Driving Innovation, Fairness and Excellence in Australian Higher Education

The experience of the past three years, 2013 to 2016, shows the great difficulty for implementing major changes to higher education funding and regulation as a single package.

The need for change is driven by the impact of making university an integrated part of the education system, accessible by any Australian with the aspiration for university study and the capacity to gain from it combined with expectations for change in how higher education is delivered over the coming decade.

The way ahead is to concentrate on achievable, useful changes where each can be considered and its impact assessed.  Changes should be directed at ensuring an effective Australian university system that meets the needs of all Australians for well-educated graduates and valuable research.

The Government’s fiscal challenge remains clear.  Expenditure on universities and students will be examined as much as other areas.  However, without the necessary resources from Government, students and business, universities will struggle to continue to deliver excellence in teaching and learning and research.  A major cut to funding is not a useful way ahead.

In contrast to many areas of Government expenditure, investment in education, including higher education, is about improving longer-term economic and social outcomes, with a return to Government revenue.

Recent graduate outcomes confirm that graduates remain better positioned than those without a degree while showing the impact of slow economic growth and sluggish employment opportunities.  Studies of graduates over the longer term confirm the advantage and suggest that the opportunities for each individual following a degree are better than if they had not undertaken it.

The IRU proposed seven actions consistent with three objectives to guide changes for the medium term.


  • demand driven funding as the core funding mechanism for supporting all aspirants to gain the higher education that they need including where they opt for an initial ‘sub-bachelor’ degree;
  • base university revenue sufficient to maintain universities’ core capabilities to deliver student learning outcomes and research to meet future needs; and
  • a focus on allowing universities to opt in to changes with long term significance, testing out changes and encouraging incremental take up.


  1. A commitment to support each Australian achieve their potential with an initial expansion of sub-degree places, targeting regions of under attainment.
  2. Maintenance of an effective HEPP program with sufficient funding that it encourages universities to focus on enrolling students from all backgrounds and rewards those who do so best.
  3. Targeted support for universities with ‘outer metropolitan’ and ‘regional’ bases to support the effective Australia wide access to university education and research without propping up failing aspects of a university.
  4. Further exploration of mechanisms that encourage universities to develop some areas of high achievement, without constructing complex interventionist approval mechanisms.
  5. Extending and improving information about student and graduate outcomes.
  6. Reworking of the standard Commonwealth Grant Scheme (CGS) and student payments based on:
  • fewer, clearly distinct, funding bands driven by an assessment of the reasonable resource standards targeted at future requirements to deliver expected learning outcomes;
  • simplified student charges in which no student pays any more than the current highest charge;
  • a factor addressing student background, to reward enrolment of a diverse student population; and
  • consideration of an additional factor targeting student outcomes against university level targets tied to accessing higher levels of revenue from Government and student combined.
  1. Adjust HELP repayment arrangements in ways that speed up repayment but which do not affect the core elements of HECS-HELP.

Let’s focus on achievable, useful changes

Innovative Research Universities (IRU) congratulates the Liberal National Coalition on its return to government following the 2016 election.

IRU looks forward to continuing to work with Senator Simon Birmingham, whose reappointment will allow continuity in developing a revised Government approach to supporting an effective Australian university system that meets the needs of all Australians for well-educated graduates and valuable research.

We also welcome the newcomers to the Industry, Innovation and Science portfolio namely Minister Greg Hunt and Assistant Minister Craig Laundy as well as Senator Nigel Scullion who retains the Ministry for Indigenous Affairs.

The next three years will continue to be challenging.

The Government’s fiscal challenge remains clear.  Expenditure on universities and students will be examined as much as other areas.  However, without the necessary resources from Government, students and business, universities will struggle to continue to deliver excellence in teaching and learning and research.  A major cut to funding is not a useful way ahead.

We need to concentrate on achievable, useful changes that improve how universities operate, and step back from articulating major reform packages that cause much debate but little change.

For this to occur, all sides of the Parliament need to focus on constructive consideration of potential changes.

A Timely Focus on University Research Funding

Labor’s pledge to restore university research funding is a step in the right direction. It focuses the lens on the importance of underpinning Australia’s research capability, a critical component of the transitioning Australian economy.

IRU supports the commitment to restore funding for key research programs.  This builds on Labor’s argument that Government should be the major funder of universities.

Programs such as Co-operative Research Centres have provided a valuable platform for universities, industry and other research end-users to work together to address important issues and have contributed towards increasing industry driven research.

“Such initiatives are worthwhile,” said Professor John Dewar, Chair of the Innovative Research Universities (IRU) group.  “We are reassured by Labor’s commitment.   This will enable IRU’s research –intensive universities spread across Australia to continue to deliver outstanding research.”

Sharper Incentives: proposed changes and rules for Research Block Grants – IRU submission

The essence of the 2015 Watt Review of Research Policy and Funding Arrangements proposals for research block grants is that universities should be responsible for the use of funds against the two prime purposes of supporting the universities’ research output and supporting research students.

The consultation paper ‘Sharper Incentives for engagement: New research block grant arrangements for universities’ poses many options that would diminish the simplification the Watt report proposes, particularly for the new Research Training Program.  Many of the options raised hold back from giving universities the responsibility to use the resources provided in the way they consider best to generate future research outcomes, with further funding dependent on success.

The IRU approach on the new programs’ requirements is to oppose rules that only express conservative good practice and to support those integral to achieving key policy aims for the two programs. The areas where we agree that full university flexibility for the Research Training Program should be moderated by other considerations are:

  • to maintain the focus on research degree completions by limiting the period of support a student can receive;
  • to ensure that student stipends ensure both a minimum reasonable level of support and also avoid the appearance of unnecessarily generous levels of support for some individuals.

On program reporting, the IRU approach is that it should be structured around the collection of relevant research outputs through an agreed regular national data collection with minimal collection of expenditure uses.  The draft guidelines also require amendments.

Read full submission attached (6 pages).

IRU Responds to Labor’s Plan for Budget Repair

The Labor ‘Plan for Budget Repair’ maintains Labor’s pledge to reverse any reductions to the base Commonwealth Grant Scheme crucial to universities’ education and research delivery. This will maintain base funding at the 2012 levels indexed.  This commitment is fundamental to Labor’s argument that Government should be the major funder of universities.

The statement includes several items that affect universities and students.  These are:

  • changes to the annual indexation measure to use the Consumer Price Index (CPI) only rather than a mix of CPI and professional wage growth;
  • reduction to the threshold for repayment of Higher Education Loan Program (HELP) amounts;
  • accepting tightening of the Research and Development (R&D) Tax incentive; and
  • reducing funding to Industry Growth Centres and abolition of the Innovation Xchange.

The change to indexation will toughen the challenge for universities to deliver at the standard required through tightening the funding available.

The change to the HELP repayment threshold is of less concern. The base threshold has been reduced and raised several times without effect on university participation. In the balance of ensuring all potential students follow their aspirations and having reasonable levels of HELP repayment these changes can be supported.

The changes to the R&D Tax Incentive sidestep the key issue about the Incentive. We need to move on from the constant battle between tightening and loosening eligibility to focus the Incentive at research that uses the research capability in universities and other research agencies.  If elected to Government, Labor should look to the yet to be released report from the Chief Scientist and Head of Innovation and Science Australia which addresses how to make the Incentive work to optimum effect.

IRU supports the Industry Growth Centres as potentially valuable means to link smaller businesses to research and management support that will assist them prosper. It is too early as yet to tell how effective they will be.  Reducing the small amount of funds for the Centres will make it harder to determine what impact they could have.

Overall the changes allow Labor to prioritise funding without doing major harm to university education and research.
Download the statement below.

Budget provides higher education clarity from the Government

Budget 2016 provides the needed clarity about the Government’s long-term intention. The higher education discussion paper provides a solid basis to focus on adjusting the higher education funding system to achieve the outcomes required. 

Higher education needs certainty for the future, with clarity for the coming decade about the balance of Government and student investment. The 2016 Budget provides the needed clarity about the Government’s long-term intention following the failure of its previous higher education packages to gain the support of the Parliament.

Implementation of major changes from 2018 gives the time to get the settings right.  Set against the Labor position to buttress public investment in universities the electorate has a clear choice in deciding the next Government in the coming election.

The higher education discussion paper provides a solid basis to focus on adjusting the higher education funding system to achieve the outcomes required.

Ruling out a full system of higher education provider driven charges, the emphasis returns to which combination of Government and student contributions will generate the resources needed at levels Government and student will sustain. The ‘trilemma’ remains.

The discussion paper rightly proposes fundamentally rebooting the grouping of funding and charges to suit current and future expenditure needs.  This is not glamorous nor will it be easy but it is necessary.

The paper devotes much space to the trials of HELP, responding to reports released over the past year.  It is important to review its operations but the outcome should hold to its core intent: a system to ensure all Australians can access undergraduate university education suited to their aspirations without concern about fees.

The budget also contains decisions to buttress the quality assurance system including provision of information to prospective students.

These come at the expense of cuts of over 20% to the Higher Education Participation Program (HEPP).  The HEPP cut risks undermining a program critical for educating all students well.  Following review it is essential that the long term program in the 2018 package sustains the incentive to enrol all suitable students regardless of background.

The loss of the Office for Learning and Teaching, with a commitment to maintain national Teaching Awards, marks the demise of yet another scheme to improve cross sector understanding of how to deliver higher education well.  We now need a discussion about how to maintain the focus on good education delivery that leads to improvements within each institution as part of the delivery of national education outcomes.

The Budget also confirms that the various Indigenous support programs will be combined as IRU has long proposed. This sets each institution the challenge to continue to improve Aboriginal and Torres Strait Islander student outcomes.


For comment contact IRU Executive Director, Conor King M: 0434 601 691


Three problems with the Supplementary Report on HELP from the Parliamentary Budget Office

On 6 April 2016, The Parliamentary Budget Office (PBO) released Report no. 02/2016 Higher Education Loan Programme: Impact on the Budget offering models and costings for the HECS/HELP program into the future, taking into consideration Labor’s demand driven policy and Liberal’s potential deregulation one – amongst others.

IRU Executive Director, Conor King asked four big questions of the PBO 13 April 2016.

The PBO issued a supplement to the report on 20 April 2016.

Conor King has three main problems with it.

  • First, the Parliamentary Budget Office’s (PBO) estimate is highly dependent on the interest rate for Government borrowing. Its chart shows that when the interest rate was low the cost reduced twice.  Change its assumption about future interest rates for Government borrowing and the estimated costs will grow or shrink accordingly.
  • Second, the PBO estimates the cost to Government differently depending on whether the Government directly pays a university or advances money for a student.  The PBO assumes Government borrows to advance money for students; but uses revenue to pay universities directly.  The consequence is that on its assumptions given time it would be cheaper for Government to eliminate student payments in favour of direct Government subsidy.
  • Third, the Supplementary Report still leaves opaque the long term cost of HECS-HELP, the current funding system for undergraduate education. This prevents use of the Report to consider the consequence of the current system against the various alternatives.

Read more attached or contact Conor King 0434 601 691

Four questions for the Parliamentary Budget Office on the true cost of HECS-HELP

I do not fully understand the Parliamentary Budget Office report: HELP, impact on the budget.

The headline figure in is that in 2025-26 the annual cost of HELP on an underlying cash balance basis will be $11.1 billion. How does a suite of programs bobbing along at an estimated cost of around $2 billion suddenly and inexorably begin to rise from 2017-18 to six times the current level with lending only doubling?  This has been transformed into a flurry of concern that the main university funding system is out of control.

As I ponder the report four questions come to the fore.

  1. What is the split of the $11.1 billion across the five distinct HELP programs?

The report does not break out HECS-HELP, the core program supporting undergraduate students in Commonwealth funded places. At a guess on the PBO assumptions HECS-HELP is about $6.6 billion in 2025-26.

  1. What is the split of the HECS-HELP amount to show the current program plus the impact of the Government’s proposed changes?

At a guess on the PBO assumptions the current program would be at a cost of $4.5 billion in 2025-26.

  1. What is the saving to the Government from its proposed major reduction in funding through the Commonwealth Grant Scheme?

Any assessment of the HELP programs should surely allow for the reduced call on direct Government funding. The saving has to be at least equal to the cost the loan increases to replace it.

  1. On what basis does the PBO hypothecate all HELP costs to Government borrowing, ignoring the contribution of many other major Government programs and driving up the notional cost of HELP?

The counter, and equally self-serving argument, is that none of it does.

Read full Executive Director comment below.

Who funds the researcher?

The Grattan Institute report The cash nexus: how teaching funds research in Australian universities has opened up the debate about how universities’ responsibility to lead research and higher education delivery in Australia is achieved within each institution.  The issue is important, with expectations high for university delivery on both fronts.

The report’s assessment of the relationship of the four relevant factors – expenditure on teaching, expenditure on research, revenue for teaching and revenue for research – glides too easily across the data, assuming a single purpose for universities’ largest single revenue source, the Commonwealth Grant Scheme.

Applying the report’s logic, the conclusion I reach is that Government does not fund academics’ salary as they research.  This seems strange.

Another interesting implication is that the extent of the subversion of teaching funds should be greater in universities with more substantial research output per student.  That is, the services for students should be that much better in universities with relatively low levels of research activity, since there is less research to prop up.  Is this the experience of students in such universities?

To take the four factors in turn, before looking at the substantive issues – how should Government fund research, and should students contribute to research costs.

Read more by downloading the statement in full below.


Setting the scene for 2016 and beyond

The release today of Universities Australia (UA)’s Keep it Clever policy statement for the 2016 election sets the measure for our major political parties’ higher education policies.

Innovative Research Universities endorses UA’s 8 Policy Principles.  They lay down what is required for universities to provide the investment in education and research Australia needs to be a prosperous country closely linked with the world with a well-educated workforce and world-class research profile.

The critical question for Australians and for our political leaders is how Australians will invest in their university system.

We have two contrasting options before us.  Both could provide the needed investment.

Labor has renewed its commitment to public investment as the means to ensure universities have sufficient resources. It has committed to abandon major savings from its last year in Government and to restore any savings from base university funding that might be passed before the election. We look forward to further clarity on the effective increase of university resource per student.

The Coalition supports a more competitive higher education environment, one in which there is greater flexibility in the level of fees charged to students in receipt of Government subsidy, and a wider array of institutions in which to enrol.

The IRU will work with both sides towards the aim of a sustainable, accessible and top-quality higher education system.  We will work with the Government as it redevelops the detail of its package to avoid the weaknesses of its initial proposals, particularly the risk of very high charges to students backed by high levels of HECS-HELP debt. We will contribute to Labor’s developing policy. The decision will be made in the 2016 election.


For comment contact

IRU Executive Director, Conor King M: 0434 601 691/0403 222 528