Australian Vice-Chancellor's Committee

Section A describes how universities can contribute to the social, scientific, economic and cultural goals of the nation over the next 20 years - the AVCC's vision for the sector into the next century. The universities are uniquely placed in terms of their intellectual know-how, skill base and physical resources to equip Australia for the 21st Century.

Section B addresses major issues which have the potential to affect the contribution of universities to national objectives. This section deals with the issues identified under themes one to three of the Review's guidelines. It addresses issues which relate directly to students. University graduates are a resource of greater value to Australia than all its physical resources. Universities need to be able to respond to global trends with an emphasis on maximising the potential of all our human resources. The AVCC believes the nation must provide access and encouragement to participation in university-level education for as many people as possible who can benefit from it, offering a range of subjects, levels, breadth and timing to suit the demand for new learning patterns. Recognition is given to the need for different modes of delivery for the various categories of students.

Suitably qualified students from low socio-economic backgrounds need to be provided with sufficient income support to make higher education a realistic option for them. Issues relating to income support are covered under this section.

Section B2 highlights issues relating to staff. While students are Australia's future resource, university staff are Australia's current source of highly skilled and trained experts in most fields of intellectual endeavour.

Section B3 highlights the need for world class infrastructure for teaching, research and research training.

Section B4 comments on curriculum issues.

Section B5 looks at issues relating to research, training, links with industry and intellectual property.

Section B6 addresses structural issues such as enhanced cooperation between the education sectors to improve the diversity of choice of educational opportunities for students. It also covers National Competition Policy and its impact on universities.

Section B7 looks at the regulatory role of Government.

Section C tackles the Review's themes four and five - financing the higher education system. It outlines the objectives for the funding of universities in Australia in the 21st Century and the current funding context. Recommendations are made about a goal for the absolute level of resources for the year 2010 to achieve the objectives and to realise the vision which has been outlined. In setting this goal, recognition is given to the need to share responsibility for funding of universities between the Government, students and other beneficiaries. Finally, bearing in mind the objectives of funding for universities, and the desired elements of an ideal funding mechanism, components of a funding model are discussed.

It is also important to take stock of the changes made in higher education to date in order to provide the context for the direction of the sector over the next 20 years. The Appendix summarises the major changes to the sector over the last 10 years and the impact that these have had on the size and shape of the sector as it stands in 1997. It also compares Australian universities with their international counterparts to the extent that the data are available.

RECOMMENDATIONS

Recommendation 1:

The AVCC:

(i) commends its vision of the sector in the 21st Century to the Review Committee; and

(ii) recommends that the Government recognise the importance of higher education to Australia's future and through its funding and regulatory decisions, ensure that universities are able to contribute in the best way possible to Australia realising that future.

Recommendation 2:

The AVCC recommends that:

(i) the Government set a participation target which is tied to a population indicator such as the 17-64 age population. The target should be no less than exists currently and no less than participation rates in comparable OECD countries;

(ii) the Government minimise the disincentives to participation in higher education by all students and, in particular, disadvantaged students; and

(iii) the number of HECS exemption equity scholarships offered by the Government should take into account the number of disadvantaged students in the system. The number of scholarships could be linked in some way (perhaps as a percentage of) the total number of disadvantaged students.

Recommendation 3:

The AVCC recommends:

(i) the changes relating to AUSTUDY announced in the 1996 Federal Budget should be reviewed by the Government. Particular consideration should be given to the effects of the reduction in expenditure for the program caused by the raising of the age of independence, and the more stringent means test, to ensure that there has been no negative impact on the participation of students in higher education; and

(ii) the Government provide universities with a notional amount of money per undergraduate to form a pool of funds which would be available for universities to use to assist genuinely needy students. Such funds would be retrieved through the Australian Tax Office in the same way as occurs for HECS.

Recommendation 4:

The AVCC recommends that:

(i) funding for the CUTSD Program be enhanced to cover multi-skilling opportunities; the adoption and use of advanced technologies and telecommunications for teaching and research; management skills for academic staff; the recognition of career paths for non-academic staff (professional administrators) and the need to promote teaching excellence;

(ii) the Commonwealth introduce a number (say 36 in the first instance) of prestigious teaching internship grants for completing PhD or Postdoctoral fellows to undertake full-time teaching activities in universities for up to 6 months; and

(iii) universities seek to offer larger numbers of flexible appointments with remuneration packages consistent with their enterprise bargaining principles and processes.

Recommendation 5:

The AVCC recommends that:

(i) the Government make a substantial investment in upgrading the information technology and telecommunications infrastructure in universities to ensure that communication networks for the delivery of educational services are at least comparable with the best in the world; and

(ii) the Government and universities jointly establish a national program to undertake research and development on the use of information technology to enhance the teaching and learning process in universities and to provide information and advice on international best practice.

Recommendation 6:

The AVCC recommends that consistent with the Government's stated goals of restoring Australia's research infrastructure to an internationally competitive level and promoting quality and excellence in research:

(i) the Government provide immediate additional funding together with a continuing commitment to higher levels of funding needed to restore, enhance and develop university research infrastructure;

(ii) in particular, additional funding should be provided by the Government to restore the Research Quantum to at least 6 per cent of the operating grant;

(iii) in the longer term, further additional funding should be provided to raise the Research Quantum to a level which is a truer reflection of the funds required to sustain a research base of international quality; and

(iv) RIBG funding should be continued in its present form with at least its current level of funding beyond 1999.

Recommendation 7:

The AVCC recommends the Review Committee note that, as is appropriate, there is a diversity of responses between and within universities to restructuring the undergraduate curricula.

Recommendation 8:

The AVCC recommends that the Government monitor annually the number of HDR enrolments to ensure that APAs are provided for about 40 per cent of full-time HDR enrolments.

Recommendation 9:

The AVCC recommends that:

(i) the Government should boost funding for university-industry linkages using the existing funding mechanisms, which have been demonstrated to be successful. These mechanisms include both the ARC's Strategic Partnerships with Industry - Research and Training Scheme, and the Cooperative Research Centres Program; and

(ii) the R&D tax concession, the Government's cornerstone program to support and encourage the growth of new R&D in Australian industry, should be reinstated to its original level of 150%.

Recommendation 10:

The AVCC recommends:

(i) that the Review Committee note the crucial importance of a strong research base and associated research activity in universities to the generation of intellectual property; and

(ii) that Government, universities and the Business Council of Australia jointly review the processes leading to the patenting and commercialisation of intellectual property developed within universities with a view to improving these, and assessing the effectiveness of current mechanisms.

Recommendation 11:

The AVCC recommends that there should be better cooperation between universities and TAFE through:

(i) developing a coherent and workable national system of credit accumulation and transfer for both directions;

(ii) facilitating admission processes to universities and TAFE by extending the ranking system to include other relevant assessments and predictors of student performance for those wishing to undertake undergraduate university programs; and

(iii) exploring alternatives to competency based assessment used by TAFE.

This does not mean each sector will not wish to market its distinctive edge: with TAFE sensitive to the particular skill requirements of industry and universities enhancing a wider cultural and reflective approach.

Recommendation 12:

The AVCC recommends:

(i) the Review note that universities are taking the implementation of National Competition Policy seriously. They are examining aspects of their commercial operations to see if any of these are contributing to a lessening of competition in the market place. Most universities have developed or are in the process of developing codes of practice to guide the implementation of National Competition Policy within their operations; and

(ii) that universities retain their tax-exempt status except in circumstances where the Government agrees to increase core funding to a level which fully compensates for the loss of tax-exempt status.

Recommendation 13:

The AVCC:

(i) sees no immediate prospect for changing the relative roles of the Commonwealth and State/Territory Governments in the funding and administration of the post-secondary sectors but it believes that the issue should be kept under review as the sectors evolve;

(ii) believes serious consideration should be given in the DEETYA Review of Reporting Requirements and, any other future review processes, to the unnecessary complexity and regulation as evidenced by increasingly detailed guidelines, accountability and reporting requirements issued by the Commonwealth; and

(iii) recommends that any body established by government to provide advice on the operation and future direction of the higher education system should be so constituted that it is independent of both government and universities, has clearly defined functions and has an obligation to report publicly.

Recommendation 14:

The AVCC recommends:

(i) that the level of resources which Australia should invest in higher education should reach 2% of GDP by the year 2010; and

(ii) the Review Committee note that in determining this goal for investment in higher education, the AVCC recognises that responsibility for funding higher education is, and should continue to be, shared between the Government, students and other beneficiaries.

Recommendation 15:

The AVCC recommends that:

(i) the Government continue to provide financial support for public universities to meet the educational, social, economic, scientific, cultural and political objectives of the nation. The benefits to the public would not be fully captured if the higher education system were to be driven solely by private funding;

(ii) the Government should restore some of the present reduction in the public contribution per EFTSU, and should plan for return within the next few years to, as a minimum, the 1988 levels of funding per student;

(iii) the Government should reinvest the increased HECS revenue in universities to contribute to increasing the international competitiveness of the higher education system; and

(iv) of the 2% of GDP target for total resources for higher education, the Government should aim to increase its Outlays on Final Consumption Expenditure of Universities to 1.15 % of GDP by the year 2010.

Recommendation 16:

The AVCC recommends that:

(i) it will be contrary to both the national interest and to equity of student access, to further increase the percentage contribution through HECS which is derived from Australian university students and graduates; and

(ii) the effects of the increased, differential HECS charges should be reviewed prior to any further changes to the HECS mechanism.

Recommendation 17:

The AVCC recommends that of the 2% of GDP target for total resources for higher education, the contribution from external sources (excluding Australian students through HECS) should rise to 0.65% of GDP by the Year 2010.

Recommendation 18:

The AVCC recommends:

(i) the continuance of core funding for universities via the Commonwealth operating grant which should be as inclusive as possible to give universities maximum flexibility to manage their resources;

(ii) adherence to the rolling triennial principle in the provision of the operating grant to provide certainty for universities and underpin strategic university planning processes and management;

(iii) the continuance of performance-based funding for the research component of the operating grant (Research Quantum); and

(iv) that the Commonwealth offer a tax deduction for industry investment in university teaching and training analogous to the current tax incentive to invest in research.

AVCC SUBMISSION TO THE REVIEW OF

HIGHER EDUCATION FINANCING AND POLICY

A. THE FUTURE OF HIGHER EDUCATION

Decisions on the shape of higher education over the next twenty years can only be made in the light of an understanding of wider international challenges facing Australian society as a whole. The next 20 years are likely to see:

. increasing globalisation of technology, communications and commerce;
. a shift in the distribution of wealth to some developing countries from the Western developed countries;
. the growth of regionalism (Europe, the Americas, and the Asia-Pacific region); and
. an increase in religious and ethnic tensions around the world.

The relative balance of power of the last fifty years has given way to a world political context which is more complex and less certain. Globalisation is transforming existing structures of wealth, skills, technology and production. Within these global transformations, nations and associations of nations are arming themselves with the knowledge, skills and intellectual capacity to meet the challenges of accelerated change and uncertainty.

Many of Australia's neighbours, particularly in East Asia, are moving from "developing" to "newly industrialised" nations (East Asian economies have been growing on average in excess of 8 per cent each year over the last decade). Their increased savings and rapid economic growth will see the Asia-Pacific region hold its position as the strongest growth area of the global economy. Some forecasts have even predicted the share of world trade of the Asia-Pacific Economic Cooperation (APEC) forum countries will grow to almost 50 per cent in the year 2000. In contrast, Australia's average Gross Domestic Product (GDP) growth over this period has been just 3 per cent (Figure 1).

Figure 1

GDP Growth, East Asian and Australian Economies

By 2005, trends in GDP per capita will see Japan and Singapore well ahead of Australia, and Taiwan and Korea only marginally behind Australia. Within ten years Taiwan will have moved ahead of Australia if current growth rates continue. While Australia is well placed to take advantage of developments within the region, we have not fully understood, as our neighbours have, the crucial role which investment in higher education plays in economic development. Our neighbours' GDP growth has been heavily underscored by investment in human capital over several decades. For example, Government expenditure on education in Taiwan was 11 per cent of GDP in 1993-94 and 17 per cent of GDP in Singapore. This compares to 5.3 per cent in Australia during this period.

Australia will not be isolated from the global forces of change. Australia must be ready to influence change wherever it can, be aware of what these developments mean for its people, and address the problems and opportunities which global change offers. Relying on finite resource-based industries and tourism could lead to a decline in national wealth, particularly relative to our neighbours. Harnessing our potential intellectual capital and geographic advantages could mean that the nation will share in regional growth and wealth creation.

There can be no doubt that universities can and will need to play a dominant role in shaping Australia's future and its economic, social, and cultural position in the world. They will provide the nation with citizens who have the necessary skills for Australia to flourish in the changing environment. Skills such as flexibility, scepticism, a critical approach to received wisdom and sensitivity to different cultural and ethical value systems, the capacity to take the long term view, as well as the more tangible vocational and professional skills.

In addition, universities are themselves becoming one of the key investment currencies between nations. Australia is well placed to provide world-class higher education to increasing numbers of both Australian and international students. The benefit to Australia of educating foreign students is more than monetary. In the longer term, the benefit extends to the creation of a professional class of citizens in other countries who have first hand knowledge of, and perhaps sympathy to, Australia.

Competition in the region and elsewhere, however, will be fierce. Other countries are positioning themselves to take on the global challenges posed by the next century and are investing increasing amounts to secure their future. National plans such as "Singapore Unlimited", "Malaysia Vision 2020" and the national strategy documents of Korea, Hong Kong, and Thailand all highlight the need for increasing investment in higher education as a key to their economic growth.

While challenges from Asia will almost certainly be Australia's most important focus, we will also need to be primed to meet growing pressures from North America and Europe. US President Bill Clinton's top priority for the next four years is to ensure that all Americans have the best education in the world. Clearly for the Americans, education is seen as a critical element in maintaining their nation's future competitive edge.

A recent Organisation for Economic Co-operation and Development (OECD) report puts "learning" at the centre of any strategy to increase employment. The study argues that for countries to be equipped for the labour market of the future, their people will need higher levels of education, a well managed transition from education to employment and the capacity to continue updating their skills and knowledge throughout life.

The costs to Australia of not providing wide access to high quality university education will be that the nation as a whole, will be left behind. Low skill levels will jeopardise our capacity to generate wealth. In turn, this will limit the capacity of the Government to have control over national objectives. In a relatively short time our national influence, prestige and ultimately our security could be undermined. Our chance to exercise effective control over the shape of Australia's future will have been lost.

Australia needs to embrace a vision in which investment in higher education is rightly understood as providing the principal foundation upon which our future wealth and security can be assured.

A Vision for Universities : Shaping Australia's Future

The university sector in the 21st Century will be:

. rich in the diversity of its missions, academic courses, research programs and modes of service delivery but united in its commitment to excellence in all areas of academic endeavour;
. seen as the principal foundation for our national prosperity and social and cultural well-being. It will be closely integrated with, and attuned, to the needs of Australia's manufacturing, rural, mining and service industries; and
. publicly and privately funded to a level which ensures that opportunities to participate in higher education are available to all Australians who are able to benefit from them, but also drawing support from other sectors.

Universities will offer teaching and training which is in response to the needs of students, employers and industry and which uses the knowledge and expertise of high calibre staff committed to the rigorous pursuit of high quality standards.

They will produce graduates who understand and who are highly proficient in dealing with the dramatic scientific, technological and cross-cultural changes occurring throughout the global market place.

Australia's links with education systems elsewhere in the world, particularly in the Asia Pacific region, will be strong and Australia will become a favoured destination for the world's best students, university teachers and researchers.

Australia's universities will continue to support free intellectual inquiry and they will be nourished in this by a strong commitment from Government and industry to basic and applied research.

A premium will be placed on an understanding of our national history and Australia's Indigenous culture and the means for using this understanding to generate solutions to national problems.

Recommendation 1:

The AVCC:

(i) commends its vision of the sector in the 21st Century to the Review Committee; and

B. MAJOR ISSUES FOR THE SECTOR

B1. STUDENTS

Access and Participation

If Australia is to continue to have a world class university system which can provide opportunities to participate in higher education for all Australians who stand to benefit from them, universities need to be equipped to meet the rising demand for new university places which will emerge in the years ahead.

Population levels are growing. By 2010 Australia's population is expected to have grown 15 per cent to 20.8 million. Demand for university education will come from three main areas: school-leavers, postgraduates and mature-aged enrolments. In addition, industry's needs in the 21st Century will drive demand for continual updating of knowledge and skills to remain competitive.

Sources of Demand

(i) School-leavers

. the retention rate of secondary students has increased from 57.6% in 1988 to 71.3% in 1996 and this improvement has led to a consequently higher demand from school-leavers for university places;
. the Australian Bureau of Statistics' projected population for the 17-19 year old group implies that there will be increases in this population group from 1998 which can be expected to increase the level of demand for higher education courses;
. a university education leads to greater potential earnings and the ability to enter higher status occupations as well as providing social and cultural benefits to the nation. In recent years the aspirations of young people and their parents about higher education have increased dramatically. We can expect this trend to intensify in the decades ahead; and
. equity programs in universities will also facilitate increased demand from disadvantaged groups.
(ii) Postgraduates
. greater numbers of graduates will produce a concomitant increase in higher demand for postgraduate education. A greater competitive environment will also result in greater demand from industry and other major employers for employees with higher levels of skills, knowledge, training and expertise.

(iii) Mature-aged enrolments

. increased demand from sections of the population who were unable to participate in higher education at the time they left school but later find the need to do so, to enhance their career prospects or enable them to change careers; and
. closer ties between TAFE and universities and growing credit transfer arrangements will also trigger demand from mature-aged TAFE students.

(iv) Industry

. changes to our social and economic framework especially to the structure of the workforce, will require updating of knowledge and skills;
. industry will demand, as a matter of necessity, that their employees are as skilled as any in the world; and
. there will be an ever increasing need to draw on academic expertise through seminar and conference fora to keep abreast of current developments with our trading partners.

Modes of Delivery

While the mode of delivery for the various categories of students may differ, access to university education has been greatly enhanced through developments in information technology and telecommunications, distance education and open learning, although the impact may well vary according to the category of student:

(i) School-leavers

. the direct contact of a campus education provides school-leavers with the irreplaceable opportunity for close intellectual engagement with their teachers, researchers and peers. Without this form of contact, it is very difficult for young students to reap the full benefits of their education and thus to develop and mature personally, intellectually and socially;
. notwithstanding this, many aspects of teaching for example, traditional lectures and classrooms, are likely to be placed under strain given rising demand and tightened budgets. The challenge for university administrators will be to utilise the new developments in information technology and telecommunications such as computer conferencing, audiographics and video conferencing to complement the most important elements of a campus education; and
. while the campus experience is important for the majority of school-leavers, some students will continue to need to acquire their learning at a distance, particularly students in remote areas. Such learning will be assisted by the advances in information technology and telecommunications, but it will be incumbent upon universities to ensure that these needs are not overlooked or sidelined through budget restrictions.

(ii) Postgraduates

. the need for postgraduates to have close interaction with their supervisors and first hand experience in undertaking research using university equipment and infrastructure and access to libraries will not change. If anything, there will be a greater need for intensive, full-time research if we are to keep abreast of international trends and developments.

(iii) Mature-aged enrolments

. these students, particularly if in employment, benefit greatly from an appropriate suitable mix of support, the social benefits obtained through campus life and the convenience of on-line access to courses. A greater number of these students will be able to work from home as long as universities can match the demand for on-line tuition.

(iv) Industry

. as with mature-aged enrolments, universities will need flexible structures and on-line access to cater for the new patterns of demand from industry;
. universities will need to operate as "virtual" centres of learning with flexibility to deliver certain courses to a place and at a time determined by the convenience of the learner and not the institution; and
. the industry group will increasingly look for "just in time" learning offering short courses which focus on the attainment of specific knowledge and skills.

Participation

On the basis of the predicted increase in demand for university education from undergraduates, postgraduates, mature-aged and industry, further consideration should be given to determining a target level of participation in higher education. In 1988, the higher education participation rate was 40 per 1000 (17-64 age group) and has increased to 54.2 per 1000 in 1996. To prepare for the challenges of the 21st Century, Australia should aim to continue to enhance this participation rate. The latest available OECD data on higher education indicates that while Australia fares well in participation in the 18-21 year old bracket, we have a relatively low participation rate in the 22-29 year age bracket compared to similar OECD countries.

From 1998, there will be a real reduction in opportunities for Australian students to obtain a Government funded place. Cuts to university operating grants of 5 per cent and limited prospects of growth funding will mean that by 1999, some 21,000 fewer Australians will be able to gain a publicly funded university place. This will be in addition to the significant number (16,000 students identified in the 1996) who applied for but were unable to obtain a Government funded undergraduate place. This loss of opportunities will impact particularly on students from low income backgrounds whose families cannot afford to take the opportunity of purchasing a fee-paying place at university.

There is a range of disincentives to pursuing a university education for some students (in particular, low-income families and other disadvantaged groups). The disincentives include:

. the maintenance of AUSTUDY for full-time students at the 1996 rate (rather than increasing it in line with the cost of living increases);
. the abolition of the AUSTUDY Supplement which provided loans for genuinely needy students;
. raising the age of AUSTUDY independence to 25. This is a powerful disincentive for students over the age of 22 to commence study;
. the increases to the level of the Higher Education Contribution Scheme (HECS);
. the introduction of differential HECS; and
. the lowering of the threshold for repayment and the increase in the levels of repayment for HECS.

The introduction of differential HECS is likely to have most impact on low demand higher cost disciplines such as science and engineering which may have serious consequences given the international pressures for these skills.

The Government introduced for 1997 an annual number of 1000 HECS exemption scholarships for commencing disadvantaged students. However, in 1996, there were 242,683 students from the Aboriginal and Torres Strait Islander (ATSI), non-English speaking background (NESB), rural and isolated and low-economic status equity groups enrolled in Australian universities. It is estimated that, moderated for students who traverse several groups, there are about 100,000 students from equity groups. It is estimated that the number of targeted scholarships to be offered by the Government will only be available to about 4 per cent of these students, which is a very low proportion of the total disadvantaged student population. In addition, part-time students who are on relatively low incomes are required to meet the higher HECS charges immediately and many are thus in the disadvantaged group affected by the HECS changes but are not eligible for the exemption scholarships. This is a further reason for extending the scheme.

1996 Enrolments in Equity Groups

ATSI - 6161

Isolated - 10561

NESB background - 30348

Disability - 5482

Low SES - 82453

Rural - 95853

Women in non-traditional fields - 11825

Taking all the foregoing factors into account, the AVCC argues that the Government should plan for a significant increase in the number of students participating in higher education over the next 20 years. It should also seek to minimise the disincentives to participation in higher education by all students and particularly disadvantaged students.

Recommendation 2:

The AVCC recommends that:

(ii) the Government minimise the disincentives to participation in higher education by all students and, in particular, disadvantaged students; and

Student Support

While most of the disincentives to student participation have been examined above the mechanisms of student support in Australia deserve special consideration.

AUSTUDY currently provides income assistance for a significant number of students who would otherwise have difficulty studying. However, Government expenditure on AUSTUDY was reduced by $135m in the 1996-97 Budget, which will limit the eligibility and level of benefit. More broadly, in terms of providing a living income, AUSTUDY is far from adequate as it provides income "assistance" rather than "income support", with part-time work remaining the main source of financial support for many students. The personal and parental income test is stringent and the current levels payable to independent students fall well below the Henderson poverty line. The proposed Youth Allowance to replace AUSTUDY will be set at the 1996 rate.

Currently the dollar amount for the standard AUSTUDY and unemployment benefits is the same. The level of AUSTUDY should be set at a rate higher than unemployment benefits, particularly for school-leavers, as an incentive for those young people who have commenced higher education, to continue their studies.

The raising of the age at which AUSTUDY and ABSTUDY students are considered independent of their parents, and so not subjected to the parental means test, from 22 to 25 years goes against every trend in contemporary society which points to decreasing the age at which students are still considered dependent on their parents. It means that many students will be dependent on family support in order to study for many years after they have legally attained adulthood. It serves as a powerful disincentive for students aged 23 or 24 years to commence a university degree.

The proposed Youth Allowance does not include the AUSTUDY loan supplement. The AVCC has argued in its submission to the Youth Allowance Taskforce that universities should be provided with a notional amount of money per undergraduate to form a pool of emergency funds which would be available to assist genuinely needy students. The money would be retrieved by the Australian Tax Office in the same way as occurs with HECS repayments. Such a scheme would require an initial Government outlay but since the money would eventually be "recycled" once students commence employment, there would not be a continuing cost escalation.

Recommendation 3:

The AVCC recommends:

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