A step into the unknown



22 May 2014


Thank you for the invitation to speak to you once again, at a pivotal moment for the future of higher education in Australia.

I am grateful to ACPET’s national chair, Martin Cass, and the council’s board of directors for giving me this opportunity.

This is not the era of benign neglect that the Prime Minister foreshadowed last year.

This Government's plans, if realised, would represent a seismic shift in the way this country functions.

The compact between government, students and providers would be torn up, its values and principles set aside.

We are entering a Brave New World — a world we did not vote for, and still cannot see in any detail.

A Brave New World, moreover, that looks curiously akin to the failed experiments of the Cameron Government in the United Kingdom.

I think we can be forgiven for some misgivings.

The words of Professors Kwong Lee Dow and Valerie Braithwaite, in their review of regulation which I released when I was minister, are worth recounting …

 “It is easy to recommend apparently straightforward amendments to the legislation which appear agreed by everyone. But this is worryingly simplistic. Patching individual pieces of legislation can fix functional irritations, but will not necessarily change the way in which legislation is being applied and why.”

Surely we can agree that it is the spirit in which any policy shifts – including deregulation – should be approached.

So let me begin by restating the two basic principles upon which Labor's higher education policy rests, because these are the principles by which we will judge these measures.

We will resist any change that threatens to undermine the quality of Australia’s higher-education institutions.

And we will ensure that social equity, not just participation, is maintained. The compact at the core of HECS must be upheld.

It is about excellence and equity together - not one at the expense of the other.

It is about harnessing talent where it lies.

It is about equipping this nation, and all its people, for the future.

These are values that ACPET has endorsed.

I am aware that debate about Australia’s higher education system often mischaracterises it as a split between public universities and private providers.

I hold that this is a false dichotomy.

The system Labor oversaw when we left office was in fact a partnership between university and non-university actors – both public and private. A partnership designed to deliver tertiary education in the national interest.

Public and private providers – 120 in fact – receive funding of various degrees from the Commonwealth – competing on quality and course offerings.

Only 37 of these are regarded as public universities; 59 are TAFEs with the balance often referred to as private providers.

I want to emphasis today that my view of what makes a great tertiary institution is not its management structure but the quality of the education it provides. 

The question of excellence is paramount in teaching and research.

When I spoke to an ACPET conference in 2001, the reputation of your industry was threatened by the prevalence of fly-by-night operators with the flimsiest of credentials or none at all.

ACPET came to me to work co-operatively to improve the competitive environment in your industry.

To remove crooks from the industry, because poor quality assurance was damaging it. Criminals were operating in an environment of fragmented and ineffective regulation.

And together we made progress in cleaning up the industry.

As a result there are now universal protocols and accepted standards with which providers of higher education must comply.

There are no more shopfront degree mills.  No more purported universities run out of diving shops, whisky wholesalers or post office boxes.

One of the lessons of that history is that the conflict some like to pretend exists between markets and regulation is an illusion.

Without regulation, no market can function properly.

Poorly regulated, or unregulated, markets allowed charlatans to flourish, tainting the reputations of genuine educators and threatening Australia’s international education industry.

Because quality is the key to our international reputation. It’s our most precious asset.

I worry that it is once again up for negotiation today.

Because what are we seeing from the Government we elected on the promise of no changes to university funding? And no cuts to education?

In the name of competition, deregulation and all-round belt-tightening, the Abbott Government intends to reduce the level of Commonwealth funding of the cost of degrees, and to remove the cap on fees so that providers can charge whatever the market can bear.

It is an excuse to withdraw public investment from higher education.

They want to create – I emphasise create – an artificial quasi-market.

But they will court disaster if they fail to ensure that a proper regulatory framework is in place before scores of new entrants rush to claim government funds.

The budget papers reveal that the introduction of competition and the expansion of the demand-driven system – coupled with a reduction of Commonwealth assistance per student – will in fact save this government $1.1 billion over the forward estimates.

It is not an expansion of higher education, but a contraction in funding.

That means creating a level playing field for old and new providers will not be a simple matter.

There are some key questions that the Government needs to come to  grips with quickly. They are questions you might want to pose to the Minister this afternoon.

First, price. How will the Government determine the appropriate subsidy per place? I note its intention to pay teaching-only institutions a different rate to universities, which historically have used between 10 and 30 per cent of their teaching funds to cross-subsidise research.

Paying teaching institutions a lower rate will lessen the risk of a blow-out in costs. But it might also raise questions about smaller public universities that are less active in research, perhaps creating pressure on some of them to become teaching-only institutions, too. Nor might that be the only consequence of universities and other providers competing for funds. Some private providers have argued that if they are to get less than universities because they are teaching-only institutions, there should also be recognition of costs they bear but universities do not.

For example, private providers have to pay for their buildings, whereas university property is taxpayer-funded. Does that mean that in fairness universities should pay rent to the taxpayers?

The fact that some private providers have already raised such a question about a deregulated system is an indication that there is a long way to go before an appropriate distribution of funding between universities and other providers can be determined.

There is also the question of how students are to be protected as providers enter and leave the market, which will happen more frequently in a weakly regulated system. There are already measures in place that protect international students — such as the Tuition Protection Service — but it may become necessary to provide domestic students with the same protections.

How will the Government set standards of reporting?

With public subsidy comes public responsibility. I support calls for greater public accountability, including the provision of completion and retention rates, which are so important in measuring the success of pathway courses.

And lastly, how will the Government ensure that it gets the regulation right?

The sandstone universities have something of a head start when it comes to building a reputation in the community. But private providers do not have that luxury.

I vividly recall that, as minister in August last year, I was advised by the department that they had run the ruler over providers to determine who was or was not low-risk.

From an immigration perspective, only 142 of about 1030 non-university providers were found to be low or medium-risk.

From a business-risk perspective, only 55 per cent of those 142 were low-risk.

There is another possible consequence of opening up the market. Might not some of the largest foreign institutions, such as Yale, Oxford or Singapore, also consider establishing themselves in Australia, taking advantage of the public subsidies and low risk?

So it worries me that the government has given no indication of how it might deal with any of the issues of regulation.

Even now, there is now a bill before the Parliament that is of acute concern.

The bill seeks to make changes to the national regulator - TEQSA.

The budget will reduce the regulator’s capacity by cutting $31 million over 4 years - half its funding over the next four years.

The bill will remove TEQSA’s continuous quality assessment function.

If the bill is made law, who will undertake that task?

The bill will also allow additional powers to be delegated to any Commonwealth officer. Not just a TEQSA official. Is it possible that this could mean an immigration compliance officer?

That is how poorly the legislation is drafted.

The appointments of the current Commissioners will be terminated, and new Commissioners appointed. And the roles of Chief Commissioner and Chief Executive Officer will be split.

And finally the Minister will have greater power to give directions to TEQSA, and will be required to approve TEQSA’s schedule of fees.

I am concerned about the potential for increased political interference in TEQSA’s operations.

As we are seeing with the Australian Research Council.

So that is why Labor has moved to refer the TEQSA bill to a Senate committee inquiry.

All of this suggests to me that we are not seeing what the Prime Minister likes to describe as a 'grown-up government' in action.

This higher education shambles — I hesitate to call it a strategy — has all the hallmarks of policy on the run.

It is policy driven by the imperatives of a fabricated budget emergency. An excuse for austerity.

The reality is that these policies have been around for a long time.

They reflect the same ideology that would have us privatise CSIRO.

Privatise the ABC and SBS.

Ideology, not evidence, drives the agenda.

If we were in any doubt, the Commission of Audit's report would have put them to rest.

We are kidding ourselves if we think that its more appalling excesses have been laid to rest.

Labor will outline its response in full once we have the detail of the legislation before us.

But we will not betray our compact with you - the compact we forged in the interests of the sector, the students, and the nation that needs your services.

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