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.

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.

Review of Research Policy and Funding Arrangements: IRU Submission

Review of Research Policy and Funding Arrangements: IRU submission The terms of reference for the Review of Research Policy and Funding Arrangements set out a twofold focus.

The first is to consider the overall system architecture of Government support for research and its use. The overall structure has not been reconsidered since the creation of the research block grants in 2001 although the incremental changes to elements of the system have significantly altered its balance.

The second is to ensure the structure encourages the take up of research by end users, particularly those able to use research for commercial ends. Read more in the attached PDF below.

 

Labor Back on Track

Innovative Research Universities (IRU) welcomes the release of Labor’s higher education policy proposals promising higher public investment in universities.

“These proposals build upon the groundwork that Labor had put in place when in government.  We endorse in particular Labor’s commitment to continue the demand driven system and to augment government funding per student.  We look forward to further clarity on the extent of the additional funding per student, the key issue in university funding,” says Conor King Executive Director of the IRU.

“This proposal puts Labor back on track with the credible alternative that we have been seeking.  We need two strong credible policies driving our major parties.”

Expanding access does not mean lowering completions or undermining student learning outcomes.  Australia has a high level of completion, with recent data showing levels comparable to those of the past two decades.  Labor is right to point to the lower level from students from some backgrounds, students whom the IRU is committed to educate as part of our focus on inclusive excellence.  We need to keep improving those outcomes, with incentives from Government one element to doing so.

The challenge for the proposed Higher Education Productivity and Performance Commission is to make meaningful a process of university agreements, a weakness in past arrangements. Targets must be grounded in each university’s students and history.

The plan to rework the proposed Higher Education Participation Program into a Higher Education Access and Growth Strategy is an opportunity to make better use of the program, which has been subject to too many adjustments over recent years.

Labor needs to keep open the potential to extend the number of sub-bachelor places a university can provide.  These are an important mechanism to assist people with lower initial academic skills test their capability for completing a degree.

Higher public investment in Australia’s universities entails not just increased investment at undergraduate level but underpinning Australia’s world standard research capability. We will await Labor’s research and innovation policy framework to complement today’s announcements.

IRU looks forward to an inclusive process of consultation on the Labor proposals, to ensure they would produce a sustainable system that will stand Australia in good stead for the years ahead should Labor be in Government.

 

END

For comment contact

IRU Executive Director, Conor King M: 0434 601 691/0403222528

Principles of the Higher Education and Research Reform Bill 2014 and related matters: IRU Submission

The need for further change in higher education is clear.

Over the past six years Governments of both sides have endorsed the need for all interested Australians to access higher education to meet their needs.

The challenge remains to design the funding and charges regime that ensures universities and other higher education providers can deliver the quality of education outcomes required now and into the future, at a viable level of Government investment.

The Coalition Government’s solution is to reduce the rates of Government funding spreading its support across students at all higher education providers, with universities and other providers raising the additional revenue required through fees. The Government’s package, expressed in the Higher Education and Research Reform Bill 2014 (the Bill), continues to generate considerable opposition targeted at its combination of a 20% cut to funding rate and unconstrained fee deregulation.

Read more in the attached PDF below.

Reducing government funding where higher fees are charged

Following the failure of the Government’s higher education package to pass the Parliament we now need to explore openly options for the future that that would:
substantially alter the current settings in a way that could be sustained for a decade or more;
complete open access to higher education, the fundamental change put in place since 2009, by incorporating sub-bachelor programs and including all registered higher education providers;
give universities and other providers a means to generate the needed revenue; and
make best use of Government investment within overall fiscal constraints.

The IRU supports further investigation of the Phillips-Chapman proposal to reduce Government funding should universities and other funded providers be permitted to raise fees above current levels. This proposal effectively means tests universities by the fees they raise. Read more…

Whence: how do we solve the trilemma?

The farce continues.  Universities cannot budget for 2016 and beyond with the level of base government investment and student payments essentially unknowable.

Since April 2013 universities have been subject to two budget driven changes neither of which has been implemented.  The Labor efficiency dividend remains on the Senate bill list; the Pyne reforms have been rejected twice.

We now need an effective process to solve the trilemma:

  1. universities should have the resources needed to provide effective, high quality, future focused education that meets the needs of all students;
  2. higher education should be affordable, supported by HELP debts repayable across a working life;
  3. Government should invest in students’ higher education, consistent with Government fiscal capacity, to support all Australians develop their capability.

Bring the three together and we will have an Australian higher education system the world will envy. Let them remain apart and university education will wither.

To achieve this requires constructive discussion aimed at resolving the resourcing challenge sensibly, with cross parliament support.  The first step is to resolve the high level outcomes needed, followed by exploration of options, based on analysis, with a willingness of all parties to be constructive.

Fee flexibility must be part of the discussion.  Limiting access to university should not.  It is sad that the Labor party could question a major achievement of the Rudd-Gillard Government.

It is clear that the unfettered deregulation of student fees is too open a system to gain broad support.  In combination with HELP it risks providers and students exploiting the loan subsidy to over-invest in education.

The options floated over the past year to moderate deregulation now need serious analysis as part of an open discussion to find the best way to the future.  IRU has listed the Phillips-Chapman option as worthwhile detailed work.  It would means test universities access to Government subsidy based on the level of fees charged. There are other ideas to explore.

The process will not finish quickly.  Much of the discussion of the past year has been too vituperative to contribute usefully.  Hence the Government should confirm the target for changes to begin as now 2017.

END

For comment contact

IRU Chair, Professor John Dewar, M: 0418 980 509

IRU Executive Director, Conor King M: 0434 601 691

 

Higher Education and Research Reform Bill 2014: IRU Submission

The need for further change in higher education is clear.

Over the past six years Governments of both sides have endorsed the need for all interested Australians to access higher education to meet their needs.

The challenge remains to design the funding and charges regime that ensures universities and other higher education providers can deliver the quality of education outcomes required now and into the future, at a viable level of Government investment.

The Coalition Government’s solution is to reduce the rates of Government funding spreading its support across students at all higher education providers, with universities and other providers raising the additional revenue required through fees. The Government’s package, expressed in the Higher Education and Research Reform Bill 2014 (the Bill), continues to generate considerable opposition targeted at its combination of a 20% cut to funding rate and unconstrained fee deregulation.

Read more in the attached PDF below.

Will Government fund higher education to the standard required?

The IRU argues that the approach of Governments of both sides has not and will not deliver the significant increase in Government funding sufficient to teach students to the standard required. Governments have not taken past opportunities to increase funding in this way, despite recommendations from the Bradley report and the Lomax-Smith report about the relative funding between disciplines and the clear areas of underfunding.