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Review recommends extension of demand system

 14 April 2014

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The review of the demand driven funding system report has concluded that the demand-driven funding system, introduced as the keystone of the Rudd government’s “higher education revolution, has been a success and should be extended.
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large_crowd_of_people_at_festiva_450The review of the demand driven funding system report has concluded that the demand-driven funding system, introduced as the keystone of the Rudd government’s “higher education revolution, has been a success and should be extended.

Commissioned by the government in November 2013 to examine the impact of the system on higher education provision, the report by former education minister David Kemp and the Grattan Institute’s Andrew Norton has 19 findings and makes 17 recommendations. It says:

The demand driven system is a policy advance that needs to be preserved and enhanced in the interests of student opportunity, institutional flexibility and economic productivity.

The key set of recommendations are that Commonwealth Supported Places (CSPs), which are currently largely restricted to students in undergraduate courses at universities, be made available to students at non-university higher education providers and to students undertaking sub-degree (associate degree) and some postgraduate programs.

With university enrolments increasing by 22% from 2009 to last year, from 444,000 to 541,000, the review notes that the required Australian Tertiary Admission Rank (ATAR) for university entry has been reduced at most universities, in some cases below 50, which has led to the inevitable debate over university entry standards. The review panel found strong evidence that lower-ATAR students can achieve academic success, but also that they are at considerable risk of not completing their courses. Extension of CSPs to sub-degree programs would encourage “less–prepared” students into pathway programs, rather than directly into degree programs, and substantially improve ultimate outcomes:

A key to success in study is academic preparation. Outcomes for less-prepared students improve substantially if they first take a ‘pathway’ program, such as a diploma course. Some specialised colleges offer these programs, often with similar course content to the first year of university but with smaller classes and more personal support. Students who successfully complete pathway programs often do as well as, or out-perform, students with better original school results.

The report suggests the cost of the expansion could be funded by increasing student fees, decreasing government contributions, imposing a flat 10% loan fee on HECS-HELP.

It says that targets for attainment (40% of young people holding a degree by 2025) and equity participation (disadvantaged people making up 20% of students by 2020) adopted by the Rudd government should be dumped – which education minister has already flagged.

Ian Young, chairman of the Group of Eight universities, says the targets are no longer necessary anyway, because the attainment target will be reached anyway and the “vast majority of institutions are committed to (improved equity) outcomes.”

The report concludes that inclusion of private higher education providers and TAFEs within the demand driven system in their own right would give greater scope for new models of higher education delivery, and create more competition with the public universities.

The report has been generally welcomed by the university sector and non-university providers, with the Australian Council for Private Education (ACPET) describing it as a “victory for common sense” .

The National Tertiary Education Union expressed concern about the recommendation to open up CSPs to private providers, saying that “the adoption of a fully contestable market in higher education will threaten the financial vitality of our public universities because they have research and community service obligations, which do not apply to private providers.”
This concern was also expressed by Greg Craven, vice-chancellor of the Australian Catholic University, who said giving private providers access to government subsidies might prove to be problematic.

There is a basic psychological difference between a statutory body (university) ploughing money back into the enterprise and a private college whose modus operandi is to make a profit. Right or wrong, there are simply a different set of economic assumptions and if you are going to extend public funding you have to think that through.

 

See

RUN welcomes Demand Driven Review Report

 

 

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