The Group of Eight (Go8) welcomes the opportunity to provide input into Labor’s inquiry into post-secondary education (PSE).
We strongly support the need to conduct a thorough, independent and comprehensive review of the entire PSE sector and to develop a comprehensive stable framework and funding system. The PSE sector is vital for the economy and to meet the skills, knowledge and innovation needs of the future.
The Demand Driven System (DDS) has been a great success for Australia. It has opened up a university education to a large proportion of school leavers, creating new opportunities and contributing to social progress and economic prosperity. It has served the nation well, but now needs revision to meet current socioeconomic and work force challenges and needs.
The Go8 believes that the future of work means Australia is going to require a more and more sophisticated PSE system if it is going to thrive, within which the vast majority of people will receive training and education that goes beyond secondary education. This will include high end studies at Bachelor, Masters and Doctoral levels at Go8 universities – but also a range of credentials that support life-long learning. It will include a large, high-quality Vocational Education and Training (VET) sector that seamlessly links into subjects at the diploma and associate degree levels. And the system will need to provide multiple pathways and encourage affordable and targeted life-long learning for people from all educational starting points and backgrounds.
In the fourth industrial revolution, careers will no longer be built from a single, foundational qualification, undertaken immediately following secondary school. Instead, they will require a portfolio of skills and knowledges, combined with practical application, gathered over time across a spectrum of roles, industries and educational institutions.
Diversity will be our strength in this process.
For this reason, we must avoid outdated concepts that pit institutions or sectors against each other, and instead recognise how each contributes to creating the multi-skilled, adaptive, diverse and flexible workforce on which national success will depend.
Through this review, the ALP has gifted itself a once in a generation opportunity to develop a coherent and cohesive vision of a post school education sector which rests on an integrated and supportive policy framework. To shy away from this challenge is to waste the opportunity on which the ALP is prepared to embark.
The review must have a focus on participation of students from low socio-economic backgrounds. While some significant gains in access have been made for some equity groups since 2009 (most notably students from low socio-economic backgrounds as currently defined, and Aboriginal and Torres Strait Islander students) levels of participation have not improved sufficiently for some disadvantaged groups relative to the broader population. They have deteriorated for students from rural and remote areas and there have been challenges with levels of attrition.
The new review’s terms of reference should require it to take a fresh, evidence-based look at equity of participation in post-school education, and to recommend the long-term strategies that should be pursued to reach parity in post-secondary educational outcomes.
We believe it is essential that this review:
- Recognises the diverse range of roles and types of institutions within and between the higher education and VET sector. The funding model will need to recognise and encourage that diversity.
- Assesses the vital impact and contribution of tertiary education institutions to Australia – with our education, research, innovation having a profound economic and social impact. Understanding this impact is important in recognising the return on investment by public funds.
- Explores how best to encourage and enable our institutions, as applicable, to contribute to the innovation ecosystem.
- Adopts a holistic view of the finances of the sector, looking at not just the immediate direct costs but also the substantial economic benefit from the skilled work force produced, the commercialisation of research and international education. From this perspective, funding PSE can be seen as an astute investment for economic return.
Any legitimate review of our sector must be prepared to face and address the distorted funding model whereby teaching, particularly of international students, cross-subsidises research.
It is critical for the economic future of Australia that research is properly funded and that proposals for change are advanced with a clear view of the impact on other parts of the system.
Research is the life-blood of a knowledge economy. It provides the discoveries that drive innovation, technological development and greater efficiencies in our systems and processes. Without it, we risk a slow slide into irrelevancy.
Yet the current distorted funding model limits the capacity of Australia’s high performing institutions to provide the innovative research solutions that competitor nations are pursuing with far more effect. Across the Go8 alone the cross-subsidy forced by this distortion is estimated at over $2 billion, representing nearly a quarter of the total R&D spend by Australian universities.
As noted above, much of this comes from international student tuition fees. However, that situation is becoming increasingly precarious. Competition among nations for these students is ramping up, and countries such as Canada, New Zealand, China and Japan have much to offer prospective students. Should we cease to be perceived as an attractive destination – or even simply be seen as less attractive than these other options – all of these achievements, as well as Australia’s role as an innovative, knowledge-based economy, is at risk.
We desperately need a Plan B. We urge the ALP to use its review to get the funding settings right.
But it is also essential to recognise that education and research are not costs, but investments in the prosperity and wellbeing of our nation. A 2015 report by Deloitte Access Economics estimated: 
- The existing stock of all knowledge generated by university research to be worth almost $160 billion in 2014, equivalent to approximately 10% of Australian GDP, and exceeding the entire value-add from Australia’s mining industry;
- That increased investment in research over the last 30 years has added almost $10 billion to GDP each year (in 2014 dollars), primarily through gains to national productivity; and
- That the benefits of this improved productivity were equivalent to almost a third of the average living standards growth experienced over this 30 year period in Australia, with the majority of these benefits accruing to the public.
Finally, it is important to recognise that an effective review process is only part of the picture. Once solutions have been identified there must also be a mechanism to ensure they can be implemented and evaluated, and to address both the long-term nature of real and beneficial change and the issues that will inevitably arise in a context of continual change and disruption. Given the rapid pace of technological development it could take ten or more years for Australia to foster a cohort of workers with the necessary skills and experience in a field as new and developmental as Artificial Intelligence, for example. A stable and effective policy environment is a critical factor in the success of such a strategy. The Go8 therefore urges the ALP to complete the process through to the establishment of an ongoing independent expert advisory body, able to provide guidance through the complex landscape of meaningful policy reform. We have also included in this submission an overview of what such a body might look like (Appendix A).
The terms of reference we provide here are deliberately succinct, in accordance with the advice from your office. We look forward to discussing these with you in more detail when we meet on 17 May.
Suggested Terms of Reference
- What is Australia’s vision for a PSE sector suited to the knowledge economy in the era of the fourth industrial revolution?
- What is the role and impact of PSE in Australian society and the economy? Should there be a genuine diversity of university missions, and, if so, how should this be achieved?
- What is the appropriate structure and size of the post-secondary education system? This should include consideration of pathways between and within VET and university education and the role of institutional missions in achieving this; the role of public and private institutions; and how to address issues of disadvantage and equity in PSE. The latter should include specific consideration of the needs of Aboriginal and Torres Strait Islander students, those from low-SES backgrounds and those from rural, regional and remote areas.
- How can federal / state cooperation in training best be achieved?
- Should Australia develop a national regional higher education strategy?
- What are the appropriate admission standards for each area of PSE? How do we best cater to the needs of different cohorts of students, including international?
- How do we best support universities in conducting research across the entire continuum? eg., from basic, curiosity led endeavours through to the development of breakthrough applications that drive innovation and benefit for communities locally, nationally and globally.
- How can the funding model for PSE be shaped to reflect the return on investment for the nation as well as the direct, immediate cost?
- How can higher education best address the inevitable challenges of a developing knowledge economy? What are the emerging needs of industry, and how best might these be delivered? How do we equip students in a world of disruption and ongoing change (automation, robotics, Artificial Intelligence) as well as address the need for lifelong or ‘top up’ learning?
- What are the appropriate employment outcomes for PSE? How do we address employability – both in the immediate and longer terms – for all our student cohorts, including international?
- How do we best address the needs of disengaged young people, especially those living in regions where access to training providers or resources might be limited?
- How can Australia build and maintain world class research facilities?
- How can we resource education and training in the full PSE context to provide for the genuine cost of different educational offerings in a way that is sustainable into the future? This should include consideration of the explicit institutional missions of universities in terms of their level of research intensivity, and incorporate in that context:
- Vocational education;
- Undergraduate education by discipline (in a non-research-intensive institution);
- Undergraduate education by discipline (in a research-intensive institution);
- Postgraduate education by discipline (coursework);
- Postgraduate education by discipline (research);
- Research (ie direct and indirect costs);
- Public and private institutions; and
- Equity groups (ie., ATSI, low-SES, rural, regional, remote areas).
- How can we structure research funding in PSE to deliver outstanding discovery and applied research which generates innovation and economic return? The funding model for research should cover the full economic cost of research and consider the return on investment.
- How do we create a funding model that is long-term and strategic so that coherent higher education planning is made a priority? How do we recognise the differing missions of institutions in the funding model? How can financial sustainability be created for government support for post-secondary education – including VET – and the HELP scheme?
- The amount of the resource standard provided to the Higher Education supplier by Government depending on the prospective private benefit and ability to pay from the student undertaking the course.
- Adjustments for the educational needs of low-SES and other disadvantaged students.
- A Higher Education Commission to ensure that the funding framework continues to be developed and enhanced through solid evidence and intellectual rigour.
- What governance models should be used to regulate a remodelled PSE sector? What – if any – gaps exist in the current model?
- Appendix A: Overview of an Independent Expert Advisory Committee
As noted above, a comprehensive review of the PSE environment is only part of the effort required to ensure that Australia is best positioned for the future.
An expert, independent advisory body can also play the essential role of overseeing the implementation and evaluation of the findings, as well as providing ongoing support and advice. This will be particularly important given the increasingly complex challenges that will inevitably arise in a growing knowledge economy.
We are pleased that the ALP has already recognised the need for such an entity in its 2015 announcement of the establishment of an independent Higher Education Productivity and Performance Commission to deliver the right labour market outcomes. As noted by Opposition Leader Bill Shorten during this announcement, such a body could “build a better partnership between the Commonwealth government, and universities – upholding a new focus on accountability and performance and lifting productivity in our universities”.
Such a body should have the following features:
- be responsible for providing comprehensive and evidence-based policy advice on post-secondary education, including teaching and research, with funding decisions remaining with the Minister and government, advised by the Department;
- monitor the state of post-secondary education and provide public advice to the Minister;
- in conjunction with the Department and in consultation with the Minister, have data collection, analysis and dissemination functions, and maintain a watching brief on the health of the system, recommending action to maintain and improve it so that it continues to meet the government’s objectives;
- provide independent, comprehensive, and timely information about student enrolment, educational outcomes and other educational policy issues to assist long term planning;
- develop policy options for government to encourage and fund the enrolment of students from disadvantaged backgrounds, including the provision of supplementary financial support for students and their chosen institution;
- report publicly on accreditation, quality assurance and assessment in post-secondary education to ensure, inter alia, that there is an informed market as to the quality and type of education provided by different institutions, recognising their different missions;
- use its information and reviews of the system to devise mechanisms to measure performance and make recommendations on costs, providing the government and the sector with comprehensive and sophisticated data to seek strategies for greater efficiency and cost management in higher education;
- collaborate with the university, schools and VET sectors to ensure that all levels of education and training in Australia are mutually supportive and effectively complementary; and
- recommend legislation that the body deems necessary or appropriate to improve post-secondary education.
To achieve these aims the body would operate within fiscal parameters set by government and provide advice based on higher education industry expertise with a policy focus on the long term. Once established the government could investigate changing the body’s role to assist with longer term system issues, as well as explore ways to reduce regulatory burden and incorporating appropriately regulatory functions.
An expert advisory body could play an important role in supporting and coordinating government strategy for international education through its various responsible agencies and departments, including Austrade. The body would be an effective and efficient means for government to ensure a comprehensive approach to policy thereby further reducing red tape and duplication. For example, it could facilitate alignment of key policy areas, such as student visas, with other important policy settings across government.
There are number of precedent setting international models including Hong Kong, California, New Zealand and Ireland. Of particular interest is the Irish model – the Higher Education Authority (HEA) – a statutory body with a multi-function mandate that includes both funding universities and providing policy advice to the Minister for Education and researching higher education issues. Other key activities/characteristics of the Irish model are:
- The HEA’s nine board members are all leaders in higher education and research in Ireland with the exception of the chair who comes from the private sector.
- The HEA aims to provide high quality evidence-based advice, and undertakes research on a wide range of policy issues to inform its advice to the minister.
- The HEA produces five-yearly strategic plans that provide a roadmap for implementation of the government’s National Strategy for Higher Education to 2030.
- The HEA also advances its policy agenda through Standing Committees of the HEA Board for Policy and Planning, Governance and Performance Management, and Research and Graduate Education.
- The HEA’s research output is prolific. In just the last two years it has published reports from its reviews and research on:
- Investing in National Ambition: A Strategy for Funding Higher Education: Report of the Expert Group on Future Funding for Higher Education (2016)
- Review into Gender Equality in Irish Higher Education Institutions (2016)
- What do graduates do? The class of 2014 (2016)
- A Study of Progression in Irish Higher Education 2012/13 to 2013/14 (2016)
- Student Grant Recipients (2015)
- Student Accommodation: Demand and Supply (2015)
- Graduate Surveys: Review of International Practice (2015)
The implementation of such a body in Australia – while desirable for reasons outlined above – would require much further discussion. In particular, on the balance of policy/regulatory/funding activity for such a body and relatedly the relationship between such a body and the Department of Education in the carriage of policy development and with TEQSA in terms of regulation.