identified high quality, innovative courses’. Notably, the Government has ruled out fee deregulation across the
entire higher education sector as a means to contain costs.
The options proposed in the discussion paper have met
with a mixed response. The Group of Eight (Go8) and the
Regional Universities Network, for instance, oppose
the idea of flagship degrees, concerned that they would create a two-tier
Vocational education and training
The Mitchell Institute’s response
to the Government’s discussion paper, Redesigning
VET FEE-HELP, suggests that the expansion of student loans to the VET
sector has led to cost-shifting by some
of the states for some courses. The states and territories have been able to reduce the number of
places they subsidise, with students able to access Commonwealth VET FEE-HELP loans
Ensuring quality in tertiary education
The quality of the student cohort is an issue in
higher education. More students with lower Australian Tertiary Entrance Ranks (ATARs)
are being accepted into university. Coinciding with the introduction of the
uncapped demand-driven system, the share
of offers to applicants with ATARs of 50 per cent or less
increased from 1.6 per cent (3,607 applicants) in 2012 to
4.4 per cent (9,723 applicants) in 2016.
To address concerns
that students are being accepted into courses for which they are not academically
prepared, the Minister for Education and Training asked
the Higher Education Standards Panel (HESP) to
provide advice about ways to improve the transparency of higher education
student admissions policies. The Go8 universities support
the HESP’s recommendations, including the proposal to publish minimum, median
and maximum ATARs for every degree. The Go8 has also suggested the publication
of student progression rates.
Vocational education and training
In VET, the issue of quality relates to both
students and providers. Contestable government funding has created an incentive
for new providers to enter the VET market, although the evidence on whether
this has occurred is mixed.
Also, the Victorian Registration and Qualifications Authority recalled almost 10,000 VET qualifications in 2014
and 2015 ‘because of concerns about poor training and standards breaches’. A recent Senate inquiry also examined the private
VET sector and found the national regulator, the Australian Skills and Quality
Authority (ASQA), was struggling to adequately regulate the sector, protect the
rights of students and act firmly and quickly to stamp out abuses.
rates of VET course completions, in part due to the suitability of students
for courses, is also an issue for the sector. In response, the Government has implemented new
minimum literacy and numeracy standards for VET FEE-HELP students and made
other amendments to the scheme.
Reducing tertiary student debt
The Grattan Institute’s report, Doubtful Debt: the
Rising Cost of Student Loans, shows that the proportion of unpaid student
loan debt is increasing. It estimated that by 2017 the Government will have $13.0
billion in loans that it does not expect to collect (known as ‘doubtful debt’).
One reason for this debt is the repayment threshold—some debtors will never
earn more than the income threshold or will do so for too few years to repay
all their debt. The major cause of the amount of doubtful debt, however, is
that HELP debts in deceased estates are written off.
The Government’s proposal to reduce the current repayment threshold
from $54,869 to $50,638 has bipartisan support and there is also some support for collecting HELP debts from deceased
A major concern for the VET sector is providers who
have used unethical
sales techniques to sign up students to a VET FEE-HELP loan. These students
may have no hope of repayment. The Government’s proposals in its discussion
VET FEE-HELP, are intended to redress unethical provider practices.
Meanwhile, the Australian Competition and Consumer Commission has launched legal
action against five VET FEE-HELP providers.
Future directions for tertiary education
It is not clear if, or how, the higher education
system will be changed based on the options presented in the Government’s
discussion paper. The Go8 asserts
that the uncapped demand driven system has ‘harmed the economy, diminished the
value of higher education, and created the false view that anyone
without a degree is a “failure”’. However, there appears to be
political appetite to restore caps on university places.
The process of VET reform has already begun with the Government’s recent
changes to VET
FEE-HELP. However, the future of the
scheme is still under consideration as canvassed in the
Government’s recent tertiary education discussion papers. A new National
Partnership (NP) with the states and territories will also have to be
negotiated to replace the existing (NP) Agreement on Skills Reform, which is scheduled
to expire in 2017. The sustainability of TAFEs also remains an
J Griffiths and M Harrington, ‘Tertiary education ’, Budget review 2016–17, Research paper series, 2015–16, Parliamentary Library, Canberra, 2016.
P Noonan, Participation in tertiary education in Australia: policy imperatives and scenarios
, Mitchell Institute policy paper, 2/2016, Mitchell Institute, Melbourne, 2016.
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