Higher Education Base Funding Review Final Report. (December 9, 2011)

The 200-page final report of the Higher Education Funding Review was delivered to the Minister for Tertiary Education, Skills, Jobs and Workplace Relations, Senator Chris Evans, this past October and released to the public yesterday.

Below is a digest of the 10-page executive summary:

The evidence available to the Higher Education Base Funding Review Panel (the Panel) showed that the Australian university sector was well managed and had adapted to changing circumstances to become more efficient and productive, such that it is now able to use any additional funding effectively. The trust of the community and government investment over many decades has been and continues to be justified. Australia’s higher education system has been responsive to government initiatives and has diversified its income sources... Nevertheless, specific local issues, changing policy settings and rapid global changes have the potential to pose significant risks to the quality and effectiveness of Australian universities.

[T]he Panel noted ongoing concern in the sector about the potential for emerging international issues to erode Australia’s competitive advantage in the international higher education market. There are pressures on operating costs and infrastructure, reflecting the dramatic changes in the sector over the last two decades; a period marked by far more than just expansion... stresses [reflect] changes in student and employer expectations, technological change, teaching reforms including online delivery and an increasing emphasis on work-integrated learning.

[It] confirms the principle that base funding is provided to support universities in their fundamental role of providing teaching and learning informed by scholarship and a base capability in research, within appropriately resourced facilities. Funding should be sufficient to support these purposes... As a matter of principle, fees should not be a barrier to participation. In addition, universities should be supported in meeting the additional costs of teaching able but underprepared or disadvantaged students, and base funding should be supplemented by targeted programs to promote social inclusion.

The higher education base funding system should be fair, simple and transparent with universities remaining autonomous yet accountable for the expenditure of public money... The Panel’s recommendations begin by asking the Australian Government to endorse the principles and in so doing acknowledge the purposes for which base funding is provided.

The Panel believes that in aiming for the best standard of higher education that we can afford, the nation would need to commit to improving performance on a suite of targets or benchmarks rather than aim simply to invest more funds... the Panel recommends that, following consultation
with the sector, a triennial ‘State of the Higher Education System’ report should be produced. This should allow an ongoing focus on the effect of the current reform agenda and those areas that improvements and investment should focus on.

Based on data from a commissioned study, the Panel reached the conclusion that the current funding clusters no longer reflect the costs of delivery of teaching, scholarship and base research capability in all disciplines... On the information presented to the Panel, there was no conclusive evidence that any disciplines were overfunded.

As regards postgraduate coursework education: the Panel concluded that where the Australian Government approves a postgraduate course for funding it should be at the same rate and students should be charged the same contribution as an equivalent undergraduate course.

The Panel acknowledges the requirement that Australian universities teach in an environment informed by scholarship and research and defines the level of research activity required to support this role as base research capability.

There is evidence that despite considerable investment in refurbishment, much of the present higher education infrastructure is still unfit for purpose in the 21st century... The Panel urges the Government to support the development of contemporary learning spaces through refurbishment and assist universities to make their building stock fit for purpose in the 21st century.

The Panel believes that as the largest employers of graduates from the disciplines of teaching and nursing, states and territories should play a greater role in workforce maintenance and in identifying ways to avoid cost escalation and cost shifting in this area.

The Panel believes that Australia should maintain its current income-contingent loan system and that its repayment threshold should continue to be set at a level which does not deter participation. The Panel... recommends that the system of maximum student contributions remain in place... [However,] the Panel regards the pattern of student contributions in the current system [variable approach] as inequitable. [It recommends] that the 40:60 [student : government] ratio should apply consistently across all disciplines.

[L]ow student enrolments in some courses are related to lack of attainment in prerequisite Year 12 subjects, the Panel believes that some of the funds saved from removing [course] subsidies might be redirected towards initiatives focused on potential higher education students in secondary education.

[T]he Australian Government should develop an agreed instrument to allow ongoing costing data to be collected in order for future funding policy to be based on robust evidence and to be responsive to future needs.

The Panel places a high priority on increasing the funding to those disciplines that are demonstrably under funded... The current funding differentials are inaccurate and require too much cross-subsidisation. Unless this is resolved, as a matter of some urgency, the demand driven system will be inefficient and lead to unintended consequences.

In considering these recommendations the Government will have many competing demands on its resources but the Panel emphasises the need to continue to give priority to our university system as a way of investing in human capital and national productivity.

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Note added December 14, 2011: Universities Australia chairman and vice-chancellor of Melbourne University Glyn Davis told The Australian: "back of the envelope" calculations indicate the initiatives recommended by the review would require a 10-15 %  increase in base funding over four years.