Some Thoughts by the Group of Eight on the Review into the Impact of the Higher Education Support Act of 2003 [HESA] on the Higher Education Sector. (March 7, 2007)

    On December 19 last year TFW wrote:

The Minister for Education Science and Training, Julie Bishop, being unable to think of anything useful to do for Australia's universities has decided to launch a two year review into the impact of the Higher Education Support Act of 2003 on the higher education sector.

Minister Bishop said that the Department of Education, Science and Training will undertake the review, which will investigate the impact on the higher education sector of the higher education reforms enacted through the Act and the 2003 Our Universities: Backing Australia’s Future reform package.

It will be conducted during 2007 and 2008 and will be overseen by an Interdepartmental Steering Committee, chaired by the Department of Education, Science and Training, with membership from the Department of Prime Minister and Cabinet, Treasury and the Department of Finance and Administration.

“Consultation will be undertaken with higher education providers, peak bodies, professional organisations and other interested parties, including via submissions,” Minister Bishop said.

“Independent, external consultants may be engaged to assist with consultation and examination of technical issues.”

In essenceTFW then expressed the view beware the governmental internal interdepartmental review.

One of the submissions made to the first phase of Ms Bishop's review is from the Group of Eight (Go8) who have made it publicly available through its Website. For the submission itself click here.

Here are some of the more pertinent excerpts from the four-page submission.

The incremental increases in funding that have occurred in 2005, 2006 and 2007 as a result of the Commonwealth Grants Scheme (CGS), the conversion of marginally-funded places to fully-funded places and the 25 per cent increase in HECS fees HESA allowed, have together provided a welcome injection of additional resources into Go8 universities. Combined with the funding that is flowing from other BAF [Backing Australia's Future] initiatives, these changes have helped to moderate the erosion of funding rates per student.

The discussion paper claims that the financial position of Australia’s higher education sector is sound and that therefore the review will not assess the adequacy of overall revenue levels, or consider the appropriateness of student contribution amounts (p.4). The Go8 questions these assumptions. Trends in academic salaries, student to teacher ratios and deferred expenditure on the maintenance of essential infrastructure all point to a sector that remains under considerable strain.

The Go8... urges the review to look beyond the question of the appropriateness of funding relativities between disciplines, [and] to address the broader question of whether the HESA funding and regulatory models provide a framework capable of supporting a dynamic and internationally competitive higher education sector into the future.

The funding framework upon which HESA is based is not viewed as a sustainable mechanism by which to support Australia’s higher education system in the longer term.

[I]n the absence of indexation arrangements that reflect the cost increases they face, Australia’s universities will be left with little choice but to again seek one-off increases in Commonwealth and student contributions.

The Go8 is pleased... that as part of this review DEST has commissioned a study to identify current cost relativities between disciplines. It is hoped that this work will produce up-to-date evidence of the true relative costs of different types of teaching.

Under current arrangements, income received from the Government and from student contributions falls well short of meeting the full costs of the education and related services provided. At one Go8 university [Melbourne] this funding gap has been estimated at an average of $1,200 per domestic undergraduate student per year.

Commonwealth contributions and student fees for each course [should] cover the true costs of course delivery.

The policy documentation released with the BAF package in 2003 very clearly claimed that a key intention of the reforms was to reduce red tape and government controls over the strategies and day-today operations of Australia’s universities...

[However,] it is the Go8’s view that HESA has actually had the effect of reducing flexibility and increasing regulatory constraints on the capacity of institutions to pursue their individual strategic missions.

The Go8 believes that Australia’s universities would...derive significant benefits from moves that would allow them to balance student load and funding over a period of three or four years rather than annually.

In the absence of improvements to indexation arrangements, or increases in Commonwealth and student contributions, the gap between income from these sources and the cost of course delivery will inevitably increase.

With appropriate policy settings philanthropy is an area where significant potential exists for Australia’s universities to attract additional supplementary revenue.

The Government’s commitment of funds to support a Business Industry Higher Education Collaboration Council (BIHECC) investigation of possible strategies is therefore strongly supported. In this regard the Go8 notes the matching funds initiative recently announced in the UK under which up to £200m has been committed over three years to provide £1 for every £2 universities raise privately.

It is not possible to assess the suitability of the CGS without also considering the adequacy of the funding framework as a whole. There is considerable scope to improve the efficiency, sustainability and flexibility of the funding model, but this will require changes to HESA that go beyond simply shifting funds between disciplines. The Go8 would be happy to expand on any of the issues raised in this submission as necessary.