Submission to the Review of Higher Education Financing and Policy
Australian Democrats
Presented by
Senator Natasha Stott Despoja
Australian Democrats’
Higher Education Spokesperson
"The Australian Democrats hold very firmly the notion that educational funding, particularly at this level, is crucial to the economic growth of this country. It is absolutely vital for us to be able to progress well past the year 2000, which after all is only 18 years away; it is not light years away. We must, since we have not done so in the past, grapple with the essential task of setting national goals for our tertiary education institutions. They can be set only by a co-ordinated operation between all governments -Federal and State- within this country so that we can agree on what is needed. We need to fund the institutions and the students to produce the highly educated citizens in this country who will in turn support and be the mainspring for our economy in the year 2000."
Senator Michael Macklin
Australian Democrats’ Higher Education Spokesperson
Senate Hansard 5 May 1982
"This Government has failed to match increased places with funding for infrastructure, staffing and capital works. Students have had to tolerate substandard facilities, with overcrowded tutorials and lectures, inadequate laboratory equipment, insufficient course materials and library books, which contravene occupation health and safety regulations and have a detrimental effect on teaching standards. Students are rightly suggesting that the education they pay for must be of an excellent standard if this country is to emerge from recession and if we are to become the clever country. This crisis signals an erosion of the historical role of a university in providing a centre for learning, research and progress and suggests that the Government's priority areas are those mostly commercially viable areas and do not stress other areas such as the humanities."
Senator Karin Sowada
Australian Democrats’ Higher Education Spokesperson
Senate Hansard, 26 November, 1992
"The Australian Democrats see it as imperative that higher education in this country be accessed via merit, skill, intellect and ability, not by earnings. It is shameful that we saw the beginning of this process in the late 1980s. We saw the introduction of the higher education administration charge by the then Labor government. We saw the beginning of a pattern, which the coalition has grabbed with both hands and run with. We have seen the entrenchment of user pays education in this higher education system, and it is shameful."
Senator Natasha Stott Despoja
Australian Democrats’ Higher Education Spokesperson
Senate Hansard, 28 November 1996
The Australian Democrats hold these truths to be self evident. Education is a public right.
The Australian Democrats believe that money invested in education is an investment made by the Government in the future of the nation.
In an era of rapid social and technological change it is vital that the higher education sector reflects a commitment to life-long learning and recognise that education is an instrument with which to advance the community and to enrich the individual.
While recognising the need to foster autonomy, diversity and choice in education, national planning is required if resources are to be effectively utilised. The Australian Democrats support a higher education sector which:
Access to quality education should not be restricted, or diminished, by an individual’s gender, age, health, socio-economic background, racial or ethnic origin, or place of residence.
Community Support for Accessible Higher Education
These views are supported by the public response to the changes announced by the Coalition Government in the 1996 Federal Budget. Community concern over the impact of decreased levels of funding, increased levels of debts, and a deregulation of the undergraduate sector appears substantial. The Australian Democrats note the results of public opinion surveys conducted in 1996 which found that:
Furthermore:
The Australian Democrats maintain that any consideration of the role of higher education in our society should take into account, and reflect, the strong community support, that exists for a publicly funded and accessible higher education system.
Increased demand for higher education reflects the role of education and training in contemporary industrialised societies. Australians have embraced the notion of a ‘Clever Country’ and have enrolled in Universities in unprecedented numbers.
Participation in higher education has increased from 420,850 enrolments (304,000 EFTSU) in 1988 to 575,617 (410,475 EFTSU) in 1993. In 1990, 83% of all higher education funding income was public, with 75.2% provided by the Commonwealth through operating grants and the HECS Trust Fund. If the HECS Trust Fund contribution is removed, the Commonwealth provided 63.4%. By 1993, only 69.0% of higher education revenue comes from Commonwealth sources (including the HECS Trust Fund). When HECS is excluded, only 56% of revenue comes from the Commonwealth.
Between 1988 and 1993, total students numbers increased by 37% while total staff numbers increased by only 11%. Yet, over this time, a significant portion of the additional funding required for the expansion of the sector came from the HECS payments by individual students.
The Australian Democrats support the expansion of participation in higher education, but note that this has not been adequately matched by a commensurate increase in Commonwealth funding.
The impact of International Students
Alongside this rapid expansion in domestic participation has been the increase in the participation in the Australian higher education sector of international students. Between 1988 and 1995, the number of overseas students in Australia increased nearly fourfold to more than 80,000. A survey, conducted for the Western Australian Department of Commerce and Trade, last year, found that more export dollars come into the country from higher education than from wheat, and with 21% annual growth rate over the last seven years, has the highest rate of growth of any export industry.
Each international student is estimated to spend $23 000 per year in on education and living expenses Australia. In 1995 there was $1.88 billion in direct expenditure by international students. The analysis undertaken by Curtin University economist, Mr Steven Kemp, observed that Universities were fearful of becoming dependent on overseas students income, and that "if there were to be any abrupt changes in policy or fall off in student numbers they would really feel it."
To date, Australia has been capturing a larger market share that the United Kingdom or the United States of overseas students but this could change as these countries realise the potential export earnings. Australia should not lose the hard work put in by Universities over the last decade for the sake of short term measures to slash and burn funds for higher education. However, operating grants are being cut by 4.9%, or $1.95 billion, over the next three years.
The impact of the 1996 Higher Education Budget’s operating grants funding cuts on the quality of education, resources, students support services must be reassessed. Taking into consideration their effect on international demand for Australian higher education.
Credentialism and the Clever Country
Student, community, and workforce expectations are of increasing educational attainment. Graduate starting salaries have fallen to an all time low. In 1996, the 20th annual survey of the Graduate Careers Council of Australia found that graduates embarking on their first full time job receiving a median figure of 79.6% of average national earnings. Yet, when the survey began in 1997 graduates entered the labour market at the level of average national earnings.
The survey concluded that the decline was attributable to the rising number of new graduates, which grew from about 300,000 in 1997 to 620,000 in 1995. This combined with the effects of a slow labour market and changes in the economy which have resulted in graduates entering jobs which 15 to 20 years ago were considered suitable for secondary school leavers. When compared to the initial graduates surveyed, the graduates of the 1990’s have the additional burden of a HECS debt, coupled with the structural limitations placed on the viability of that degree to barter for highly paid professional employment.
The changes made by the Higher Education Legislation Amendment Bill (1996) rely on assertions that do not reflect the finding of the Graduate Careers Council Survey.
These moves, including the differential HECS; a lowered HECS repayment threshold; and an accelerated repayment schedule; are, premised on the understanding that graduates enjoy substantial economic benefits as a result of their educational attainment and that this benefit can be directly linked to the composition of their course of study and each graduate is accorded these benefits in line with their field of expertise.
The Australian Democrats note that graduate earnings are shrinking and that the attainment of higher education is not necessarily linked to future financial privilege.
The Australian Democrats oppose the notion that all graduates in a given professional field enjoy the same living conditions, earnings and lifestyles, as their fellow graduates. Further, the Australian Democrats are concerned that those who do not graduate are also burdened with debt.
The role of higher education in contemporary society can be seen in the trend to lower graduate salaries. As greater levels of education are required for participation in the labour market, and for that labour market to remain internationally competitive, credentialism manifests.
Distinction between undergraduate and postgraduate degrees are becoming blurred in many professions, particularly those where postgraduate study is a prerequisite to professional accreditation.
Student Financial Assistance
The Australian Democrats note that the West Committee does not specifically address the role of student financial assistance. Yet, student financial assistance is a vital part of increased participation in higher education of those groups who are traditionally disadvantaged.
Adequate levels of student financial assistance are a vital key to broadening access to higher education for students from traditionally educationally disadvantaged backgrounds.
The Australian Democrats reject contentions that publicly funded education is regressive. The claims that lower socio-economic groups and so-called ‘Australian battlers’ had not increased their participation rates in higher education between the abolition of fees and 1989. Comments made by the Minister for Employment, Education, Training and Youth Affairs in the parliamentary and media debates leading up to the passage of the Higher Education Legislation Amendment bill (1996) are fallacious.
The Democrats note that in 1973, the year before fees were abolished under the Whitlam Government, only 20% of full-time students paid fees for higher education and, of those who did not pay, 41% received Commonwealth scholarships and 39% received state government teacher studentships. These schemes paid the fees on the students behalf.
Importantly, before fees were abolished they were set at a level lower, in real terms, than at present. Students contributed around 15% towards the course cost, yet, the current rates of differential HECS compel students to paying as much as 80% of course costs.
Furthermore, the attitude taken by Government to student financial assistance has changed. When TEAS was reviewed in 1975 the conviction that "the maximum payments under TEAS should relate to the basic needs of students at a level that would enable them to study without inordinate financial pressure" gave students and the community an assurance that the Government was committed to increasing the participation of people from lower socio economic backgrounds.
This pledge was echoed when the Hawke government introduced the AUSTUDY scheme. Part of the Priority One: Young Australia package, the introduction of AUSTUDY was heralded by Minister, Senator Susan Ryan, as a rebuke to the lack of adequate financial support for students between 1975 and 1983. Senator Ryan stated during second reading speech:
AUSTUDY benefits will be progressively aligned with the unemployment benefit rates....Rates of benefits will be increased each year and by 1989 AUSTUDY and the unemployment benefit rates for young people in this age range will have come together.
AUSTUDY is not a quick fix solution but a carefully planned initiative which addresses the fundamental problem of ensuring that young people have the opportunity and the incentive to study until they have completed a full education. The scheme with its much improved allowance structure for secondary and tertiary students will remove the disincentive to study which arose because unemployment benefits outstripped the basic rates of education allowance for young people. This was a legacy of the Liberal Government from 1975 to 1983.
Despite the assurances of the Hawke Government, AUSTUDY was not progressively aligned with the unemployment benefit, and the financial disincentive to study has been entrenched for a further generation of Australians.
By 1984, however, the number of students with access to financial assistance had declined to 47%, and in 1996 only around 40% of full-time students received income support. The majority of Australian students who did manage to receive AUSTUDY in 1996 received around 38% of the Henderson poverty line and the maximum, standard rate of AUSTUDY is set at 55% of the poverty line, or 80% of unemployment benefits.
In 1997, the Howard Government has raised the AUSTUDY age of independence from 22 to 25 years and has further restricted access to AUSTUDY.
The Australian Democrats maintain that any decline in the level of assistance available to those people will be reflected by a commensurate decline in their ability to participate in higher education.
Any commitment to expanding the participation of target equity groups in higher education must acknowledge the decline in the levels and availability of student financial assistance. Student financial assistance must be at least equal to the unemployment benefit—to ensure that a disincentive to study is not present.
The Australian Democrats recognise that an individual benefit, as well as a community benefit, is derived from participation in education. However, the benefit to the individual is far outweighed by the social, intellectual, cultural, and economic benefits derived by the Australian community.
The Australian Democrats believe that the fairest and most efficient method of calculating the financial benefit is to tax according to the actual wealth of an individual rather than expected, or projected, earnings.
Higher eduction should be publicly funded through a progressive taxation system. Fees, loans schemes, and vouchers exacerbate disadvantage, and have been shown to be psychological and financial disincentives to study for many in traditionally educationally disadvantaged groups.
User-Pays Education
The Australian Democrats address the recent changes to higher education financing enabled under the passage of the Higher Education Legislation Amendment bill (1996). Specifically, the reintroduction of upfront undergraduate fees and differential HECS.
Dr Bruce Chapman, architect of the HECS scheme, commented that the changes have the `potential to change the system of higher education more than anything else that has happened in the Australian debate over the last 30 or 40 years and that includes the abolition of fees in 1974 by the Whitlam Government and the institution of HECS in 1989’.
Upfront Fees
The move towards up-front and full-cost fees is the most regressive measure in the 1996 Higher Education Budget. Currently, there are no safeguards and mechanisms that will ensure that the previously mentioned 25% quota will be enforced. The Ministerial Guidelines have yet to be tabled, and the Universities have already demonstrated varied interpretations of the legislation.
Upfront fees for undergraduate degrees have already proven to be ill-conceived and an unwieldy policy tool to create additional funds for a sector which has recently been stripped of operating grant funding.
The ability of the reintroduction of upfront undergraduate fees to make substantial profits for public universities is doubtful given the existence of private Universities, and the already high participation rates in higher education of those, from higher socio-economic backgrounds, who will tend to access this option in public Universities.
The findings of the 10th Higher Education Council Report on upfront postgraduate fees charged in Australian universities in 1995 support this.
This report found that target equity groups were disadvantaged in an up-front fee paying system. The report found that, in 1995, while women comprised over 50% of the population, less than 42% of all fee paying postgraduate places were held by women. While indigenous Australians comprised 1.4% of the population, their representation in fee paying postgraduate courses was 0.5%. While rural Australians made up 24.3% of the population, their representation was just over 10%. While isolated Australians comprise 4.4% of our population, only 2.2% were represented in fee paying postgraduate courses.
The most devastating figure of all is the representation of Australians from lower socio-economic backgrounds. They may make up one quarter of the nation’s population, but comprise only 6.59% of those enrolled in fee paying postgraduate courses.
The Australian Democrats are concerned that the trends that have emerged in the deregulated postgraduate sector will be replicated in the undergraduate sector.
Initially, upfront postgraduate fees were capped at 20% of load. Since their reintroduction we have observed that attempts to contain these fees fail in the majority of postgraduate courses.
This trend has been further exacerbated by the recent reduction to operating grants coupled with the Federal Government’s stipulation that undergraduate HECS load must be maintained. This year alone we have seen 4,210 HECS liable postgraduate places sacrificed in 1997.
The experience of the deregulation of the postgraduate sector has demonstrated that upfront fees are unwieldy, and restrict merit-based access to higher education.
Upfront fees are a proven financial and psychological barrier to participation, their reintroduction of up-front full cost fees for undergraduate education is opposed by the Australian Democrats.
Differential HECS
The Australian Democrats note that the differential HECS is a system that administratively, socially, academically, and economically does not make sense.
The Teaching profession provides a clear example of the vagaries of the differential HECS system. Financially, it makes no sense for Teachers with similar income-earning potential to have significantly different HECS debts. Those who pursue Sciences will have HECS debts that are completely different from the debts of those who pursue Arts, even though their income-earning potential is the same.
The construction of differential HECS on a curious mixture of future graduate earning potential, course costs, and course demand promises to skew course choice.
Already the impact of the differential HECS has raised concerns from State Governments and professional bodies that the increased HECS had dampened demand for professions such as Nursing, and that the enrolment numbers were not sufficient to meet future demand for the profession.
The Australian Democrats maintain that actual wealth, not predicted wealth, should be taxed.
The Australian Democrats call for the differential HECS to be abandoned.
Vouchers
The Australian Democrats oppose the treatment of students as consumers of higher education. A voucher system embraces this approach. A voucher system for higher education encourages individual ‘choice’ at the expense of national planning and consistent funding in the sector. The higher education sector relies on this stability to ensure quality education and research.
This system of financing higher education would privilege further the ‘prestige’ institutions, and erode gains made in increased participation by adversely affecting regional, rural and "red-brick" universities. Similarly to the differential HECS, a voucher scheme would skew course choice and would see the Government relinquish its responsibility to ensure that higher education serves the public good not simply the private ‘consumer’.
The Australian Democrats reject a voucher scheme which offers students a ‘choice’ at the expense of quality, planning and the national interest.
Scholarships
The Australian Democrats note that the Government’s announcement of 4000 HECS exemption scholarships over the 1997-2000 represent less than 1% of the enrolments over this period.
The participation of target equity groups such as indigenous Australians, rural Australians and people from lower socio-economic backgrounds should be increased to a level commensurate with their representation in the community.