Kelvin Thomson (Wills, Australian Labor Party) Share this | Hansard source

The Higher Education Support Amendment (Indexation) Bill 2010 will amend section 198-20 of the Higher Education Support Act 2003 to provide greater clarity on indexation arrangements under part 5-6 of the act. The amendment will detail the formula and components of the formula. As a result of a recommendation by the review of Australian higher education, the indexation arrangements will replace the Safety Net Adjustment wage price index with the Professional, Scientific and Technical Services labour price index published by the Australian Statistician. This index is considered to better reflect wage price increases in the higher education sector.

I would like to take the opportunity provided by this bill to talk about the need to invest and the benefits of investing in higher education. I particularly want to take that opportunity, having heard the member for Sturt, the shadow minister for education, reiterate the opposition’s position in support of full fees for domestic students. The argument for this advanced by the coalition both when it was in government and now when it is in opposition is truly remarkable. In the first place it says, ‘Let’s bring overseas students here and we will charge them full fees for bringing them here,’ and, having done that, it asserts that domestic students should have the same rights. This is like saying that everybody should have the right to eat prison food.

It is not an advantage to be charged full fees. It means that tertiary education—post-secondary education—becomes the preserve of those who are wealthy or fortunate enough to come from wealthy families and it sets up a two-tier education system. I think that is completely unsatisfactory and I absolutely support the action taken by this government to abolish full fees for domestic students. It also fails to recognise that education is an investment. It is not simply a private benefit to the person who receives the education; it is a public benefit because it helps to secure a skilled workforce which is better able to contribute to national productivity. My own view is that there is hardly anything more important than determining both our collective prospects as a nation and our personal prospects as individuals, our children’s prospects as individuals, than getting a good education. So it is a question of investment; it is not a question of saying, ‘We want to treat education as a fee for service and have everyone paying full fees, full tote odds,’ and essentially restricting tertiary education and the benefits of that to those who are well off.

Regrettably, a report by the Organisation for Economic Cooperation and Development, the OECD, titled Education at a glance , back in the year 2005 singled out Australia as the one country which had been cutting back its public investment in higher education and training. The report found that from 1995 to 2002 public investment in education increased in most countries regardless of changes in private spending. The report said:

In fact, many OECD countries with the highest growth in private spending have also shown the highest increase in public funding of education.

And back in October 2005, Sophie Morris, from the Australian Financial Review, reported:

The main exception to this is Australia, where the shift towards private expenditure at tertiary level has been accompanied by a fall in the level of public expenditure in real terms.

I remember speaking with the chief executive officer at the Moreland Community Health Service, who was lamenting the need for more GPs and dentists. Of course, it is not just doctors and dentists; everywhere you look, we have been experiencing skills shortages.

We discussed the way in which, following the privatisation of utilities in Victoria, workforce training levels have been inadequate. A lot of training in Victoria was carried out by the old government authorities—Melbourne Water, the old Board of Works, V/Line, the railways and various public instrumentalities, gas and fuel, the SEC, the Forests Commission and the like. They did a lot of work by way of workforce training and building skills. But, following privatisation of those utilities, neither governments nor private employers did enough to meet the need for a trained workforce, leading to competition for workers and skill shortages across a whole range of areas in the workforce.

That kind of anecdotal concern that you hear from people in places like community health services who are familiar with these things was backed up by more detailed research carried out by Monash University’s Centre for Urban and Population Research. There is an article by Bob Birrell, Daniel Edwards, Ian Dobson and Fred Smith titled ‘The myth of too many university students’ published in People and Place. It outlines that after the coalition came to power in 1996 the number of domestic students in Australian universities at the undergraduate level hardly increased at all. All of the increase in professional training at the undergraduate level in Australian universities came via overseas students.

In the years after the Howard government came to power in 1996, domestic undergraduate commencements increased from 132,000 to 135,000—that is a bare two per cent increase. Essentially, those domestic undergraduate enrolments flatlined. During that same period undergraduate commencements by overseas students in Australian universities increased by 20,000 from 16,000 full-time equivalent students in 1996 to 36,000 by 2003. That is a 125 per cent increase. To underscore the difference in the pattern of domestic commencements, the proportion of the total student population reflected by overseas students doubled during this period. Back in 1996 it was 10.8 per cent of the student population; by 2008 it was 20.7 per cent—essentially a doubling, a massive increase during that period of time.

All the growth in higher education in this country was in overseas student places. There was nothing for domestic students. Yet there is a massive demand for university trained people in the Australian workforce. The modern economy has an insatiable appetite for professionally trained people. The unemployment rate in 2009 in Australia for people with higher education qualifications was significantly lower than for those without such qualifications. In particular, the difference in unemployment rates between those with and those without higher education qualifications was greatest amongst those recently graduated from university—that is to say the 25- to 34-year-old age group. Only three per cent of people with qualifications are unemployed compared to seven per cent of those without qualifications. Furthermore, people whose highest level of educational attainment was a bachelor degree had mean weekly earnings—if you go back to 2005—of $1,049. This rose to $1,434 for people with a postgraduate degree. By contrast, people whose highest level of educational attainment was year 12 had mean weekly earnings of $631—that is around 40 per cent less than those with a degree.

Clearly, having the tertiary qualification is a real advantage. It is an advantage both in finding work and in finding better paid work. Given this, it is perfectly understandable that parents wish their children to have access to university training with the likelihood of a well-paid job to follow. Naturally, the capping of the number of university places in the face of high demand for entry has led to increasing competition for these places. During the period I am talking about it coincided with a six per cent increase in the number of secondary-school-age children going to independent fee-paying schools. Between 1997 and 2004, enrolments in Australian independent secondary schools rose by nearly 50,000 students, or 27 per cent, and enrolments in Catholic schools rose by 28,000 students, or 10 per cent. In comparison, government secondary schools gained slightly more than 8,000 students, an increase of less than one per cent.

As the concern about skill shortages mounted, employers expressed alarm at what this meant for their enterprises. Their concerns prompted the Howard government to increase the skilled migration program and in particular to encourage overseas students to stay on in Australia as migrants after the completion of their courses. Immigration may be a short-term way of dealing with this, but it comes at the expense of the opportunity for many young Australians to improve their economic situation through the acquisition of a university degree. There are plenty of young Australians who wish to achieve this; unfortunately the places are simply not available to them. The truth is that there has been too little domestic training at university level, not too much, and the number of government subsidised HELP places should have been rising in line with demand in the professional employment pattern. This is sensible both from the point of view of employers and from the point of view of increasing opportunity for Australia’s young people.

Despite overwhelming evidence that a knowledge based economy requires an increase in professional level training, Australia is one of the few Western countries where participation rates in higher education for domestic students have fallen in recent years. Bob Birrell, John Sheridan and Virginia Rapson have done work on the particular failure to expand domestic training levels of professional engineers, despite severe shortages having been evident in Australia for some time. They note that domestic undergraduate commencements fell between 2001 and 2004, from over 177,000 to 165,000, and that domestic undergraduate commencements in 2004 were similar to the levels in 1995. Engineering domestic undergraduate commencements peaked in 1997 at 11½ thousand. By 2004 they had fallen to 10,700. So the only growth in engineering training at Australian universities has been due to growth in the number of overseas student enrolments.

We should not be outsourcing our skills needs, we should not be selling out our young people; we should be investing in the training of our young people. I note that HELP is a very large financial burden on young people and acts as a deterrent to them obtaining tertiary qualifications and skills. When HECS, now known as HELP, was originally introduced by the federal Labor government in the 1980s, it was said that it would generate money for more tertiary places and that it was reasonable for people who had profited from their higher education to put something back. I think that had merit in theory. But whatever the merits of the theory, in practice it has not worked out quite that way. The Howard government substantially reduced the income threshold at which HECS cut in so that, instead of it being about affluent professionals giving something back, it has become a burden for quite modest income earners and a yoke around the necks of young students.

The contribution made by government assisted students to their university education increased between 1996 and 2005 from 20 per cent to 37 per cent. Nor was this a question of the government switching resources from tertiary education to trades training. Between 1997 and 2006, the Commonwealth contribution to vocational education and training costs declined by 20.5 per cent and, between 1997 and 2008, government spending per hour on public vocational education and training declined by 22 per cent.

The shadow minister referred to the Bradley review of Australian higher education. The Labor government’s Bradley review of Australian higher education was an important step forward in identifying issues in this sector. It acknowledged that most job growth would be in occupations requiring university degrees and it set a target to increase the share of Australians with university degrees, and that is very welcome. In the 2009-10 federal budget the government announced major reforms to higher education. The government accepted the Bradley review’s recommendation to introduce an uncapped student demand driven system—sometimes called a voucher system—for the funding of university undergraduate places from 2012. This is a major policy change to the allocation and funding of student places, which to date have been funded through agreements with universities on a set of capped number of places.

The Bradley review said we could achieve a ‘demand driven entitlement system for domestic higher education students’ where public funding will be provided for each undergraduate student eligible for a university place at a cost of $1,130 million over four years. The budget papers have allowed $491 million from 2009-10 to 2012-13 towards this objective, and I believe that this will be money well spent. From 2010 universities will be allowed to over-enrol student places by 10 per cent in anticipation of the introduction of the new student demand driven funding in 2012.

I note that the Executive Director of the Australian Technology Network of Universities, Vicki Thomson—no relation, as far as I am aware—said in a recent article in the Australian:

We have a recent study which irrefutably lays out the impact of this sector on the economy in terms of lower health costs, increased productivity and increased living standards … We are an intrinsic part of the economic and social fabric of the Australian landscape.

The KPMG Econtech report Economic modelling of improved funding and reform arrangements for Australian universities of April 2010 estimates that increase in GDP from higher education reform, a combination of funding increase and structural change, would commence with an increase of $13 billion in 2014, rising to $36 billion by 2020 and $163 billion by 2040. That is a very substantial GDP increase. Other significant findings from the report include that the increase in public funding and structural reform will ensure that the government’s target of 40 per cent of 25- to 34-year-olds having degrees by 2025 can be met, and there are 44,000 more graduates annually projected by 2025. If the funding of vocational education and training is also expanded by the same proportion as for universities, the education revolution at tertiary level, covering both higher education and vocational education, can deliver as much as an eight per cent increase in GDP, spread across Australia, at a public funding cost of just 0.7 per cent of GDP in 2040.

The spread of Australia’s universities means that higher education funding directly assists inner and outer metropolitan areas and regional Australia. Graduates go on to work across Australia, bringing their knowledge and skills to all communities, as teachers, engineers, nurses, agricultural scientists and other professionals and managers. The innovative research of universities also adds substantially to the widespread national gain, delivering a 25 per cent plus rate of return on public funding. Universities demonstrably deliver on each of skills, productivity, exports, innovation, workforce participation and tax revenue growth across Australia.

It would certainly be better if all young Australians who are presently missing out on a place at a university or TAFE were given a place. In 2009, 18½ thousand eligible applicants missed out on a university place. Professor Bob Birrell has said that the real number of students missing out may be much larger. He says that eligible applications amount to 227,000, compared with actual acceptances of 161,000—a difference of 66,000. The proportion of resident young people enrolled in higher education in Australia is relatively low by European standards. This reflects the period since 1996 when there has been very little increase in the number of domestic subsidised places.

In conclusion, I welcome the government’s initiatives to address the lack of investment in the tertiary sector and to address what has been, I believe, a short-sighted reliance on overseas students and what is referred to as ‘skilled migration’. We should train our own young people.

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