Natasha Stott Despoja (SA, Australian Democrats) Share this | Hansard source

time is up. I think that suggestion of ‘No!’ came from his own side. This is groundhog day for us. We have been doing this—that is, analysing and commenting on higher education policy—for 10 years at least, so I always enjoy the possibility of a debate with Senator Carr.

I also rise to speak on the Higher Education Endowment Fund Bill 2007 and the Higher Education Endowment Fund (Consequential Amendments) Bill 2007 as the higher education spokesperson for the Australian Democrats. I begin just where Senator Carr ended—that is, that we debate this legislation on the day after a vital OECD report was released which demonstrated that our country is the only developed country apparently to cut public spending on tertiary education in the decade to 2004. When you look at the table in that report, as I have had the opportunity to do, as well as at the media reports today, it is very clear that Australia is lagging behind the rest of the world when it comes to government contributions to university funding. According to the Age article today:

The OECD found private spending soared—

soared—

mainly due to students leaving university with a greater debt after the federal government lifted maximum HECS fees in 1997.

Unsurprisingly, the government has challenged these statistics. I particularly like the comment from the Minister for Education, Science and Training quoted in the paper today:

… the OECD analysis was flawed because it counted HECS and government full-fee loans as money paid by students …

Der! It is money paid by students. Doesn’t the minister get it? People are repaying these loans, these debts—their HECS. The debate takes place today within the context of, yes, 11 years of blatant underfunding; 11 years of fee hikes and increased loans and charges; deregulation and further deregulation of the postgraduate sector; almost total deregulation, it seems at the moment, of the undergraduate sector; and, of course, paltry, miniscule movement on the issue of student income support. As I say every time, we know that this is a fundamental, absolutely vital issue, a key issue, when it comes to increasing participation in education across the board and higher education specifically, especially for those groups that come from traditionally disadvantaged backgrounds.

With that context in mind, yes, the Senate can welcome the legislation before it today, albeit that it is quite skeletal legislation, quite a framework of legislation, but not nearly as detailed or as specific as it should be. It certainly has some key flaws, some of which have been referred to by Senator Carr in his comments, particularly in relation to the powers of the minister—that is, ministerial discretion—and a lack of accountability and transparency in some of the roles of the minister and responsibilities when it comes to the decisions, for example, of the board.

The government’s Higher Education Endowment Fund announcement in the budget was indeed a surprise and a welcome surprise in many respects. The recent announcement, too, of an additional $1 billion to be added to the fund out of the massive budget surplus in this country is also welcome. The two announcements represent a long-overdue investment in the higher education sector in this country, a sector that has been long starved of funds. So no wonder the sector generally and legislators are pathetically grateful for what has been given as part of the budget this year.

As I say—and many commentators have made this point—and as Senator Carr said before me, it has to be seen within the context of 11 years of underfunding of the higher education sector, starting, of course, with some $1.8 billion of cuts back in 1996. As I mentioned, since then we have seen increases in fees, loans and charges—and do not forget the implementation of so-called voluntary student unionism. They have been just a few of the radical reforms under this government, in some cases aided and abetted by Independent senators.

The cost to the sector of inadequate indexation has now blown out to around $1.5 billion. The shortfall has been made up from university operating budgets. VSU has stripped around $160 million alone from annual contributions—funds that we know were used for sporting and other recreational facilities, student welfare and other services, and, of course, representation. These services are now either existing on voluntary student contributions—representing a mere fraction of their previous income—or being assisted, once again, through university operating grants, and there is more and more demand on those particular university operating budgets.

In that context, a regular stream of grants for capital works or research facilities will certainly be put to good use by the higher education sector. There is much support for this initiative—I do not doubt it. But we need to make sure we do not get too carried away with the headline figures. Yes, a $6 billion investment fund sounds very impressive. But it is expected to translate into between $300 million and maybe $450 million per annum in competitive grants, according to the government’s own figures. Do not get me wrong; the Australian Democrats do not oppose the idea of a long-term capital fund that can provide returns in perpetuity. We think the government is definitely getting much mileage out of the overall $6 billion invested in this fund. But I think that is actually quite misleading, and perhaps even more misleading was the minister’s statement from her budget press release, where she indicated that ‘a dividend of around $900 million over three years from 2008-09’ could be expected—and this was with the original investment of $5 billion.

Evidence to the Senate committee from Bruce Gregor of Mercer Investment Consulting suggests that the government’s estimates are quite optimistic, even with the $1 billion extra that has been contributed to the fund. You would know this, Mr Acting Deputy President Marshall, because you were there. I sat next to you for the committee hearings while we frantically used our calculators to work out exactly what this would mean on an annual basis. Mr Gregor suggested that an aggressive investment position could be expected to yield inflation plus four to six per cent in returns, which equals a dividend of around $240 million and $360 million for grants on a $6 billion fund. However, due to volatility and the requirement in the legislation to preserve the initial capital first and foremost—an understandable part of the legislation, arguably—a defensive strategy is necessarily required in the short term which is likely to yield a return of inflation plus two per cent.

With the United States showing some signs of heading into recession, and given the recent market volatility, you have to wonder what returns are likely from this fund in the near future when there is a clear and understandable intention to preserve its real value. If the government has reason to believe that the returns over the short term will be higher than those indicated by Mr Gregor then I am happy for them to explain that today. Perhaps the minister would take that on board and give us some of the financial modelling behind their estimates as to whether it will be greater or otherwise. Otherwise, I think we need to conclude that the impact of this fund will be seen further into the future than indeed the government would have us believe.

I also want to sound a note of caution regarding the government’s expectations that this fund will serve as some kind of ideal mechanism through which to attract a greater level of philanthropic donations to higher education institutions. Again, this was another area of debate and questioning during the Senate committee process. I agree with the government that this is a worthy goal and I commend the government’s focus in the area, though I will quickly rescind that if they see any improvement in this area as just another excuse to remove or rescind government funding to the area of higher education. However, as it stands, philanthropic donations need to be donated unconditionally. They will simply disappear into the fund itself, to be disbursed as the respective advisory boards and ministers see fit. For some people that may be fine; that may be how they want their donations to take place. Most philanthropic donors, I might suggest, like to feel some connection to the cause that they are contributing to. Again, this was evidence that we heard at the Senate inquiry. They are often more motivated to donate to specific causes that personally resonate with them. The more general the fund, the less likely, arguably, it is to attract support.

At the moment, philanthropic donations to the fund are handled in what I would describe as a very general fashion indeed. I note the minister’s intention to seek advice on how the management of philanthropic donations could be altered to allow donors more control over how their funds are used. I look forward to any announcements in this regard. But, until these are forthcoming, I do not expect this fund to be the catalyst for philanthropy that the government seems to suggest.

Over the long term, even with a more limited grant stream than the government is advertising, this fund should be more valuable than if the government were to award the whole lot now. The key difficulty, though, for us here is that we cannot really anticipate exactly how it will impact on the higher education sector because, once again, the Senate is being asked to rubber-stamp an initiative when we have been given little information and little detail on how it will actually work. This is a key issue. Even money given with the best intentions can have unintended consequences. This fund is no exception. There are a couple of factors that concern me about the direction in which this fund could go.

Firstly, the media release from the minister said that the HEEF advisory board would ‘take into consideration whether universities had been able to raise matching funds’. There is no doubt that such a requirement would favour the more established universities, particularly the Group of Eight universities, over the smaller regional ones and other institutions. I note the remark by the minister in her media release that proposals which ‘support Australian government policy with respect to diversity, specialisation and responsiveness to labour market needs’ would be favoured.

So there is a clear indication that certain types of projects that fulfil the government’s ideals would be favoured. This was further reiterated by the Department of Education, Science and Training in the submission to the Senate Standing Committee on Employment, Workplace Relations and Education inquiry. Eh? What is going on here? I thought this was supposed to be about infrastructure and research facilities. What does responsiveness to labour market needs have to do with anything in this debate? What does it have to do with the allocation of these particular funds? Does this mean that universities that are more active in putting their staff on AWAs might be frontrunners when it comes to handing out grants under the fund? If not, what does it mean? I implore the government to explain: what does that sentence mean? It has certainly struck a note of caution for some of us. I am very concerned by that statement from the minister. It makes me wonder whether this fund is some kind of stick, disguised as a carrot, with which to bludgeon the sector into adopting a broader government ideology. Before anyone chokes on their Weeties, we have seen blackmail measures through higher education legislation before, particularly in relation to Commonwealth grants and industrial relations. But I digress.

There is a problem here: we really do not have the details to be able to answer some of these questions. I know that the government today will use its numbers in this place to pass legislation with the bare minimum of detail, and legislation that gives the minister incredibly broad powers to implement the program as she sees fit—or, indeed, as does any minister in the future. As read, division 2 of this bill gives the minister the power to appoint the members of the advisory board, to terminate their appointment and to give them written directions about their functions and how they perform them. Under section 45, the minister can authorise grants with little apparent reference to recommendations from the advisory board. Presumably the minister will also hold the authority to determine the all-important program guidelines that will establish eligibility and merit criteria for the competitive application process.

This is an all too familiar trend that we have seen in this place of consolidating power for the executive government. There are not nearly enough protections or safeguards in this legislation. Indeed, the extent of ministerial discretion in this bill was noted by the Group of Eight, by the National Tertiary Education Union and by the Federation of Australian Scientific and Technological Societies, whom I note went to the point of stating that the Higher Education Endowment Fund runs the risk of being a significant slush fund for ministerial pork-barrelling. No-one wants that, so why not clean it up? Why not tighten some of the provisions in the act?

That is what the Democrats will attempt to do. I will have a series of amendments that deal with some of these issues of accountability, transparency and the advisory board. That is because I believe this is an important scheme. That is because I am happy to see increased investment in the sector, especially if we are realistically talking about the kind of money that the government has talked about—$6 billion. I want to ensure that it is used in a way that is good for universities, good for the sector and good for the community but that it is done in a way that is completely aboveboard, transparent and accountable. I am happy to speak to those amendments in more detail during the committee stage of the bill. Primarily, what I am intending to do is to amend the bill so that it is more specific about the composition of the advisory board and so that it requires the minister to table the recommendations of the advisory board. I think that is a pretty basic amendment. I would also like to make the program guidelines a disallowable instrument so that the parliament and, through us, the community and specifically the sector will be able to ensure that we are not merely signing off on funding that will have an impact on the sector which was not intended. So it will be making sure that the guidelines are not only public, as they will be, but also disallowable, so that there is a role for the parliament in that process.

The idea of these amendments was supported by stakeholders—those who appeared before the Senate inquiry. Indeed, most of these amendments were recommendations or were called for in the submissions that were put forward by the relevant sector groups who appeared before the committee. So I hope that senators will look at them objectively. They are not particularly radical or unprecedented, but they ensure that there are further safeguards built into the legislation and that there is some check on ministerial power and discretion.

I am happy to state that this is a welcome initiative. There are many unaddressed areas of the higher education sector in relation to funding. Obviously, the big, outstanding one is adequate, appropriate and realistic indexation. Who is tackling that? Don’t tell me that the Labor Party is tackling it. I note the comments in the paper today from Stephen Smith, the education spokesperson for the opposition. He said that the OECD report showed 11 years of underinvestment and neglect under the coalition. Yes, big tick—right on! Mr Smith said that Labor was committed to increasing funding at every level, but he would not give details. Not give details! Isn’t it time we should be getting details?

At least today I know a little bit more about the government’s position on higher education funding. Actually, having said that, I have probably known a lot about the government’s position over the last 11 years and have not necessarily liked it, but at least I have known the position. I say to Labor colleagues in this place: give us a little more detail. What are you going to do on indexation? What is going to happen on income support? Please do not tell me that you are going to emulate the pathetic approach of this government to student income support. Okay, so we have had a little win, and, yes, the Democrats are thrilled that the student income support bill will come before the Senate this week, ensuring rent assistance to Austudy recipients. Yes, I have been working on that for a long time. I am happy to see it. But it is nothing in the context of the broader issues that need to be addressed in relation to income support. When is the government going to respond to the Democrat initiated Senate inquiry into student income support? That was the first Senate inquiry that looked at those issues specifically. Isn’t the convention three months to respond? What are we up to? Three years? That was the last election. This government is not going to touch indexation. Is the next government, whether a Labor government or a coalition government? What are you going to do—either side? What are you going to do about student income support to realistically invest, particularly in those aspiring students who come from backgrounds that are disadvantaged? There are so many outstanding areas and I do not hear the requisite detail from either side.

We are feeling a bit bolshie today and are not going to support the Labor amendment. The Australian Democrats do not just want rhetoric from either side. We want a bit more detail. And I have to say that I am inclined to agree with Senator Carr on a lot of things, including about three-quarters of the amendment, as I recall. The bit about broadband is a bit too propagandish. They are good points, but, no, we are not supporting that today. We are going to move substantive amendments to the legislation that actually back this up with some detail, some transparency and some accountability. I implore colleagues to consider those amendments. (Time expired)