Enhancing choice, innovation and access
This chapter begins by examining the proposed deregulation of student
fees, analysing the key concerns expressed by submitters and witnesses. It
draws on lessons learned from higher education systems abroad, and describes
why the proposed reforms are unique in the world of higher education.
The chapter also identifies barriers to education still faced by some
students, and outlines measures within the Higher Education and Research Reform
Amendment Bill 2014 (the bill) which will help address those barriers.
Finally, the chapter looks at the proposed changes to Commonwealth
contribution funding clusters, describing how these will be simplified and
Deregulation of fees: striking the right balance
Fee deregulation and reductions in government spending are individual
measures within a comprehensive package of reforms which are designed, through
consultation, to improve the quality of the sector in the interest of students
and the nation. Measures such as deregulation must be seen as part of a whole
reform package, which is why all providers support the initiative. It is a fact
that postgraduate and international student fees were deregulated over 20 years
ago, and many providers see deregulation as the next logical step needed to
keep Australia at the forefront of the competitive global market.
The table below, taken from the bill's Regulation Impact Statement,
illustrates the overall effect of the estimated change in government
contribution that will occur as a result of the proposed reforms. The figures
show both the potential decreases, but also increases, likely to be experienced
by students, the weighted average being 20 per cent.
Figure 2: Approximate
change in government contribution
The reforms are intended to give higher education providers freedom to
operate within a dynamic economic environment. Institutions would be able to
make independent choices about fees, teaching methods, courses to be offered,
scholarships and other services.
The department explained that deregulation would:
to access the resources they need to deliver world class education, ensuring
Australia is not left behind at a time of rising performance by universities
around the world.
However, the proposal to end regulatory control over the amount
providers can charge students for tuition is also arguably the most
controversial aspect of this bill, with a large number of submitters concerned
about fee deregulation paving the way to exorbitantly expensive degrees.
As discussed below, the committee heard evidence refuting this view.
Skyrocketing fees – fact or fiction?
The committee is aware that scare campaigns about the cost of degrees
skyrocketing to $100 000 and beyond have been rife since these reforms were
Since the May budget
there has been extensive commentary and speculation about the budget measures,
including claims they will herald the arrival of hefty university fees that
will impose significant debt on students. Such speculation is alarmist and
I think there is a
lot of scaremongering around what is going to happen, but Australia has a
completely different system to the United States, for example. One of the
bedrocks of that is our income contingent loan scheme and the fact that
students are not paying upfront and they do not need to repay until they reach
an income threshold level.
Warnings about hefty degree costs came from submitters such as the
National Tertiary Education Union:
by the NTEU found that the cost of attaining a university degree in Australia
will rise substantially as a result of these changes and there will be cases
where the cost of a degree at some Australian universities will exceed
$100,000. The NTEU’s latest analysis shows that the cost of attaining a five
year medical degree, for example, would rise from about $50,000 at present, to
well over $90,000 as a direct result of government cuts to funding per student
and the imposition of interest rates on student debt. The analysis shows that
universities would only need to increase fees by as little as 10% above that
necessary to compensate for cuts to funding for there to be $100,000 degrees.
And were echoed by the Australian Council of Trade Unions:
Based on fees
currently being paid by international students and even some domestic students
attending private universities, the cost of some university degrees is
estimated to exceed $100 000.
Other submitters presented these views even more strongly:
fees]...allows universities to price gouge domestic students rather than the
international students they have used so far as 'cash cows'. As the Government
is taking funding out of the higher education sector in an 'efficiency
dividend', student fees may rapidly approach the world market prices that
international students pay.
The fear appears to be that higher education providers, without
modelling and no longer restrained by regulation, will increase fees in the
knowledge that there will always be those who can afford them and in complete
disregard of those who cannot. Such projections of fees spiralling out of
control, rendering higher education unattainable for many, appear to be unwarranted
We have absolutely no intention to gouge students. We would
certainly be taking into account future earnings in setting the fees because we
would not want to set fees that were too high for particular professions.
The committee also heard evidence that:
[Y]ou could have a system where you gave the power to a body,
whether that body was TEQSA or the Australian [C]ompetition [&Consumer]
[C]omission, to disallow a price increase on a set of statutory grounds. The
types of statutory grounds that I would be thinking of would be the
relationship of the cost of the degree in delivery, to future earnings, to any
effects on national need in areas of industry or otherwise and to any
reasonable degree of cross-subsidisation within a university.
The University of Western Australia (UWA) informed the committee of its
decision to be among the first to signal its pricing intentions in order 'to
counter much uninformed speculation about possible fee levels:'
Based on the current
legislation, UWA proposes to set an annual fee (student contribution) of
$16,000 commencing in 2016 for domestic (Commonwealth-supported) students per
annual fulltime enrolment (48 points of credit) in any of our five
undergraduate degrees (BSc, BA, BCom, BDesign, BPhil(Hons)). The price will be
subject to annual indexation.
The National Centre for Social and Economic Modelling, based at the
University of Canberra, the only Australian university which does not support
looked at the cost implications of UWA's decision to set an annual fee of $16
The main findings of
the results are not at all surprising—that is, roughly speaking, we have got a
doubling of fees. So $16,000 for the basic courses at the University of WA
would be roughly a doubling of the up-front costs....and at least a doubling of
the repayment costs... This is over the entire repayment period. This is in
nominal terms. It might be preferable to look at this in terms of constant
price version, but in terms of the actual dollar repayments, they increased
from around $31,000 up to $143,000.
Questions were raised, however, concerning the methodology applied to
the National Centre for Social and Economic Modelling (NATSEM) modelling, and
therefore its reliability.
Other submitters understood that the benefits of deregulation extend
beyond the economic argument, and reminded the committee that exaggerated
estimates of future course costs should not obfuscate the benefits of the
reform package, such as its capacity to boost equity in the interest of students.
Ms Vicki Thompson, director of the Group of Eight, said:
...the reality that some medicine, and psychology degrees
already cost taxpayers $100,000..."That’s a bit of a scare campaign. There
are degrees now that cost $100,000 — it’s just that the student is not paying
it. The taxpayer is."
The Australian Liberal Students Association also submitted that:
The reality is that the HECS-HELP system will still be in
place and you will not have to pay up-front fees. But because that is not in
the public debate as much as the other points have been, we can get the very
dangerous outcome that the scaremongering, rather than the reality, is having
an impact on access to higher education and the choices high-school students
The Council of Private Higher Education (COPHE), a peak body
representing private higher education institutions across Australia, which
enrol almost 10 per cent of the nation's higher education students and offer
degrees from undergraduate to doctorate level, argued that cost estimates support
the view that 'the total cost of these degrees, at $30–70,000, and paid when
they are earning, need not panic students.'
COPHE added that its members 'have indicated that whatever they receive in
Commonwealth support for students will be passed on to students through reduced
Furthermore, while it is true that providers would have unfettered
ability to determine fee levels, it is possible that fees will only need to
rise enough to compensate for the decrease in Commonwealth funding. In some instances
fees will in fact go down. COPHE submitted that all students, except for those
currently enrolled in teaching courses, will benefit from lower fees as a
result of the reform package.
The impact of competition on price
There is strong evidence supporting the view that fee deregulation will
boost equity and innovation. For one, while it is true that deregulation would
allow providers to determine—in the context of their particular
circumstances—the price they charge for courses, it will at the same time
require providers to compete on price in order to attract students. Higher
education providers will therefore focus on offering students the best possible
product, rather than packing lecture theatres with students in order to meet
In fact, proof that deregulation will encourage competition on price
In a sense, we do not
need to speculate too much, because we already have a fully deregulated system
with an income contingent loan in place. We call it postgraduate education in
Australia. The system that we are proposing for undergraduates already exists
there. So let's look at what happens in that particular sector—no speculation
required. The first thing you notice is that there is price competition. When
you look at the prices across Australia's universities, there is a factor of
three between the lowest and highest in terms of the fee charged by
What about high cost degrees?
The committee also examined degrees known for being expensive, and
considered how the reforms would impact on these.
For example, the committee heard evidence that the graduate starting
salary for students who complete a degree in medicine is $60 000, and that
income progression over five years is around 5.5 per cent per annum. While
there is a wide variance in earnings between different medical specialisations,
a self-employed general practitioner (GP) earns approximately 1.7 times the
average wage. Self-employed specialists earn around 4.3 times the average wage,
and, after 20 years' employment, 42 per cent of students who graduate with a
medical degree are in the top earning quintile.
These figures support the view that medical graduates' career earnings
are more than sufficient to service the student debt accrued. Since the HELP
student loan system guarantees that debts only have to be paid when earnings
are adequately high, the committee is confident that graduates of high cost
degrees are insured against unserviceable debts.
Lessons from overseas – why our
system is better
Some submitters were concerned that the proposed reforms would see
Australia emulating overseas higher education systems—such as those in the
United States (US) and United Kingdom (UK)—where deregulation brought
In the US, some student debt burdens are disproportionate to graduate
The US system also stands out in other unenviable ways, some of which were
brought to the committee's attention:
economies, the United States stands out for its failure to adapt its higher
education system to the needs of a modern knowledge economy...undergraduate
education is in a state of crisis, failing to meet either the needs of the
economy for educated workers or its historic role as an engine of social
mobility. The proportion of US males with university education is actually
falling. Although substantial progress has been made in promoting gender and
ethnic balance at leading universities, the reverse is true with respect to
Professor John Quiggin explained to the committee that, in the US, even
for those who manage to graduate, degrees from lower-tier institutions do not,
in general, provide a route into the upper end of the income distribution. The
wage premium for an associates degree over a high school education is only
about 20 per cent. Community college pays off only for the minority who are
able and tenacious enough to manage the transfer to a bachelor's degree, and
then to complete that degree.
Professor John Dewar, Chair of the Legislation and Financing Working
Group, was not convinced of the validity of any comparison with the US. He
explained the US system was not one national system as would be the case here:
[The US higher
education system]...is a very complicated system. It is not a single system, it is
multiple systems. I know that there is significant debate about the level of
student indebtedness there and the impact of unconstrained fee charging
environments on student fees.
Similarly, a submission from the Group of Eight explained that debt
burdens like those in the US are not possible in Australia:
...the HELP system of
student loans means that graduates only repay when they earn enough to be able
to do so. Repayments are a specified proportion of a graduate's income (which
cannot exceed 8%).
By contrast, in the US crippling debts are incurred by graduates:
...of the for-profit
institutions, not because of the level of the tuition fee, which is actually
lower than the not-for-profits, but because there is no provision of loan
support for the students. The students then graduate and they have to repay
very quickly against Credit Foncier loans, mortgage-style loans, from banks,
and if they have not got employment—and a few of them haven't had in the last
few years after the 2008 recession—they get caught in traps. In Australia that
The committee put questions to multiple witnesses on this, and formed a
strong impression that the higher education system the government is looking to
implement is unlike any other system in the world. Professor John Dewar, Chair
of the Legislation and Financing Working Group—established to advise the
government on components of the higher education reform package—confirmed this
In the United Kingdom (UK), for example, student fees are capped, which
may instinctively be an attractive measure if the goal is to prevent very high
fees, but was found to in fact be detrimental:
One of the lessons we
learn from that sort of system is that, if you cap fees, institutions will move
very quickly towards the cap. This takes us into a whole different debate...That
is why I am opposed to capping, in either a hard form or a soft form, the
amount of fees universities can charge. The UK evidence is very clear on that
point—as is the Australian evidence from previous occasions on which the
student contribution cap has been lifted. When it was lifted in the early 2000s
under Minister Nelson, universities very quickly raced to the cap. There was no
real price differentiation. So I think there are lessons to be learnt from overseas.
Professor Dewar explained that the effect of increasing student fees
varies between cohorts of students. He explained that, in the UK, students from
disadvantaged backgrounds had continued to enrol in healthy numbers, but that
enrolments from other cohorts had dropped following fee increases:
The cohort we think is of most concern are the
mature-age and part-time students, who in the UK have declined quite
significantly in number since those fees were introduced. Correspondingly, and
perhaps counter-intuitively, there has been almost no impact on the propensity
of disadvantaged students to enrol in universities in the UK.
However, the Australian loan scheme differs from that of the UK. In a Higher
Education Policy Institute (HEPI) report by Ms Libby Hackett, Chief Executive
of University Alliance (UK) and a visiting Senior Research Fellow in higher
education policy at the University of the West of England, it was noted:
the major difference is that in Australia, virtually
every student will be able to access a Government fee loan (either subsidised
or not) that is repaid on an income-contingent basis. The only students that
could not access a loan would be those that had reached their FEE-HELP lifetime
maximum loan allowance of $96,000. In England, however, Government fee loans
are limited to particular groups of students. This is because there is only one
type of Government fee loan in England and it carries a significant subsidy and
therefore has to be rationed. England has prioritised first-time undergraduate
students at this time. The consequence has been growing pressure on
postgraduates, some part-time and mature entrants and those seeking to re-train
(known as ELQ students) who cannot access a public loan.
The committee is of the view that comparisons with other higher
education systems are unhelpful as a directly comparable system does not exist.
The committee is confident that the HELP system of student loans, discussed in
further detail later in this chapter, provides adequate insurance against debt
outpacing income growth, and is for this reason of the view that students who
take on higher-cost courses will be in a position to service their loans once
they are established in their chosen careers.
The committee for this reason concluded that the safeguards in place in
Australia, such as the income contingent loan scheme, will see our system
improve with deregulation without experiencing the negative consequences seen
The committee is sensitive to community concern about fee increases.
However, ascertaining whether this bill would indeed have the effect of driving
up prices is not served by scaremongering. Concerted campaigns against these
reforms have skewed the public debate and done the community a great
I think the uncertainty that there currently is
around the fee environment and the level of fees will undoubtedly have affected
their decision-making for this round of applications.
The committee sees no compelling evidence supporting assertions that
fees will rise so dramatically that large swathes of the population will opt
out of higher education. The career advantages gained through higher education
will continue to motivate people to pursue degrees, much as they have done
since deregulation began three decades ago. Furthermore, the continued ability
to 'learn now, pay later' through student loans, which ensure that loan
repayment is contingent on income will ensure that students only have to repay
a proportion of the total cost of their degrees once they begin benefitting
In addition, competition for student enrolments will ensure that
providers keep costs in check. It is not logical or in providers' interests to
make education prohibitively expensive.
Deregulation means that providers will no longer be beholden to
government and subject to the budgetary whims of the day. They will have the
freedom to develop innovative and sustainable business models which equip them
for 21st century challenges, and give our higher education
institutions an edge in the competitive global market.
Fee deregulation will widen choices for students and improve the higher
education sector's ability to respond to varying levels of student demand,
student ability, interests and backgrounds. The committee is satisfied that the
reforms will ensure Australian students can enjoy the best higher education
options in the world.
Ultimately, deregulation is not just about the bottom line. Removing
government intervention and red tape is about allowing the sector the space to
foster creativity and innovation. Fee deregulation will lead to greater
competition, and with greater competition comes greater choice. In combination
with this reform package as a whole, deregulation will benefit individuals and
However, the committee considers it necessary to address the organised
scare campaigns about impending fee increases. For this reason, the committee
urges the government to consider communicating the benefits of deregulation
through a public education campaign.
Addressing barriers to education
One of the principal aims of this bill is to ensure that potential
students have a clear pathway to higher education regardless of their
circumstances or background, support through their education and choice as to
where they will study.
Currently, a number of student cohorts are at risk of significant
impediments in terms of access to higher education. These include students from
lower socioeconomic backgrounds, regional students, Indigenous students,
mature-age students and those with low Australian Tertiary Admission Rank
The proposed reforms seek to improve access for these groups by
encouraging student mobility, expanding the scope of the demand driven funding
system for higher education and introducing a safety net in the form of the new
Commonwealth Scholarship Scheme. The committee examined whether the relevant
measures of the bill do enough to expand access to higher education and ensure
that at-risk cohorts are not disadvantaged in relation to other students.
funding to non-traditional higher education providers
The government proposes to expand the demand driven system, continuing
the work of the previous government, such that private universities and
non-university higher education providers registered by TEQSA will have access
to demand driven bachelor places.
In supporting students who choose to study at these institutions the government
is promoting equity and enhancing opportunity. Currently only seven non-university
higher education providers receive a small allocation for government subsidised
student places each year,
leaving the vast majority of students at these non-university higher education
providers to pay full tuition fees.
Innovation and competition
These reforms will provide private universities and non-university
higher education providers with the flexibility they require to effectively
specialise and differentiate from one another.
The expansion of the
demand-driven system to include more non-university higher education providers...
will further influence the sector by sharpening competition, which will drive
innovation and diversity, thereby offering new and alternative pathways of
access. Their alternative business models will encourage cost-effective
practices serving as a floor to moderate fee rises.
Addressing the inequity which currently exists, generally speaking, the
benefits of the demand driven system that was first introduced under the Labor
government in 2012, do not flow to those students who elect to undertake
studies at institutions other than public universities.
Government invests in
higher education because there is clear evidence that there is a public benefit
from having an educated population. All universities in Australia, public or
private, are not for profit organisations, which meet the same quality
standards, engage in the same functions (teaching, scholarship, research,
community engagement) and contribute the same level of public benefit to the
wider community. As such, the justification for providing government subsidies
is equally applicable to all universities.
The committee heard evidence from various stakeholders that
non-university higher education providers often operate in niche areas that may
be under served by the public system. Specifically, Study Group International,
a non-university higher education provider, explained that as non-university
private higher education providers often endeavour to meet a need in an
industry they do not believe is being adequately met by the system, the
proposed changes would result in 'an environment that creates a higher level of
competition within non-university private providers but also between public
providers and non-university private providers [that] can only promote more of
The committee also notes that the TEQSA Advisory Council is currently
considering how vigorous competition can drive innovation...
It can allow choice
to students; it can empower them not just to select between different
universities, different institutions and different courses but also to choose
between different modes of delivery, different structures of degree and
Recognition of sub-bachelor qualifications
Commonwealth subsidies will also be provided on a demand driven basis
for eligible students enrolling in TEQSA accredited higher education diplomas,
advanced diplomas and associate degrees, in line with the recommendations of
the Bradley Review.
Currently the government is subsidising 19 243 sub-bachelor student places. However,
under the proposed changes, the department expects to see this number 'increase
by more than 80 000 a year by 2018 (35 000 at bachelor level, 48 000 at
diploma, advanced diploma and associate degree level), an increase of around 9
Improving the efficiency of the
The Kemp-Norton Review of the Demand Driven Funding System found
that expanding access to sub-bachelor pathway courses would lead to the
improved efficiency of the higher education system by better matching students
with appropriate courses.
It would address
student quality concerns about lower ATAR entrants, by increasing their
academic preparation before they enter a bachelor‑degree course. It would provide a lower risk entry
point for low SES students. In combination with the inclusion of non‑university higher education providers in the demand
driven system, it would remove the unfairness inherent in diploma students in
private colleges paying much higher annual tuition charges than bachelor‑degree students in public universities.
The focus of these reforms is on increasing access to quality higher
education. The government recognises that the non-traditional higher education
system has a strong vocational focus and clear linkages to pathways into higher
education from VET programs. Northern Melbourne Institute of TAFE provided
evidence before the committee that this approach is particularly applicable for
their students with low-socioeconomic and disadvantaged backgrounds, as well as
their high proportion of first-in-family students and mature age students.
Equity, access and opportunity
The government's proposed expansion of the demand driven funding system
for higher education received support from both private universities and
non-university higher education providers and their respective students.
Submitters examined the ability of the reforms to address funding inequities in
the current system and emphasised the increasingly important role of supported
pathways to bachelor and post graduate studies.
Many TAFE students
are first in family to undertake higher education, and are often from lower SES
and disadvantaged backgrounds. TAFE offers an accessible alternative to
university. Domestic and international research demonstrates that the prospect
of university education can be intimidating and a ‘step too far’ for many of
these students. Greater choice in higher education provider, along with more
equitable funding arrangements, may ease barriers to participation and will be
welcomed by many students and parents as a result.
The proposed expansion of the demand driven funding system will
facilitate increased and more equitable access to higher education.
This may include
students completing diploma and advanced diploma programs at TAFE, who did not
consider undertaking further study due to a lack of aspiration and confidence
to complete higher education in a university setting.
Further, the amendments will allow non-university higher education
providers to better fill any voids that may present in specific regions for
local provision of education, to better service the needs of communities. In
this light, Chisholm Institute explained to the committee how they had built
their degrees on industry strength.
With Monash being the
only university in our region, there were very few opportunities locally
because of the required ATAR. Many students in our region only enrolled in a
higher education offering after completing a VET qualification. Many students
in our region are 'first in family' for tertiary study and come from a
low-socioeconomic background. They are predominantly mature aged and also have
significant work and family commitments. The opportunity to offer higher
education programs has been critical, but our degrees currently cost about
Nearly 12 per cent of domestic undergraduate students at Bond University
come from rural or regional areas. The university informed the committee that a
sub-bachelor diploma program in 2015 would cost a student $22 800, and an
undergraduate diploma in university English studies in 2015 would cost $32 528.
With respect to the bill's proposed extension of Commonwealth subsidies
on a demand driven basis to eligible students enrolling in TEQSA accredited
higher education diplomas, advanced diplomas and associate degrees, the
committee heard substantial evidence about the ability of these sub-bachelor
courses to provide effective mechanisms for students to undergo expeditious
training in areas linked to vocational outcomes as well as the value of such
studies to provide pathways into higher education. The cost of such higher
education was also discussed.
Ms Katrine Arch a mature-age student who is currently studying a
Bachelor of Complementary Medicine at Endeavour College of Natural Health
provided evidence to the committee.
I am excited about
the potential for being on an equal footing with a student studying at a
university. I choose to love natural health and holistic healing.
Unfortunately, there is no university offering for what I want to do. The
current system penalises those who choose to look for alternative ways to learn
or, in my case, in fields that are not yet accepted in mainstream Australia.
Miss Sara Moad, a second year Bachelor of Dance student at Wesley
Institute, emphasised the current inequity and financial disadvantage students
experience simply because they choose a career in a profession that is not well
represented at public universities.
If and when the bill is implemented, I will have already
graduated, with a debt of $56,000, of which $11,000 is an administration fee of
25 per cent—more than I need to save for a house deposit. Compare this with my
brother, who will have completed a three-year degree in design at a public
university, with a HECS debt of around $15,000. I will pay more than three
times the amount... How is that equitable? Professionals in the performing arts
have the ability to share so much with their communities and build culture, and
often do so despite earning a lower income compared to other professions.
Mr Anthony Donald a student who is currently studying business at
Christian Heritage College (CHC) also provided evidence before the committee.
Mr Donald stated that he was 'one of those stereotypical people who did not do
well in high school' and had very little of idea of what he wanted to do once
he had finished year 12. Mr Donald explained that through CHC he was able to
enrol and complete a diploma in ministry and thereafter pursue a business
In obtaining evidence from students studying at higher education
institutions outside Australia's public university system, the committee
focused its attention on the current costing per annum of courses and how much
the reform package would save students. In this context, it is important to
consider the benefits students will experience from the provision of
Commonwealth Grant Scheme funding to non-traditional higher education
providers, who may elect to lower their student fee as a result of Commonwealth
support. COPHE explained that:
Member institutions of the Council of Private Higher
Education have indicated that whatever they receive in Commonwealth support for
students will be passed on to students through reduced tuition and some have
already indicated they will hold their 2014 tuition fees through 2016 if
reforms are in place.
Of equal import is the removal of the HELP student loan fee of 25 per
cent for FEE-HELP and 20 per cent for VET-FEE HELP, and the removal of the
FEE-HELP lifetime limit.
The proposed removal of FEE-HELP and VET FEE-HELP fees will
reduce the cost of education for students in full-fee paying courses. This will
remove a deterrent to students considering study in these courses, and reduce
their total cost of education.
The government is tightly focused on improving admission strategies to
higher education, including providing alternative mechanisms to admission to
universities. As such, these proposed changes to the funding and regulatory
framework will bring the government in line with the evolution of
non-traditional higher education providers as integrated tertiary providers.
Non-traditional higher education providers, including TAFE Directors Australia
endorsed this reform.
Commonwealth funding is required to support the increasingly
important role TAFE plays in broadening student choice and access,
strengthening the capacity and reach of the system, particularly in regional
areas and addressing critical skills in the Australian economy.
Questions were raised at the hearing about the ability of Australia's higher
education framework to provide adequate assessments of private universities and
non-university higher education providers, in line with community expectations
regarding quality and reputation. However, the process for becoming a higher
education provider is the same for all higher education providers: public
universities, private universities, as well as all other non-university higher
education providers, such as TAFE, all have to meet the same high standards.
Notably, Navitas Limited, a private education company, approximated that
there are currently only 150 non-university providers of higher education
providers operating in Australia.
With respect to accreditation of higher education programs through
TEQSA, various Institutes of TAFE made it clear that as a regulator in the
higher education sector TEQSA 'regulates very rigorously, and as...
non-university provider[s] we certainly apply the same rigour to ourselves and
to the curriculum.'
This means that our
graduates achieve the same learning outcomes and at the same levels as their
university counterparts... there is an expectation that academic staff have a
thorough knowledge of their disciplined field and its latest research findings
and their applications, in addition to an understanding of contemporary
scholarship and of learning and teaching. This is required both by TEQSA and by
professional accreditation bodies. Without that accreditation, our students
would be considerably disadvantaged in the degrees that they graduate with.
With regard to the qualifications of our staff, we believe they are equivalent
to the increasing number of teaching-intensive or teaching-focused staff at
Study Group International explained that the accreditation process
through TEQSA was rigorous and 'can take up to 12 to 18 months and maintaining
registration requires continuous investment in quality assurance and
The committee also heard evidence about the Quality Indicators for Learning and
Teaching (QILT), and the vastly improved MyUniversity website that will serve
informed and active consumers.
The proposed QILT indicators are a performance measure instrument that
was announced as part of the 2014–15 Budget:
The QILT provides a coherent suite of Government endorsed
surveys for higher education, that cover the student life cycle from
commencement to employment. Higher education providers will receive data from
the surveys relating to their students and graduates, supporting their
continual improvement efforts in key areas such as teaching practices, learner
engagement and student support... Importantly, students and families will have
better information about higher education institutions on which to base their
decisions. This, in itself, reduces the system’s reliance on regulation to support
Professor Peter Shergold, Chair of TEQSA Advisory Council, highlighted
the necessity and value of the QILT indicators to Australia's 'immature' higher
education market. Professor Shergold emphasised the role of the proposed QILT
indicators in ensuring all higher education providers report in the same way so
that Australia has an informed and transparent market in which students can
make informed decisions. 
You need to know that
you can look on there and see for every provider of higher education what the
student satisfaction is at that institution, what the student outcomes are,
what the employer satisfaction is. That helps you to judge whether you want to
pay more or less between one institution and another.
The department also acknowledged the importance of transparency and
outlined information about higher education providers that would be available
to Australians through QILT:
Accountability for quality will be enhanced through more
transparent information to inform choice of study options for students and
their families. New information provided through the Quality Indicators for
Learning and Teaching (QILT) will compare how successful previous graduates
have been at finding jobs and what other students and employers think of a
The committee is convinced the expansion of the demand driven funding
system to private universities, non-university higher education providers and
sub-bachelor qualifications will ensure equitable access for all students,
irrespective of their choice of study or provider.
The committee is satisfied that the proposed measures will improve the
efficiency of the higher education system by providing appropriate and
effective pathways for all students. Specifically, the committee considers that
these measures are necessary to facilitate pathways to higher education for
those students from lower socioeconomic backgrounds, regional students,
Indigenous students, mature-age students and those with low ATAR scores.
The committee is persuaded by evidence that the proposed changes will
create an environment of healthy competition between non-university providers
and also between public and non-university private providers such that
innovation will flourish.
The committee notes stakeholder concerns about the professional
accreditation process of private universities and non-university higher
education providers. However, the committee is satisfied that TEQSA is an
appropriate and satisfactory quality agency, and that the QILT indicators will
ensure Australia has an informed and transparent higher education market.
It is the committee's view that an awareness campaign to communicate to
students, particularly those from target cohorts, the impact of the changes to
their future studies could allay concern and ensure students are fully informed.
Commonwealth Scholarship Scheme
A key component of the government's higher education reforms is the
establishment of a new Commonwealth Scholarship Scheme. Under the proposal,
institutions with more than 500 students enrolled would be required to put 20
per cent of the additional revenue raised through fee increases towards
'activities to improve access and participation.' The committee understands
that this measure is intended to ensure disadvantaged students are given every
opportunity to access higher education.
The Government’s reforms to higher education will provide
opportunities for regional universities and the regional communities they
serve. By uncapping sub-bachelor places, the Government will allow an
additional 80,000 students to access Commonwealth subsidies by 2018. This
includes more people from disadvantaged backgrounds, from rural and regional
communities and those who need extra assistance to complete their studies. The
new Commonwealth Scholarships scheme will allow universities to offer
scholarships to students from regional and remote areas.
Students from low SES backgrounds
The submission received from the Australian Department of Education
explained that the introduction of demand driven funding has expanded
enrolments and improved access for students from disadvantaged backgrounds:
Between 2012 and
2013, domestic undergraduate low socio-economic status (SES) student enrolments
increased by 7.2 per cent to 124 193, with an improvement in the participation
rate of low SES domestic undergraduate students from 17.1 per cent in 2012 to
17.3 per cent in 2013.
Ms Jenny Lambert, Director of Employment, Education and Training at the
Australian Chamber of Commerce and Industry, explained that by increasing
access to education overall, the uncapped, demand-driven system has also helped
Only four per cent of
working-age Australians were at university in the late 1980s, just prior to the
fees being reintroduced. Now there are close to double that. The uncapped
demand-driven system in place now has allowed more students than ever to access
universities, including those from lower socioeconomic backgrounds. This has
happened despite fees, as the opportunity for economic rewards drives behaviour
and, when access is freed up, people respond.
This echoes the findings of the Kemp-Norton review, commissioned to look
at and make recommendations in relation to the demand driven funding system.
The reviewers concluded that the system increased opportunities for students
from lower socioeconomic backgrounds:
thousands of new student places in anticipation of the demand driven system. In
2013, the equivalent of 577,000 full-time students received Commonwealth
support in paying their tuition costs, an increase of more than 100,000 on
2009....These new places have been widely distributed. There are more students
from the major cities and from regional and remote areas, more students from
all socio-economic backgrounds, and more Indigenous students. There are more
undergraduate students in all major fields of education. Every public
university increased its number of Commonwealth supported students between 2009
However, the committee recognises that disadvantage continues to act as
a barrier to higher education for some, and that it is imperative that this
bill ensures that money is available to address this. In the committee's view,
the package ensures that higher education will be cost free at the point of
delivery for all students, and that under the HELP scheme students will
continue to have no obligation to repay their debt until they have sufficient
income to do so.
Students from regional communities
Domestic enrolment at regional universities has grown at a higher rate
than the average for all public universities since the introduction of demand
driven funding for bachelor degrees in 2012. This is indicative of regional
universities' capacity for innovation and ability to take advantage of new
Regional universities are well placed to capitalise on the
unlimited availability of sub-bachelor places, both by enrolling more students
in their own right and forming partnerships with other local providers such as
TAFE [technical and further education] institutes. A number of universities
have already forged partnerships with regional TAFEs to develop new courses or
expand operations into previously underserviced locations where there are poor
higher education attainment rates, but good VET [vocational education and
training] preparation to diploma level. Regional TAFEs that are approved to
operate as higher education providers will also be able to provide additional opportunities
for regional students and support the economic development of their
However, students from regional communities face more than just the
costs incurred through course fees. Professor Sandra Harding, Vice-Chancellor
and President of James Cook University, explained that it is a fallacy assume
that it is any cheaper to study or conduct research in regional areas:
[I]t is no cheaper to
be in regional areas than it is to be in metropolitan areas. Indeed, depending
on where you are there are increased pressures sometimes, particularly when you
are in smaller communities where there is low rental availability and high cost
attached to rents. That really can be very expensive. Similarly, the cost of
food, amenities and utilities can all be higher in some areas.
The committee notes that the costs to study or conduct research vary greatly
depending on geographical location.
The committee understands that regional universities can potentially benefit
greatly from the reform package, as discussed in the following section. At the
same time, the committee is of the view that steps must be taken to ensure that
the financial barriers students face are recognised and that students from
regional communities have access to metropolitan higher education institutions,
should they choose to study there.
Given that guidelines for eligibility for the scholarship scheme are yet
to be released, the committee is of the view that scope exists for them to be
weighted towards assisting students living away from home.
Furthermore, the committee is persuaded by evidence that the uncapped,
demand driven system has increased overall access to higher education. In
principle this applies equally to areas of study which are known for being more
expensive, such as medicine. For this reason, the committee is inclined to
support complete deregulation of the undergraduate higher education sector,
recognising that this entails uncapping undergraduate medical degree places.
The committee recommends that guidelines for the Commonwealth
Scholarship Scheme seek to address some of the financial barriers faced by
students from low SES backgrounds and regional communities in accessing higher
Addressing 'thin markets' in regional areas
One aspect of the package that received substantial commentary from
submitters was the effect of the reform package on 'thin markets' in regional
areas. While a number of submitters acknowledged the benefits of the reform
package for regional universities in the extension of sub-bachelor places, they
emphasised the disproportionate effect of the package as a whole on regional
universities and called for the government to provide a structural assistance
package to assist rural and regional higher education provider to adapt to the
Charles Sturt University, who have the second highest number of low-SES
students in Australia highlighted the concerns of regional universities.
... if we are
essentially relying on the ability of students to pay fees to fund research
aspirations, that is going to have a disproportionate effect on regional
universities. So we therefore think there needs to be some sort of package
which actually assists with that, with the details to be determined.
Regional Universities Network (RUN) highlighted the significant gap that
exists between higher education attainment in Australian capital cities
compared with regional Australia.
The further away from capitals, the lower the post-school
education attainment. In 2011, 31 per cent of people aged 25-64 who lived in
major cities held a bachelor degree or above, compared to about half that in
regional Australia; 18 per cent of Australians living in inner regional areas
had a degree, declining to 15 per cent for outer regional areas and down to
only 12 per cent for very remote areas... It is critical to grow the proportion
of educated professionals working in the regions, if regional Australia is to
have sufficient, educated professions to fully participate in the world
With respect to regional Victoria, Federation University of Australia
... if the legislation
remains demographically neutral, higher education participation rates in
regional communities will continue to decline and the net migration flow of
that 18-to-35 age group out of regional Victoria will continue to decline.
Federation University of Australia also submitted that without a
regional adjustment package the University would have to significantly
cross-subsidies their students to survive.
Flinders University highlighted the importance of regional higher
education providers for regional economies and regional social cohesion.
... our experience,
both in the Riverland and in regional South Australia, and now in the Northern
Territory, is that if we recruit people from the territory and train them in
their territory, they are likely to stay in the territory as doctors. That part
of the story is something that needs to be recognised.
The National Union of Students emphasised the tendency of rural and
regional students who are studying at rural and regional universities to remain
in their communities.
They have every
intention of studying and going back into their communities and practising
social work or being teachers, of going back into their communities and practising
in their local areas. I think there also needs to be an acknowledgement of
Professor Henry Ergas, acknowledged the legitimacy of the concerns
raised by the rural and regional higher education community, however, submitted
that with the correct assistance, rural and regional higher education providers
could prosper within the proposed new reform package.
I see that
Wollongong, which is a regional university, in a sense—it is in an area that is
certainly not a terribly high-income area and that attracts many students from
low-socioeconomic-status families—is adjusting quite successfully to those
changes. I think regional universities will be able to position themselves in
such a way as to attract students and funding over time. But that will take
time. It will require changes. And ensuring that they are able to do so is
important, not merely for those regional communities but also for enhancing
competition in the system as a whole.
The department also provided evidence to the committee demonstrating the
proven abilities of regional universities to successfully adapt to structural
Regional universities have always shown strong capacity to
innovate and take advantage of new policy settings. The introduction of demand
driven funding for bachelor degrees in 2012 has seen domestic enrolments at
regionally headquartered universities grow at a higher rate than the average
for all public universities... In a deregulated fee environment, regional
universities will have scope to set tuition fees at levels that will both cover
their cost of delivery and make their offerings competitive with other
providers in the market.
The committee recognises that rural and regional higher education
providers deliver high quality and essential educational and research services
that are vital for Australia's remote communities, our regional economies and
regional social cohesion.
The committee acknowledges that it is not in the national interest to
lessen the participation rate of regional Australians in higher education and
acknowledges the difficulties that rural and regional higher education
providers will experience as a result of the reform package.
The committee believes that tackling the cultural and social issues of
access to higher education for those students from lower socioeconomic
backgrounds, 'first in family' for tertiary education and regional areas, is
paramount to ensuring the evolution of career pathways envisaged by this reform
Simplifying the Commonwealth contribution funding clusters
In order to simplify Commonwealth subsidies, Schedule 1 of the bill
proposes to change the current cluster funding arrangement. Specifically, it proposes
to streamline the eight funding clusters into five funding tiers. The rationale
for the change is to 'incorporate a more rational reflection of factors
relevant to the cost of delivery' as identified by the Base Funding Review
allocated to a particular cluster based on the standard teaching method and
infrastructure required to deliver the course as well as the private benefits
for graduates, drawing on the work of the BFR. The BFR suggested five
discipline groups as an appropriate framework for the Commonwealth Grant
Scheme, arguing that the current model 'would be improved by reducing the
number of funding clusters.'
The BFR held targeted consultations with stakeholders to obtain views
from the sector about the principles and recommendations to inform its
The BFR also received 161 submissions in response to a consultation paper
released prior to the targeted consultations with stakeholders.
In restructuring the clusters arrangements, the department has taken
into account a range of variables, including the standard teaching method,
infrastructure costs, and the estimated prospective value of respective
disciplines to students.
The new funding
clusters were developed based on the following principles:
Simplifying the system to reflect
only major differences between disciplines.
Grouping disciplines based on
average relative cost of delivery.
Private benefits for graduates.
As proposed, the five tiers are:
Tier 1 – Low cost
courses with traditional lecture and tutorial format with high private returns:
Management and Commerce, Food and Hospitality, Mixed Field, Law and Economics.
Tier 2 – Other low
cost courses with traditional lecture and tutorial format: Society and Culture
(including social studies and humanities, but excluding law, economics,
clinical psychology and foreign languages) and Communications (excluding audio
Tier 3 – Medium cost
courses that combine traditional lecture and tutorial format with significant
practical experience requirements – Computing, Behavioural Science, Welfare
Studies, Other Health, Architecture and Building, Education, and Creative Arts
Tier 4 - Laboratory
based disciplines with small class sizes and/or high equipment costs: Science,
Engineering, Allied Health, Nursing, Environmental Science, Clinical
Psychology, and Foreign Languages.
Tier 5 - High cost
disciplines with high infrastructure costs and/or intensive teaching:
Agriculture (excluding environmental science), Medicine, Dentistry, and
The committee notes that:
Under the new five clusters some important disciplines have a
lower funding reduction than the average 20 per cent reduction. These include:
teaching, health (including nursing), foreign languages, veterinary science and
A number of submitters examined the impact of the proposed changes to
the cluster arrangements on specific disciplines and questioned their
In assessing the student impact of the transition to a deregulated
higher education environment, some submitters were of the opinion that the
system would be better understood if there was a flat 20 per cent reduction
across all disciplines.
It will be easier to
understand if there is simply a uniform reduction across all disciplines,
rather than adding into what is already a fairly complicated mix of changes
these new changes to funding clusters. I think we understood that there was a
strong policy rationale behind the proposal for the five as opposed to the
eight, but we felt that to throw that in at the same time as doing everything
else risked creating serious confusion in the minds of potential students.
In contrast, others provided evidence that a uniform reduction
arrangement would result in major disadvantage to particular disciplines, such
as nursing and teaching and to universities who have specialised in particular
disciplines and therefore would not have capacity to cross-subsidise courses to
Charles Sturt University (CSU) argued that the five tiers, as proposed,
fail to take into account regional labour market demand, graduate earnings or
the impact of increases in course fees on student enrolments in professional
In evidence before the committee, Professor Andrew Vann, Vice Chancellor
of CSU, expressed concerns about the level of cuts and subsequent fee increases
in areas of chronic labour market shortage in rural and regional areas, with
students already hesitant to enrol in such disciplines.
Funding levels that reflect costs
Equally, the committee received submissions and took evidence at the
hearing that supported the simplification of the Commonwealth funding clusters.
Catholic University] strongly supports the differential level funding of
courses as proposed by the Government. The Government’s figures take into
account the cost of delivering the course and the capacity for the student to
repay based on the difference in salaries earned in different disciplines.
Professor Dewar, Chair, Legislation and Financing Working Group
explained that there was no clear correlation between the different rates
across the current system of eight clusters and the costs of delivery of
disciplines, and therefore, they had been the subject of criticism.
historically derived and no-one really had a good rational to explain them... The
view was taken that, as part of these reforms, we would shift the allocation of
government subsidy onto a more rational footing.
The department submitted that 'the new five clusters resolve anomalies with
the current eight funding clusters and reduce the complexity of the
Commonwealth Grant Scheme.'
The department also explained that:
The subsidy levels
associated with the existing funding clusters are primarily based on historical
decisions from the 1980s and do not reflect the relative costs of course
delivery today. As a consequence, if eight funding clusters are retained and
fees are deregulated, there is a potential for fee setting to be more complex
and less transparent to students. 
In response to criticisms about the proposed changes to the cluster
arrangements and their potential to impact on disciplines such as science and
engineering, the department submitted that:
proposal of retaining the eight funding clusters with a consistent reduction in
subsidy funding across the clusters would adversely affect teaching, nursing,
IT, architecture and welfare courses. Such an arrangement would favour around
one-third of universities compared to the proposed five clusters (for most the
gain would be marginal), while two-thirds of universities would be worse off, a
number of them significantly, due to their high proportion of teaching and
nursing students. 
In the context of a deregulated higher education environment, where
higher education providers will have the ability to increase fees to offset
reduced Commonwealth funding, the current cluster structure is not sustainable.
The alternative eight
cluster proposal would have the greatest negative financial impact on
universities that have less capacity to increase revenue from students, in
particular regional universities.
The Panel has
concluded that the base funding model would be improved by reducing the number
of funding clusters.
The department acknowledged that the new five funding clusters would
affect institutions differently dependent on their discipline profiles, giving
the following example:
Institutions with high proportions of students enrolled in
teaching and nursing, such as some regional universities, have lower than average
reductions in per student funding.
The committee considers that the streamlining of the current eight
funding clusters to five funding tiers is necessary to implement the package of
reforms. The committee is also satisfied that adequate consultation with the
higher education sector was conducted with respect to the BFR that made the
recommendation to reduce the funding clusters.
The committee acknowledges that these reforms reflect factors relevant
to the cost of the delivery of higher education courses, and that the proposed
changes are limited and appropriate to ensure universities have the means to
resource their institutions.
The committee is persuaded that the proposed relative level of
government contribution is based on the relativities identified in the BFR and
that the resultant reduction of Commonwealth subsidies to certain courses is
justified in order to create a sustainable demand-driven system.
The committee considers that it is important to decrease the regulatory
burden on higher education providers, and is convinced that these amendments
will improve the regulatory framework of the sector. The committee nonetheless
recognises the challenges inherent in moving to a deregulated system, and urges
the government to address these challenges through a structural adjustment
package. This package should prioritise tailored assistance for providers
catering to regional, rural and disadvantaged students.
The committee is persuaded by evidence that the proposed changes to the
funding cluster arrangement will have a greater impact on some higher education
providers, and as such, transitional support arrangements are necessary for
such entities to ensure the government's intended outcomes.
The committee recommends that the government explore the provision of a
structural adjustment package to assist certain sections of the higher
education sector transition to a fully deregulated system.
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