Messages to the minister: what universities want

Campus Morning Mail asked key stakeholder groups to tell Chris Pyne like it is.

Australian Technology Network

Vicki Thomson, Executive Director

Higher Education and its benefits – private versus public

The ATN wonders if the Government really has the hang of this cost-benefit analysis thing. By our reckoning it works by performing an analysis of the benefit to the party that pays the cost. However, the to-date indefatigable and imperturbable Minister Pyne seems set on comparing the cost to government with the private benefit for the student.

The ATN suspects that most Australians really do care about the public benefits of higher education – even if not always consciously. There are millions of professionals in Australia -such as teachers, nurses, lawyers, engineers – that our country depends on and all trained in universities. And in times of crisis you can bet that Joe or Joanne public are grateful for the university trained paramedic, surgeon or other expert attending them, rather than experiencing a de Botton-esque status anxiety attack about the private earning power their taxes have provided.

Now a small confession:  we at the ATN are not economists. But ATN favourite (UTS VCRoss Milbourne is, having trained under Nobel Prize winner George Akerlof at Berkeley. And to paraphrase the UTS VC the public cost – private benefit analysis argument for higher education is “bullshit”.

Bullshit aside, it is true to say is that if you haven’t got the money you can’t pay the cost, regardless of the attendant public benefits. So Minister Pyne may find himself caught between a rock and a hard place.

Roasting the productivity chestnut

The incineration of the Australian Workforce Productivity Agency (AWPA) as part of the government’s regulation roast, and the torching of the $700 million National Workforce Development Fund in the Budget has left scorch marks and question marks around national productivity, skills needs, and participation.

The ATN laments the loss of AWPA, whose focus and ambitions around closing gaps in these areas is close to its heart. The impact of AWPA’s departure may well have ramifications for a government that faces key challenges to roll out its “earn or learn” approach to managing young people.

AWPA appears to have flown too close to the sun by advising that significant additional public investment in tertiary education was needed, such as $1.3bn in additional funding for tertiary education from public and private sources per year by 2025 to underpin skills, participation and workforce development needs in an ageing population.

Somewhat fatefully, one of the four AWPA future workforce models in 2012 included a “ring of fire” scenario in which workplaces were hit by intense shocks- perhaps an eerie prediction of its own demise.

As we bid AWPA a fond farewell, the Treasurer’s plea to Australia of “we don’t only want you to work, we need you to work” rings loudly. The questions around “in which areas” and “how” remain, and with the loss of AWPA’s insights, one wonders just how government will manage to get the right balance in our nation’s skills base.

A $20bn medical research fund does not a whole-of-government reinvestment strategy make – to paraphrase the Chief Scientist. He’s clearly been polishing his strategic research priorities since September 18. The ATN wholeheartedly agrees with him.

The ATN also wonders what we will see from the government’s Industry front man Ian Macfarlane in terms of much needed government support for innovation, and in particular industry-university collaboration. The Budget saw the demise of Commercialisation Australia, Industry Innovation Precincts and Councils, Enterprise Connect not to mention a round of the CRC program. The replacement?  A very mysterious half billion dollar Entrepreneurs’ Infrastructure Program designed to “implement the Government’s new approach to industry policy”. Really?

We are also expecting Messrs Abbott, Hockey, Robb and Macfarlane to release their Industry Investment and Competitiveness Agenda in the not too distant future. Rumours are that it will contain reference to “PFROs and the real economy” which might mean more of a shakeup for CSIRO et al.

We can but hope that amongst all of this, the Government does not become hoisted on a petard of its own making by focusing too much on the “corporate benefits” of government support for research and development and not enough on the “public benefits”. The result would not only be bad policy but a mess analogous to the fee deregulation PR fiasco we are currently witnessing.

While the Commission of Audit noted that “there are inherent incentives for public and private sector researchers to collaborate” the ATN suggests that government should not forget that there are also inherent difficulties in leveraging those incentives.

Group of Eight

The Group of Eight did not respond to an invitation to write on its concerns for this morning’s CMM. However yesterday the Eight issued this statement.

The Group of Eight (unanimously supports the core elements of the Government’s proposed reforms to higher education policy and financing, said Go8 Chair, Professor Ian Young AO.

“In particular we support:

* expanding the demand-driven system to non-university providers, with adequate quality controls;

* extending funding to sub-bachelor degree programs (e.g. diploma and associate degrees); and

* deregulating tuition fees.”

“There are some aspects of the package which would benefit from further consultation,” Professor Young said.

“To avoid unintended adverse consequences, we believe further consideration needs to be given to how the HELP loan interest rates and the Commonwealth Grant Scheme funding clusters are modified.”

“We appreciate Minister Pyne’s initiative of forming working groups to consider specific matters alongside the consultation process being undertaken by his Department.”

“We want to work with the Government to look at alternatives, and we are undertaking modeling to inform our discussions with government,” Professor Young said.

“Our interest in exploring some issues further does not suggest any diminution of our support for the general direction of higher education reform,” Professor Young concluded.

Innovative Research Universities

Conor King, Executive Director                                                           

Uncapped student fees and scholarships: policies in conflict?

The current student charges and loan system is based on the individual, charging them an amount that is set by discipline but otherwise standard. There is no variation by academic capability, whether current or prospective, no judgement by current wealth, whether personal or familial. The person enrols, commits to the charge, and in due course pays it whether upfront drawing on personal or family resources or from subsequent income when it is sufficiently high.

The argument to remove restrictions over the amount a person pays are also largely based on the individual, arguing that the person should decide how much they will pay (usually in the future) in return for the education provided.

The requirement that a proportion of the charges committed to by students should be used for scholarship programs conflicts with the focus on the individual by forcing all those who do sign up for the full payment to cross subsidise those who will not, on the grounds that the others have less familial or personal wealth at point of enrolment and/or that they may be academically more capable. It may be that the latter simply have more sense.

The scholarship arrangement could mean a student from a well off background who achieves a modest future income has underwritten the education of the initially less well-off student who also achieves a modest future income, with the status at point of entry determined by the person’s family not their own wealth.

The need for the scheme is tied to offsetting any inclination of those with less current wealth to commit to courses. Reducing the scepticism about high charging courses also serves to reduce pressure on those institutions considering high charging courses to moderate the fee.

By containing use of the funds so raised to within each institution there is also great concern that the funds can be used to target potential students not prioritising that university. Hence a sought after applicant may face the choice of going to the initially preferred university X, paying the standard fee, against going to University Y at little or no fee.

This will be more likely the higher the fees at a given institution such that for some institutions the student body will be a set of capable students, often from wealthier backgrounds, cross subsidising entry by those with the notable academic capability that generates the reputation that justifies the fee to be paid.

HE reforms: the state of play

The Government’s suite of changes to higher education have generated more attention than any since John Dawkins began his creation of a university driven higher education system compiled from the previous universities and CAEs. As then as now though it is the impact on student charges that gets the most attention.

Hence we face a dual debate.

One by those most affected targeting how the proposed system should work in practice; the changes that will align the HE regulatory and funding systems for the first time. There are many complicated issues and some key questions that divide those involved but the likely outcome is changes in line with those the Government has proposed.

The challenge for universities in these discussions is to engage with the potential of the new, not work out ways to operate as if nothing were changing. A good example is to avoid creating 15 student fee rates as the starting point merely to recoup precisely by discipline what the current system provides when Government and Student contributions are combined. It makes more sense to estimate the lost revenue and recoup that from students using increases to the current three charges bands or creating a suitable set of five.

The fee changes and the change to the indexation rate for HELP debts will be a debate that will continue to resonate across the broader public, for whom the finer points will not matter. To understand what the changes could mean, and then assess the implications is challenging. Starting from the base that a charge of around $10,500 would leave universities with current revenue, each thousand above that is about a 5% increase in base revenue.

The initial sense is that there are insufficient deterrents against very high charges that would lead to a very large investment in some or many individuals with the cost shared by them and the Government, with the return to both individual and Government unclear. It is possible to over-invest in education. It is here that we can expect argument for changes to focus.

Regional Universities Network

Peter Lee, Regional Universities Network chair

Budget 2014 – The equity measures (Scholarships and Higher Education Participation Program)

The proposed reforms suggested in the Government’s higher education package must be carefully calibrated so we can continue to encourage students to participate in higher education in the regions and work in regional Australia.

RUN is particularly concerned about the impact on regional students of some elements of the package. The “Commonwealth Scholarships”, which suggests a scheme directly funded and administered by the Commonwealth, should see the scholarship money pooled and allocated to students who need assistance to go to the university of their choice.

Such a pooled fund would allocate the available funds against a consistent set of criteria, to the benefit of all Australians. If the aim is to attract students with less financial capacity to attend a university, then surely it should be their choice as to where they choose to study, not just the wealth of certain individual providers. The focus must be on student choice.

We strongly advocate a formula for the new Higher Education Participation program that takes into account the various pathways into university and individual circumstances of low SES students. Student success (e.g. the percentage of load completed in a given year by a low SES student), rather than a measure of retention or progression to a given point (e.g. second year) would better suit the student profile. Such a measure would better account for study breaks often taken by low SES students as they blend study and work to generate sufficient funds to attend university, and from breaks created by other life circumstances.

Budget 2014 – Fee contribution and interest rates on HELP loans.

If the Commonwealth contribution for certain disciplines is significantly lowered through two effects, an overall reduction and the new cluster arrangements, student fees may rise to ensure the current level of funding per student is maintained. If real interest rates are applied to HELP loans, higher education may ineluctably become a luxury item for many regional Australians with unintended and damaging consequences for their communities.

Disciplines such as science, engineering, agriculture, and creative and performing arts will require significant fee rises to return to the current funding position. Should such fee rises deter students from studying these important disciplines, such courses may close in regional Australia. We know that 75% of students who graduate from regional universities are still employed in regional communities 5 years post-graduation, and we also know that graduates in these disciplines enrich regional communities. This potential outcome is not something we should risk for the one third of Australia that lives outside the major metropolitan centres.

We are particularly concerned about the effect on participation that the new real interest rate arrangements may have on our low SES, mature age and young adult students and prospective students, including those who will also be adversely affected by other measures in the budget. It appears unfair that a real interest rate is applied to loans prior to the completion of a degree or during breaks in employment, particularly for women taking breaks for family reasons, and that the new interest rate arrangements are retrospective and will apply to students who were not appropriately advised when they commenced their degrees, in some cases, many years ago.

Know something the world needs to know? Anonymity guaranteed but lots of questions asked, stephen4@hotkey.net.au