The Job-Ready Graduate Reform Package announced by Minister Tehan involves major changes to the Commonwealth’s framework for the provision and funding of subsidised domestic student places.

These include highly differentiated pricing signals for students, changes to the manner in which universities will receive funding for teaching and a revised formula for the distribution of growth places. Frank Larkins and I have profiled these important issues in CMM here and here .

One interesting feature of the Job-ready Graduates Package is that it is premised on a number of planning assumptions. The issues underlying these assumptions have exercised the minds of higher education analysts for some time and, in some cases, since introduction of the HECS scheme nearly thirty years ago.

Assuming the Package passes the Senate its implementation should help answer the following issues:

 Is the under-representation of students from rural and remote Australian predominantly a function of a shortage of places in those regions?

– The Package provides for growth of student places at 3.5 per cent per annum, well above provision for other regions.

– The Package assumes rural under-representation is largely a supply-side issue.

– In effect, the Package appears to discount, as being insignificant influencers of student demand, lower year 12 completion rates in regional areas, a proportionately greater preference for VET studies and the lack of breadth and depth of later year secondary education.

Is the perceived shortage of teachers and nurses a supply-side issue?

– The Package includes teaching and nursing within courses leading to jobs likely to experience greatest employment growth. It provides for significantly lower HECS fees to encourage increased enrolments in these courses.

– The Package assumes that any workforce shortages in teaching and nursing throughout Australia is the result of insufficient numbers of appropriately trained graduates.

– In effect, the Package discounts the relevance of longer-term career prospects, employment conditions and community and government attitudes towards teaching and nursing as valued professions. It accepts as a given the high turnover rates within teaching and nursing as able graduates seek more satisfying and rewarding careers elsewhere.

Are pricing signals by way of deferred HECS payments effective in influencing student choice of course or career?

– The Package is explicit in pricing science, engineering, IT, agriculture, nursing and teaching at significantly lower cost to prospective students in an endeavour to influence course enrolment decision-making.

– The Package introduces a stark contrast in HECS costs, with $3,700 a year for education, nursing and agriculture and $7,700 for STEM courses significantly lower than most humanities and social sciences at $14,500.

– These highly differentiated HECS fees will clarify whether it is possible via deferred HECS fees to send pricing signals that influence student choice more than previous fee changes.

– In doing so, the Package will also clarify whether students from different lower socio-economic backgrounds are likely to be more price sensitive. Should this be so, then humanities and social science may well become the preserve of the more privileged.

Is there a latent, untapped supply of students available to undertake STEM courses?

– Through its pricing signals the Package deliberately encourages students to redirect their preferences to science, engineering and IT courses.

– The Package assumes there are sufficient numbers of school students studying STEM-type subjects who are willing and able to further their studies at university.

– The Package will provide answers to whether the decline in Year 12 enrolments in subjects such as Specialist Mathematics, Physics, Chemistry is readily reversible or alternatively is more systemic, whereby a chronic shortage of qualified teachers and inadequate facilities result in student disengagement with STEM well before Year 12.

Can the cost of university teaching really be determined?

– Adopting the latest Deloitte Transparency in Higher Education Expenditure findings, the Package adjusts revised rates of funding universities will receive for teaching subsidised domestic students. As reported elsewhere rates of funding increase by up to 55 per cent for Languages and English and decrease by up to 17  per cent for Mathematics.

– The Deloitte Report acknowledges limitations on its findings, including that only 32 universities participated, and that only 19 universities were able to supply bottom up activity-based costing data. It incorporates international enrolments within its modelling.

– The Package sets funding on the basis of 2019 costs. Since then Universities Australia has foreshadowed a decline in revenue (mainly international fee income) of between $3-4.5 billion in 2020 and up to $16 billion by 2023. The COVID-19 shutdown of campuses and the consequential shift to on-line course delivery are also radically changing university teaching cost structures.

– The Package will shine a light on whether teaching costs can be empirically determined – or whether teaching costs are more a reflection of the quantum of funding received.

Ian Marshman, Honorary Fellow, Melbourne Centre for the Study of Higher Education


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