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Policy Paper1 Higher Education – a national priorityA confident, strong, quality higher education sector is vital to Australia’s economic, cultural and social development. The higher education sector makes a substantial contribution to regional economic growth and development. It provides jobs for Australians, educates our future workforce, creates future leaders, drives much of our economic and regional success, facilitates important cultural and trade links with other countries and enriches our social and environmental landscape. In 2001, the higher education sector employed approximately 80,000 people and generated total revenue of $10.2 billion, contributing 1.5 per cent to Gross Domestic Product. Many institutions, particularly those in regional areas, play a significant role in the economic and social life of their communities which goes far beyond their traditional educational activities. Our institutions produce graduates whose skills are eagerly sought in the international market place. Through higher education, Australians can also fulfil their personal, social and economic potential. Recent data show that average gross lifetime earnings for university graduates are over $600,000 more for men and $400,000 more for women by comparison with non-graduate counterparts. The median starting salary for graduates is $35,000 – approximately 85 per cent of average weekly earnings. Australia’s higher education sector enjoys an excellent reputation both at home and in the international arena. The significant number of overseas students who seek to study at our universities here and at offshore campuses is evidence of the high regard in which Australian higher education is held. However, higher education faces new horizons and challenges. Standing still in a policy vacuum is neither a responsible nor a viable option. If we are to ensure a sustainable university system able to drive the future economic and social success of this country, and support future generations of Australians, increased resourcing and regulatory reform are essential. 1.1 The need for reformThe case for reform is clear. The extensive Review process provided evidence that there are significant external and internal pressures impacting upon higher education institutions that will only become greater over the coming years. Consultations confirmed the Government’s view that major reform to the policy framework for higher education is required. The Review of higher education was launched in March 2002 and concluded its extensive public consultation process in October 2002. More than 730 submissions were received. A total of 49 consultation forums were held, involving around 800 participants. A Reference Group, consisting of a number of eminent Australians representing business, industry, students, the Indigenous community and the higher education and vocational education and training sectors, provided support and advice through the months of consultations and deliberations. The central finding of the Review was that the present framework for funding and policy has become unwieldy, complex and inequitable. The consultation process drew out a number of significant problems, including the following:
These pressures are exacerbated by excessive and restrictive regulatory and reporting demands currently imposed by both the Commonwealth and State and Territory governments. While universities have recognised the need to diversify funding sources and build on their individual strengths in the national and international market places, some government policies have constrained their ability to do so. For example, some State and Territory government regulations make it difficult for universities to engage in commercial activities with other institutions or industry. The governance arrangements in some States and Territories also impede the effectiveness of some university councils. Heavily centralised Commonwealth bureaucratic arrangements have produced a sector that is not maximising its potential and is limited in its ability to be internationally competitive. During the Review consultation period many stakeholders confirmed this to be the case, indicating that the existing funding and regulatory arrangements:
The current arrangements also support an inequitable situation whereby students with the financial means can access fee paying places in public and private institutions of higher education, whereas students from low income backgrounds either cannot, or do so by making unacceptably high sacrifices. Without reform, Australian higher education will be put at risk. Funding and regulatory constraints, if not made more flexible, will affect teaching choices and learning outcomes, threaten the role of regional universities, and could adversely affect the international competitiveness and the reputation of Australia’s universities. After a year of productive discussion, we now have a unique opportunity to achieve fundamental reform in the Australian higher education sector. Australia’s competitors are already rapidly moving through similar reforms to develop significantly more diverse higher education systems that respond to the widening demands of a globalised, interconnected world. Australia and Australian higher education cannot afford to be left behind. 1.2 A new visionFour key principles underpin the package of reforms set out in this statement. SustainabilityAll existing public self-accrediting higher education institutions must achieve longterm sustainability. The cost of course provision in higher education has increased considerably, often due to factors outside the control of universities such as increased global competition for academics in key areas and changes in the value of the Australian dollar. Universities must be freed from unnecessary constraints. They should be able to respond flexibly to the needs of their constituencies, including potential and existing students, staff, employers, industry, local, regional and national communities. Institutions need to be given maximum opportunity, consistent with public accountability and social responsibility, to develop innovative responses to rapidly changing environments in teaching and learning, in the direction and commercialisation of research, and engagement with industry, research institutions and other education providers. QualityAustralia’s universities have a reputation for providing high quality educational experiences, and it is vital that this be maintained and enhanced. A renewed emphasis on teaching and learning outcomes, particularly at the undergraduate level, will help to ensure that students develop knowledge and skills that are relevant to their own needs and to those of employers, professional associations, labour markets and society. EquitySystemic barriers to the participation of historically disadvantaged groups, in particular Indigenous Australians, must be addressed. Individuals should be enabled to fulfil their potential, regardless of their personal circumstances and backgrounds. Targeted intervention measures and new approaches to student financing will seek to encourage participation and retention of under-represented groups. DiversityAustralia needs a high quality higher education sector with a range of institutions servicing different communities and varied requirements. It is neither necessary nor desirable for all universities to be the same. A more diverse system will be achieved by institutions forging distinct missions within the overall system and through greater collaboration between individual universities and other education providers, industry, business, regions and communities. 1.3 Future directionsThe future direction of Australian higher education will be forged through an integrated policy framework based on the four foundation principles outlined above. The reforms will establish a partially deregulated system of higher education in which individual universities are able to capitalise on their particular strengths and determine the value of their course offerings in the market place. There will be renewed emphasis on teaching and learning outcomes, greater recognition of the role of regional campuses and institutions, and a framework for research in which all Commonwealth funding is either competitive or performance-based. New arrangements for student financing will encourage lifelong learning and ensure equity of access to higher education – no eligible student will be required to pay fees up front when they enrol with an eligible higher education institution. Higher education will be free at the point of entry. Improved access for disadvantaged groups will be supported, and the market for private higher education will be opened up, while still enhancing quality control. Diversity will be encouraged through the creation of performance-based incentives for institutions to differentiate their missions. Laying the foundation for this ten year vision, approximately $1.5 billion in additional funding will be invested in higher education over the next four years, with more than $660 million in additional funding per year from 2007. Over the next ten years, the Commonwealth will provide more than $10 billion in new support for higher education, including an estimated $6.9 billion in additional funding to the sector and approximately $3.7 billion to support new student loans. There are three major elements to the reforms. 1. Support for higher education institutionsA new Commonwealth Grant Scheme (CGS) will replace the current system of block operating grants to each university. The Commonwealth will negotiate with each higher education institution to deliver a specified number of Commonwealth supported places in particular course disciplines. This will ensure that universities provide the courses and the numbers of graduates that are needed by the nation. Each institution that receives funds under the CGS will enter into a Funding Agreement with the Commonwealth. The Agreement will specify the number of places and the discipline mix that the Commonwealth will support. Institutions will be paid according to the discipline mix actually delivered in a year, as long as the total Commonwealth contribution does not exceed one per cent of the Commonwealth contribution that would have been payable on the agreed discipline mix. Penalties will apply to institutions that enrol Commonwealth supported students beyond a two per cent limit. Each university will set its own student contribution levels within the ranges set by the Commonwealth. Commonwealth funding per student will increase, following institutions’ adherence to a set of National Governance Protocols and compliance with Commonwealth workplace relations policies. Higher funding levels will also be introduced for student places at regional campuses of public higher education institutions. Approximately 25,000 new Commonwealth supported places will replace marginally funded places from 2005. These places will be distributed throughout the sector over four years from 2005. There will be additional Commonwealth supported places provided annually from 2007 to meet anticipated population growth. This will create 1,400 new Commonwealth supported places in 2007. An additional 745 places will be provided by 2008 in the National Priority areas of nursing and teaching. 2. Support for studentsA suite of income contingent loans under the new Higher Education Loan Programme (HELP) will underpin student financing. All eligible Australians will receive a Learning Entitlement of five years of equivalent full-time higher education (to be extended on a pro-rata basis if studying part-time) with an extension beyond five years where a student is undertaking an initial undergraduate course or pathway in which the normal enrolment period is longer than five years (e.g. medicine at undergraduate or graduate degree levels or double degrees with honours). Learning Entitlement appeal mechanisms and associated remission of debts, where circumstances prevent students from completing studies, will be the responsibility of institutions. Individuals will also receive an additional entitlement after a specified number of years to be determined by the Commonwealth at a later date. There will be enhancements to the current Higher Education Contribution Scheme (HECS), including an increase in the repayment threshold from $24,365 (2002–03) to $30,000 (2005–6). For the first time loans will also be offered to help students who are paying full fees in public and eligible private higher education institutions (FEE-HELP). A third loan scheme will be established for students who need financial assistance to study overseas (OSHELP). Commonwealth Learning Scholarships for educational and accommodation costs will also be offered. Increased support will be provided to students from disadvantaged groups, particularly Indigenous students.
3. Support for a diverse and equitable systemPerformance and incentive funding will be available to encourage universities to differentiate their missions and to achieve reform in the areas of learning and teaching, equity, workplace productivity, collaboration and quality. The reforms outlined in this paper are subject to the passage of Commonwealth legislation. Full implementation details for the reforms will be provided over the coming months.
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Any comments or
queries should be sent to:
highered@dest.gov.au
Department of Education, Science and Training
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