A New Deal for HE – the road ahead

The interim report of the Australian Universities Accord has been released by Mary O’Kane and her team. It lays out feasible steps for achieving a grand vision.

This review is a big deal. We should not underestimate the importance of higher education to modern states.

There are about one million domestic students in Australian universities. So, at any one time a million Australian families are connected to a university. That’s 3 or 4 million people, about 8% of the voting population.

The previous review, the Bradley Review, led to an increase in participation so that now nearly 50% of young Australians hold a university degree. You’ll be getting the picture: universities have a major role in setting the culture of our society and the sovereign capability of our country.

If new government policies align to strengthen universities and help them to serve students and the community, Australia’s future will be bright. If the government gets this wrong and is not able to follow through on the ideas in the review, we’ll all be affected and Australia will fall behind.

The report starts by sketching a vision. The main themes are education and research.

The education section makes two strong points: universities can build social cohesion by ensuring that no one misses out, and they can enhance human capital so Australia remains competitive.

The research section is refreshing in that it celebrates our achievements – which are huge. So far Australia is keeping up with the world and the growing economies in Asia. We are the inventors of WiFi, solar panels, Cochlear implants – not just the Hills Hoist and the Stump Jump Plough. Now is the time to accelerate and the report makes it clear how we can.

We just have to get behind research and establish a mechanism for stable funding rather than cross-subsidising it precariously from funds meant for teaching. If we can do that, we will improve research and we will improve teaching and the student experience.

The ambition in the report is impressive. Across the world, countries are grappling with changes in the world order and coming to terms with the astonishing rise of Asia. Australia is in the East. It matters that we are not only neighbours of Asian countries but in the digital world we are in the Asian time zone.

The east is home to most of the world’s population. We are in proximity to some of the most rapidly developing economies on the planet. To the North, cities like Singapore, Hong Kong, and Shanghai are booming. Our country will prosper too if we keep up.

We can avoid the malaise, divisions, and recessions that accompany complacency and a failure to modernise. The interim report is a call to shrug off complacency and to be ambitious about building a knowledge economy that is high-powered and that is inclusive.

There were five immediate actions in the report. The guarantee around funding for domestic student teaching is locked in for a further two years. This stability will be valuable to universities.

The rule that students who fail more than half their subjects in first year lose Commonwealth support for their program is abandoned. Perhaps unsurprisingly, this rule was disproportionately affecting students who came from the most disadvantaged high school systems and wasn’t helping anyone. Rejecting this rule will help and will cut administrative overheads too.

There is also a positive commitment to establish some regional study hubs and to make more student places available to Indigenous students. Finally, there is a call for universities to keep working on safety and ensure they provide fair workplaces. Universities are looked up to and they have to work hard to make sure their actions justify this respect.

Several other themes in the report merit discussion here. Primarily, the report argues for investing in knowledge. Australia has done this reasonably well and higher education has become more accessible to more Australians, largely as a result of Bruce Chapman’s income contingent loans. But university is not for all school leavers.

What about the other 50% or more in some areas who don’t attend? The report recognises that education, including lifelong learning, should be available to all, so that no one feels excluded, and so that society can benefit from making the most of all our human capital.

One idea in the report is the provision of a Lifelong Learning Entitlement to support studying and even living expenses via an income contingent loan, with the entitlement being available to fund not just university but also vocational education. Uniting the funding of both sectors via this approach could be a game changer as it could enable more collaboration between the sectors. At present, as well-intentioned as both players are, the fact that universities are funded Federally and TAFEs by the States causes bureaucratic challenges.

The other idea also involves a simple funding mechanism. At present peer-reviewed grants offered by the ARC and NHMRC do not cover the full research overheads. Research is not fully funded. Universities cover the unfunded research costs by diverting revenues from student fees. The review talks about “moving over time to ensure National Competitive Grants cover the full cost of undertaking research”. This is really smart. Peer-review adds a quality dimension that delivers, with top researchers making big contributions in both fundamental and in applied research as they are the people who are sought out by industry.

If we are to start funding the full costs of research, we need to begin with National Competitive Grants. Moving from just one to two to three billion dollars annually, would cover the costs associated with Category 1 grants, boost our research, send a message about quality, and help ensure fees that were meant to support teaching were actually spent on teaching. It would also reduce our reliance on international student fees for this purpose. Relying on international student fees undermines our sovereign capability and I liked the ideas in the report that lessoned our reliance on these, rather than increasing our dependency via extra levies.

But what – is the report just asking the treasury for more money for universities? No, the report is asking us to look around the world and see who we want to be like and to be smart about what we invest in. Time and again investing in knowledge and in people has been a good bet. It increases social cohesion and well-being, it improves health, it stabilises democracies, it supports national security, and it generates prosperity which means that these modest but important investments end up funding themselves. That’s why they are called investments.

Sure, tough decisions will have to be made about funding priorities – there are other big ticket items on the horizon – submarines, stage three tax cuts, transport, health, and welfare – but not all of these are investments, some are just costs.

By carefully managing the timing and phasing of funding commitments in various projects, Australia can easily manage supporting investments in higher education and if we do, we will reap the rewards as we continue our journey from an agrarian, to a mining, and ultimately to a knowledge economy.



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