Anne McEwen (SA, Australian Labor Party) Share this | Hansard source

The incorporated speech read as follows—

The Higher Education Endowment Fund Bill 2007 is a small step in the right direction towards providing Australia’s tertiary education institutions with the funding they need and that our nation urgently requires.

The Bill, and the Higher Education Endowment Fund (Consequential Amendments) Bill 2007 follow the Government’s announcement in the 2007-08 Budget to create a continuous endowment fund which is intended to generate earnings to be used for research facilities and capital expenditure in Australia’s higher education institutions.

Labor supports this Bill with some reservations. Like so much of the legislation the Government brings to this chamber, it is too little too late and is a desperate attempt to remedy 11 years of neglect of a sector critical to the future economic and social well being of the nation.

We know that this legislation is here before the Senate only because Labor and Kevin Rudd have put education front and centre for the forthcoming election campaign and a desperate Prime Minister has decided he had better do something to make it look like he really cares about something other than caring about clinging on to power long enough to plan his retirement.

For 11 years the Howard Government has undermined and underfunded the higher education sector and it is only now, on the eve of an election that the Government has chosen to do something that will, hopefully, increase the sector’s funding. This funding mechanism, cumbersome though it is, is welcomed, but is not enough.

The National Tertiary Education Industry Union expressed a similar view stating in its submission to the Senate Enquiry into this Bill that it “acknowledges the Higher Education Endowment Fund does provide additional funding to universities, although we would stress that it in no way makes up for nearly a decade of serious disinvestment by the Commonwealth in Australia’s university system.”

A vibrant, well funded tertiary sector is a priority for the NTEU—the major union in that sector—but Mr. Howard made it clear from the beginning of his term as Prime Minister that education would not be an area that he would prioritise.

In his very first term of office in 1996, Mr Howard presided over budget cuts to university operating grants of a cumulative 6% from 1997 to 2000. That meant a massive $850 million loss to the sector.

Universities have  attempted to claw back this money somehow, and charging exorbitant amounts for degrees and taking in full fee paying students has been the avenue some have been forced to take.

In 1999, Prime Minister Howard infamously said that ‘The Government will not be introducing an American-style higher education system. There will be no $100 000 university fees under this Government.’ Of course that was another untruth from this Government and the most recent edition of the Good Universities Guide shows that there are now 104 domestic full-fee university degrees that cost in excess of $100 000, three of which cost more that $200 000.

Labor Leader Kevin Rudd made comment the other day about how he had benefited from a free tertiary education thanks to the vision of a former Labor Leader, Gough Whitlam.  Many of us in this Chamber were also beneficiaries of that system and it is depressing to see that in such a short time we have now got a university system that—unless this Government is stopped in its tracks—is fast approaching the bad old days when only the wealthy could afford to contemplate a tertiary eduction.

Unlike the soon to be retiring Prime Minister and the Treasurer, Mr. Costello, who would like to be Prime Minister and who has been instrumental in wrecking our higher education system, Labor on the other hand does support universities and does support students and proudly puts education front and centre of our vision for the future.

We are committed to phasing out domestic full-fee degrees at public universities commencing 1 January 2009 to ensure access for all young Australian students is based on merit rather than financial means.

This Government’s appalling disregard for the nation’s higher education system doesn’t stop at lack of funding. Another attack on our universities was the Howard Government’s introduction of Voluntary Student Unionism—despite the opposition of the sector. That was a spiteful and miserable piece of anti-student legislation which has had a significant impact on universities across the country.

This bullying, extremist Government saw VSU as a way to silence students and—in its usual blinkered, visionless way—failed to see the implications such legislation would have on universities and their surrounding communities. Student unions provide subsidised child care, organise sporting teams, provide free advocacy to students and create vibrant, social campuses. A number of these services provided by student unions were also made available to the local community and this was particularly important in regional areas. Student unions also paid for the maintenance of many buildings on campuses. By introducing VSU the Howard Government put even more financial pressures on universities to provide services and infrastructure on top of an  $850 million budget cut.

The Government’s own analysis has shown that there is a significant backlog of deferred infrastructure maintenance that has built up since 1996 when this Government was first elected.  That deferred maintenance expenditure was estimated by the Department of Education, Science & Training to be at $1.5 billion for the university sector. The Department’s figure appears to be  conservative.  The Group of Eight Universities estimated that the total deferred maintenance liabilities was $1.53 billion in 2006 for the Group of Eight universities alone.

A number of submissions to the Senate Inquiry into this Bill expressed the view that the Government’s under funding of the university sector since it came to power is a significant contributor to the current situation. The funding cuts made by the Howard Government have not only led to the deferment of essential expenditure on the maintenance of buildings and facilities, but have changed the operation of universities. With greater financial pressures, the quality of teaching in the university sector has been difficult to maintain, a situation that negatively affects hundreds of thousands of students across Australia.

According to Universities Australia, the student-staff ratio has gone from 14.6 students per teacher in 1995, to 20.4. The Group of Eight’s submission to the Senate Committee also found that universities have had to reduce academic salaries relative to average wages, making it difficult for the sector to attract top quality staff.

Of course, this Government’s only real contribution to the staffing situation at universities is to tie up administration in red tape, not the least of which is to force universities to offer AWAs as a condition of funding. This is a  classic example of the breathtaking hypocrisy of a Government that spruiks about freedom of association and choice and flexibility but really it is just an  interventionist and overbearing bully that demands the higher ed sector implements the governments IR agenda or risks funding.

The effects of this Government’s under funding of the tertiary sector has had real implications for Australians. Apart from Ireland, Australia spends the least on education of the English-speaking OECD countries.

Another damning statistic is that of the English speaking OECD countries, Australia now ranks second lowest for persons in the age groups 25 – 35 with an upper secondary education. 

These are appalling statistics that show under this Government Australia has not kept pace with our compatriot OECD countries. Instead of facilitating growth, the Government has stopped growth in the education sector.

Australia’s education system now relies on more private financing than all other OECD countries with the exceptions of the United States, Japan and South Korea.

It is an absolute disgrace that during a period of rapid economic growth, largely due to the resources boom—and in a period of huge government surpluses—we fail to provide for our educational institutions. An estimated 52% of the cost of tertiary education today is dependent on private sources, a huge increase from the 1995 figure of 35% dependency on private sources.

So now, in a desperate attempt from a desperate government to address its woeful lack of investment in Australia’s future, we are being asked to support the establishment of the Higher Education Endowment Fund, a financial asset fund consisting of cash and investments.

The Treasurer and the Finance Minister will have the power to credit cash amounts to the Fund through a Special Account which is created by the Bill. These Ministers will also be required to issue an Investment Mandate to the Board regarding the investment of monies in the Fund.

A Higher Education Endowment Fund Advisory Board will also be established. The chief role of this board will be to prepare reports for the nominated Minister as well as keeping the Minister informed on any relevant issues. The nominated Minister is in turn responsible for providing copies of those reports and the annual report to the Education Minister.

The consequential Bill amends the Future Fund Act and the Income Tax Assessment Act 1997 to support the implementation of the Higher Education Endowment Fund. The Bill consists of two primary amendments along with related changes and some minor amendments.

The first primary amendment is the extension of the Board’s functions under the Future Fund Act to include its functions under the HEEF legislation and the second amendment to the Future Fund Act is to ensure that investments will be consistent with the Future Fund’s objectives by including two limitations on its mandate.

Labor will support the Higher Education Endowment Bill 2007 and the Consequential Amendments as we recognise the importance of investing in our tertiary education facilities, particularly after the financial hardship they have faced over the last 11 years. We do, however, have a number of concerns which I would like to outline.

Firstly, the Bill gives the Education Minister of the day an enormous amount of power over the Endowment Fund. The Education Minister will decide who is on the Advisory board, appointing and dismissing members of the board at his or her own will. This allows for an incredibly biased, political board and not the independent board wanted by the sector. The National Tertiary Education Industry Union submitted that:

‘Given previous experience of the use of Ministerial power in relation to areas like the Australian Research Council grants process, the interests of transparency and good governance would be better met if the functions and responsibilities of the Board are set out in the Higher Education Endowment Fund Bill 2007. This must include the appointment process, which should be open and transparent.’

Many submissions received outlined another concern in regard to the Advisory Board and that is the credentials of those appointed to the board. It is important that the board is comprised of people who are very experienced in the tertiary education sector so that they will be able to make decisions that will be most beneficial to the sector.

From the submissions received it is clear that for the board to have the confidence of the sector there will need to be appropriate selection criteria. For example, The Australian Academy of Science expressed its hope that members of the Advisory Board will be appointed for their knowledge of the higher education sector, and on the basis that there is no conflict of interest.

The Australian Technology Network of Universities—in its submission—acknowledged that:

‘When assessing proposals, the Advisory Board will also consider the degree to which funding will support Government policy with respect to excellence, quality and specialisation.’ This consideration is particularly important as we face such an enormous skills shortage—another result of the lack of vision and future planning from this tired Government and its stale leadership.

Under this Bill, power is given to the Education Minister to give directions and authorise grants to eligible higher education institutions. With the allocation of grants determined only by the Education Minister, however, the grant process may not be independent and based solely on merit. The only requirement that needs to be met when allocating grants is that the board must have provided a statement for the relevant financial year. This does not stop the Minister from having complete control over the grants process as the Advisory Board is appointed by the Minister.

There is also the possibility of some institutions receiving large grants for the Government’s own political gain. While the Board will specify a maximum grants amount in accordance with the Maximum Grants Rules, these rules will be determined by the responsible Ministers. It has been advised that the deliberations regarding the Maximum Grant rules will be informed by external advice from an asset consultation, but this is not in the Bill and does not seem to have been committed to by the responsible Ministers.

The Group of Eight reflected these concerns in their submissions, stating:

‘The Bill vests control over the selection and allocations of grants from the Fund to the Minister of the day. With such large amounts of public funding involved, the policy priority should be the achievement of clear, transparent and non-political mechanisms for allocating grants. There are risks under this model that funding allocations will be based on political factors rather than on the merits of individual proposals or through any strategic consideration of the sector’s infrastructure needs.’

I note that the Scrutiny of Bills Committee Alert Digest no. 11/07 indicates that the Committee intends to ask the Minister whether or not the ministerial directions and authorisations in the Bill are appropriately exempted from disallowance provisions.  We look forward to the Minister’s response and note that, once again, the Government has put into the Chamber legislation that is insufficiently detailed and accompanied by an explanatory memorandum that is also lacking in detail.

Both the Australian Technology Network of Universities and Universities Australia noted that the legislation does not set out in any detail the rules by which funding is to be distributed under the HEEF.

This is concerning as without the detail, we cannot know if the system chosen will be fair or if it will disadvantage some institutions. Labor would like to know how the income expected to be generated through the fund will be distributed.

Many submissions noted concern with the requirement that a university is able to put up funds to match those provided by the fund. The Innovative Research Universities Australia stated in their submission that ‘matching funds should not be a requirement as some infrastructure cannot attract such funding.’ There is legitimate concern in the sector that this requirement would seriously damage a number of universities, particularly new, small and/or regional institutions.

There is also great concern regarding the possibility of a proportion of the grants being competitive. The March 2007 Productivity Commission Report on Public Support for Science and Innovation agreed that:

‘Competitive grants schemes effectively lock up a significant proportion of each university’s block funds and that any attempts to increase the proportion of competitive research funding relative to discretionary research block funding is not warranted and would threaten universities’ ability to undertake meaningful strategic research.’

That Report  also stated that ‘the high cost to universities in leveraging competitive grants is a threat to the quality of educational services that universities are able to deliver, especially in an environment where there have been significant real cuts in university operating grants for government supported students.’

It is unclear exactly how much funding the Higher Education Endowment Fund will provide as predictable returns will not be achievable over the first five years and very few of the Bill’s practicalities have been made available.

However The Federation of Australian Scientific Technological Societies estimates that the fund is likely to provide a funding stream of between $300 and $400 million per annum. This is a similar amount to the $300 million for each year from 2008-2011 estimated in the Treasurer’s Budget Paper.

Labor is particularly concerned by Section 49 which provides that in the event of a bad year and the Fund returns little or no income then the Fund will not release any money. Such a decision would mean a loss of an expected $300 million to the sector.  This has implications for eligible higher education providers that may be relying on being awarded approval for funds for infrastructure projects.

For Australia to be successful on an international level, it is crucial that Australia has high quality educational institutions. The Higher Education Endowment Fund will benefit research and capital projects, as well as improve the necessary infrastructure for teaching and research in the coming years. However the detail of the Bill will determine wether or not these benefits will extend to all tertiary education institutions.

I trust that the HEEF’s potential to be politicised will not be exploited and that we see the creation of a transparent funding process.

After 11 years of neglect, it’s about time the Government gave back to the universities of Australia.