Chapter 1 - Introduction
There are a number of obvious deficiencies in the package of
reforms outlined in the Nelson review: (i) there is the ill-conceived
commitment to Voluntary Student Unionism; (ii) there is an overly tight
straitjacket for the distribution and re-distribution of government subsidised
university places; (iii) there is an excessive degree of control inherent in
the discipline mix, with the potential for gross intrusion upon university
autonomy, academic freedom and student choice; (iv) there is a totally
illogical link between increased funding and ideological components of
industrial relations and unduly formulaic changes in governance; and
(v) there are new taxes on international activities which only serve to
provide funds for additional government regulators. However, the most
significant defect is the lack of an effective mechanism for indexation of the
government contribution. The proposals in this package are not sustainable in
the medium to long term and there will continue to be an inbuilt degradation
factor and an ongoing need for episodic injections of additional funding.
Professor Gavin Brown,
Vice-Chancellor, University of Sydney[1]
23.1 On 26 June 2003 the committee was asked by the Senate to inquire into the policy and
principles underlying the Government’s higher education package, as set out in
the ministerial statements entitled Our Universities: Backing Australia’s
Future.
Characteristics of the inquiry
23.2 The committee
was asked to report by the end of October 2003 but, in view of the tight
timeframe of the inquiry, it was agreed to extend this tabling date to 7 November 2003. It is unusual for a references committee to deal with legislation,
but when the inquiry began the expected legislation had not been introduced.
The committee decided that it was appropriate to commence work on examination
of the policy documents forming the Higher Education Review 2002 package, which
was presumed to be the basis for the legislation that would eventually appear.
It was fortunate that this process was followed because, as events transpired,
it would not have been possible for the legislation committee to deal with the
bills in the time that elapsed between their introduction to the House on 17
September 2003 and the end of the sitting year, by which time the Government
hoped to have the legislation pass the Senate.
23.3 The committee
received 486 submissions, in addition to supplementary submissions. This number
was considerably greater than the 364 submissions the committee received for
its higher education inquiry in 2001. This inquiry dealt with issues that have
considerable and immediate implications for current students and academic
staff. They had deep reservations about the policy upon which the legislation
would be based and, as the evidence revealed, many of the important
stakeholders were taken aback by a number of policy details which appeared to
be ‘tacked on’ to the anticipated core financial provisions. Two points should
be noted about the submissions and inquiry process.
23.4 First, in contrast
to the 2001 inquiry, the sources of submissions were much more clearly focused:
limited essentially to those potentially and directly affected by the proposed
legislation. In this inquiry there have been very few submissions from
organisations outside of the education sector or from members of the public at
large. On the other hand, student unions and representative councils have made
a collective contribution to evidence that in many cases has been remarkably
scholarly and well documented. In addition there has been a concerted effort by
student associations to encourage individual submissions, most notably the
scores of letters received from medical students at Sydney University and the
University of New South Wales. The Council of Postgraduate Students Association
(CAPA) and the National Union of Students (NUS) and their state branches have
been active, along with, as might be expected, the National Tertiary Education
Union (NTEU), both centrally, and through state affiliates. The states and
territories have clear responsibilities for universities: most universities are
established under state or territory legislation. All state governments have
made submissions and all have been represented at public hearings.
23.5 Second, it may
be noted that, of the 486 submissions received, very few indeed were steadfast
in their support for the Backing Australia’s Future package in all
aspects. It should be noted that a significant number of submissions were
received after the legislation was finally introduced on 17 September. Two or
three of these later submissions took the line that, while the promised reforms
were worthwhile, the Government had jeopardised its chances of putting them
through as a result of bad judgement on the detailed provisions contained in
the bill. This was also the view of some vice-chancellors. Submissions to
parliamentary inquiries can generally be relied upon to take a view contrary to
the policy under examination. What makes this general rule remarkable in this
instance is the number of submissions, most of them from universities, which
praise the general policy direction but damn the detail and the implementation
strategy. It was difficult for committee members to ignore the sense of
disillusionment which was exhibited by university administrators who found
themselves faced with legislative detail setting out all the ways in which
their educative work would be made more onerous, their financial management
tasks more precarious, and their institutions more fragile as a consequence of
the passage of legislation which they did not anticipate would emerge from the
amicable consultations which marked the preceding Crossroads process. As
understanding of the actual legislation grew, the tone of response became
increasingly concerned and alarmed.
23.6 Further to this,
particular mention should be made of the university submissions. Most
universities responded through their vice-chancellors, and their number
exceeded the committee’s expectations. It was anticipated that the Australian
Vice-Chancellors’ Committee (AVCC) would represent the views of all
universities. There appears to have been a strategy planned within the AVCC for
the organization to present a united front of vice-chancellors to a Senate
inquiry that was not regarded with much enthusiasm by the AVCC. This attempt
quickly collapsed, in part for the reason that the funding projections issued
by the Department of Education, Science and Training (DEST) established a
pecking order of winners and losers which put an end to ideas of university
solidarity. The committee found itself in receipt of submissions from
universities whose hopes for additional funding arising from the ‘reform’
package had been dashed by the DEST projections. The second reason for the
collapse of the AVCC’s unity was the doggedness with which certain key players
failed to gauge the mood of the organisation’s membership and continued to
pursue the strategy of unquestioning support for the Government’s position.
23.7 While all
universities may claim to have been disadvantaged in some way by the proposed
new regime, the most obvious disadvantage was evident in the serious funding
cuts affecting the University of Western Sydney, Victoria University and the
University of South Australia. All of these are relatively new universities
serving outer metropolitan areas and lower socioeconomic level communities.
Clearly, the Government failed an early test of its professed concern for
equity in overlooking the inevitable wave of criticism that would come, as it
did, from the wider community in those regions affected by the proposed funding
reductions. As the committee was told in Parramatta, the population of Western
Sydney, already higher than Western Australia (with its four universities), is
expected to grow by half a million in the next 15 years.[2]
23.8 The tenor of
such criticism became infectious, such that submissions received from
universities late in the day were more forthright in their adverse comment than
those received earlier. Some of this had to do with a gradual realisation that
an earlier support for Crossroads principles could not be reconciled
with the policy detail which subsequently emerged in stark form in the actual
legislation. This explains why nearly all submissions from universities
commenced with a ringing endorsement of the Government’s reform policy in
general terms, while the bulk of each of the submission tore apart the details
of implementation, notably the role of DEST in university micro-management, the
extremely parsimonious equity and student income support provisions, and the
matters considered extraneous or ‘ideological’, like industrial relations. An
aggrieved chair of the Australian Vice-Chancellors’ Committee described the
Government’s actions as ‘changing the goalposts’.[3]
23.9 A concern to the
committee is the timing and status of the guidelines which pertain to the
legislation. The guidelines are delegated legislation and therefore subject to
parliamentary disallowance. At the time of the DEST appearance before the
committee on 17 October 2003, only one set of the ten guidelines planned for
tabling had been made public, with several others promised in the time that
would elapse before debate on the bill in the Senate. The committee was advised
by DEST that some guidelines would not be made until they were needed, as far off
as 2006. Yet the attitude of the Government to the making and purpose of its
guidelines is remarkable. The committee learned, for instance, that
disallowance of the workplace relations provisions by the Senate would result
in the contingent financial grants being withheld. On the other hand,
disallowance of some other guidelines would have little effect for reasons
which were explained:
But there are other provisions within the bill so that, if the
guidelines are not agreed by the parliament, there is adequate detail and the
basis of the arrangements in the bill. A number of those cases have sufficient
detail in this bill to understand the way the system will work, and they are
not dependent on subsequent guidelines.[4]
23.10 The committee is
interested in why the Minister and the department make regulations if they are
not needed to implement policy. The committee assumes, on the contrary, that
the various guidelines, as an integral part of the package, are essential to an
informed consideration of the legislation by the Parliament. As the guidelines
are to detail the ‘quality and accountability requirements’ on which funding is
to be made conditional, and in doing so specify the intrusions of DEST into
university operations, it is imperative that they be made available to the
Senate in complete and final form before debate commences on the legislation.
23.11 Apart from
receiving submissions and several petitions, the committee heard from some 147
witnesses from all states and territories. As usual, witnesses were selected on
the basis of written submissions and in order to ensure a wide representation
of opinion. Public hearings commenced on 22 September 2003 in Parramatta and concluded in Canberra on 17 October 2003. The committee visited all states,
and where possible conducted public hearings at universities. A list of
witnesses and hearing venues can be found at Appendix 2.
23.12 Characteristics
of submissions noted previously have an echo in the tenor of evidence presented
at public hearings. As the implications of the legislation began to be felt
soon after its introduction to Parliament, the weight of opinion quickly began
to harden against it. Vice-Chancellors who had previously supported Backing
Australia’s Future, and who were cautious rather than critical in their written
submissions, were unexpectedly robust and emphatic about the weaknesses in the
legislation by the time of their appearance before the committee. Yet, even at
this point there was a glow of optimism shining through this evidence: that
somehow reason would prevail, and that the Government would be persuaded to
make badly needed changes. This optimism extended to almost extravagant hopes,
as in the case of vice-chancellors wanting to believe that the Minister could
be persuaded to restore the indexation of the Commonwealth Grants Scheme. The
committee never learned the basis for such optimism.
23.13 The
vice-chancellors presented the committee and the Senate with an interesting and
extremely difficult challenge, to which there are several elements. First the
committee was told that the bills should pass because there was too much of
value in them to be discarded. The core financial provisions needed to be
implemented. Second, the vice chancellors appeared to agree that some
provisions in the bills were totally unacceptable, and should be discarded.
Third, the legislation must pass in 2003 if universities were to plan their
futures effectively. The issue of whether the Government might withdraw its
legislation if frustrated over what the universities might regard as expendable
clauses was not raised. Evidence from Professor Deryck Schreuder sums up this
plea to the committee:
We are not for a package in whatever form; we are for the right
package. We have been making recommendations as to how the amendments should be,
we will make further recommendations, once we have worked through the
legislation even more closely, and we rely on the Senate’s very close scrutiny
of this to establish the right package. I may be really naive; in the end, we
would like to see a bipartisan, across-the-parliament resolution of commitment
to Australia’s universities and so put a line in the sand. This is the reform
time, and hereafter we build the kind of world-class system that our students
and our community deserve.[5]
23.14 It was pointed
out on a number of occasions to vice-chancellors that there was a diminishing
time-frame for the Senate’s consideration of the legislation. There was
uncertainty about the Minister’s own time-frame for changes, and the committee
heard of a more relaxed time-frame for delivery to the Minister of final advice
from the AVCC. The committee is concerned that there is pressure on the Senate
to pass legislation flawed in both conception and detail, simply to satisfy
vice-chancellors who live in hope that something will come along in due course
to fix up all the unworkable provisions. It agrees with the Government (which
at last has accepted the committee’s view) that the status quo is indefensible.
It takes the view, however, that ‘reform’ should be worthy of the name, and for
this reason recommends deferral of consideration of the legislation.
23.15 This legislation
is universally agreed to represent the biggest change to higher education
legislation since 1987. As such, it requires that the Minister needs to
schedule more time to consider it. Above all, bills like this need
parliamentary time. The committee draws the conclusion that the Minister and
his advisors have failed to understand that policy and legislative
implementation is a continuing rather than a compartmentalised process and one
which does not conclude with the tabling of the bill in the House. Nor can
false expectation be raised without cost to policy credibility. Essentially, as
the ensuing discussion makes clear, the committee believes that the provisions
of the Higher Education Support Bill 2003, and the policies underlying it, are
seriously flawed both in terms of principle and in potential practical impact.
Even those few who continue to support the policy direction taken by the
‘reform’ package consider that the policy miscalculations and procedural errors
associated with the package threaten to turn the Backing Australia’s Future
legislation into a failure of both policy and political process.
Overview of policy
23.16 The Government’s
higher education ‘reform’ package represents a profound threat to Australia’s
university system. It would fundamentally alter the relationship, with regard
to university governance and regulation, between individual universities and
the Commonwealth, and between the Commonwealth and the states and territories.
Most seriously, the Government’s policies, given form in the Higher Education
Reform Bill 2003, allow Commonwealth intrusion at the most basic of levels –
right into the personal and academic records held by universities on students,
and as far as the tutorial room and the lecture theatre.
23.17 The extent to
which this package and legislation allow the Minister and his or her agents to
intrude into the day-to-day affairs, as well as the major decision-making, of
public universities is unprecedented. It goes far beyond the powers accorded
to the Minister and department under the current legislative regime set out in
the Higher Education Funding Act 1988. The entry and search powers of the bill
are much more draconian than those applying under the Commonwealth’s ESOS
(international education) regime: the latter requires that a magistrate’s order
be obtained before such powers can be exercised against an education provider,
while the HESB provisions carry no such requirement. The grounds offered by
the department’s evidence for this departure from the judicial process are
spurious. While it is true that the consequences of investigations under the
ESOS Act might amount to criminal charges or to actions under the Migration Act,
those arising from this higher education legislation could be equally serious:
the withdrawal of all Commonwealth funding or, presumably, the laying of
criminal charges for defrauding the Commonwealth and similar offences. These
powers must be checked by means of a judicial process.
23.18 Furthermore,
from all possible political perspectives, the policy package is a disastrous
failure. For those who were seeking radical deregulation of the sector, the
bill provides the opposite of what they asked for: it allows a massive increase
in regulation of universities’ activities and accords to the Minister
unprecedented powers to intrude into the affairs and decisions of universities.
23.19 From the
perspective of those supporting a strong public higher education sector, the
package also fails because it shifts a much more significant share of the cost
of university study onto individual students and their families. Already,
Australian students pay a greater proportion of the cost of public higher
education than in almost any other country: this package potentially leads the
world in privatising the financing of ‘public’ higher education.
23.20 In revolt
against the intrusive and draconian powers bestowed on the Minister and his
department in this bill, many key conservative commentators and most university
heads have either publicly disowned the package, or have appealed to the
Government just as publicly to make fundamental and detailed changes to it. University
of Melbourne Vice-Chancellor, Professor Alan Gilbert, previously an outspoken
supporter of the Government’s deregulatory agenda, has now declared that the
industrial relations provisions contained in the bill are so intrusive that the
new regime was ‘not worth the money’.[6]
23.21 The
disappointment of individual vice-chancellors, each eyeing the legislation for
its potential impact on their own institution, is palpable. Aside from the
divisive, destructive and entirely unnecessary changes to the industrial
relations regime, the new administrative and reporting requirements and costs
it imposes are regarded as exceptionally onerous. The potential intrusions into
academic decision-making and into the personal privacy of students and staff
are regarded with alarm: they threaten a tectonic shift in the relationship
that has existed between government and universities in Australia for 150
years.
23.22 While the
custodians of our universities – individual vice-chancellors – have almost all
come quickly to realise that the new golden age, promised by the Government, is
not to be, in their collective manifestation as the Australian
Vice-Chancellors’ Committee the realisation has been slower and less complete.
The AVCC has now expressed its disappointment in the bill, but it remains
essentially beguiled by the Government into thinking that there is hope that the
flawed package can be patched up by means of rational discussion, conducted
behind closed doors. This view is delusory because it fails to appreciate that
the fundamentals of the Government’s approach are inimical to its soundness or
its practical workability.
23.23 To underlie its
reform package, the Government promised four principles: sustainability,
quality, equity and diversity. It has failed on all counts.
23.24 The package is
not sustainable, either financially or from a policy perspective. Financially,
it contains a reliance on market forces in terms of pricing while at the same
time imposing rigid and exacting regulation that will not allow the benefits of
flexibility and independence to flow to institutions. Relations between
universities and government are completely one-sided: the purchaser-provider
split as constructed accords all power in the market to the ‘purchaser’ of
services – the Commonwealth. Meanwhile, the shift to commercialisation of
provision through increased fee-charging places and partial deregulation of
HECS charges is destabilising for most institutions, creating financial
uncertainty and threatening the financial viability of some. Coupled with the
failure to provide better indexation arrangements to allow for increases in
salary costs, this regime will inevitably drive tuition fees higher and will
eventually put inordinate pressure on the ceiling on HECS charges. The fact
that this ceiling is determined annually by the Minister potentially relieves
the pressure on universities – but only by placing it on students by
effectively removing the limitations on what the majority of them can be asked
to pay.
23.25 Also
unsustainable is the deregulation of the full fee-charging regime, accompanied
by a cap on the amount that students can borrow from the Commonwealth to
finance their studies. Inevitably, this will lead to upfront fees that will
price many less advantaged students out of the market.
23.26 The package does
virtually nothing to serve the objective of improved and guaranteed quality. It
potentially opens up access to Commonwealth funds, through the Commonwealth
Grants Scheme, to hundreds of private providers of varying types, sizes and
missions. Realising the need to ensure quality of provision in an unfamiliar
and uncertain universe, the Government has framed its entire legislative
package from this perspective – failing to recognise that Australia’s public
universities have a long tradition of robust processes and standards which
render the intrusion into, and policing of, their activities unnecessary and
unproductive. In fact, applying the petty and punitive regime of this
legislation to established universities – with their internal safeguards
already mostly in place – is counterproductive.
23.27 The role
envisaged for the Australian Universities Quality Agency (and, apparently,
other similar ‘quality auditing bodies’) is inappropriate and well outside the
current brief of AUQA. As a quality assurance agency, AUQA is charged with
examining and reporting on the processes of universities designed to
ensure that quality as claimed is delivered: actual standards and levels of
quality are defined by the institution itself. Performing quality audits
is not the brief of AUQA as it stands, nor of any other body within the
Commonwealth jurisdiction.
23.28 As for the goal
of equity, this package undermines that principle in two major areas:
institutional equity (equity of provision) and individual equity (equality of
opportunity). The funding model contained in the package has vastly
differential effects on institutions, with adverse consequences for several
outer-metropolitan based universities in predominantly low socioeconomic
areas. It appears that the regional campus loadings – essentially a bandaid
measure which tacitly recognises the unsatisfactory nature of the CGS as an
allocative mechanism – would be applied in an ad hoc manner, in apparent
response to political considerations. Already advantaged universities will be
able to cash in on their location and reputation to charge higher tuition fees
in the deregulated market, leaving newer institutions lagging behind.
23.29 For individual
students, the package clearly provides greater opportunities to those for whom
financial considerations weigh less heavily: they can choose a fee-paying
place, even where fees exceed the $50,000 cap on FEE-HELP loans. A single class
will contain students admitted on fundamentally different bases, with
HECS-related students required to meet tougher entry criteria than their
fee-paying classmates. Those in regional and outer-metropolitan areas will
enjoy fewer options in higher education: the ‘equity’ measures announced as
part of the package are completely inadequate in scope to accomplish more than
window-dressing in this regard.
23.30 The model on
which financing aspects of this policy package is founded is clearly an
American one. The American approach to public policy in general, and in
education in particular, is profoundly foreign to Australia and Australians. An
environment where what we might regard as public services are differentially
available, directly proportional to personal wealth, is anathema to the
egalitarianism which underlies an Australian approach to the provision of
public services.
23.31 Finally, the
Government avows a commitment to greater diversity of provision. This would
entail a parallel commitment to endow all types of universities with genuinely
adequate financial support, and with parity of esteem and treatment. By
creating an environment where, in the throes of competition, resource-rich,
established universities can systematically trample on the rest, the scene is
set for the less advantaged institutions to wither into oblivion. At best, some
may linger on as ‘teaching-only’ undergraduate degree factories where the
preconditions for a vibrant academic culture – an active research base and a
competitive resource environment - have vanished. The differential effects of
the deregulated fee-charging regime and of the absence of indexation will hit
the many and leave the few to capitalise on the advantages they can seize.
23.32 The higher education
policy developed by the Government through Backing Australia’s Future
and its associated legislation rests on two doubtful assumptions. The first is
that higher education benefits flow overwhelmingly to the direct recipients of
learning: that the benefit is primarily an individual one, albeit with flow-on
benefits to society. It follows that the recipient, as the principle
beneficiary, must pay a high price for the learning from which he or she will
gain. Thus the cost of higher education is to be gradually shifted in ever
increasing proportions from the public purse to the individual student.
23.33 The second
assumption is that universities will not only survive on a radically altered
funding diet; they will thrive. This second assumption was the issue most
commonly addressed in evidence to the committee. The vice-chancellors committee
appeared to be divided between those of its members from long-established Group
of Eight universities who appeared for the most part to believe that in
fee-charging, as distinct from in Commonwealth grants, lay the hope of
expansion of high-quality higher education. It is generally conceded that some
of the Group of Eight universities, though not most, will benefit financially
from the proposed changes. Other vice-chancellors from lesser known, smaller,
newer and rural universities were under no illusions. Neither DEST nor
universities possess a sound empirical base to form accurate estimates of the
level of demand for full-fee courses. This policy thus represents a leap into
the unknown. It is rare that important domestic policy is implemented on such a
basis.
23.34 The flaws in
this policy are not difficult to identify. First, the willingness of students
and would-be students to borrow money to pay for their education is a matter of
doubt. Those from middle class backgrounds accustomed to living with
substantial levels of debt may have few problems. For the majority of students
the debt burden, in the light of more accustomed debt for houses and family
needs, will be a disincentive for university study. Nor is the likely pool of
wealthy potential fee-paying students very large. While the committee majority
objects to the enrolment of fully fee-paying students in principle, it
recognises that in any event, the ‘pickings’ here are likely to be slimmer that
the Government would have us believe.
23.35 Finally, the
simple transfer of the funding burden from the public purse to the private
pocket, even incrementally over time, is unlikely to occur as the Government
intends. In its 2001 inquiry resulting in Universities in Crisis, the
committee heard strong evidence that increased private investment in
universities could not be used to substitute for lost Commonwealth grants. This
private investment was in a sense ‘tied grants’ for specific purposes, which
did not include general infrastructure maintenance.[7]
The committee also believes that the level of private investment is to some
extent determined by the extent of continuing public investment. Declining
public investment is most obvious in the run-down state of university
infrastructure. This is most obvious in science and engineering research
investment. It is also very real, if less obvious, in the decline in
undergraduate and postgraduate core (or ‘enabling’) science and mathematics
courses which are dependent on Commonwealth grants. Industry will not invest
unless the ground is prepared. A cost transfer for the benefit of the taxpayer
is not only poor social policy, it is poor economics.
23.36 It is not only
the survival of universities that is under investigation in this inquiry, but
their survival in a recognised form. Traditionally, universities are a
collective or community of students and academics who form a compact for the
purposes of teaching, learning and research. This radically altered funding
diet and the administrative changes accompanying it will affect the quality of
this relationship. It will also, paradoxically, alter the relationship between
the government and the universities because, while the Higher Education Support
Bill points the way toward an ever diminishing level of Commonwealth financial
support, it provides for an unprecedented level of intrusive micro-management
by DEST of university program arrangements and ministerial discretion over
individual programs. These measures, alongside the measures to curb the
representative nature of university governing councils and to dictate the terms
and conditions of workplace arrangements in ostensibly independent statutory
public entities, are policies at odds with the principle of academic freedom
and the goal of diversity.
23.37 Universities
should serve the public good. This policy package carries the potential
significantly to reduce the number of participants in the experience of higher
education, giving rise to frustrated expectations of individuals, the weakening
of the national skills base, declining average incomes and a widening
socio-economic gulf between those with access to wealth and those without.
Thus, while the proposed legislation may be accurately described as ‘radical’
in that it presages social and economic change, it is not to be regarded as
‘reforming’ because the likely changes appear to point toward less equitable
social and economic outcomes.
23.38 Higher education
has traditionally been the path to higher incomes, better living standards and
improved national economic performance. The close relationship between private
and public benefit has been assumed. A high proportion of educated individuals
in the population are perceived to ensure a high degree of economic and social stability
and a respect for civil society. The role of the state in the provision of
education at all levels has long been accepted as important in the maintenance
of both social stability and prosperity. There is no tension between private
and social benefit in maintaining a public education system because it aims at
developing talent, knowledge and responsibility to the benefit of all levels of
society.
23.39 The committee’s
twin philosophical objections to the legislative outcome of Backing
Australia’s Future therefore go to the core of the policy. The first of
these is the vision of the diminishing role of the state in funding higher
education and the greatly increased burden placed on the ‘individual
purchasers’ of educational services - students and their parents - who in many
cases will need to weigh the costs and benefits of a university education. This
will be a challenge not faced in more than two generations. It will thrust a
cost burden on individuals and will result in a squeeze on personal borrowings not
anticipated by economic planners and lending institutions. Its effects on
regional and rural areas will be profound, as the multiplier effect on their
economies is very considerable. The Government will come to realise in time
that the worth of the social capital generated by universities, and their role
in creating employment and in stimulating the creation of wealth, far exceeds
the current value of the very modest expenditure of public funds[8].
It should be emphasised that this policy direction is exactly the opposite of
international trends for comparable developed countries.[9]
23.40 The second
philosophical objection goes to the unprecedented extent of the intrusion on
the part of the Commonwealth into the functions and activities of universities
that is sanctioned by this legislation. The committee finds it difficult, under
this scenario, to envisage Australia’s universities of the future as vibrant,
intellectually open, politically independent centres of teaching, learning and
research.
Issues of contention
23.41 Since the
committee is fundamentally opposed to this legislation, it follows that there
are few divisions in the bill to which it agrees. While the Government claims
that its provisions may be benchmarked against the criteria of sustainability,
quality, equity and diversity, it is clear to the committee that they cannot,
and that this is a rhetorical catchphrase: part of the package merchandising
whereby the expectation is that people will take at face value all that is
claimed.
Indexation
23.42 Nearly all those
submissions dealing in detail with university finances called for a return to
full indexation of funding levels under the new Commonwealth Grants Scheme. All
vice-chancellors emphasised its importance. For some it was an issue upon which
the long-term survival of their universities depended.
23.43 As will be
detailed in a later chapter, the Australian Vice-Chancellors’ Committee (AVCC)
placed concerns about the lack of proper indexation at the top of the list of
university grievances. The accumulated loss of income would gradually result in
a deterioration of salary levels and infrastructure, threatening the
sustainability of universities as they currently operate. The strongest
statements about the lack of financial sustainability in a system where there
is effectively no indexation came from Professor Gavin Brown, whose submission
(and subsequent appearance before the committee) confirmed the committee’s view
of the basic funding flaw in the package.
23.44 Professor Ross Milbourne
told the committee that he could not understand why universities were not
treated in the same way as schools in regard to the levels of indexation they
were allowed on their Commonwealth grants. He argued that, were that policy to
be adopted, most of the contentious financing issues that might come out of
this package would evaporate because the extent to which universities would
have to vary average HECS levels would diminish and they could do more within
that framework for equity and diversity.[10]
23.45 For a few, the
unlikely event of any return of satisfactory indexation arrangements was a
reason for favouring radical deregulation of the fee-charging regime. Professor
Alan Gilbert, Vice-Chancellor of the University of Melbourne put it to the
committee that it was unlikely that governments, whatever their party political
background and whatever other exigencies they faced, would agree to maintain an
absolute priority for keeping higher education well funded. Professor Gilbert,
when invited by Government senators to criticise the Opposition higher education
policy, declined to do so on indexation, stating that its commitment to full
indexation was one of the strengths of the policy. Professor Gilbert
nevertheless held to his belief in complete fee deregulation.[11]
23.46 The committee
notes the comments of Professor Bruce Chapman on the inadequacy of the
package’s indexation provisions and their likely effect of making HECS rises
inevitable. The committee accepts this assessment, despite the brave intentions
of some universities to delay this as long as possible. Indexation has been a
silent but ever present issue in this inquiry in so far as the inadequacy of
current arrangements is the reason for proposals for a new funding model.
23.47 Finally, the
committee believes that the Government’s refusal to maintain full indexation is
part of an undeclared industrial relations strategy to reduce, over time, the
proportion of staff on long-term contracts. Full indexation would allow
long-contract positions to be routinely filled upon resignation and retirement
of incumbents and for new positions to be created. The Government’s preference
is for more ‘flexibility’ despite the adverse effects of this on universities.
23.48 The committee
joins all universities in urging that indexation, based on the Wages Cost
Index, be restored as the most effective financial assistance that can be
offered to universities.
HECS increases
23.49 The committee
found considerable opposition to HECS increases from students and from
universities whose enrolment catchment areas have a high proportion of students
coming from low socioeconomic groups. Such universities would be reluctant to
raise HECS charges, and would do so only when they had no other funding option.
Group of Eight universities were broadly in favour of being able to gain access
to increased funding through higher HECS imposts.
23.50 The committee
has heard from Professor Bruce Chapman that in the absence of any changes to
the indexation system no institution would be able to survive ‘down the track’
without increasing the HECS charges. That is because for every year that they
do not do so there is a potential two per cent shortfall coming from the lack
of full supplementation.
The
system with its current arrangements must inevitably mean that if there is no
change to the indexation then this price instrument [increased HECS] will cause
a radical change in the burden of financial resources. No institution will be
able to survive down the track without increasing the HECS charges. ... All the
institutions down the track will ... have higher HECS arrangements. [12]
23.51 Some
universities have already announced that they will increase HECS by the full 30
per cent.
23.52 One of the
dangers of partial deregulation of HECS is illustrated in the early
announcement by the University of Sydney that it will raise its HECS fees by
the full 30 per cent, while other universities have said that they will do so
to a lesser percentage. The continuing evolution of a hierarchy of institutions
will accelerate as a result of this provision. As one submission pointed out,
this will create a new ‘binary’ division which could eventually lead to a more
restricted choice of university education.[13]
It is for this and for equity reasons that the committee majority is opposed to
partial HECS deregulation. A much more equitable way to deal with the needs of
universities for the additional funds that would be raised by increasing HECS
is to index Commonwealth grants adequately. This solution is proposed in
Labor’s 2003 higher education policy, Aim Higher.
23.53 The committee
heard of a number of anomalies and problems that will arise from the partial
deregulation of HECS. First, this policy would put pressures on universities
that would force them to discount their HECS rates in order to retain their
student load or to maintain the quality of their student load at acceptable
levels. In the case of regional institutions, the level of discount would have
to be a very small amount below the standard HECS rates for the cut rates to
eliminate completely their regional loading. This might eventually result in the
development of a seriously inequitable system.[14]
23.54 Another issue
arises in relation to the difference in entry-score cut-off for HECS-related
students and for those paying full-fees - the decisions that will have to be
made by universities at student entry level which might keep high-performing
students out of the HECS streams.[15]
There are serious equity decisions at stake here.
23.55 There are also
serious equity issues in relation to disadvantaged students, who are more
likely to be averse to the prospect of debt. Higher fees will further
discourage them from taking out loans. The committee notes commentary that
varying fee regimes in different universities and in different courses may
further restrict the choice of courses for disadvantaged students.[16]
23.56 The committee is
persuaded by arguments put forward in a number of student submissions that
increased HECS burdens are likely to be excessively onerous for a high
proportion of graduates, especially those who will be working in occupations
which are not highly remunerated.
Student loans and full-fee payments
23.57 The deregulation
of university fees represents the most significant policy shift in higher
education by a government in memory. But John Howard has not sought or received
a mandate for these radical changes. Four years ago the Prime Minister was
assuring the House of Representatives:
I can also inform the House that we have no intention of
introducing a loans scheme. I make it very clear that any attempt by the
Australian Labor Party to run a scare campaign on the basis of a loans scheme
or real rates of interest will fail because there will be no real rates of
interest.[17]
...That means, in particular, a clear rejection of vouchers for
post-secondary education, a clear rejection of the deregulation of university
fees... [18]
23.58 The following
day, the Prime Minister confirmed this message:
We have taken a decision yesterday that was reported to this
parliament, and I think widely welcomed throughout the Australian community, to
maintain the existing higher education system. We have no intention of
deregulating university fees. We have no intention of altering the current HECS
arrangement.[19]
23.59 The Prime
Minister had earlier denied, in an answer to a question from one of his
backbenchers, that the Government would be introducing an ‘American style’
education system, and
that there would be no $100,000 university fees under his government. [20]
Yet it was known at that time, as a leaked paper from the then Department of
Employment, Education and Training, revealed, that the current Minister was
working on a document which would pave the way for a policy change along the
lines that we have come to see in Backing Australia’s Future.
23.60 The committee is
also opposed to the enrolment of full-fee paying Australian undergraduate
students. There are two reasons for this. First, this policy poses a serious
threat to the principle of merit entry to universities. Second, there should be
no additional cost burdens placed on academically eligible students. HECS
places should be found for all students who meet university entry requirements,
even if not at the university of their first choice.
23.61 Universities
will be able to offer a full-fee paying quota of up to 50 per cent of student
places in a particular course, and as market forces operate, this quota will
enable some universities, for some courses, to set fees that may be very much
higher than the HECS fee. Well-established universities may well be able to
charge students at rates which far exceed the cost of delivering the course.[21]
As Professor Chapman remarks, this is a long way from the theoretical ideal of
course charges reflecting costs and government subsidies reflecting
externalities.[22]
23.62 The committee
received a very large number of submissions opposed to full-fee entry. Many
objected on the grounds that it threatened the standard of university courses.
The view was expressed that a fee for a place was not far removed from a fee
for a degree. While universities assured the committee that matriculation entry
points were likely to be only a few points lower than the HECS cut-off, it is
not satisfied that this will be the view in years to come if the hierarchy of
universities begins to operate on the American model. The committee has heard
evidence in its 2001 inquiry into the state of higher education about the
unethical practice of ‘soft marking’ in the case of foreign fee-paying
students, and is not satisfied that quality assurance processes will always be
effective in relation to fee-paying non-performers.
23.63 Another problem
with full-fee arrangements is their discriminatory effect. Despite the
income-related nature of the repayment regime, debt averse students are less
likely to take advantage of this arrangement which appears to have been
designed for students aiming either at jobs which pay very well soon after
graduation or at students with access to considerable private funds. On this
basis it is inequitable.
23.64 A related issue
is FEE-HELP, access to which is available to students to pay full-fees. The
interest rate on this loan, being close to market rates, has invoked
considerable criticism. The committee notes research by Professor Bruce Chapman
in which he concludes that the FEE-HELP rate of interest is inferior to the
current HECS arrangement, and that it could be easily replaced by an additional
impost in the form of a HECS supplement. This would both reduce the interest
burden on students and be far easier to administer. The committee majority is
opposed to FEE-HELP in principle, just as it is opposed to the arrangements in
the legislative package – the extension of full-fee paying - that make FEE-HELP
necessary for the package to operate.
Learning Entitlements
23.65 Under these
arrangements students are entitled to five equivalent full-time years of
university study. The committee believes the rigidities of the five year limit
will involve considerable cost, inconvenience and deprivation for a large
number of students.
23.66 As the Phillips
Curran report pointed out, there are many paths taken by students through
university. Some drop out early in a course and return later to finish it.
Students may for good reason change courses in mid-stream. Some wish to study
for a double degree or a second degree. All of these choices are affected by
the limitation posed by the five-year Learning Entitlement.
23.67 Student comment
was particularly adamant on this issue. A typical student response was that
learning entitlements were a threat to life-long learning; there would be a
discriminatory effect on low-SES level and mature aged students; the policy
discriminated against those who had changed their study or career preferences
through the course of their studies.[23]
23.68 The committee’s
view is that all the objections to the learning entitlement are valid.
Principally, the issue is one of inequity, but the policy also falls down on
the issue of diversity because it ignores the need for life-long learning.
University course offerings are likely to be restricted over time through
limitations placed by the learning entitlement. The Government is trying to
address this through ad hoc announcements of exceptions to this restriction,
but a piecemeal approach has concomitant dangers. Finally, the committee sees
the policy as a measure to trim Commonwealth expenditure on higher education by
removing opportunities for individuals to improve their educational standing.
It sees this policy as another show of indifference to the social utility of
universities in serving to broaden the national skills base and the knowledge
base generally.
Governance issues
23.69 As detailed in a
later chapter, one of the most disturbing aspects of the Higher Education
Support Bill is the extent of the Government’s intervention in the governance
and administration of universities. While it was obvious from the policy papers
that preceded the bill that much tighter control was sought by the Government,
as a condition of Commonwealth grants, many commentators and stakeholders
failed to foresee how far these intrusions were intended to go. The committee
regards this basket of issues as central to any evaluation of the legislative
package.
23.70 There are two
main elements. First, the so called ‘governance protocols’ which set new
guidelines for university governing bodies – councils and senates – whose
appointments are subject to state and territory legislation.
23.71 The second
element is the very detailed administrative arrangements for Commonwealth
funding which are specifically legislated for in the Higher Education Support
Bill and in a number of legislative instruments called Guidelines. Some, but
not all of these Guidelines were released on 3 November. Under these,
universities will come under much more stringent and direct supervision by the
Department of Education, Science and Training (DEST) for all matters relating
to course approval and course mix, the allocation of funded places and other
matters.
23.72 In its
discussion paper on governance and management issues the Government committed
itself to reducing bureaucratic intervention in the management of universities,
but the existence of the protocols in the new legislation has made nonsense of
the Minister’s earlier assurance that he would cut ‘red tape’. He stated that
the extent to which this was possible depended on the confidence of the
Government, first in university governance arrangements, and second with regard
to whether agreements could be reached on outcome measures to replace
unnecessary emphasis on ‘process and inputs’.[24]
There is no apparent connection between the altered structure of senates and
councils and the reduction in ‘red tape’. Governing bodies would not be expected
to concern themselves with such matters. As is later explained, the real
purpose for the shake up of senates and councils is to impress on them their
corporate and fiduciary responsibilities. Minister Nelson sees them as dynamic
boards of directors with ‘top end of town’ credentials. For many reasons, both
the committee majority and the overwhelming majority of submissions addressing
this issue are in complete disagreement with the Minister’s perspective.
Universities are not corporations, and ‘top end of town’ appointees to
university senates would be the first to recognise this fact.
23.73 As to the second
element, the bill sets out in explicit detail the increased and onerous
obligations on universities and, contrary to the Ministers assurance in the
relevant issues paper, makes no mention of how the arrangements legislated for
may be altered by negotiation. Vice-chancellors have been outraged by the
intrusions which their universities will face into areas of student
administration over which they are no longer to have discretion.
23.74 It is the
Minister’s discretion that has been markedly increased, including the
discretion to allocate a specified number of Commonwealth supported places to
each university, and their allocation and distribution between funding clusters.
Clauses in the bill set out numerous conditions attached to Commonwealth
grants. Nothing is left to chance, that is, to the universities. As one
vice-chancellor has stated:
I could imagine that all of those provisions would be defensible
if the guidelines that supported them were minimalist and highly circumscribed
the circumstances with which a minister would exercise those discretions. What
concerns me is that the meaning of the legislation and its operation are going
to depend on a very detailed structure of guidelines that accompany it and on
current evidence we have reason to fear that all of those powers that you have
referred to are going to be subject to wide discretion and represent, I think,
an interventionist regime of the kind we have not seen before in Australian
higher education.[25]
23.75 The governance
protocols fail on the grounds that they attack the diversity of the university
sector. The Government appears to assume that they will operate in the same
way, and cater to the same kinds of students, in all instances. It may deny
this, but the governance provisions - setting a size limit of 16 members and
ousting student and academic staff representation – appear to confirm what the
Government would deny. The Governments protocols are aimed to standardise the
operations of universities in a way that no self-respecting university should
tolerate. The committee totally rejects all the clauses in the bill relating to
governance.
Recommendation
That the Governance Protocols be rejected as a simplistic ‘one size fits all’ approach to the complex and differentiated task of
governing diverse universities serving different communities.
Industrial relations provisions
23.76 The Government’s
intention to link $404 million in funding in 2004-06 to the acceptance of its
industrial relations clauses, providing for the offer of Australian Workplace
Agreements, has been a highly emotive issue within universities, causing some
bewilderment in the wider community as well. The difficulty which the
Government has in relation to the industrial relations clauses is that of
convincing anyone that they are relevant to higher education ‘reform’.
23.77 It is clear to
the committee that the Government’s determination to make AWAs available in
universities has much to do with its disapproval of the role of the National
Tertiary Education Union’s influence in the enterprise bargaining negotiations.
It claims that the NTEU acts as the ‘gatekeeper’ in negotiations[26]
and that the union runs a pattern bargaining campaign over salaries and conditions,
which is a claim answered in Chapter 4 of this report. The committee
believes that the maintenance of a floor under salaries and conditions is at
least one way of ensuring that there is some base standard of quality of
education offered across the diverse sector.
23.78 The Government’s
insistence that Australian Workplace Agreements be offered to university staff
in any round of enterprise bargaining has the potential to cause disruption, or
at least disharmony, throughout the sector. Indeed, it has already done so,
with enterprise agreements on hold following a joint ministerial statement on 22 September 2003 confirming the Government’s intention to impose financial penalties on
universities which do not comply with the provisions of clause 33-15 of the bill.
It is little wonder that vice-chancellors have been highly critical of these
provisions in the bill. The inclusion of this provision, together with the
governance provisions have made it far harder for the Government to win the
support of those from whom they would normally receive support. One of these
supporters, Professor Alan Gilbert, has described the IR provisions as
‘bureaucracy run riot’.
23.79 What makes these
provisions inexplicable is the current atmosphere of industrial harmony in
universities. National Tertiary Education Union members who appeared before the
committee described how this had been achieved, and why it had been sustained.
Productivity gains had been real, and the myth of the indolent academic had
long been dispelled. Performance was being rewarded. The committee gained a
sense that university administrations had learned much over immediate past
years about maintaining industrial harmony. It was evident that
vice-chancellors, in the main, had earned the goodwill of university staff, although
issues of disagreement inevitably remain.
23.80 As the committee
argues in Chapter 4, the industrial relations issue must be understood in the
context of a wider Government agenda: that of ensuring that universities are
placed on the same footing as any other workplace for the purposes of
negotiating salaries and conditions. Any claims that universities may have for
being ‘special’ or having a ‘unique culture of collegiate relationships’ is
apparently not a valid consideration.
23.81 The committee is
opposed to the workplace relations provisions on principle. It notes the
evidence from several vice-chancellors that common law contracts are used in
particular circumstances, especially for senior personnel and these are much
more flexible and less cumbersome than AWAs. It notes also the views of the
NTEU which has warned of the potential for administrators to force AWAs on
university employees, particularly those who are young and female and engaged
in general clerical duties. The committee accepts that some employees will be
more vulnerable than others: a common workplace experience. For these reasons
alone it opposes these provisions in the bill.
State and regional issues
23.82 The committee
notes from the outset that, if particular parts of the university sector are struggling
now to stretch their budgets to cover the needs of all their students and to
serve the varying needs of their regions, the changes proposed in the Higher
Education Support Bill will in almost every instance make the task more
difficult.
23.83 The reason for
this, as the core arguments in this report makes clear, is that it is a
discriminatory package, aimed, however haphazardly, at establishing a more
clearly delineated hierarchy of universities. It is aimed at allowing those
institutions best equipped through accumulated assets and tradition to become
beacons of entrepreneurial learning success so that they will be even less
dependent on Commonwealth funding. Their role is to set the pace for the rest.
23.84 Nearly all of
the beacon universities are close to the centres of metropolitan cities. The
metropolitan regional universities and the rural universities may constitute a
majority of enrolments, but the government’s policy was not written primarily
for them. The committee has taken notice of some of the serious problems they
face. They are a diverse group. The outer metropolitan universities need to
deal with large population growth and a demand for enrolments not matched by
the allocation of funded places. Rural universities, the largest employers in
their regions, have in common with outer metropolitan universities a lower
socioeconomic base from which to draw students, except that in the case of
rural universities the income levels are even lower. Rural universities also
pay a premium for their relative isolation. Travel and freight costs are an
impost on students and an addition expense to the university. Slow and
inconvenient rail links, where they exist at all, are a deterrent to enrolments
of prospective students from the metropolitan areas.
23.85 The Government’s
response to the higher costs of university education in rural areas is the
regional loading, which excludes many students from the University of New
England and the University of Southern Queensland who are enrolled as
distance learning students. The committee notes the misleading title of this
allowance in so far as it is a rural rather than a regional loading. The
committee also notes the arbitrary classification of ‘regional’ loading. The University
of Wollongong lobbied hard to be included, and it succeeded. On the other hand
the University of Newcastle (twice the distance from Sydney than is Wollongong)
was considered too close to Sydney to qualify for the loading. This
demonstrates the wonder that is ministerial discretion.
23.86 The committee
also heard evidence from the University of Tasmania and the three universities
in South Australia that also highlighted the concerns of institutions in states
with static population levels and difficulties in maintaining a satisfactory
rate of economic growth. Both Tasmania and South Australia lose a higher than
average number of their matriculating school leavers to universities in Victoria
where course offerings are much broader and where more funded places seem to be
available.
23.87 The evidence
appears to be very strong that students from rural and remote areas remain
particularly disadvantaged. If they are able, and are offered HECS places at
universities in the city, they are often liable to considerably high living
expense. The cost of living in a residential college, institutions that offer
the security that young undergraduates from the country need, is very high. Professor
Bruce Chapman has suggested that a HECS loan top up to pay for miscellaneous
up-front expenses would be a very practical initiative which could be achieved
at very minimal cost. The committee agrees.[27]
Student participation in student organisations
23.88 That other
obsession of the Government, the abolition of automatic student organization
fees, is again introduced, this time in the Higher Education Support Amendment
(Abolition of Compulsory Up-front Student Union Fees) Bill 2003. The bill
requires that universities do not collect student organisation fees as a
condition of enrolment.
23.89 Several members
of this sub-committee recall dealing with the first attempt by the Government
to abolish automatic membership of student organisations in 1999. The arguments
have not changed since then. This, like the AWA issue briefly discussed above,
is a matter of ideological concern to some members of the Government who place
a higher value on the claims of an individualist libertarianism than on a
community amenity funded by an obligatory levy. That this is a wildly
impractical stance to take is easily demonstrated to the overwhelming number of
university stakeholders.
23.90 The committee
opposes this provision because any examination of the issue on its practical
merits falls down. There is no other way for a satisfactory level of service to
be provided for students except through student organisations which, as they
run at cost, depend on the fees paid by all students to operate the range of
services that they provide. Given the peculiar circumstances of running
services on campus it is highly unlikely that any contracted private provider
or business could offer the range or quality of service that students currently
enjoy. Student organisations are a ‘natural monopoly’, the removal of which
would result in a marked deterioration in student services and a considerable
loss to university life and culture.
23.91 Evidence to the
committee indicated the severe consequences to campus and community life, based
on the Western Australian experience. The financial costs to universities in
maintaining, in the absence of student organisations, even minimal student
amenities would be considerable.
Conclusion
23.92 The committee
identifies a consistent policy theme threaded though this proposed legislation.
It is radical without being reformist; it is both deregulatory in policy intent
and highly regulatory in its processes. It is based on false assumptions about
the role and purposes of higher education and it exhibits profound ignorance of
the way universities operate and perceive their responsibilities. This is
evident from the way in which the Government managed to unite all university
opinion against it – an achievement almost without precedent. Government may
have won some plaudits for the conduct of the Crossroads inquiry. It has
forfeited this praise because it is now obvious that either it did not listen
to the stakeholders, or what is worse, it put them through a charade; a
pretence at consultation.
23.93 Finally, the
committee believes that none of the divisions of the bill meets the criteria of
sustainability, quality, equity and diversity. First it is a package that lacks
the sustainability that indexation of grants would provide. Second, there is no
guarantee, in the absence of increased direct funding, that infrastructure
costs and staffing costs can be met so as to ensure high quality teaching and
research. Third, the legislation is inequitable now, and will become
increasingly so over time as enrolment numbers are threatened by increased
fees; and fourth, the legislation aims at a rather ruthless conformity rather
than diversity, as university autonomy is diminished.
Recommendation
Important features of the nation’s higher education
system are being fundamentally reshaped and redefined by the Higher Education
Support Bill. Such a radical assault of the fundamentals of the
system was not foreshadowed nor discussed during the review process. The sector
and the broader community do not support discarding university autonomy and
academic freedom.
These bills will initiate a regime which will shift costs
to students. It will stifle student choice and impose a heavy burden on
families. These bills will deepen inequities in society, and undermine economic
and social prosperity.
The bill is so badly flawed, at both a philosophical and
technical level that it should not be given a second reading.
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