Universities Australia is the peak body representing Australia’s 39 comprehensive universities, including two private not-for-profit universities. Many of our members, and other groups of universities, have provided individual submissions to the committee and you have already heard from a number of them. Our comments will complement the views they have put forward.
UA’s core business is, working in partnership with the Government and the Parliament more broadly, to ensure that the policy, regulatory and fiscal framework supports a strong, vibrant, responsive, innovative and internationally competitive university system: a system that serves its students and the nation.
All universities operate on a not-for-profit basis. Every dollar that comes in to a university is invested in the university. Universities do not generate dividends, nor do they exist as vehicles for generating financial wealth for shareholders.
As Professor Ian Jacobs, Vice Chancellor of the University of NSW observed last week, universities are servants of their communities. They exist to deliver public goods most directly in the form of higher education and research.
Through this they contribute to social cohesion, economic advancement, industrial and economic diversification, regional development, business innovation and the solutions to some of our most confounding problems.
Underpinning every successful nation is a strong higher education and research system.
Australia’s university system is one of the best in the world.
It educates more that 1.3 million students each year, employs over 120,000 staff, and supports a further 40,000 jobs.
The sector contributes over $2 billion each year to Australia’s regional economies, and sustains in excess of 14,000 regional jobs. It delivers three quarters of the value – currently $22.4 billion – of Australia’s highly successful international education sector and is responsible for the high esteem in which Australia is held as a destination of choice for international students.
But higher education is worth more than dollars.
Against a background of economic and technological change, increasing global competition, and a threat of widening disparity in opportunity – including between regional and metropolitan areas – university education is a way to bridge the gaps, shape our future and transform lives.
Australia cannot be an innovation nation without strong universities.
Without adequate, sustainable and predictable funding, universities cannot open their doors to properly support, or provide the quality of education expected by all those with the requisite ability to complete a university education. They cannot undertake the world-leading research that saves lives and transforms industries or assures Australia’s successful transition to a very different technology-based future where lifelong learning, upskilling and reskilling are the new norms.
Neither this Bill, nor its 2015 predecessor, are policy reforms. They are budget savings measures and should be discussed and debated as such – honestly and transparently. The primary purpose of this Bill is not to strengthen the university system, to provide a better experience for students, to drive a national innovation agenda, to put universities on a more sustainable footing or to improve Australia’s international competitiveness as a provider of international education. It is to deliver a $2.8 billion saving to the Federal budget.
One component of the Bill, the efficiency dividend, will reduce total base funding to universities by around $330 million a year by 2021 (in 2018 dollars). This is the equivalent of removing one university from the system.
When it comes to budget repair, the sector has more than contributed its fair share. Since 2011, universities and their students have contributed $3.9 billion to reign in the federal budget deficit.
It is important to note that this $3.9 billion budget repair effort is in addition to $3.7 billion, currently held in the Education Investment Fund for university infrastructure, the Government has announced will be repurposed.
While the Bill contains a number of positive measures – support for HEPPP, expanding the demand driven system to sub-bachelor places and incentives for more work placements – the majority of our members are strongly of the view that these do not outweigh the negative impact that the cuts to public investment, and the increase in students fees, will have on students, research and regional communities.
For this reason, the consensus view of the sector is to oppose the passage of the Bill.
Much has been said about the ‘rivers of gold’ flowing to universities as a consequence of the introduction of the demand driven system and the surpluses that universities hold, in justifying a $2.8 billion cut to the sector.
To be clear, this increase in public funding has been driven by enrolment growth associated with the introduction of the demand driven system – a policy initiative supported by both major parties. Far from delivering untold riches to universities, enrolment growth means expenditure growth as existing programs, services and infrastructure are expanded to meet the increased load.
To claim that the demand driven system is unaffordable because it has done precisely what it was meant to do, that is, increase participation from disadvantaged groups and increase the number of graduates to meet future labour market projections, is curious to say the least.
Even with the growth in enrolments, it is a fact that both as a share of government outlays and as a share of GDP, public investment in higher education is falling. Public funding for tertiary education as a proportion of GDP dropped from 1.2 per cent in 1995 to 0.7 per cent.
In relation to surpluses, those universities that do post a surplus – and not all do – reinvest these into teaching and research. This reinvestment is lumpy, often non-discretionary and varies substantially from year to year.
To point to surpluses as a rationale for reducing funding is to mis-understand the fundamentals of good governance and sound financial practice.
Just under half of all universities are either operating a deficit or are on slim operating margins of less than 5 per cent.
A number of State Auditors-General have recently expressed concern in relation to the financial health of some universities. The NSW Audit office, for example, has at the top of its list of financial risk for universities, the ‘potential impact of government policy changes’.
There is a certain irony in the argument that says that declining university surpluses should be further eroded so that a Federal budget surplus might be achieved.
A number of elements of the package, specifically performance-based funding and post-graduate scholarships, require substantially more thought and consultation with the sector, to achieve the policy objectives being sought.
In relation to performance-based funding, the evidence of need is scant. Attrition rates have not changed markedly in recent years, retention is on par with the rest of the developed world and student satisfaction continues to climb. That said, universities are demonstrably committed to continuous improvement in meeting the needs of their students and will support a scheme that achieves this. However a punitive approach that disadvantages the very universities that support students most in need, is not that scheme.
A package based on funding cuts and increases in fees will reduce the range, diversity and quality of universities’ offerings, driving the system to greater homogeneity as lowest cost modes of delivery are pursued. The case for how this benefits students has yet to be made.
There is no doubt that universities in regional or outer metropolitan areas, as well as those institutions that do the heavy lifting on access and equity will be affected most.
In summary, the majority of our Universities Australia members oppose the passage of the legislation in any form because:
- Students will pay more and receive less;
- It will result in less rather than more diversity as universities pursue lowest cost models;
- It does not deliver true reform;
- It will lead to large bureaucracies and administrative costs for government and universities without a commensurate benefit;
- It will lead to financial difficulties for many institutions and make higher education less accessible;
- It will cast a pall over the future of non-economically viable courses, campuses and student support services and will likely lead to staff reductions; and
- Will further increase the level of financial exposure of the sector to international education.