Higher Education Review Process

Higher Education at the Crossroads: An Overview Paper

attachment a
background and statistics

• structure and scope
• quality assurance
• australian participation in education
• overseas students
• funding
• students
• staff

structure and scope

a1   Australia’s education system has three sectors: schooling, vocational education and training (VET) and higher education. Qualifications from each sector are awarded within a coherent national structure called the Australian Qualifications Framework (AQF)
(figure a1). Adult and community education programmes are also offered by a number of institutions and compliment the formal educational programmes under the AQF.

figure a1: the australian qualifications framework

a2   In 2000, around 5.5 million Australians participated in education. State, Territory and Commonwealth Governments and other providers share responsibility for the education system, with particular roles varying between sectors (table a1).

table a1: roles and responsibilities in the australian education system

a3   Table A2 shows the scope of the Australian education system. Simple comparisons between sectors should be undertaken with care because of wide variations in study loads, course lengths and the degree of private investment by sector.

table a2: key features of the australian education system, 1997

      Sources: ABS 4224.0 (1998)
Higher Education Funding Report for the 1998–2000 Triennium.
unpublished DEST data.

school education

a4   In the last two decades, Australia has seen the numbers of students completing the full 13 years of school education steadily increase. The apparent retention rate of secondary school students to year 12 was 72.3 per cent in 2000, although there were considerable interstate variations (ABS 4221.0, 2000). In 2000, 9 595 Australian schools catered for 3 247 425 school students, with 69 per cent of students attending government schools. Australia’s governments provided $18.4 billion to school education in the 1999-00 FY (including private schools).

vocational education and training

a5   In 2000, 1 627 285 people participated in VET. Participation varies from a 12-week course to full-time attendance at college. Some 63 per cent of VET participants are part-time. In 1997 there were 2 110 registered VET providers, which included government providers (operating in some 1000 locations), commercial providers and community providers and employers. In 1997, 74 per cent of post-school VET students were enrolled in colleges of Technical and Further Education (TAFE), which are funded and administered by State and Territory governments. In 1998 it is estimated that $8.5 billion was spent on vocational education and training, with 44 per cent of this being public spending (NOOSR 2000).

higher education

a6   Australia’s higher education system currently comprises:

• 39 universities;

• 4 other self-accrediting higher education institutions (Batchelor Institute of Indigenous Tertiary Education, Australian Maritime College (AMC),
  Melbourne College of Divinity (MCD) and the Australian, Film, Television and
  Radio School); and

• around 85 other higher education providers accredited by State and Territory accreditation authorities. These include theological colleges and providers with specialist interests in particular vocational or artistic fields.

a7   The number of private and non-self accrediting higher education institutions has changed periodically. The number of private higher education institutions in this report is from the most recent national survey, conducted by Watson (1999).

a8   There are 42 institutions eligible for Commonwealth operating grants. Eligibility for operating grants and loans is determined by the Parliament listing an institution in the Higher Education Funding Act 1988. This list includes 38 universities (Bond University is excluded), Batchelor Institute, AMC, Avondale College and Marcus Oldham College. A slightly different list of institutions are eligible for research support. The research list includes all 39 universities, Batchelor Institute, AMC, and MCD.

a9   Australian undergraduate students enrolled at those institutions – other than those admitted on a full fee-paying basis - may access the Higher Education Contributions Scheme (HECS). HECS provides a tuition cost subsidy and an income-contingent loan which has no real rate of interest. Australian postgraduate students enrolled at those same institutions may borrow for tuition fees through the Postgraduate Education Loans Scheme (PELS), which like HECS, is income-contingent and interest free.

a10  With the exception of the Australian National University and AMC, which are established under Commonwealth legislation, and the Australian Catholic University, which is established under companies law, higher education institutions are established under State or Territory legislation. The establishment legislation typically defines the powers and composition of the governing body of the institution.

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quality assurance

a11   The quality assurance framework for higher education in Australia encompasses:

• the Australian Qualifications Framework (AQF), which was established in 1995. It provides for the national articulation of awards. There is a public register of self-accrediting institutions that are recognised by MCEETYA (figure a1);

• Self-accrediting universities, which are established under legislation with the authority to accredit their own programmes and with primary responsibility for assuring academic and administrative standards;

• State and Territory governments, whose responsibilities were standardised in the National Protocols for Higher Education Approval Processes (National Protocols) in March 2000, especially in respect of the recognition of new universities;

• the Australian Universities Quality Agency (AUQA), which began operations in 2001. It monitors and reports on quality assurance in Australian higher education, and audits each self-accrediting institution and the accreditation bodies of the States and Territories over a five-year cycle; and

• the Commonwealth Government, which monitors and publishes performance data annually and promotes quality and excellence in teaching; for example, through the Australian Universities Teaching Committee (AUTC), established in 2000, and the Australian Awards for University Teaching.

a12  The National Protocols contain agreed criteria, which an institution must meet for recognition as a university. They state:

An Australian university will demonstrate the following features:

• authorisation by law to award higher education qualifications across a range of fields and to set standards for those qualifications which are equivalent to Australian and international standards;

• teaching and learning that engages with advanced knowledge and inquiry;

• a culture of sustained scholarship extending from that which informs inquiry and basic teaching and learning, to the creation of new knowledge through research and original creative endeavour;

• commitment of teachers, researchers, course designers and assessors to free inquiry and the systematic advancement of knowledge;

• governance, procedural rules, organisation, admission policies, financial arrangements and quality assurance processes, which are underpinned by the values and goals outline above, and which are sufficient to ensure the integrity of the institution’s academic programmes; and

• sufficient financial and other resources to enable the institutions’ programme to be delivered and sustained into the future.

a13  The National Protocols also contain criteria, which must be met for the accreditation of higher education courses offered by non-self accrediting institutions. These are:

• the course design and content should satisfy the requirements set in the Australian Qualifications Framework for the award level;

• the course should be comparable in requirements and learning outcomes to a course at the same level in a similar field at an Australian university;

• the delivery arrangements, including matters of institutional governance, facilities, staffing, and student services are appropriate to higher education and enable successful delivery of the course at the level proposed; and

• the provider has appropriate financial and other arrangements to permit the successful delivery of the course, and is a fit and proper person to accept responsibility for the course.

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australian participation in education

a14 In 2001, 44 per cent of Australia’s workforce had completed a post-school qualification. Twenty-six per cent of people in the labour force reported that their highest level of educational attainment was Year 10 and below (table a3).

table a3: highest level of educational attainment by labour force status,
may 2001(a)

      (a) For persons aged 15 to 64 years.
source: ABS 6227.0 (2001)

a15  Like most developed countries, Australia’s population structure is ageing with its largest age group being 30-39 year olds and fewer people in each successively younger age group (table a4).

table a4: australia’s population, 2001

source: ABS 3201.0 (2001)

a16  Over 8 million Australians (42 per cent of the population) are under the age of
30 years. These are the people most likely to participate in education (table a5).

table a5: australian participation rates, 2000

source: DEST, unpublished data

a17  Australia’s current and projected age structures are not regionally uniform. Planning throughout the education system will need to be mindful of considerable regional variations in the expected size of those age groups which place high demand on educational services (for example, see figure a2).

figure a2: index of estimated population growth, 15 to 19 year olds by state,
2000–2019

source: ABS 1353.0 (2000)

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overseas students

a18  Overseas student numbers have been increasing steadily since the mid 1980s. In 2000, there were 188 277 overseas students enrolled with Australian education and training providers, which represents an increase of 16 per cent from 1999. Eighty-one per cent of overseas students resided in Australia in 2000. Most overseas students participated in the higher education sector (table a6) and most of those undertaking VET or higher education courses studied in the fields of business, administration and economics (table a7).

table a6: overseas students by educational sector

      (a) Figures do not match Selected Higher Education Statistics because of definitional differences.
source: AEI: Overseas Student Statistics 2000

table a7: most popular courses for overseas students

source: AEI: Overseas Student Statistics 2000

a19  The export value of Australian education was $4.0 billion in 2000–01 including fees and living expenses. Government supports the education export industry through Australian Education International by providing 55 per cent of the organisation’s $15.6 million funds (200001 FY). The Commonwealth Government plays a key role in promoting the internationalisation of education, including trade in education and trade in professional services. It facilitates the recognition in Australia of qualifications gained overseas and promotes the recognition of Australian qualifications in other countries.

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funding

a20  The higher education sector has experienced considerable revenue growth over the last half century. Revenue has increased from Ł2.9 million in 1950 to $9.3 billion in 2000 (CBCS, 1950). In real terms, this represents a 95-fold increase in revenue over 50 years.

a21  There have also been considerable shifts in revenue sources. Four key features of figure a3 demonstrate the long term shifts in university income sources. Firstly, the increasing role of the Commonwealth and the decreasing role of the States in university financing in the post-war era can be seen (reflecting the transfer of income taxation powers to the Commonwealth). Secondly, the figure shows a gradual movement since the late 1980s to restore the share of university income derived from students. Thirdly, the figure shows increasing reliance of universities on revenue earned from other than domestic students, notably overseas fee-paying students but also including consultancy services. Finally, the figure shows a declining share of revenue obtained from investments, endowments and donations.

figure a3: university income by source, 1939–2000

institutional funding

a22  At the beginning of the decade Commonwealth grants, of $3.4 billion, made up over 60 per cent of university revenue. By 2000 universities obtained less than half their revenue from Commonwealth grants, which totalled $4.2 billion.

a23  From the mid-1980s the Commonwealth encouraged universities to find funds from other sources in order to ensure that the system could continue to expand. Over the decade, income from fees and charges doubled mainly due to the conscious effort of universities to attract more overseas students. The number of overseas students tripled. By 1999 revenue from fee-paying overseas students amounted to $805 million or approximately 10 per cent of sector revenue.

a24  Domestic fee-paying postgraduate students provided another source of funds. In 1991 there were 85 985 domestic postgraduate students and around 10 per cent of them paid fees. By 2000 there were 113 238 domestic postgraduate students, some 45 per cent of whom were fee-paying. Thus the number of domestic fee-paying students increased by five fold over the decade. In 1999 domestic postgraduate fees provided $176 million to institutional revenue.

a25  In 1998 and subsequent years, the Commonwealth Government paid universities the equivalent of the minimum up-front HECS payment for each undergraduate student enrolled above the target level who was liable to pay the contribution. This was equal to $2 644 per student in 2001. In 2001, undergraduate over-enrolments totalled 30 658 equivalent full-time students and will cost $66 million.

a26  Changes to HECS increased the flow of funds to the sector throughout the decade. The changes announced in 1996 had by far the biggest impact. Between the financial years 1996–97 and 1997–98 revenue from repayment of debts through the tax system increased from around $260 million to over $470 million. In 1999–00 repayments contributed over $532 million.

a27  The increase in funding available through the Commonwealth and other sources also focussed universities on research activity. Research output increased in a number of areas.

a28  Funds flowing to higher education institutions from other Commonwealth portfolios (mainly Health, Industry and Agriculture) totalled around $300 million in 2000 (excluding Cooperative Research Centre funding).

a29  Table A8 provides details of the changes in revenue and expenditure experienced by the sector over the 1990s as well as other changes in revenue and expenditure.

table a8: finance characteristics 1991 and 2000

part a university operating revenue before abnormal items

part b university operating expense before abnormal items

part c revenue sources

part d higher education research expenditure 1996 and 2000

      (a) 2000 Salaries do not include superannuation
(b) includes HECS
(c) excludes HECS
(d) books are weighted at 5
source: For parts a, b and c— Selected Higher Education Statistics 1992, DEST Finance 2000, Selected Higher Education Statistics. For part d—Higher Education Research Data Collection.

a30 The total revenue of the 40 publicly funded higher education institutions was
$9.3 billion in 2000. Figure A4 shows the share of revenue from various sources
in 2000. Commonwealth payments through the education portfolio in 2001 totalled over $5.86 billion and comprised:

• $4.7 billion for general operating purposes, including HECS contributions; and
• $1.2 billion for research and research training programmes.

figure a4: sources of revenue, 2000—contribution analysis

source: Higher Education Report for the 2002 to 2004 Triennium

tuition funding

a31  Several areas of higher education provision have been deregulated or partially deregulated since the late 1980s. Overseas students are now almost entirely full fee-paying. Almost two-thirds of Australian enrolments at the postgraduate coursework level were fee-payers in 2001. Some full-fee places are also available at the undergraduate and postgraduate research levels, but only when all fully subsidised places are filled, and for undergraduates, only up to 25 per cent of fully subsidised enrolments in any course.

a32  Most domestic undergraduate students contribute to the cost of their education through the Higher Education Contribution Scheme (HECS). Prior to 1 January 1997, students paid a flat rate of HECS. Since then, students commencing a new course of study pay HECS at one of three different levels depending on the course they are studying. The current HECS contribution levels per annum are:

• $3 598: arts and humanities; justice, legal studies; social science and behavioural science; visual and performing arts; education and nursing;

• $5 125: mathematics and computing; other health sciences; agriculture and renewable resources; built environment and architecture; science, engineering and processing; and administration, business and economics; and

• $5 999: medicine and medical science; dentistry and dental services; veterinary science and law.

a33  Students who defer payment of HECS begin repaying their debt through the tax system when their income reaches the minimum threshold, which is $23 242 for the 2001–02 financial year. HECS debtors exempt from the Medicare levy or who have a reduced Medicare levy are not required to make repayments. Students receive a 25 per cent discount on any amount over $500 paid up-front to a university. People who make voluntary repayments of HECS debts over $500 to the Taxation Office receive a 15 per cent discount. On average, students contribute around 24 per cent (or $3000) towards the annual cost of their courses. The Commonwealth, on average, pays around $12 000 a year (including the student contribution) for each university place.

a34  From January 2002 postgraduate coursework students at publicly funded universities are able to access loans under the Postgraduate Education Loans Scheme (PELS). These loans have no real rate of interest and are only for meeting the cost of up-front fees. Debts are added to any existing HECS or OLDPS debt and the combined amount becomes a single debt to be repaid in the same way as HECS.

a35  The Open Learning Deferred Payments Scheme (OLDPS) is available for students taking undergraduate units through Open Universities Australia (OLA). Students must be studying full time (i.e. doing at least two undergraduate units in a study period) and have made satisfactory progress. In 2001 undergraduate units cost $425 each. The OLDPS loan is $352 for each subject. OLDPS debts are repaid in the same way as HECS and PELS.

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students

a36  Over the decade, the number of students participating in higher education increased by 30 per cent, from approximately 534 500 students in 1991 to 695 500 students in 2000. This dramatic increase in the number of students participating in higher education was the result of:

• the Commonwealth Government increasing targets for undergraduate student load, combined with the introduction of marginal funding of students above
  target load;

• an increase in the number of overseas students; and

• an increase in the number of postgraduate fee paying students.

a37 Undergraduate target load was first specified in 1994. Since then the target load has increased each year. Universities have consistently enrolled undergraduate students beyond the targets set by the Commonwealth. Between 1996 and 2001, undergraduate over-enrolment increased from 11 417 to 30 658 equivalent full-time student units.

a38 The increase in overseas students was undoubtedly driven by the fact that universities could charge these students full fees. Universities were quick to take up the opportunity to generate income and the number of overseas students enrolled in Australian universities increased from just over 29 600 in 1991 to around 95 600 in 2000.

a39 The story is somewhat similar for postgraduate students, with the number of fee-paying Australian students increasing from around 9000 in 1991 to 51 000 in 2000.

a40 Table a9 provides a summary of changes in the student population over the last decade.

table a9: student characteristics 1991 and 2000

(continued)

table a9: student characteristics 1991 and 2000 (continued)