On November 21^st the 38 year old Australian Democrat Senator from Queensland, John Cherry, had occasion to write some 3,400 words to explain that he would "be voting against the [higher education support] bills in their present form because the package as it stands is not in the best long term interests of Australia. I say this with regret because as has been pointed out '…if the legislation is not passed, it may be many years before such an opportunity comes again.' It would be tragic if the Government were not prepared to modify the package to deliver clearer economic and social benefits for Australia."

The excerpts below taken from Senator Cherry's critique are reprinted with his permission.

The Australian Democrats do not have a balloted policy on universities. Our 2001 schools policy includes the commitment to “…increasing spending on education to at least five per cent of GDP within three years, with priority to government schools, improving access to quality free higher education and promoting research and training.”  The most recent OECD data shows total [Australian] public spending on education flat at 4.6% of GDP in 1995 and 2000, while private expenditure rose.¹  The $2.5 billion a year needed to bring our public spending up to 5% (the spend in Canada, the United States, and the European Union) would, in my view, be a strong economic investment in Australia’s future. Unfortunately, neither of the major parties are prepared to make that investment and we are left with second best policy alternatives.

 

The Nelson package does partly meet our policy objective with a $683 million (0.1% of GDP) increase in public funding in 2007. But, this is offset by around $700 million in extra  student HECS and fees contributions, and a failure to fully index Government grants in future years (reducing public spending by $100 million a year).

To my mind, a decent higher education policy should have three objectives:

1. It should ensure that that adequate public and private investment is going into education to meet future needs;

2. It should ensure that equity considerations, particularly the participation of students from disadvantaged backgrounds, are promoted; and

3. It should ensure that academic freedom is protected while ensuring that national policy priorities are also pursued by universities.

The Nelson reforms attempt to do these things, but, in my view, fall well short.

 

The reforms propose an increase in university operating funding of $405m in 2005/6 and $544m in 2006/7. The problem is the wage cost indexation formula introduced by Education Minister, Simon Crean and Finance Minister Kim Beazley in 1995 which under funds salary increases. The failure to fully index grants left universities in 2001 $535 million worse off than in 1995². By 2005, this gap is likely to have widened to more than $700 million³.

The increases in grants announced by Government return a bit over half of the cuts since 1995. But, because the grants are not properly indexed, the squeeze on university funding will start again. This gap will be filled by price flexibility on HECS and, increasingly, full fee places funded through the FEE-HELP mechanism. The Australian Government funds universities well below OECD benchmarks.

The Nelson package will further increase the percentage of course costs paid by students.

Unless the Nelson package contains full indexation of operating grants, I have no doubt that the result will be that Australian universities will be starved by lack of indexation into offering more and more full fee places and imposing maximum 30% HECS increases.  I have no doubt that the FEE-HELP system is designed to make the acceleration of full fee places as attractive as possible.

Given the attitude of the ALP and the Coalition,  free university education is not politically achievable. If students must pay, HECS, as an income contingent payment scheme is probably the fairest funding mechanism. Indeed,  HECS has had little overall impact on access to education.

By OECD standards, Australian students are already paying too much of the funding burden for universities, with public funding 27% below the average contribution. Any increase in HECS beyond the increase in public funding will worsen Australia’s already poor performance on university funding against OECD benchmarks.

As a Queensland senator, I am extremely concerned about equity outcomes in terms of higher education participation, as Queensland universities have a higher proportion of low socio-economic status [LSE] students (23.4%) than any other state other than Tasmania (33.3%), well above the national average of 14.8%. Indeed, the DEST draft paper warned that any future changes to HECS arrangements will need to be carefully designed to minimize their effects on groups more sensitive to student charges⁴.

It is worth noting that the universities with the lowest proportion of LSE status students in each state are the G8 universities, who are also the universities most enthusiastic about increasing fees by the maximum amount.

The Government defines its LSE equity targets in terms of measurement as students from the bottom quartile of the income distribution⁵.  The AVCC estimates that the scholarships will cover just 20% of eligible students⁶, a maximum in 2007 of 5075 scholarships to be shared between 25,000 eligible students. This is a recipe for disaster and division.  If the scholarship program is to have any real effect in equity terms, the numbers should be expanded to 25,000. At a minimum, the AVCC proposal of doubling the numbers (to 10,000) and establishing a $150 million equity grants scheme should be considered. Scholarships should last to the completion of a first degree (including combined degrees, graduate degrees like law and medicine, and honours), and not be limited to four years.⁷ Further, all Government and university scholarships  awarded on the basis of financial disadvantage should be exempt from tax and social security means tests.

My preferred position remains no increase in full fee domestic undergraduate places. As discussed earlier, the G-8 universities are most likely to utilise full fee places. Yet, they have the poorest records in terms of equity participation by lower SES groups. It would not be unreasonable to insist that any universities offering any full fee domestic places must place half of the fees so collected in an Equity Participation Fund to improve equity outcomes on that campus.

Universities and governance. While I broadly support the notion that Governments should be able to set national priorities for universities, the micromanagement proposed in the package is excessive and extreme. The Minister has recognised that to some extent in discussions with the AVCC, but has not gone far enough. The tying of funding to changes in governance arrangements is complete overkill. ...A better approach would be to work through the Ministerial Council to improve governance and lines of accountability to State and Federal Governments.

The link to workplace relations reform should be totally opposed as unnecessary, ideologically driven and counterproductive. The impositions proposed by the Government directly contradict its own Workplace Relations Act objective 3(b) of which provides: “ensuring that the primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace or enterprise level.”

 Having said that, it is not unreasonable for the Government to be interested in promoting productivity within universities. Further development of robust performance appraisal and assessment procedures should be encouraged across all campuses to ensure staff are delivering, whilst still protecting academic freedom.

The link to imposing voluntary student unionism should also be opposed as ideologically driven. The ACCC has recently found that compulsory student union fees can be justified under the public interest exemptions of the Trade Practices Act, and there the matter should rest. ...A better approach might be to establish an independent benchmarking review of the efficiency and effectiveness of student unions (including the National Union of Students) to make recommendations to maximise benefits to students from the payment of compulsory fees.

I think the overall design [of the Nelson package] carries very serious risks ...as the package stands, I do not believe that it deserves, or will receive, majority support in the Senate.

 

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1 OECD “Education at a Glance 2003” table B2.1

2 Burke G. and Phillips D.  (2001) “Funding Issues for Higher Education” mimeo, Monash University

3 Senate Committee report p. 28

4 Aungles et al 2002

5 Crossroads p.59

6 AVCC “Response to the Higher Education Reforms in the 2003 Budget” June 2003 p. 16

7 Phillips Curran “Independent Study of the Higher education Review” Vol 2. p.79

John Cherry

senator.cherry@aph.gov.au