Report
Introduction
1.1
For
some time, the Senate has harboured concerns about the approach of the
Government to the timely provision of information as requested by the
Parliament. These concerns go to the propensity of government ministers to
respond to requests, in particular to requests for specific financial and other
data related to Commonwealth expenditure, by citing the principle of
‘commercial in confidence’. On this basis, requests are denied.
1.2
Senate
standing order 164 can be invoked in an attempt to have documents tabled. The
standing order provides for the Senate to make an order for documents to be
produced by the Leader of the Government and laid on the table. The documents
so produced are known as returns to order. This report arises from the
Government’s refusal so far to comply with this order.
1.3
Odgers
Australian Senate Practice says that:
Refusals
by the government to comply with an order have been rare. Refusal is usually based
on the argument that to produce the document would not be in the public
interest.[1]
1.4
However,
in the past, ministers have offered several other grounds. These have included
an appeal to confidentiality and, more recently, under the current government,
the resort to the concept ‘commercial-in-confidence’ has become increasingly
common.
1.5
In
1999, the government refused to produce information on higher education
funding, citing three grounds including ‘commercial confidentiality’. The
Clerk’s advice questioned the grounds put forward, saying that they were
‘over-extended and confused the claim’.[2]
1.6
It
is open to the Senate to take various forms of action in circumstances where a
minister refuses to provide documents in response to an order. The Senate may,
if it so determines, accept the justification given. Or the Senate may censure
the minister. At the most extreme, the Senate could treat a refusal to provide
documents as contempt of the Senate[3].
1.7
While
this inquiry deals specifically with a particular instance where the appeal to
confidentiality has been invoked to avoid the provision of documents to the
Parliament, there is a more general issue at stake: the grounds on which the
Senate finds it acceptable for a Minister to refuse to comply with an order of
the Senate. This is a question relating to the concept of executive privilege.
1.8
In
the Senate Standing Orders, the principle of confidentiality is mentioned as a
possible justification for refusing to table a document only when a minister is
quoting orally from a particular document, and an order is made for the
document to be tabled (Senate Standing Order 168(1)). Standing Order 164, which
deals specifically with conditions applying to Returns to Order, does not
specify the grounds on which a minister may refuse to comply. Precedent in this
area suggests, however, that the Senate is not usually satisfied with an appeal
to confidentiality per se. On the question of commercial grounds
(as opposed to confidentiality grounds) for the withholding of documents, Odgers
cites an occasion in 2000 when the Senate allowed the withholding of certain
material associated with contracts entered into by Telstra, on the basis that
the material was ‘genuinely commercially sensitive’.[4] Odgers does not note any
further cases where this reason has been successfully invoked.
1.9
The
Government, in refusing to table the information requested in the instance
occasioning the current inquiry, also justified its action by referring to the
fact that, in collecting the same information from universities, it had made an
undertaking to them to maintain confidentiality of the data supplied. There do
not appear to be precedents for the Senate accepting as adequate grounds for
refusal such undertakings regarding confidentiality.
1.10
Thus
it is argued by the Opposition senators that the use of the principle of
‘commercial-in-confidence’, and, secondly, the reference to undertakings to
maintain confidentiality of data, are not of themselves acceptable grounds for
the Minister’s refusal to table documents as ordered.
1.11
In
its refusal to table the information as ordered by the Senate, the Government
also cited other grounds. These, too, are worthy of examination.
1.12
One
action available to the Senate in these circumstances is to refer the matter of
the government’s refusal to comply with the order to a Senate committee. There
are precedents in this regard. Because the Senate has become increasingly
disturbed by the government’s propensity to cite commercial confidentiality in
connection with its own dealings with Commonwealth agencies and
Commonwealth-funded agencies and institutions – such as universities – it
decided in the case of the current inquiry to refer the matter of such a
refusal to the Employment, Workplace Relations and Education References
Committee.
Background and key issues
1.13
This
inquiry arises from a request of the Senate lodged on 21 August 2002 for a Return
to Order of six categories of information.[5]
This information relates to the financial position of Australian universities
as assessed by the Department of Education, Science and Training. The
Government has refused to provide this information.
1.14
While
Senator
Ian Campbell,
representing the Minister, the Hon Brendan Nelson MP, tabled limited material
related to two of the categories of information requested, the Government has
refused to release further data on the basis that it would be inappropriate to
do so. In a letter to Senator Carr, Dr Peter Shergold, then
Secretary of DEST, argued that the information contained in these requests was
intended as a basis for policy advice to the Minister, and was not provided by
universities in order to comply with legal requirements under the Higher
Education Funding Act. He argued, therefore, that there was ‘no obligation in
the Act to treat any information provided as public or to disclose it to the
Parliament.’ He further stated that information in the documents requested by
the Senate was provided by universities to DEST on the basis that
confidentiality would be observed, and in return the Department ‘also makes it
clear to the universities that the Department’s own financial analysis of this
data will be regarded as commercial in confidence.’[6]
1.15
In
response to the Government’s refusal to table further information, the matter
was referred to the Senate Employment, Workplace Relations and Education
References Committee on 18 September 2002.
1.16
While
there are no specific terms of reference for this inquiry, the key issues to be
addressed relate to:
- the
financial standing of Australian universities, insofar as this can be gathered
from information before the Inquiry; and
- whether
it is appropriate and justifiable for Government to withhold the information
contained within this request, and whether financial information collected by
DEST from universities, and DEST analysis of individual universities’ financial
standing and projections on the same, should appropriately be viewed as
commercial-in-confidence and withheld from public scrutiny.
1.17
The
following sections summarise the
information provided to the inquiry in terms of these two key issues.
The financial standing of Australian universities
1.18
The
Government has vigorously rejected claims made in the Senate that the
university system is in crisis[7].
The submission provided by DEST to this inquiry asserts that the ‘financial
performance and financial position of the higher education sector remains
sound’. Evidence provided to support this claim points to increased revenue,
positive liquidity, low levels of borrowing (by private sector standards) and a
significant level of assets.[8]
1.19
Data
for individual universities is not cited to support this claim. Rather, the
DEST analysis is based on the aggregation of data for all universities that
receive funding under the Higher Education Funding Act 1988. The
Department does not acknowledge or address any differences between the
individual institutions which comprise the higher education sector, beyond
stating that the number of universities posting a deficit averaged
approximately five per year between 1993 and 2002, and that a deficit alone is
not an indicator of a financial crisis.[9]
1.20
The
figures published by DEST for each institution (published in statistical
publications, such as Finance 2001: Selected Higher Education Statistics), and
other data collected through the Senate Estimates process, show that the
financial strength of individual universities varies substantially.
1.21
As
Table 3 (overleaf) shows, three of the 42 institutions for which data is
recorded captured nearly half the operating profit of the sector in 2001. Seven
universities – Sydney, Melbourne, Queensland, Western Australia, ANU, Monash
and UNSW – which were in the top eight in terms of operating result and
operating revenue in 2001 had been in that position consistently for the past
several years. Not only does a group of the largest and wealthiest universities
dominate the sector in terms of financial success, but its position of strength
appears to be consolidating. The obverse side of this is that a large number of
universities account for only a small percentage of the surplus. A number of
institutions operate uncomfortably close to a deficit and some have for a time
been in deficit.
Changing cost drivers in higher education
1.22
The
funding gap between institutions is linked to emergent cost
drivers. The changing environment in which universities operate has demanded
substantial investments in capital infrastructure, staffing and commercial
activity. For example:
Universities
have had to increase their investment in information technology and e-learning
environments to meet the learning expectations and needs of students and
communities. Rapidly obsolescent technologies increase depreciation costs.
According to former DEST Secretary, Dr Peter Shergold, net investment in capital assets –
including buildings and IT infrastructure – has increased by $4.7billion since
1996.[10]
1.23
The
introduction of the Research Training Scheme, and a concomitant capping of the
total funded postgraduate student load, has adversely affected newer
universities seeking to grow postgraduate research student capability. Between
1998 and 2002, a total of 455 research student places disappeared from ten
universities. The main losers have been newer, regional and outer-metropolitan
universities such as University of Western
Sydney,
University of New England, James Cook University and the University of Canberra. Therefore,
in order to maintain critical mass in areas of research excellence,
universities are investing in building research capacity from discretionary
funds and seeking international research student markets.
1.24
Competition
for education and research markets has also increased the need to develop staff
capability and attract ‘stars’. This is a substantial cost driver in new
universities trying to build critical mass in areas of teaching and research
excellence.[11]
1.25
Since
1996, the indexation of university operating grants has been inadequate and
inappropriate. All salary increases have been funded from within universities’
discretionary funding. Indexation of the proportion of operating grants
notionally tagged to salaries is pegged to movements in the Safety Net
Adjustment: in other words, to the salary movements of the lowest paid workers.
David Phillips and Gerald Burke argue that
if Average Weekly Earnings increases were applied to the salary component of
operating grant indexation, it would have delivered an additional $500m in
2001.[12] At the same
time, the proportion of indexation tagged to infrastructure – measured by the
CPI – has not kept pace with cost increases in equipment and library
infrastructure caused by the declining value of the Australian dollar. Since
October 1996, the Australian dollar has declined relative to the US by 17.6 per
cent. It must be remembered, however, that during much of the intervening
period the decline was actually much higher, being above 30 per cent.
1.26
The
effect of emergent cost drivers is reflected in increased borrowings. Between
1996 and 2001 (latest figure available), sectoral borrowings increased by 121
per cent. According to DEST, this level of borrowings is low by private sector
standards, and poses no cause for concern. Unlike the situation in the private
sector, the majority of universities’ assets are fixed and directly linked to
operating use; and are therefore unable to be realised. Therefore, the actual
level of assets against which universities could borrow would be substantially
lower than that shown by a straight debt-to-revenue calculation. DEST has not
calculated borrowings against realisable assets.[13] In fact, DEST does not have
detailed data on the realisable or liquid
assets of either individual universities, or of the system as a whole.
1.27
As
is the case for liquidity and operating result, the actual level of borrowings
varies substantially across the sector. Table 1 provides detail for 2002,
showing that, while eleven public higher education institutions had no external
borrowings in that year, a further eleven had external debt exceeding $20
million. One of them, the University of Melbourne, had
accumulated debt of over $148 million. The committee notes, also, that the
sector-wide quantum of external debt more than doubled between 1996 and 2002.
Some universities, in financially sound circumstances, might be taking
advantage of low interest rates to borrow to finance capital works: in the case
of others, however, the escalation in borrowing implies that they may be
struggling in an increasingly deregulated, market-oriented policy environment.[14]
Table
1 – Universities’ external debt, as at 31 December
2002
($ 000)
University of Melbourne
|
148,304 |
Monash University
|
83,130 |
RMIT
|
50,000 |
University
of Technology, Sydney
|
40,000 |
Deakin University
|
31,812 |
Edith Cowan
University
|
29,819 |
Curtin University of
Technology
|
28,198 |
Griffith University
|
25,769 |
La
Trobe University
|
25,513 |
James Cook University
|
20,564 |
University of Notre Dame
|
20,445 |
Macquarie University
|
16,884 |
University of South
Australia
|
15,000 |
University of New
England
|
11,171 |
Australian Catholic University
|
10,667 |
Murdoch University
|
10,256 |
Victoria University of
Technology
|
7,644 |
Swinburne University
|
6,500 |
University of Wollongong
|
5,049 |
University
of the Sunshine Coast
|
4,427 |
University of Western
Sydney
|
4,077 |
University of Canberra
|
4,000 |
University of Ballarat
|
3,495 |
Flinders University
|
3,090 |
Northern
Territory
University
|
2,358 |
Queensland University of
Technology
|
858 |
University of Adelaide
|
100 |
University of Western
Australia
|
40 |
Central Queensland University
|
2 |
Charles Sturt University
|
0 |
Southern
Cross University
|
0 |
University of New South
Wales
|
0 |
University of Newcastle
|
0 |
University of Sydney
|
0 |
University of Queensland
|
0 |
University of Southern
Qld
|
0 |
Australian
Maritime College
|
0 |
University of Tasmania
|
0 |
Australian National University
|
0 |
|
|
Total
|
609,172 |
1.28
A
recent report by the firm Standard and Poor’s Australian universities – a credit
rating perspective July 2003 notes that, in the authors’ view, the
credit differentiation between Australian universities is likely to widen as a
result of the introduction of the Government’s higher education reform package,
Backing Australia’s Future. The report notes:
With
fee income becoming a greater proportion of universities’ income in recent
years. The credit profile within the sector is becoming more diverse,
reflecting differences in academic reputation, research base, student demand,
and income diversity. The outcome of the federal government’s review of higher
education announced in May 2003 will give further impetus to these trends. With
greater scope to earn more fees from domestic undergraduate students,
universities with high reputations and strong student demand will be in a
position to boost their financial profile.[15]
1.29
The
report goes on to point out that much of the financial assets of universities
are encumbered or restricted in some way.[16]
Standard and Poor’s says that it is essentially liquid or realisable assets that
should be used in assessing the capacity of an institutions to carry debt. In
an answer provided to the EWRE Committee examining the Estimates, the
Department essentially admitted that it had little idea of the level of unencumbered
financial assets enjoyed by each university.[17]
1.30
Between
1997 and 2000, the Commonwealth Government imposed a 6 per cent cut on forward
estimates relating to university operating grants. The impact of this decision
varied throughout Australia. Because NSW, WA and Queensland at the time
had some growth factored into forward estimates, in those states the actual
impact of the cuts, in constant dollars, was not as severe as that in states
such as Victoria and South
Australia,
where no allowance for growth had been included. Indeed, in Queensland the
impact of a 6 per cent cut on forward estimates left the state with a real
increase of 8.85 per cent in operating grants between 1996 and 2001 (albeit
much reduced over the growth level previously projected), compared with a real
decline in Victoria of 5.48 per cent.[18]
Table
2 – Real cut in operating grant value, 1996-2001
|
Operating
Grant decline
1996 - 2001: %
|
Victoria
|
-5.48%
|
NSW
|
-1.38%
|
ACT
|
-2.56%
|
NT
|
-2.16%[19]
|
Qld
|
+8.85%
|
SA
|
-5.01%
|
Tas
|
-5.26%
|
WA
|
+2.01%
|
Multistate
|
+6.4%
|
Australia
|
-2.08%
|
1.31
To
varying degrees, therefore, universities have had to restructure their
operations in response to the changing operating and funding environment,
although they have done this with little additional support from Government
and, in some cases, a real reduction in public funding.
1.32
Even
when data is aggregated across the sector, there is evidence that expenditure
has risen faster than income. According to data provided through the Senate
Estimates process, if operating result and operating expenditure are converted
to constant dollars, expenditure can be seen to have increased by 82 per cent,
while operating surpluses have fallen by 48 per cent.[20]
Capturing non-government income
1.33
The
funding gap between institutions reflects to some extent their relative
capacity to prosper within an increasingly market-driven environment. Publicly
available data shows that a relatively small number of universities – mostly
clustered within the Group of Eight - capture the lion’s share of commercial
income. As Table 3 below shows, three of the 42 institutions for which data on
revenue was recorded in 2001 captured 25 percent of all fee income. The top
three also accounted for 52 per cent of investment income, and 45 per cent of
the total profit.
Table
3 – Percentage of non-government revenue won by top three earners[21]
2001
|
Total
sectoral revenue $
|
Largest
shares (top three)
|
Fees
and charges
|
2,020,661,000
|
191,560,000
– UNSW = 9%
161,604,000
– Melbourne = 8%
144,089,000
– Monash = 7%
%
held by top three = 25%
|
Investment
revenue
|
302,641,000
|
60,012,000
–Sydney = 20%
49,233,000
– ANU = 16%
48,710,000
–Melbourne = 16%
%
held by top three = 52%
|
Total
operating revenue
|
10,202,101,000
|
739,923,000
– Sydney = 7%
714,827,000
– Melbourne =7%
663,421,000
- Monash = 7%
%
held by top three = 21%
|
Total
operating surpluses
|
500,356,000
|
88,791,000
– Sydney = 18%
74,060,000
– Melbourne = 15%
57,907,000
– ANU = 12%
%
held by top three = 45%
|
1.34
Data
received through Senate Estimates shows that while the total amount of cash and
investments held within the sector increased from $4.38 billion in 1999 to
$4.76 billion in 2001, an increase of $374 million. Melbourne University alone
recorded an increase in excess of $105 million. Meanwhile, cash and investments
held by eleven institutions fell.[22]
1.35
The
number of universities’ ‘controlled entities’ (companies in which a university
holds a controlling interest) has increased in recent years, as universities
seek to develop stronger lines of commercial activity. However, this is not
resulting in consistent increases in income flow. For instance, out of fifty
subsidiaries recorded in the Victorian Auditor-General’s June 2002 Report on
Public Sector Agencies, 27 recorded a loss. Combined surpluses totalled $24.96
million (including a $6 million surplus for Victorian College of the
Arts), with combined losses totalling $26.73 million (including a $7.8 million
loss for Monash University Foundation trust, and a $3.8 million deficit for
Melbourne University Private). Some of these losses may be due to recent
currency and stock market fluctuations; some to business plans that do not
anticipate a break-even result for some years. In institutions with small
operating margins, losses can have a significant impact on operating results.
1.36
Even
in a large and relatively wealthy institution, substantial losses within
controlled entities can have a significant effect on the parent entity and the
overall operating result.
Forecasts of institutions’ financial health
1.35 The
Senate’s intention in making its Order was to obtain data crucial to an
assessment of the current and future financial health of Australian
universities. This information is relevant to the Parliament’s understanding
and assessment of the Government’s proposed reform package for higher
education. Nevertheless, no data showing financial projections were provided by
the Government to this inquiry. On the other hand, the Minister has acceded to
the Senate’s request and provided the inquiry with forecast student load
figures.
1.36 Fifteen
universities provided letters to the inquiry relating to the release of DEST
financial projection data. Five universities provided the data requested, with
the exception of the minutes of meetings, between the institutions and DEST,
where financial projections were discussed.[23] No universities provided, as
requested, copies of the minutes of educational profiles meetings.
1.37
The
DEST submission states that the projections in question are developed as part
of ‘a forecasting exercise’, but states that ‘they are not intended to be, nor
does the Department purport them to be, an accurate assessment of the likely
future financial position of a university’. The universities’ most
commonly-expressed concern regarding the release of projections of universities’
financial standing related to its accuracy.
1.38
The
committee believes that the refusal of some universities to provide information
on
financial projections was probably based more on their reluctance to put
inaccurate data into the public domain than actually to withhold the
information. Professor Gavin Brown, the
Vice-Chancellor of the University of Sydney, for
instance, advised that he had no objection to the release of any financial
information about the university, including the DEST projections.
1.39
The
committee believes, however, that institutions of any kind would be reluctant
to publish information about them which they believed to be inaccurate and
misleading, perhaps damagingly so. Possibly for this reason other
vice-chancellors were rather less sanguine than Professor Brown about the
release of their own universities’ data. As the Vice-Chancellor of Flinders
University stated, material for the financial projections was prepared for the
Minister and DEST, but the University disagrees with the projections made by
the department on the basis of the information it provided. According to the
University, the resultant DEST projections misrepresent the financial position
of Flinders.
1.40
A
number of other universities implied that the same was true of their respective
DEST projections. Professor Roger Dean of the University of Canberra stated: ‘...we
and most other universities do not wish to release the material, largely
because the projections involved are grossly inaccurate.’ There are
implications here for the monitoring and compliance role of DEST and the
relationship of trust which should be maintained between DEST, the Minister and
the universities.
1.41
While
the comments of some vice-chancellors might suggest that DEST financial
projections are in some way methodologically flawed, this accusation would
presumably be denied by the department. There is, however, consensus between
universities and DEST as to the unreliability of DEST financial projections.
The absence of agreed and reliable short-term forecasting data raises questions
as to the basis of the Government’s confidence in the ongoing financial health
of the higher education sector. Given that neither DEST nor the government have
moved beyond aggregate figures in attesting to the financial health of Australian
universities, the basis for such confidence is not known.
Commercial-in-confidence and public disclosure
1.42
It
is reasonable to ask that, when the Government claims – as does DEST in its
submission to the inquiry – that the sector is ‘financially healthy’, that it
provide access to the information that forms the basis for this judgment.[24]
This is especially the case at a time when the Government is asking the
Parliament and the people to accept major structural reform of the higher
education funding system arising from the Commonwealth’s Review of Higher
Education as set out in Backing Australia’s Future – reforms that, if
implemented, will affect the financial operations of universities, the
governance of universities, and the costs borne by students.[25]
1.43
However,
as previously stated, the Government – through DEST submissions – claims that
the information provided by universities which forms the basis of its analysis
is provided on a ‘commercial in confidence’ basis: a claim usually restricted
to disclosure of private commercial arrangements. This would imply that the
Government expects the Senate, and the public, to agree to radical reforms to
the funding of universities, and other aspects of the financial environment in
which they operate, without any means of testing its claims that the system as
a whole is currently financially sound – in terms of its capacity to withstand
the effects of the proposed reforms.
1.44
More
crucially, while the Government admits that the reforms would lead to
differential financial impacts upon individual institutions, it has refused to
allow open scrutiny of the current circumstances of individual universities, so
that the potential impact of the changes can be assessed.
1.45
Australian
universities are in an anomalous position. The National Tertiary Education
Union (NTEU) and the Minister, Dr Nelson, both agree,
as stated in the Minister’s Discussion Paper, Higher Education at the
Crossroads, that ‘few countries have higher education systems that are as
strongly public as they are in Australia’.[26] This is certainly the case if
the system is defined in terms of the ratio of private to public universities
in Australia. Only two of
the 37 institutions operating as universities are recognised as private
institutions. The others are, as the Minister’s comment suggests, classed as
public universities, established under Acts of Parliament to meet public
objectives, and as such they receive the majority of funds allocated under
HEFA. As public institutions, universities should be required to make full disclosure
in relation to funding issues and their financial circumstances.
1.46
At
the same time, the recent report published by the Productivity Commission shows
that as a system, Australian higher education is one of the most dependent on
private funding in the OECD.[27] Only Korea, Japan and the US have a
higher proportion of private investment in tertiary education than Australia. While in
those countries the proportion of funding derived from public investment grew
between 1998 and 1999, in Australia it continued to fall,
standing at 52.4 per cent.[28]
1.47
This
neatly illustrates the bind that Australian universities find themselves in: as
public institutions receiving public funds they have clear accountabilities to
the taxpayer reflected in their governance structures and in state and federal
requirements for performance and financial reporting. At the same time, they
are dependent on private income and commercial activity to remain viable.
1.48
The
importance of private income and commercial activity is one basis for arguing
that information relating to universities’ financial standing provided by
institutions to DEST, and DEST’s analysis based on this information, is
commercial-in-confidence. Yet there are equally compelling reasons why matters
relating to the present and future funding of universities should be revealed.
First, because private funding and commercial activity underpin the health of
public institutions, it could be argued that the Australian public has a stake
in knowing whether such funding is sufficient to maintain the quality and
accessibility of education demanded by a progressive nation. It could also be
argued that the public has a right to know whether the public funds invested in
universities are not being compromised by potentially loss-making commercial
activity.
1.49
The
Western Australian Auditor-General, in a letter to the inquiry, reiterated the
importance of linking substantial public funding to requirements for openness
and transparency, stating that:
Where
public funds are involved I would suggest that there is a presumption that
there should be the fullest possible disclosure and that those making a claim
of ‘commercial in confidence’ carry a heavy burden of proof to overcome that
assumption.[29]
1.50
A
further reason for full disclosure of universities’ financial information –
including forward projections – in the public interest is based on the need for
transparency and trust between stakeholders in the sector. If universities and
the Commonwealth are perceived to conspire to keep staff, students, the
Parliament and the public generally in the dark about these matters, then the
grounds for cooperation and support are lacking. Universities can only operate
where they enjoy the confidence and respect of the community at large. This
argument rests on a general view about the fundamental preconditions for a
strong civil society.
1.51
So
on what basis might information about universities’ funding be legitimately
withheld?
1.52
As
noted at the outset of this report, Odgers’ Australian Senate
Practice states that the only formally legitimate grounds for not complying
with an Order for Return is when the production of such documents would be
detrimental to the public interest. Of the eighteen universities which
responded to the inquiry regarding the disclosure of financial forecasts, none
suggested that complying with this Order would be detrimental to the public
interest. Neither has DEST demonstrated that such production would be counter
to the public interest: rather, it argues that, for various reasons, it would
be inappropriate. One of the reasons for this, according to the DEST
submission, is that universities provide this information on a confidential
basis.[30]
1.53
It
is not clear how this confidential basis is established. DEST provides no
copies of correspondence with universities that makes clear any intention to
treat as confidential the financial and other data provided to it as part of
the profiles process. Indeed, the documentation sent by DEST to universities
requesting profiles-related information makes no comment on the confidentiality
or otherwise of the data.[31]
1.54
The
DEST claim that universities provide the information on a confidential basis is
explicitly contradicted by the letters from a number of vice-chancellors, which
state that the release of the data is a matter for the Minister’s discretion.[32]
This implies that these vice-chancellors, at least, do not regard the data as
confidential, and nor do they apparently believe that they have provided the
information on the basis of a guarantee that it will not be disclosed. The
Government’s and the Department’s argument that information is confidential to
the Department and to the institution is not supported by any of the evidence
put before the inquiry. On the basis of evidence before the inquiry, the
question of who controls release of the data and in whose interests it should
remain confidential is not resolved.
1.55
Even
if it were to be accepted that the information was indeed provided on a
confidential basis, and that the minutes of profiles meetings were similarly subject
to confidentiality requirements, questions remain as to the legitimacy of this
position; especially given the absence of arguments related to the public
interest.
1.56
In
its statement of principles on commercial confidentiality and the public
interest, the Australasian Council of Auditors-General says that it is possible
to distinguish in law and practice between commercial information that should
be released and that which should remain confidential for commercial reasons.[33] This distinction reflects several
factors:
- the
economic cost to the owner of commercial information if it is released, versus
community costs if it is not;
- the
requirements of management to provide sufficient information to account for the
exercise of their stewardship responsibilities;
- the
requirements of management to obtain the consent of shareholders where proposed
action is outside of the powers delegated to management;
- the
voluntary or involuntary nature of the economic relationships to which the
commercial information relates; and
-
the
capacity to keep information secret.
1.57
In
the letters provided to the inquiry by 15 vice-chancellors none argue that
release of the information would compromise their university’s interests, or
that the private interest in these matters overrides the public interest. None
make reference to an economic cost to the university if such data were to be
published. Rather, their arguments relate to possible inaccuracies or to
disagreements with the DEST data itself.
1.58
Of
these submissions from vice-chancellors, only two explicitly sanction release
of the data, although most universities agree in principle to the release of
the data as requested, with the exception of minutes of profiles discussions.
1.59
Taken
together, these responses contain no evidence that it would be contrary to
universities’ interests for this material to be tabled in the Parliament, or
that there is a conflict between the private and public interests in this data.
Where no such case is made, there is no reason to not release data which relates
to the viability and financial management of public institutions.
1.60
In
the conclusion to its statement on principles on commercial confidentiality and
the public interest, the Australasian Council of Auditors-General Statement
suggests that concern about the impact of disclosure is frequently misplaced:
Some private and
public sector bodies are instinctively apprehensive and protective about the
disclosure of any commercial information. But such views often overstate the
implied risks to an entity that might be occasioned by the release of
commercial data. After-the-event commercial information has significantly less
value than commercial information concerning events that have yet to occur. But
even where commercial information might have commercial value to others, there
are often overriding obligations that require it to be released. This is so for
commercial information held in the private sector and, a fortiori it
applies to the public sector.[34]
1.61
Auditors-General
from New
South Wales,
Victoria and Western
Australia
provided letters to the Senate inquiry. All three refer to the use of forward
estimates or budget projections for the purpose of checking performance against
targets and thereby assuring the continuing financial viability of individual
institutions.
Conclusion and recommendations
1.62
In
conclusion, the inquiry has not heard any compelling arguments against the
public disclosure of universities’ forward projections or other financial data.
No supportable reasons have been offered for the Government’s refusal to
provide this information to the Senate. Furthermore, the question of who
controls the disclosure or use of such data – the Commonwealth Government that
sanctions the development of forward projections, or the universities who
provide the data on which it is based – is not clear.
1.63
The
committee emphasises that the government’s negative response to the Senate’s
Order in this instance is made in circumstances where major reform of funding
arrangements and mechanisms for universities is proposed. The current, and
projected, financial viability of each publicly funded university is a matter
of direct relevance to debate on this issue. The Senate will be called upon to
consider legislation giving effect to the proposed reforms, and it cannot do so
responsibly, and in an informed manner, if it is not in possession of the facts
showing where universities currently stand financially, and how the government
expects them to fare, taking account of relevant trends and policy decisions,
over the next several years.
1.64
The
government already possesses the information in a form that could readily be
provided: yet it refuses to do so. This represents an abrogation of its
responsibility, in a democracy, to facilitate fully informed debate. Without
the financial information that has been requested, the Senate would be obliged
to vote on the government’s legislative proposals in a position of comparative
ignorance – where the comparison is one with the situation of the government
itself.
Recommendation
1.65
The
committee therefore recommends that the Senate request the government
release the information as specified in the Senate Return to Order. Further, it
is recommended that this request be augmented by any more recent data, in the
relevant categories of information, that have since become available, in
particular actual data, expressed in the same format, for 2002 and 2003.
Senator
Kim Carr Senator Natasha Stott Despoja
Chair
University
Finances Sub-committee
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