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Policy Paper2 Support for higher education institutions2.1 New model for Commonwealth support of student places – Commonwealth Grant SchemeThe Commonwealth currently provides public higher education institutions with block grants determined largely on a historical basis. To encourage greater flexibility and diversity in the sector, a new Commonwealth Grant Scheme (CGS) for teaching and scholarship will replace the current block grants system. The Commonwealth will provide a contribution, set by discipline, towards the cost of an agreed number of Commonwealth supported places actually delivered in a year (see Table A). Each higher education institution that receives funds under the CGS will enter into a Funding Agreement with the Commonwealth with annual negotiations to take place over the number of places and the discipline mix that the Commonwealth will support. Places to be supported may be at the undergraduate level, the postgraduate non-research level in negotiated fields, and in enabling courses. The Agreement will be negotiated in the context of each institution’s mission and strategic direction for course provision, with strengthened Commonwealth/State consultation. 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 consistently enrol non full fee paying students beyond a two per cent limit. Unfilled places from institutions that consistently under enrol will be redistributed to other universities according to Commonwealth priorities, following consultations with the States and Territories. Though some may argue that these measures may limit deregulation, the Commonwealth is not prepared to countenance outcomes that would result in significant changes in institutional enrolment patterns, which may particularly affect smaller and regional universities. Table A: Commonwealth Course
Contribution Schedule 2005 (a)
(a) Figures are for Equivalent Full-time Students undertaking units in indicated discipline. The Commonwealth course contributions are for institutions that receive the 2.5 per cent increase in Commonwealth contributions through compliance with the National Governance Protocols and workplace relations policies. (b) The Commonwealth contribution towards course costs represents the base amount provided to institutions for students in a particular discipline. The total Commonwealth funding that supports individual students is much greater than this and includes other funding provided for operating and research purposes. 2.2 Increased Commonwealth course contributionsTo ensure the long term sustainability and quality of the sector within
an environment of limited deregulation and international competition, the
Commonwealth will inject a further $404.3 million into the higher education
sector by incrementally increasing its contribution per student place by 2.5
per cent from 2005, building to a 7.5 per cent increase by 2007. This
increase in funding will be provided once an institution has adhered to the
National Governance Protocols (see Attachment A) and has demonstrated
compliance with the Commonwealth’s workplace relations policies. In
particular, enterprise agreements should not preclude the option of
negotiating Australian Workplace Agreements. 2.3 National Governance ProtocolsUniversities are not businesses but nevertheless manage multi-million dollar budgets. As such they need to be run in a business-like fashion. Anachronistic governance arrangements, in which universities have up to 35 Council members and an average of 21, are not conducive to sound decision making. Following the October 2002 decision by State and Territory Education Ministers and their Governments to decline an invitation by the Commonwealth to participate in the development of a set of national protocols for university governance, the Commonwealth has developed a set of National Governance Protocols for Public Higher Education Institutions (Attachment A). These Protocols build on the outcomes of the Review of University Governance undertaken by the Victorian Government (2002) and the Higher Education Management Review chaired by David Hoare (1995). These Protocols will strengthen university governance by increasing the responsibilities of university councils in overseeing commercial activities, requiring councils to discharge these responsibilities in a transparent way and ensuring the protection of the public interest. The Protocols were developed on advice from both the university and business sectors having regard to current best practice models. The Protocols will require universities to specify the duties of their council members, and have in place a formal programme of professional development for council members. Members will be required to be ‘trustees’ of the institution and act solely in the interests of the university rather than as a delegate or representative of a particular constituency. Councils will not exceed 18 members and will have at least two members with financial expertise and one with commercial expertise. The majority of members will be external to the institution. The incremental increases in funding under the Commonwealth Grant Scheme will be conditional on implementation of these Protocols and the workplace reform requirements outlined in Section 2.2. This is in the best interests of universities and necessary for the building of a modern Australia. New legislation will outline the conditionality of funding and compliance will be monitored through the new Funding Agreements to be negotiated between the Commonwealth and each institution. Institutions will need to agree to and implement those aspects of the Protocols that are within their legal power. Each State and Territory will be required to agree to and implement those aspects of the Protocols within their power, including passage of relevant legislation, if institutions within its jurisdiction are to receive the CGS funding increase. Amendments will also be made to the legislation of the two institutions under direct Commonwealth control, namely the Australian National University and the Australian Maritime College, to ensure that their governance arrangements reflect best practice and the National Governance Protocols. 2.4 Regional loadingUniversities that provide places at regional campuses face higher costs as a result of location, size and history. Regional campuses generally have less potential to diversify revenue sources, a smaller capacity to compete for fee paying students and a narrower industrial base providing fewer opportunities for commercial partnerships. From 2004, the Commonwealth will provide an additional $122.6 million over four years to incorporate a regional loading into the CGS for students enrolled at regional campuses of public higher education institutions. For the purpose of the CGS regional loading, a regional campus will be a campus located outside a mainland State capital city area in a population centre with fewer than 250,000 people. Having satisfied the initial test of regionality, a campus would be recognised within one of four bands, established according to two criteria: distance from the closest mainland State capital; and size of institution.
Table B: Regional Loading Bands
(a) Band 1: Campus located in the Northern Territory; Band 2: Campus is more than 300 km from a mainland capital city and has fewer than 10,000 EFTSU; Band 3: Campus is either more than 300 km from a mainland capital city or has fewer than 10,000 EFTSU; Band 4: Campus is neither more than 300 km from a mainland capital city or has fewer than 10,000 EFTSU. (b) Loadings are based on 2001 higher education data and may vary in future years according to the actual numbers of students in regional campuses of public higher education institutions. 2.5 Conversion of marginal placesApproximately 25,000 new Commonwealth supported places will replace marginally funded places from 2005. The Commonwealth currently provides ‘marginal funding’ for ‘over-enrolled’ places (around $2,700 per full-time student place in 2002). Stakeholders expressed significant concern during the Review about the impact of these ‘over-enrolments’ on the quality of Australian higher education. Places funded on a marginal basis will be phased out over a period of
four years from 2005. These will be replaced by approximately 25,000 new
Commonwealth supported places which will be distributed throughout the
sector over four years from 2005 according to Commonwealth priorities,
taking into account the outcomes of discussions on labour market needs with
States and Territories. This initiative will increase Commonwealth funding
for student places by $347.6 million over three years. 2.6 Growth in university placesAdditional Commonwealth supported places will be provided annually from 2007 to meet anticipated population growth. In 2007, 1,400 new Commonwealth supported places will be distributed across the sector providing an additional $10.9 million. These places will be allocated on the basis of Commonwealth priorities, taking into account the outcomes of discussions with States and Territories on labour market needs. Additional places will also be provided prior to 2007 in the National Priority areas of nursing and teaching (see Section 2.7). An additional 234 Commonwealth supported medical school intake places will be created each year from January 2004 (increasing to 1,400 as students continue in their courses). All the new medical school places created through this measure will be ‘bonded’ to areas of workforce shortage. Under this arrangement, students taking these places will be required to work for a minimum of six years in an area of workforce shortage for their chosen speciality. This will be of particular benefit to outer metropolitan and rural areas. 2.7 National Priority areasAdditional support will be provided for areas identified by the Commonwealth as National Priorities. This will allow the Commonwealth to respond to current and emerging national needs, such as shortages in particular areas of the labour market and the education of Indigenous students. The Commonwealth will review National Priorities periodically. Teaching and nursing have been identified as initial key areas of National Priority, to ensure an adequate supply of high quality graduates for Australia’s schools and hospitals. The National Review of Nursing Education brought down its recommendations in 2002, and the Review of Teaching and Teacher Education will issue a final report in mid-2003. Findings from both reviews suggest a need for further support for institutions offering courses in these areas. The Commonwealth will therefore increase its contribution to institutions offering teaching and nursing courses. The additional funding will be required to be directed towards the costs associated with clinical practice in nursing and the teaching practicum. Additional Commonwealth funding for existing nursing places will begin in 2004 and over four years will result in an increase of $40.4 million. The increase in Commonwealth funding for existing teaching places will begin in 2005 with an additional $81.4 million being invested in teaching places over three years. The new ‘National Priorities’ student contribution band will be used to attract students to courses that are a national priority for the Government. Commencing from 2005, this band will initially apply to nursing and teaching courses. The maximum student contribution payable for these disciplines will be set as if the current HECS schedule continued to apply to those disciplines. Fees for students in Commonwealth supported places in the areas of teaching and nursing will therefore not increase and may in fact go down in some institutions. The student contribution range will initially be $0–$3,854. There is a pressing need to respond to the current shortage of working nurses due largely to the high attrition rate of nurses from the workforce, coupled with increasing demand for nursing places. The Commonwealth notes that the Review of Nursing Education emphasised the need for improved conditions and remuneration in order to improve retention in the nursing profession. In large part it is the responsibility of State and Territory governments to ensure that nursing graduates remain in the system. In the expectation that the States and Territories will accept their responsibility in this regard, the Commonwealth will provide an additional 210 nursing places in regional campuses, rising to 574 places by 2007 as students continue their courses, at a cost of $17.1 million over four years, to assist in addressing the nursing shortage. The 1,400 new Commonwealth supported places being made available across the sector in 2007, may be used for the delivery of teaching and nursing should demand exist. The Commonwealth currently supports students in a number of private higher education institutions. Not all of these places are in areas of National Priority and, given the need to maximise the effectiveness of Commonwealth funding, this assistance will be rationalised. The Commonwealth will set aside up to 1,400 Commonwealth supported places for allocation to private higher education institutions. These 1,400 places will include the 655 Commonwealth supported places currently provided to Avondale College (teaching) and the University of Notre Dame Australia (teaching, ICT and places occupied by Indigenous students at the Broome campus). By 2008 the new 745 places will provide an additional $22.1 million in funding. They will be allocated on the basis of the Commonwealth’s assessment of needs and priorities, in consultation with States and Territories with regard to their labour market needs. A private higher education institution delivering places for which the Commonwealth provides a course contribution must be listed as a higher education institution on the Australian Qualifications Framework Register; be subject to audit by the Australian Universities Quality Agency; and meet additional quality assurance and reporting requirements as specified by the Commonwealth. 2.8 Learning EntitlementsFrom 1 January 2005, all eligible Australian citizens, New Zealand citizens and holders of Australian permanent visas will receive a Learning Entitlement, giving them access to five years equivalent full-time study in a Commonwealth supported place. Australian citizens and holders of Australian permanent humanitarian visas will also be eligible for a Commonwealth subsidised loan under HECS-HELP. The five-year entitlement may be extended 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). Students undertaking enabling courses will not be required to use any of their Learning Entitlement. Learning Entitlement appeal mechanisms and associated remission of debts, where circumstances prevent students from completing studies, will be the responsibility of institutions. The Learning Entitlement will provide greater opportunities for more
students to gain access to a Commonwealth supported higher education place
as new entrants occupy places freed by students who have consumed their
entitlement. To encourage lifelong learning, individuals will also receive
an additional entitlement after a specified number of years to be determined
by the Commonwealth (details will be announced at a later stage). Students
will start using their Learning Entitlement from 1 January 2005. 2.9 Changes to arrangements for full fee paying studentsThere are approximately 9,400 Australian undergraduate students in full fee paying places, representing less than two per cent of the domestic undergraduate student population of 531,000. The maximum number of domestic full fee paying students in any undergraduate course is currently 25 per cent of the total number of places, if an institution has met its undergraduate student load target. This maximum will increase to 50 per cent (with the exception of medicine) excluding employer/industry funded places, to allow institutions to better respond to student demand in particular areas and to give students more opportunities to study in the institution or course of their choice. Universities will be required to submit minimum entrance cut-offs for the previous and current year for commencing students, whether they be in a Commonwealth supported place or a full fee paying place, to be made publicly available on the new Higher Education Information Management System (HEIMS, see Section 11). Prohibitions on domestic postgraduate fee paying students will be removed in respect of postgraduate nursing and teacher education courses that lead to initial registration. In the case of medical school places, the Commonwealth will allow some limited deregulation, with restrictions to continue on the overall level of intake places and the proportion of places that can be full fee paying. From 2005, the maximum number of domestic full fee paying students in programmes leading to provisional registration as a medical practitioner will be limited to 10 per cent. A national review of the allocation of medical school places will be undertaken by the Health and Ageing portfolio in 2006–07 and will include an evaluation of this initial partial deregulation. New arrangements will be established for employer/industry courses and places. The Commonwealth will not support places where employers or industry have negotiated to restrict access to those places to employees or potential employees. This means that students in those places will not be able to use their Learning Entitlement or have access to HECS-HELP to meet any related fees, although they will have access to the new FEE-HELP loans (see Section 3.2). New tax incentives to encourage employer/industry investment in higher education will be investigated by the Australian Taxation Office. Current arrangements for overseas fee paying students will not change. 2.10 Reporting requirementsCurrent work to minimise Commonwealth and State/Territory reporting requirements for higher education institutions will continue. The Department of Education, Science and Training (DEST), in consultation with the Australian Vice-Chancellors’ Committee, has developed an Institution Assessment Framework to assess universities through analysis of a range of statistical, financial and other data, a substantial amount of which universities already collect, either to meet legislative requirements, to support internal planning processes, or to release as public information. The Department will refine the Framework over the course of 2003 and it will replace the Profiles process from 2004. The introduction of performance-based funding for a number of new programmes will require streamlined and rationalised reporting arrangements. This will be achieved in large measure by the development and implementation of the Higher Education Information Management System, discussed in detail in Section 11.
The Commonwealth is determined to ensure that institutions are required to
provide the minimum of reporting whilst maintaining the highest levels of
accountability for public investment. 2.11 State/Territory and Commonwealth relationshipsThe Commonwealth will consult with State and Territory governments on a number of issues arising from the reforms, including the progressive allocation of converted marginal places from 2005 and Commonwealth supported growth places from 2007. The distribution of places is an issue which the Commonwealth has previously attempted to discuss with the States and Territories without success. Information that States and Territories provide on their state and regional labour markets will inform both the Commonwealth’s identification of National Priority areas and allocation of the 745 Commonwealth supported places set aside for courses in areas of National Priority in private higher education institutions. States and Territories will need to agree to the
Commonwealth’s National Governance Protocols, and implement those aspects of
the Protocols within their power, including legislation, if institutions
within their jurisdiction are to receive the Commonwealth funding increases
to be introduced incrementally from 2005. 2.12 Transitional ArrangementsA transition fund of $12.6 million will be available in 2005 to assist institutions adjust to the new arrangements, to ensure that no institution is significantly disadvantaged. During 2003, the Department of Communications, Information Technology and the Arts will consult relevant National Performing Arts Training Organisations on the application of the new arrangements to their particular circumstances. Appropriate arrangements will be in place prior to 2005. For historical reasons, Marcus Oldham College in Victoria currently receives an annual Commonwealth allocation for student places in agribusiness. These students are required to pay fees and do not have access to existing HECS arrangements. These arrangements do not fit within the new higher education policy framework, and therefore Marcus Oldham College will receive a one-off payment of $2.1 million in 2004, in lieu of future annual funding allocations.
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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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