Imagining an Australia built on the brilliance of our people: address to National Press Club

Group of Eight   |   30 July 2014


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When our Senate considers the government’s higher education reforms it needs to find some sensible compromises. It needs to see thatderegulation is critical to this nation’s future. It needs to consider what magnitude of funding cuts is sustainable for universities in a constrained public budget. It needs to find a compromise option which maintains the brilliance of the HECS system, allows it to be sustainable for the nation and affordable for students. It also must not forget that world class research is essential if we are to be a wealthy nation in 50 years.

Higher education and research in Australia is at a crossroad. It is time for us to make choices about what we want for our country and what we want for future generations.IanYoung Time to make choices about the future of our universities.

Do we view universities as critical to underpinning a highly skilled, clever and innovative Australia?

Or do we see universities as a finishing school for our young? An extension of high school where we teach young people the same way and the same things no matter where they study?

Are we content with having a good university system? Or do we want one that stands out amongst the best in the world?

The decisions we make now will fundamentally shape Australia’s future.

Imagine, for a moment, what the future can be – for students, for research and for our nation.

Imagine an Australia in 2020 where high school students contemplating university have intense conversations with their friends, their parents and their teachers about what type of tertiary education would best suit their passions, their learning style, and their aspirations.

Each student is weighing up real options and asking real questions:

Do I want to live at home, or on campus, or in another city or town? Do I want to have an education focused on practical job skills or do I want one focused on the exploration of ideas? Do I want to be part of a big social network and have a lively campus experience? Or perhaps a more intimate and smaller campus would suit me? Do I learn best on my own, or do I really prefer intense academic support? Do I want to be educated in a research intensive environment or am I focussed more on immediate vocational outcomes.

Imagine an education system that is highly resilient – and a contributor – to the technology tsunami sweeping across our campuses. Technology may enhance the on campus experience for many students, transforming classrooms and enabling a global exchange of ideas. For other students, who want to fit their education around other passions, technology offers them a high-quality, off-campus option.

Imagine a nation that sees the highest quality university research as essential to our wealth. One that sees curiosity and the exploration of ideas as critical to an innovative culture and economy, where collaboration between industry, government and universities is close and productive.

Imagine a nation that embraces a technology future and sees Australia as a generator of that technology.

Where we invest in our most brilliant people and our most brilliant ideas.

A nation where political debate is shaped by the intellectual rigor of our institutions.

A society which celebrates excellence.

Many may believe that the future I imagine is already here.

That we already have excellent universities that rank highly internationally.

That our education is outstanding. That students have real choices.

That our research leads the world.

Well, I’ve got news for you. That future isn’t here, not yet.

Australia is a nation that has yet to realise its full potential.

We all like to believe that the Australian education system is envied around the world.

But what do we really know? Comparative data on education is hard to find.

The Australian Survey of Student Engagement (AUSSE) and its North American counterpart the National Survey of Student Engagement (NSSE) provide us with some insight into student perceptions of their education.

That data tells us that on average, US students find their study more academically challenging than Australian students do. Australian students report lower levels of contact with teaching staff and are less likely to have participated in “enriching educational experiences”.

Fifty-three per cent of US students had participated in a practicum, internship, fieldwork or clinical placement, while only 28% of Australian students had had a similar experience.

Hard analysis shows that our rhetoric is better than our performance. Australian higher education is not bad but it is not yet brilliant.

To build an education system that is brilliant, we have to stop funding universities the same way regardless of how they teach. We have to stop the endless per-student funding cuts to higher education.

We have created a perverse incentive that rewards universities for enrolling as many students as possible and teaching them as cheaply as possible. That’s what our current system does.

That isn’t the way to build outstanding universities or to give our children an excellent education that suits their particular passions and needs.

For students to have real options and real choices, we need real diversity amongst our universities. We need to enable each Australian university to offer an experience unique to it, to play to its strengths.

We come to the present deregulation debate because governments – and the taxpayer – quite rightly want to provide as many of our young people, who want a university education, with that university education. But they don’t want to fund it to be anything more than good. And they don’t want to fund us to be different.

Two independent reviews of the university system – the Bradley and Lomax-Smith reviews – have recommended that government increase per student funding to universities. Instead, we’ve seen a steady decline. The one constant in Australian higher education over the past 20 years is that the per student funding has decreased in real terms – a 14 per cent decline since 1996.

Deregulation will enable universities to differentiate. To play to their strengths.

It may generate some of the diversity that is enviable in the US system, where students have a real choice. They can go to institutions that include tiny specialised liberal arts colleges, outstanding state universities, niche private institutions, online private providers and world leading Ivy League schools.

The deregulation debate here has resulted in what I think are highly unlikely claims of enormous fees that will saddle students with debt for life.

We must not forget that we have HECS. The US does not. Through HECS we can ensure that academic ability, not financial background, is the only barrier to university entry.

I must add for the record, that the government needs to reconsider the impact of charging a real rate of interest on that debt.

And while there are indeed some extremely expensive universities in the US, albeit with extensive scholarship programs– most are not.

The University of California, Berkeley, one of the great research universities of the world, provides an extraordinary education to its Californian students for which it charges around $12,000 per year – roughly average for a top quality state research university.

We have some idea what a deregulated system will look like for students because Australian education is already partially deregulated.

Postgraduate education in Australia is already fully deregulated.

There is a real diversity of courses and type of education at that level. Universities compete hard for postgraduate students by offering a diversity of education and a diversity of fees. Across almost all disciplines, the fees differ by 200 per cent. Real price competition does exist in a system with an income contingent loan in place.

Extending this to undergraduates will enable the development of a truly diverse system and give our young people real choice.

But what of research? It is true that we do reasonably well in the international rankings. These rankings primarily measure research. Some of our universities – including my own, The Australian National University – make the top 100.

We do reasonably well with two major advantages working in our favour: we are English-speaking and our universities are large by world standards. These two advantages bump us up the scale.

But, if we look at the ranking most experts regard as a real and defensible measure of research performance, the picture isn’t as rosy. The CWTS Leiden Ranking measures the proportion of publications in the top 10 per cent by citations – a useful shorthand for measuring research impact by how often other researchers cite a publication. In that ranking our best performing institution, again the ANU, is 104. Not one single Australian university is in the top 100.

The Chief Scientist, and my predecessor at ANU, Professor Ian Chubb, has presented compelling comparative research data looking at citation rates across a range of disciplines. That data rates Australia as above world average.

But averages are affected by the bottom rung, so being above average doesn’t deliver the future we’ve just imagined.

A more telling comparison is the European average. Australia rates below the European average. Countries we would like to think were our peers, including, Belgium, Canada, Germany, Great Britain, all the Scandinavian countries, Switzerland and the United States all out perform Australia.

If Australia was a student, our report card for education and research would be a “B minus” – “can do better”.

The nature of our university system forces us to be average. We have very few terrible universities. But we also have no truly outstanding universities.

Universities in Australia are largely funded by volume rather than quality for both education and research. And that funding creates perverse incentives that are not good for education, not good for research and don’t help us to be brilliant.

When a researcher wins a competitive government grant, a true quality measure, they usually receive only a fraction of the requested funding, and not enough overhead support to cover the costs of actually doing the research. This forces the university to find the money elsewhere.

We also, as a nation, try to share limited research funds across all universities. Outstanding researchers can hold only two ARC Discovery grants at any time, regardless of their capacity to manage multiple research programs. Because of the limited funding, the success rate for grants is currently around 20 per cent. Sharing this funding across the sector stops it going even lower. But at what cost?

The funding that does exist to support the overhead costs of research is also largely distributed on volume rather than excellence. It is determined on measures such as volume of publications and volume of research students rather than demonstrable excellence.

Sustainable Research Excellence (SRE) funding was intended to address some of these issues. However, when the Federal budget became strained, this was the first funding pot to be raided.

The ultimate outcome is that if there are no further cuts to SRE, eventually it will grow to make up 15 per cent of total research support funding. A total of only $300 million of the almost $2.0 billion of funding intended to underpin research will be distributed on the basis of demonstrable excellence.

So our universities are forced to solve this big funding gap by taking some of the money earned for teaching our next generation and shifting it to cover the shortfall for doing research.

There is no limit to how many students a university can enrol, but the fees are set by government, regardless of the quality or type of teaching.

The result is that we have universities that enrol large numbers of students, teach them as cheaply as possible, and then use the income to cover both education costs and meet the shortfall in research funding.

This is why our major research universities typically have student populations of more than 40,000 students. Compare that to Stanford with 15,000 students, Cambridge with 18,000, Tokyo with 28,000, ETH Zurich with 18,000 and the outstanding Caltech with only 2200 students.

Our universities are huge by world standards. This is bad for the quality of the education we provide to our young people and bad for the quality of research.

If we continue down this path, we won’t be brilliant.

With no change to government research funding levels on the horizon the only option we have is to make harder decisions about where we spend the money and what we spend it on.

We have to invest in excellence, wherever we find excellence.

Research concentration is essential. It builds the critical mass of talented staff and students required for the chemistry to work – to build the innovation required.

We need to make clever choices to invest where we are brilliant, where the money will pay off in the future, where other countries are not as good as us.

We also need to make research not just an add-on to our economy, but a driver and a generator of wealth.

In first world countries an estimated 50 to 85 per cent of the current national wealth is a result of investment in research and development made a generation ago. The return on R&D investment is estimated to be up to 20 per cent. That’s a lot better return than any of us earn on our savings accounts.

The opportunity for Australia to make real gains in R&D, or commercialisation, is great. If we get a “B minus” for our research and education, unfortunately we get a “fail” for commercialisation.

If you are a university that wants to actively collaborate at the highest level with industry there are some real challenges. Our industry simply isn’t shaped to make the most of our national brainpower. Only 30 of our researchers – that is people with a PhD – are employed by business. In the United States, Korea and Japan this number is about 80 per cent. In most European countries it is about 60 per cent.

When we look at the top 1000 businesses in the world for R&D spend, there are only 10 Australian companies in the list.

Australia ranks last in the OECD data on collaboration between business and higher education.

We simply don’t have the high technology companies crying out for university R&D.

Australia has been able to develop a strong economy. We are a wealthy country. We have built our wealth on agriculture and natural resources.

We have been lucky to have a land that has given us so much.

But it would be short sighted of us to expect that our natural assets will sustain our economy in 50 years.

Future wealth will be built on innovation, science and technology. We need to prepare for that future.

We need to enable ourselves to be brilliant.

Our choice is to either create or consume knowledge.

If we choose not to be a creator of knowledge we will get left behind. The gap between curiosity driven discovery and applied outcomes is now very short and very fast.

Indeed, there is research that shows that national wealth is related to the speed of adoption of new technology. It will increasingly be the creators of the new ideas that are also the ones who will develop the technology and benefit from the wealth it generates.

If we choose to be a creator of knowledge then we must invest in research and development at all levels of our economy.

We must make smart choices to invest in only what is excellent to ensure that innovation drives our economy.

Universities need to better understand industry and industry needs to make serious investments in home grown brilliance.

Government needs to create a research and development ecosystem that supports and rewards excellence.

And all three (government, universities and business) need to work as one to solve our commercialisation puzzle. We’ve long been the “lucky country”, which means we’ve long been able to be complacent and risk averse. After all, why change a good thing?

Australia is capable of producing world beating research.

This is, after all, the country that invented wireless, the cochlear implant and ultrasound. Australian researchers have made Nobel-prize winning breakthroughs that have advanced our understanding of the immune system, molecular biology, and how the universe is expanding.

Thanks to Australian researchers, penicillin is a common antibiotic, peptic ulcer disease easily treated and we may eradicate cervical cancer.

Each of these research breakthroughs required investment in basic research and patient capital.

Australia needs diversity in our universities. We do need a good average standard of education and research. But to be brilliant, we also need the truly world leading peaks. It is these outstanding peaks that allow a nation to “punch above it weight” on the international stage.

Research is a bit like the Olympics. Making the Olympic final is a wonderful achievement, but people only remember the winner. Research is very much the same, except there is no second prize. We invest in our most brilliant and potentially brilliant athletes. We also need to invest in developing our future research gold medallists.

This means we have to invest in research – and recognise it as an investment rather than a cost.

If the United States, a country committed to small government, can recognise that the prosperity of the nation is underpinned by government investment in R&D, then we can too.

I was delighted to see that Catherine Livingstone, the incoming president of the Business Council of Australia has been reported as holding very similar views.

Deregulation is not the whole answer. Students can’t carry the full burden. Government investment in truly world class research is required.

Deregulation, however, is a game-changer and a building block to making our universities brilliant.

On behalf of the Group of Eight, I urge our Senators to give universities the freedom to be brilliant.

To rise above point-scoring and political trickery.

It would be a great tragedy for our nation, for our universities, for our future generations, if our Senators pass up this opportunity, and leave us with no reform, harsh funding cuts and the likelihood of ever declining funding for research and education.

That outcome would mean ever bigger universities, ever bigger classes, more casual staff, less internationally important research. It will mean decay of our system and the potential loss of one of our most successful export industries – international students.

The reality is there are no easy options here.

Change has to happen.

We cannot continue to have a single model of a university in Australia. If we want to be brilliant, we need the real peaks of performance – great education, great research, great commercialisation.

When our Senate considers the government’s higher education reforms it needs to find some sensible compromises. It needs to see that deregulation is critical to this nation’s future. It needs to consider what magnitude of funding cuts is sustainable for universities in a constrained public budget. It needs to find a compromise option which maintains the brilliance of the HECS system, allows it to be sustainable for the nation and affordable for students. It also must not forget that world class research is essential if we are to be a wealthy nation in 50 years.

These compromises are possible and important.

The future I imagined earlier is not one that we can only dream of. It is one we can make happen. It is one we can build. Australia can be a nation that derives its wealth, not from the back of sheep or dug from a quarry. Australia can be a nation built on the brilliance of our people.


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