Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | Hansard source

I am delighted to rise to speak on the Higher Education Support Amendment (Demand Driven Funding System and Other Measures) Bill 2011, which seeks to amend the Higher Education Support Act 2003. Firstly, it removes the restriction on the number of undergraduate Commonwealth supported places that Australian universities are able to offer. Secondly, it abolishes the student learning entitlement. Thirdly, it requires universities to enter into a mission based compact with the government and, finally, it requires universities to institute policies which promote and protect free intellectual inquiry in learning, teaching and research.

These changes in part give rise to some of the recommendations contained within the Bradley review of Australian higher education, which was handed to the government in December 2008. Professor Denise Bradley and her panel outlined a broad vision for the structure of the higher education sector. For the last 30 years the Australian university sector has been highly regulated with decisions, over how many places each higher education provider can offer for each course and how much they can charge students for each place, decided by bureaucrats in Canberra. This highly centralised system did not adequately respond to student demand. For example, if a student missed out on getting a Commonwealth supported place for their preferred course, his or her only option was to go to a private institution or to take up a full-fee-paying domestic place in that course. The Rudd government abolished full-fee-paying places upon coming into office under the then minister for education, Julia Gillard, driven by ideology rather than good policy. The system still allows overseas students access to these full-fee-paying places.

There were two recommendations of the Bradley review that were broadly accepted by the coalition which would have, firstly, increased the participation in higher education so that by 2025 40 per cent of all 25- to 34-year-olds would have a qualification at bachelor level or above and, secondly, so that by 2012 all Australian universities would be funded on the basis of student demand. The second recom­mendation has amounted to the government enacting a partial deregulation of the current centralised system of dictating places. The deregulation of places, in theory, means that the number of places that a higher education provider can offer for courses to students can no longer be dictated by Canberra but is decided by the higher education provider themselves in response to student demand for specific courses.

Labor have committed to funding Commonwealth supported places for all domestic students accepted into an eligible, accredited higher education course at a recognised public higher education provider. No students are to miss out any longer on a place for a course of their choice on account of limited places. Currently Commonwealth supported places are capped by the Higher Education Support Act 2003, preventing the almost quarter of a million additional students required annually to fulfil the Bradley target from gaining a Common­wealth place. This bill removes those restrictions from most Commonwealth places from 1 January 2012. I also note that the government are providing a further $1.2 billion for this reform in 2011-12, that is, the demand driven funding system for undergraduate places, bringing the total funding for this initiative from 2010 to the end of 2015 to almost $4 billion at $3.97 billion.

The bill does not, however, uncap the number of enrolments of medical student places as those degrees are dependent on the availability of clinical placements provided by state and territory governments, nor does it uncap the number of Commonwealth supported places for postgraduate, non-research students. The uncapping of Commonwealth supported postgraduate places has been deferred at present and the measures in this bill do not extend to those places.

The bill also gives the minister for higher education the ability to cap the number of places in particular disciplines or at particular institutions in defined circum­stances. These circumstances include the proliferation of graduates in a particular field where industry is not demanding large numbers of graduates. The coalition acknowledges that universities have welcomed the recommendations of the Bradley review and the measures contained within this bill. They are welcoming the opportunity to accept the number of places for each course that will be decided by the number of qualified students wanting to undertake the course.

However, very serious unanswered questions remain regarding the adequacy of higher education funding into the future. The most pressing question is this: as universities will now have to absorb a significantly higher number of students—both as a result of the move to a demand driven system as well as to meet the government's increased participation targets—who is going to pay for the extra infrastructure needed to cater for all of these new students? As with many of this government's reforms in education, the policy may sound good, but, as we all know, the implementation of that policy always remains contentious.

There have been various claims made about the new system's impact on student numbers and thus the adequacy of university resources. This is set to become one of the great challenges in education for the government. For example, the Group of Eight have previously made mention that the sector will struggle to maintain quality if it is forced to absorb the increased number of students created by the introduction of the uncapped student demand driven system in 2012 and if base funding does not increase to cover funding shortfalls. Another study, the results of an Access Economics analysis of funding for university teaching and research activities commissioned by Universities Australia, also found that overall university funding levels are inadequate. They found that costs and funding do not match, that there are insufficient start-up funds for new programs and that the Commonwealth contribution rates for student places:

… appear to bear little relation to the actual cost of teaching or to any clear notion of public benefit and the range of maximum student contributions appears to have no solid empirical or policy foundation.

There appear to be three broad options to address the issues at hand. Firstly, higher education providers could try to accom­modate the greater number of students within existing facilities. Secondly, higher education providers could try to find the extra resources themselves. Finally, Labor could commit itself to meeting these extra costs.

The first option is clearly unacceptable. We cannot afford a decline in quality and standards in our universities, with overcro­wded facilities or less student contact with lecturers and tutors. Any lowering of standards risks further damage to Australia's international reputation, which would in turn further damage our position as one of the best destinations for international students. The second option of higher education providers having to find the funding themselves is not straightforward. Australian universities currently receive funding from non-government sources at a much higher level than the OECD average for comparable countries. It is therefore highly unlikely that much more revenue can be squeezed either from business partnerships or from international students, students who already each year inject billions of dollars into the sector through full fees and indirectly subsidise the education costs for our Australian students.

The last option, the one in which the government foots the bill, remains unclear because so far the Gillard government refuses to commit itself to the provision of any additional funding. It is worthwhile noting here that the government rejected the Bradley review's recommendation for a 10 per cent increase in the base funding rate of student places. The government instead has committed to a review of base funding to universities. The review panel, led by the Hon. Dr Jane Lomax-Smith, the former South Australian Minister for Education, has been given the task of tackling the problems of determining the additional university funding required to meet the government's objectives and determining how it is to be raised. This review is expected to report back to the government around October 2011. This is only months before the scheduled implementation of major reforms in 2012.

Where to now? The higher education sector is far from agreement on the best way to overcome this problem. Many submissions have been made to the Lomax-Smith inquiry which will no doubt stimulate further debate about how to address the impending funding shortfall for universities in accommodating all of these new places. When the results of the review are released to the public later this year, the coalition will carefully analyse Dr Lomax-Smith's work and conclusions. We will also undertake further consultation and await the government's response to the review. But I stress again that this is yet another review from this government rather than the government actually making a decision. That leaves the higher education sector yet again wanting to know what their future will be and without a clear direction from the government. The Lomax-Smith review will inform the coalition's response in this area and to speculate about the future policy direction without having considered the recommendations regarding future funding would be premature. At the end of the day, it is up to the government to come up with the solutions. They will need to make tough decisions. They are the ones who have announced the participation targets and the decision to move to a student demand driven system. They are responsible for dealing appropriately with the consequences of their decisions and need to front up with the solutions to any resulting policy challenges.

My hopes of Labor being able to pave a clear way forward in the so-called higher education revolution and address the sector's concerns about a real shortfall in funding to achieve these targets are not high. The government, for example, have no clear plan to get back into surplus. This is their fourth budget deficit in a row and since Labor came to power they have turned a $20 billion surplus into a $50 billion deficit. Labor governments have always been heavy on spending and light on restraint, including this one. As I said in relation to the government's review into schools funding, chaired by David Gonski AM, I cannot see any Labor government having a bucketload of cash to implement options stemming from the review. I fear the same for universities when the Lomax-Smith review concludes. But, despite the coalition's concerns about the transition to a demand driven funding system, we broadly support the measures contained within this bill.

There are, however, a number of measures contained within the bill that we do have concerns about. The first of these is in relation to the mission based compacts between the government and higher education providers, which are to provide a framework for jointly achieving reform objectives. These mission based compacts are supposed to provide a strategic framework for the relationship between the Commonwealth and table A and table B providers in the act. These compacts are to set out how higher education providers' missions align with the Commonwealth's goals for higher education, research, training and innovation. Specifically, we have concerns that compacts which are funding agreements between the Commonwealth and the universities will be used to micromanage universities rather than to simply align universities' objectives with those of the Commonwealth. The new funding and policy environment through the introduction of compacts is intended to free universities from command and control government regulation and to promote efficiency, autonomy and diversity in the sector. Universities will have the right to enrol as many students as they judge eligible for a guarantee of government funding and there are supposed to be no intended limits other than in areas such as medicine, as I mentioned earlier. The mission based compacts are in theory supposed to constitute an agreement between each higher education provider and the government about mission, size and the achievement of government targets. But providers are supposed to then be left to manage how they deliver these themselves. The compact system is also designed to monitor progress towards the 20 per cent low socioeconomic status participation rate and the 40 per cent attainment target and to reward providers as progress is made.

But the coalition finds it hard to trust that these deals will actually be realised. Labor is addicted to red tape and there is a real risk that these compacts will unnecessarily burden higher education providers. We do not have to look far to realise that, under the Gillard government, this risk is very real. Just look at small business. After more than three years of Labor, small business is drowning even further in red tape. Labor promised to make life easier for business by pursuing a one in, one out rule for new regulation. No new law was supposed to be introduced unless an existing one was taken off the books but, instead, Labor has imposed 220 new regulations for each one they have removed. So the one in, one out rule became the 220-for-one rule under the current government. If Labor imposes excessive reporting and regulatory arrangements on our higher education providers, it means more time, money and effort that they have to divert from real work to filling in forms for bureaucrats in Canberra and less to spend on students. Excess red tape and regulation benefits no-one. It means more cost for business; it stifles investment; it lessens innovation; it deceases productivity; and it ultimately creates a lower standard of living for Australians.

A coalition government would have a whole-of-government approach to reducing the cost and burden of regulation by cutting the overall cost of existing regulations by at least $1 billion each year; by instituting a fair dinkum one in, one out policy—no new regulation will get through the gate unless another one is being cut; by holding politicians and their bureaucrats to account by forcing them to explain to all Australians what they have done to end the mounting burden of paperwork; and, finally, by talking with industry and asking them about the real need for regulations and stopping unnecessary red tape from being introduced in the first place. We will also make bureaucrats calculate how much it will cost for providers to deal with the regulations they have created.

Our commitment to reducing the cost regulation by a quantifiable $1 billion per annum follows a successful adoption of annual dollar based red tape reduction targets set by the Victorian government. Victoria's approach to regulatory reform is highly regarded by business. The coalition recognises the proven success of Victoria's deregulation policy and will adapt and refine it. Commonwealth departments will be required to tell us how many hours small business will spend on filling in government paperwork and how much it will cost. This will include things like new software, advice from accountants, and training and time spent away from work to learn any new requirements. Departments and bureaucrats will also have to explain how many businesses will be impacted by regulatory changes and how much they will have to do to comply. Any cost provider will need to be examined by the Productivity Commission and they will be transparently included in departmental annual reports. We will also make sure that departments and bureaucrats explore other alternatives before imposing regulations, and we will require ministers to pursue the least-worst regulatory option for all policies and programs. Ministers and their departments will have to meet these targets and they will be held to account each and every year.

We wish to place on record our doubt about the government's ability to fund this new demand driven system, without resisting their predisposition towards excessive controls. The coalition does not oppose the introduction of compacts or agreements in theory, but we find it hard to believe that Labor will deliver them reasonably. It is interesting to note that any closure of courses or shifts in load between campuses will need departmental approval. Higher education providers are also going to be required to meet a range of other specifications that include social equity and research to support their circumstances for performance and general funding. In fact, the Vice-Chancellor of the University of New South Wales, Professor Fred Hilmer, has previously suggested that asking universities to each meet a range of excessive and/or competing targets would lead not to 'diversity in excellence but to mediocrity and uniformity'. For these reasons, the coalition is proposing to move the following amendment, which states:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House:

(1) notes:

(a) the growing burden of red tape and regulation imposed on small businesses, not-for-profit organisations and industry by the Gillard Government; and

(b) that the increasing regulatory burden represents a broken election promise whereby the Labor Government said that it would only introduce a new regulation after repealing an earlier regulation: a "one in, one out" rule; and

(2) calls on the Gillard Government to immediately adopt the Coalition's red-tape reduction policy which will seek to reduce the cost of the Commonwealth's regulatory burden by at least $1 billion per year."

No doubt that amendment will be circulated at the end of this speech.

The compact missions should be capable of reaching a range of different but complementary arrangements. It should be possible for higher education providers to choose what they do on the basis of their identified strengths rather than being forced to expand their operations beyond their capacity. Labor must have a national agenda on the reduction of red tape if they are to have compacts that are both achievable and worthwhile in meeting the Bradley objectives. Only a coalition government will reduce the cost and burden of regulation by at least $1 billion per year. Only the coalition is determined to ensure that government makes it easier, not harder, for higher education providers to prosper. The coalition also seeks to retain the student learning entitlement. The student learning entitlement was introduced by the Howard government in the Higher Education Support Act 2003 to achieve two objectives: first, to prevent students from occupying a Commonwealth supported place for an excessively long period of time, effectively denying another student a place at university; second, to prevent professional students from studying at the taxpayer's expense for decades, accumulating a large HECS debt with no intention of ever paying it back. As an aside, I was at university long enough ago to remember the professional students at the University of Adelaide, some of whom had left school when they were 17 and were still at university when they were 40. It seemed an excessively long period of time to improve their skills and knowledge in order to be able to make a contribution to the wider community.

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