Private higher education institutions can contribute significantly to the diversity, flexibility and responsiveness of Australian higher education. They can also contribute to the more effective use of scarce public resources through the injection of an increased level of competition which will benefit the higher education sector as a whole.
It is argued that the mix of public and private funding of higher education should broadly reflect the balance of its public and private benefits. Any remaining argument for differential regulatory and funding arrangements for public and private institutions is undercut by the need for expanded private contribution to the costs of higher education and by recognition of the role of individual choice, which should be supported equally in both public and private sectors.
Commonwealth scholarships (or vouchers) will provide an effective mechanism for facilitating individual choice and increasing private contributions to higher education, while at the same time capping the Commonwealth's contribution.
It is also argued that the implementation process for new regulatory and funding arrangements should provide for prompt action to deal with the most obvious inequities of the existing arrangements.
Christian Heritage College is a private Christian higher education institution offering undergraduate and postgraduate programs in teacher education, and undergraduate programs in the arts, humanities, and social sciences. The College's major activity is the initial preparation and continuing professional development of teachers to meet the employment needs of Christian schools. Courses offered by the College, which opened in 1986, are accredited by the Queensland Minister for Education, who is the statutory accrediting authority for non-university higher education programs in Queensland.
Christian Heritage College's submission does not attempt to address the full range of issues relating to higher education policy and to public provision of higher education, but rather seeks to comment on matters particularly relevant to private institutions, the students who choose to study in them, the specific social, cultural and economic needs they serve, and the contribution they can make to national needs. Inevitably, this submission also reflects Christian Heritage College's experience of the unresponsive rigidity of the Unified National System, and the frustrations of its protracted representations to successive governments on funding issues.
Participation in higher education, and in post-compulsory education more generally, will become even more important than it is at present to Australia's economic, social and cultural well-being.
Policy decisions are now required to clarify the definition of the higher education and VET sectors and to determine the relative balance in participation rates between them. It is argued that Australia's participation rate in higher education should be at least equivalent to the average for OECD countries. Yet whatever target is adopted for the higher education participation rate, there can be little argument that a diverse, high quality higher education sector is of vital importance to Australia's future.
In the past, Australia has relied almost entirely upon public universities to fulfil societal needs for higher education. Public institutions, if not the present regulatory and funding arrangements in higher education, have hitherto served both the nation and individual students well. However the next two decades will require continuing high, if not higher, levels of participation in a context of rapid change and increasing complexity in the external environment, and in an economic climate of severe budget constraints.
Under these circumstances, the Commonwealth should act to expand the involvement of private institutions in the higher education sector in order to meet the need for greater quality, diversity and flexibility in higher education provision without increasing the level of demand upon public resources.
The seismic shift from industry structured on a mass production model to a flexible, differentiated, high-tech information-based economy demands corresponding change in the organisation and delivery of higher education. Centralised planning and state monopoly have proven to be inappropriate industrial models in an age of unparalleled global competition and exponential growth in consumer choice, and they are equally inappropriate models for Australian higher education.
The Industrial Age belief that "bigger is better", which gave rise to the Unified National System, produced conformity rather than diversity, and responsiveness to government dictates rather than to technological, economic and social change. Monolithic institutions will be increasingly inappropriate in an era which demands flexibility and the capacity to respond to the increasingly differentiated and specialised needs and demands of employers, consumers and the nation as a whole. Smaller, specialised institutions are equally, if not more, likely to provide the diversity, flexibility and responsiveness that the future will require. Moreover developments in information technology have the potential to revolutionise the delivery of higher education. Centralised mass production is no longer necessary for providing ready access to current knowledge and high quality teaching.
Current trends suggest that over the next two decades Australian society will become more diverse and pluralistic, with some intensification of current social problems also to be expected. Australian society has already been buffeted by the increased uncertainty which change has produced, and issues of societal and family breakdown in particular are likely to become more acute.
In some respects, Australian society is entering into the unknown in the coming years. In 10-20 years time, the young adults entering university increasingly will have had reduced experience of traditional modes of family life. In addition, these university entrants will be the offspring of an already disaffected generation, the so-called "Generation X". Some may have grown up in families which have never known regular employment. The potential social effects are unpredictable, but it is likely that institutions structured on a smaller, more human scale than today's large, impersonal mega-universities will be best able to respond to students as individuals.
Moreover, with the likely continued fraying of Australia's social fabric, there will be even fewer grounds for any confidence that an education which simply involves the acquisition of advanced knowledge and skills will be adequate to equip graduates for effective personal and professional life. The impersonality of technology and the sense of personal isolation which is evident on large university campuses also call for attention to the human face of education.
In school education, one current response to individual alienation and social disintegration is an intensified concern with ethics and values. This trend suggests that higher education too needs to give greater attention to the development of students' personal qualities. In the interests of Australia's social well-being, Newman's ideal of university education as contributing to the development of wisdom and moral character needs to be revived.
It may be that secular public institutions will be increasingly inhibited by the pluralism of society from espousing moral and ethical codes (which often have a religious dimension). Australia's best interests will therefore demand a stronger role for private institutions which can provide higher education programs which contribute to the student's moral development, and which can, in the course of academic and professional learning, provoke exploration of spiritual life and religious values, especially those values associated with Australia's inherited Judeo-Christian tradition.
While the Commonwealth will be rightly concerned with monitoring the pace and direction of change, confidence in any government's ability to anticipate, to plan and to direct change centrally is likely to be misplaced. In facing an unpredictable future, the old notion of "government picking winners" is now entirely outdated. Multiple models are needed to develop appropriate responses to change, since a centrally determined model is more likely to be 100% wrong than 100% right. The necessary flexibility in higher education provision, which changing circumstances will require, can be delivered only by arrangements which maximise individual choice rather than centralised planning. The role of government should be principally to provide the conditions in which flexible, diverse and responsive institutions can develop.
It has already been demonstrated that centralised planning and artificial restrictions on the responsiveness of the higher education sector to new developments heavily penalise both students and employers. Christian Heritage College's experience provides a classic example of the inability of the present arrangements to meet emerging needs. The new Christian schools, the most rapidly growing sector of Australian schooling, have a legitimate need for initial teacher preparation and professional development which incorporate an understanding of their mission and ethos. This need is particularly acute while many schools are still in their formative years. This particular need has emerged relatively recently in parallel with the growth of the sector, which hardly existed in 1973 when the Commonwealth first made arrangements to fund non-government teacher education for the then existing Catholic and Adventist school systems. Public institutions have shown little interest in meeting the needs of Christian school employing authorities, and the establishment of the Unified National System in 1988 made no provision for the emergence of private responses to these needs. The only accredited preservice teacher education programs in Australia which specifically address the employment needs of Christian schools are those offered by Christian Heritage College. However in consistently refusing public support for these programs, successive governments since 1988 have demonstrated greater concern for preserving the existing unwieldy, discriminatory and monopolistic structure than for meeting genuine needs.
As a consequence, students who wish to prepare for employment in the most rapidly growing sector of Australian education have been forced to do so entirely at their own expense. The inequity of such a situation is obvious. It ignores the lop-sided balance of public and private benefits accruing from teacher education programs; it ignores the long-espoused principles of access and equity in higher education; and it ignores the Commonwealth's own agenda for improving the quality of teaching in Australian schools. Furthermore the Commonwealth's abolition of the New Schools Policy is likely to result in continuing growth in non-government schooling, and place even greater pressure on the supply of teachers for Christian schools.
If this example of denial of emerging needs is replicated in other fields of study, then the Unified National System has served Australia's needs poorly indeed. Higher education arrangements for the next two decades need to address both the specific case outlined above, namely funding arrangements for non-government teacher education, and the general principle of improving responsiveness to emerging needs.
Regional patterns of demand will also change with population movements. Current arrangements have highly politicised the allocation of higher education places, a situation which has penalised areas of rapid population growth, such as south-east Queensland. As a consequence, there have been significant imbalances between supply and demand in higher education due to the rigidity of centralised political processes by which places are allocated. Future arrangements need to provide for greater responsiveness to changes in patterns of demand.
The appeal or otherwise of VET courses will also impact on demand for higher education. A redefinition of the respective roles of the higher education and VET sectors is to be encouraged. An effective, high quality VET sector is not only vital to Australia's economic competitiveness, but will also allow for a sharper definition of the role of the higher education sector.
Greater responsiveness to changes in the labour market is also necessary. Section 1.3 above has related Christian Heritage College's experience of the incapacity of the present structures to respond to emerging needs in the demand for both preservice and inservice teacher education programs related specifically to the needs of Christian schools. Given the obvious national importance of quality in school education, and the Commonwealth initiatives to encourage diversity, flexibility and competition in the provision of school education, the present arrangements have clearly failed to respond, not only to the labour market but also to the national interest and the Commonwealth's own policy initiatives as well. Such demonstrated inflexibility is unlikely to serve Australia's interests well in an increasingly competitive global environment in the future.
For example, the predicted shortages in numbers of teaching graduates in the next few years indicate that there are particular problems in the responsiveness of public universities to labour market needs in fields of study which do not appear to be highly valued in those institutions. Private institutions in which the teaching profession is highly valued can make a significant contribution to alleviating the looming shortages in the supply of teachers and to improving the quality of teaching graduates.
It is important however that funding arrangements for private higher education institutions should not be restricted to institutions of university status. Funding arrangements should allow the development of specialised niche institutions as well as more broadly based universities. There is an important place in higher education for niche institutions in an environment of increasing diversity and specialisation, and these should not be forced to become broadly-based institutions in order to qualify for public support.
However neither broadly based nor niche institutions should be funded according to a rigidly specified educational profile, since such an arrangement would prevent flexible response to changes, both in overall demand, and in demand for particular courses. Institutions which were locked to specific course profiles would be inflexible, unresponsive, weak and vulnerable to change in their external environment.
For example, in Christian Heritage College's main areas of interest, higher education programs with a Christian dimension, there is a significant possibility of US institutions offering programs into Australia via the Internet. It is most important that local institutions are able to compete effectively against foreign providers, if Australian employers and students are to have access to programs which take account of the Australian context and local community needs.
Arguments against private providers in the Australian market are now academic, since technological developments will ensure that overseas private providers are active in Australia. It would be an unfortunate development if Australia's private higher education sector were to be dominated by foreign institutions with little commitment to Australia and little sensitivity to local social and cultural issues.
A case in point is Christian Heritage College's new welfare studies program, which is intended to equip graduates to work principally in non-government, church- and community-based providers of welfare services. It is surely preferable that workers in welfare programs are trained in programs which reflect an understanding of Australian culture and the Australian context, and which are subject to Australian accreditation requirements, rather than in courses developed in a quite different cultural context. It is in the public interest therefore that strong local institutions provide an effective alternative to foreign private providers in such fields of study which are of considerable importance to the well-being of Australian society.
Arrangements which permit private institutions to compete on an equal footing with public institutions will do much to ensure that private institutions are strong enough to fulfil this need.
Accreditation of higher education programs outside of universities is a state government responsibility, and should remain so since state authorities have a far greater capacity for responsiveness to local and regional community needs. Nevertheless consistency of higher education standards is of vital national importance, and Commonwealth and state authorities should work co-operatively to ensure that state-based accreditation arrangements are nationally consistent and appropriately rigorous.
Accreditation of higher education programs should reflect typical higher education processes and values, and should be administratively separate from accreditation of VET programs. State accreditation authorities should be encouraged to develop clear definitions of the roles of the higher education and VET sectors, and to resist the pressures of credentialism which would encourage the expansion of VET courses, whether public and private, into the higher education sector. State authorities should similarly resist the introduction of recognised higher education awards, such as bachelor degrees and above, within the VET sector. Existing controls on the use of certain higher education terminology, such as the word "university", should also be retained.
State-based accreditation procedures should ensure that approval of private higher education proposals is based upon appropriate academic, administrative, financial, and ethical criteria; and that promoters of private higher education initiatives have a demonstrable understanding of and commitment to higher education standards and values. Accreditation arrangements in Queensland offer an appropriate model incorporating these features.
State-based accreditation arrangements should also include processes for regular institutional review and quality assurance.
It is recommended that the Commonwealth's accountability measures recognise a leading role for consumer choice (on the part of both students and employers of graduates) as well as other market-based mechanisms in fostering flexibility, responsiveness and quality in both public and private sectors.
Where public funding is extended to private higher education institutions, the Commonwealth will have a major role in accountability and performance monitoring. However the Commonwealth should enter into discussion with state authorities to ensure that there is no undue duplication between Commonwealth accountability measures and state-based accreditation and review procedures.
The extent of Commonwealth accountability and performance monitoring measures for private institutions should in proportion to the extent of Commonwealth funding provided, and should have similar purposes and parameters to those measures applying to public institutions. For example, the exclusion of private institutions from the Commonwealth's quality agenda in recent years has not been in the best interests of Australian higher education as a whole.
Accountability measures should recognise the substantial level of autonomy which already exists in established private institutions. It is particularly important that such measures take account of the diversity in private higher education and do not impede institutional autonomy, flexibility and innovation.
The Commonwealth, in the public interest, will be rightly concerned with protecting the substantial public investment represented by public universities. However the public interest requires an equal concern with ensuring that the substantial public resources devoted to higher education are used with efficiency and effectiveness.
The Commonwealth should therefore consider the application of certain elements of National Competition Policy to the higher education sector. In particular, the Commonwealth should reform regulatory and financing arrangements which unjustifiably restrict competition between the public and private sectors, and establish a regime of full competitive neutrality between public and private sectors.
At present, for example, undergraduate study in a public institution receives significant public subsidy which is not available in the private sector. Public institutions are further protected by a far greater degree of accessibility, represented by the opportunity for students to defer the costs of their higher education studies through the HECS system. The combination of public subsidy and deferred fees creates an extraordinarily "un-level" playing field in higher education, a situation which actively restricts private providers from offering any significant level of competition to the public sector monopoly. National Competition Policy principles call for both public subsidy and deferred fee arrangements to apply equally across both public and private sectors in higher education.
It is not envisaged that such arrangements would result in any significant shift in the student population from the public sector to the private sector in the short term. However the mere presence of private providers competing on an equal footing will produce significant diversity, enhanced choice and increased competition in higher education. Such an outcome is likely to result in a more flexible and responsive system in total, and more effective use of public funds.
One need not be overly concerned about the impact of increased competition on public institutions. Public institutions will always retain ineradicable advantages in human, physical and financial resources, in reputation and so on. Recent experience of increased competition within the public sector suggests that public universities will use these advantages effectively in competition with the private sector for students. This increased level of competition will produce positive outcomes across both public and private sectors for students, employers of graduates, and for the nation as a whole.
Ultimately the anticipated expansion of the private sector will be at negligible cost to any individual public institution.
Competitive neutrality should also extend to the detail of funding arrangements in particular fields of study. For example, quarantining of initial teacher education programs at graduate level from the application of full fee regimes should apply equally in public and private institutions. Similarly, funding arrangements for inservice professional development for teachers, a matter which also needs to be addressed by the review, should apply equally to both public and private sectors.
One additional advantage presently enjoyed by public universities is the tax deductible status of gifts for recurrent purposes. Given the increasing importance of alternative sources of income in higher education, this benefit should be extended to appropriately constituted, non-profit, private higher education institutions.
Individual choice should play an important role, not only in directing the allocation of public and private resources, but also in making market judgements about the nexus between perceived private benefits and the level of private contribution.
In general terms, funding arrangements should ensure that, without impeding access to higher education, private benefits are not predominantly publicly funded. It is equally important that public benefits should not be privately funded. Funding arrangements should also reflect the fact that the balance of public and private benefit varies markedly from course to course.
The rigidity of the present system produces glaring inequities in this respect. As the Australian Council of Deans of Education has argued, teacher education courses have major public benefits, and private rates of return on investment in the costs of teacher education are low compared with many other fields of study.
Yet, while the benefits of Christian Heritage College's teacher education programs are predominantly in the public domain, students are presently required to fund the full cost of their studies privately. As a result of the existing policy denying funding to teacher education programs at Christian Heritage College, the windfall to the Commonwealth, in terms of the number of graduates filling teaching positions in both government and non-government schools at no cost to public funds for their training, amounts to many millions of dollars.
Moreover students at Christian Heritage College are also required to fund the cost of their studies on an up-front basis, a situation which has major negative implications for access and equity.
Such arrangements should be not be seen as funding for private providers, but rather as equitable funding for students irrespective of their choice of a public or a private institution. Diversity and choice can only be maximised where there is demonstrable respect for individual choice.
Funding arrangements should also be evaluated in terms of their contribution to increasing the total resources available to fund higher education. For example, the Commonwealth contribution to the non-government schools sector has stimulated greater private contribution to the cost of schooling through the growth of enrolments in non-government schools, resulting in the provision of needed student places at a significantly reduced cost to public funds.
One difficulty with the application of the per capita recurrent grant model which applies in schools is that the Commonwealth should not be committed to the provision of a university place for all potential students. While some measures of eligibility for a funded place could be easily developed, other eligibility criteria would be more difficult to apply, and the funding commitment may be open-ended as a result.
A national system of scholarships somewhat similar to the Commonwealth scholarships scheme of the 1960s may provide a better solution, provided that the value of the scholarships realistically represented the public contribution to the costs of study. In effect such a scheme of Commonwealth scholarships would be a form of voucher arrangements. The review committee's attention is drawn to the detailed arguments in favour of a voucher scheme advanced by Professor Peter Karmel in his paper "Policy Perspectives on Higher Education Financing: An Alternative Mechanism", presented to the Policy Perspectives on Higher Education Financing symposium conducted by the ANU Centre for Economic Policy Research on 25 June 1996.
Scholarships should vary in value as a fixed percentage of the standard cost in each field of study. It is suggested that, in line with the Commonwealth's existing commitments to higher education funding, the value of vouchers should initially be set close to 100% of the current cost of a place, although without full indexation to the CPI, this percentage could be allowed to drift down to approximately 90%. The value of a voucher should not be discounted if a student chooses to take that voucher to a private institution.
Increased private contribution would be attained through either "top-up" fees, which both public and private institutions could charge over and above the scholarships, or increased levels of HECS or both. Both public and private institutions should also be able to charge full fees to non-scholarship entrants. Such arrangements would provide an effective means of encouraging further private contribution while capping the Commonwealth's contribution to higher education. In addition, a scholarship scheme would not preclude other measures which provided funding directly to public institutions for particular purposes, such as special assistance to regional universities.
It is difficult to see that any other mechanism would be more effective than scholarships/vouchers in encouraging greater private contribution, competition, diversity and choice.
The Commonwealth should resist any temptation to adopt half measures in relation to the introduction of vouchers. A partial voucher scheme running in parallel with other funding arrangements would be unduly expensive to administer for the minimal contribution it would make to the achievement of the Commonwealth's objectives in higher education.
Vouchers should be awarded on academic criteria, with a small percentage reserved to address equity issues. The number of vouchers awarded will be subject to decisions of relative participation rates in the higher education and VET sectors.
A further point to note is that, from the student perspective, the cost of study is only one part of the equation. Some additional provision is needed for assistance with living costs, in view of the increasing restrictions on eligibility for Austudy. A student loan scheme for this purpose could function as an entirely separate scheme, or be incorporated into the larger set of funding arrangements.
However given the existing difficulties in funding research activity in public universities, private institutions should not be funded for a broad research profile. Yet demonstrable excellence in research should be supported and encouraged irrespective of whether it occurs in public or private settings. Commonwealth policy should therefore ensure that a significant proportion of research funding is awarded on a competitive peer-reviewed basis, open to researchers in both public and private institutions.
One final comment should be made concerning the implementation of new regulatory and financing arrangements. The consideration of matters of detail and the development of guidelines for the transition to and implementation of new arrangements may well be a complicated process in both political and administrative terms. There appears to be an increasing possibility that such matters may not be resolved in time for new structures to be implemented in 1999. In the event that there is any significant delay in the general implementation of new arrangements, there is a strong case for early action to resolve some of the long-standing anomalies and inequities of the current arrangements. From the perspective of Christian Heritage College, the present arrangements which fund teacher education programs in some private higher education institutions but not in others is an issue of inequity and discriminatory treatment which is deserving of prompt attention.
The opportunity to present this submission to the Review of Higher Education Financing and Policy is appreciated, and representatives of Christian Heritage College would welcome the opportunity to have further discussion with the committee on the issues raised in it. The task of the committee is of great importance to the future of the nation, and we wish the committee well in its deliberations.
Phone: 07 3343 8011
Fax: 07 3343 7543
email: chcqld@msn.com