25 September 2014
The government’s higher education reform package – the Higher Education and Research Reform Amendment Bill 2014 – was referred on 3 September to the for consideration and report by 28 October. Submissions to the inquiry closed on 22 September. The Senate Education and Employment Legislation Committee has now published 132 submissions to its inquiry into the Higher Education and Research Reform Amendment Bill 2014 . On 25 September The Scan posted extracts from 27 submissions lodged by higher education organisations (peak bodies) and individual institutions. This Part 2 extracts a further 12 relevant posts , with a further 12 to go.
- Extension of the demand driven system to sub-bachelor qualifications would help students take the courses that best meet their academic
Although the number of sub-bachelor places has expanded, their exclusion from the demand driven system has unfair consequences for students. For example, lower-ATAR students who are not admitted to the limited number of CSP pathway programs can attend pathway college, but paying full fees.
- Extension of the demand driven system to private universities and non-university higher education providers would make Australia’s higher education system fairer:
Fairness to students As with the sub-bachelor places, there are fairness issue in excluding private university and non-university higher education providers from Commonwealth supported places.
Supporting extension of pathway programs Pathway colleges were pioneered by the private higher education sector. Although some universities already have their own pathway colleges, it makes sense to use organisations that already do it well.
Diversity in the higher education system The growth over time of private university and NUHEP enrolments shows demand for different types of higher education than is offered by the public universities.
Fee affordability and competition in the higher education The average annual fee for a bachelor degree in a NUHEP is just under $15,000, nearly 50 per higher than the maximum student contribution amount at a university. With a funding system less biased against NUHEPs and private universities, the industry structure may change in ways that lead to more direct competition with public universities. The TAFEs are in the best current position to do this. Their fees suggest low cost structures, they have existing campus networks, they have established brands and recruitment channels, and they have a mission commitment to affordable education.
- Extending the demand driven system to sub-bachelor qualifications but not non-university higher education providers would compromise the sub-bachelor reform undermine the business models of many NUHEPs, particularly TAFEs.
- Private benefits are already sufficiently high in most cases that reductions in Commonwealth contribution rates are unlikely to make a difference to the basic yes/no decision to undertake university .
- If the Senate approves admission of NUHEPs to the demand driven system, the number that actually enter will depend on what other parts of the package are If fee deregulation is enacted, many providers are likely to enter the market. If current Commonwealth and student contributions are maintained, fewer but still many NUHEPs are likely to enter. However, a package that cuts Commonwealth contributions without increasing student contributions would substantially reduce NUHEP entry.
- Rejecting savings measures in higher education risks alternative cost cutting that would have worse long-term outcomes.
- The financial costs of HELP to government are significant and need attention.
- HELP doubtful debt could be reduced by recovering HELP debt from deceased estates.
- A reformed loan fee on HELP borrowing and real interest only for repaying HELP debtors should be considered as an alternative to real interest on all HELP debt.
- The lower initial threshold for HELP repayment should be introduced.
While the University of the Sunshine Coast (USC) asserts that it has most of the attributes required to thrive in a more competitive environment, it says the proposed changes will have a greater impact on USC than any other university . The threats to the University’s success in a more competitive environment are its short history and consequent relative lack of infrastructure, its small scale, and the almost complete absence of major industries and professional groups in the local economy. Accordingly , USC proposes:
- a substantial transition fund is established to support universities that are heavily reliant on the Commonwealth Grants Scheme and are embedded in under-developed or depleted local economies;
- the transition fund is designed so universities can develop applications for funds intended to address the underlying conditions that impair their ability to compete effectively in a deregulated sector;
- the transition fund is designed so it can support significant structural changes, such as the development of infrastructure for new study locations or the consolidation of existing sites; and,
- the interest rate on HECS/HELP loans be set at 50% of the Long Term Bond Rate, with the students’ interest rate on the loan capped at a maximum of 4%.
This submission covers interest rate options to charge on HELP debt. The key points are:
- The problem with bond rate indexation is that it leads to inequity between borrowers. This is because the interest accrued by graduates with lower incomes or who experienceperiods out of the labour force (for example, to raise a family) will exceed the interest accrued by graduates with higher incomes and longer periods of continuous employment. This inequity can come about in particular when the interest applied to the loan in a particular period exceeds the compulsory repayments made.
- Loan surcharges or hybrid arrangements are both superior to the proposed bond rate indexation in terms of borrower equity, but there are advantages and disadvantages of the different arrangements. The preferred approach may depend on the level of future tuition fees, and the importance that the Government places on eliminating interest rate subsidies for new debt.
If fee deregulation proceeds and fees rise considerably for the majority of degrees, then a loan surcharge is likely to be superior to a hybrid indexation arrangement. If, on the other hand, fee deregulation does not occur, or if it occurs but the rise in fees is not excessive, then a hybrid arrangement and surcharge could produce similar equity improvements. The key risk of applying a surcharge is the uncertainty.
The authors say they are very concerned about the apparent haste and seeming lack of expert consideration of the many complex and potentially inequitable outcomes implicit in the suggested radical fee deregulation agenda that makes up the Commonwealth’s plans. It would have been, and remains clearly the case, that a more cautious and considered approach is a preferred public policy stance and one that is still feasible. Increases in price caps to allow greater contributions from students, without compromising some essential and highly desirable characteristics of the current arrangements, would be practicable and, moreover, would allow a considered assessment of impacts without compromising the prospects of further future reforms.
The University’s position on the Bill is that it should be passed with amendments to remove, reduce or phase in the proposed 20% cut to public funding per student, continue to index HECS-HELP loans to the Consumer Price Index, and set aside for detailed review the proposed introduction of tuition contributions for domestic higher degree by research students.
With these three key changes, the legislation would represent a better balance, within a constrained funding environment. They would ensure that the sector continues to deliver the productive capacity the nation needs, as well as provide accessible higher education for all qualified Australian students.
- CDU is concerned by the possibility that both the real and the perceived costs of Higher Education as a result of the Government’s proposed Reform Package will deter students in the demographics of particular importance to CDU (mature and low SES) from tertiary study.
- CDU supports changes to the Higher Education Participation Program (HEPP) to address equity and access challenges for low SES students by introducing a HEPP eligibility threshold that would restrict HEPP support to those universities with 15% or more of students from low SES
- CDU argues for a lower than 20% reduction in CGS funding due to anticipated impacts on its student demographic and urges reconsideration of the per-place funding model
- CDU does not support indexing HELP loans to the 10 year government bond rate as this would potentially differentially disadvantage CDU’s main student demographics (mature, low SES) by increasing their level of overall debt, and acting as a disincentive to tertiary and further
- CDU strongly supports creation of a national scholarship pool from funds accruing from fee deregulation that would distribute funds to universities based on enrolment of, and performance with, student target equity groups.
- CDU supports the creation of an Adjustment Fund to support small and regional universities like CDU to cope with adverse changes as a result of the Higher Education reforms and to ensure that opportunities for students in the Northern Territory are maintained and
- CDU urges Government to delay or indefinitely postpone access to Commonwealth funding by currently non-funded providers in order for the impacts of other Reform Package changes to be assimilated and assessed by CDU would also expect that if private providers are to be eligible for Commonwealth funding that they will also be subject to the same quality control and reporting requirements that universities are required to meet.
- CDU does not support the proposal to reduce Higher Degree by Research student funding by 10% on the basis that this funding is already insufficient to support research training CDU does not support charging fees for HDR domestic students who are critical contributors to the nation’s research enterprise.
Alphacrusis says the proposed reforms are needed to put the current unsustainable higher education arrangements on a stronger footing, especially improving access to quality higher education for students from backgrounds with historically low participation.
The reforms flow from and are fully consistent with the demand driven system recommended by the Bradley Review, reinforced by the findings of the recent Kemp-Norton Review. Most importantly the reforms put the interests of students before other vested interests in higher education.
Students at Alphacrucis would be greatly disappointed if the extension of funding to students beyond those at public universities does not proceed as announced by the Government. Senators blocking the extension of funding would have to deal with large numbers of justly disappointed students, asking why their friends at public universities receive government funding and they do not. Continued discrimination is indefensible as both their degree program and those of their friends at public universities are now equally accredited by TEQSA. It is not defensible on quality grounds either as the quality of our business programs is, at the very least, comparable to those offered by universities.
We understand that the draft legislation suggests that degrees at existing universities be funded at higher rates than degrees offered by other institutions. The division between providers should not be on the basis of universities vs other institutions, but on the basis of institutions offering accredited doctoral programs vs other institutions. Providers receiving government funding at the lower rate should be able to recover the remainder of their costs from students. If this is not allowed then the providers would be forced either to compromise quality (as the lower rate is below their existing fees) or be in the embarrassing situation of being unable to accept government funding, placing the full burden back on their students.
As an institution developing strongly in recent years and likely to seek university accreditation in the near future, Alphacrusis is concerned about the current lack of clarity about such accreditation. The provider types (especially the ambiguous “University College” category) reflect their origins in a committee dominated by the interests of existing universities, and understandably seeking to maintain their monopoly over the title.
As suggested by the Kemp-Norton review of the demand driven system of funding undergraduate places, there needs to be a similar review of non-discriminatory access to research and research degree funding. Removal of the distortions in the existing system would maximise the return on the government research dollar as funds would flow to the best projects regardless of whether they are at public Universities or private higher education institutions.
James Cook University (JCU) notes that successive governments have reduced real per student funding and that the current government proposes, through the HERRA legislation, to amplify that reduction. Accessible higher education is as fundamental to the national interest as it is transformative of individual students. JCU endorses the submissions by Universities Australia and the IRU and recommends the passage of the Bill with key amendments to promote a higher education system that is financially sustainable, accessible and affordable for both students and taxpayers.
The required key amendments are:
- Moderating the proposed 20 per cent reduction to the Commonwealth Grant Scheme;
- Maintaining the CPI indexation rate on HELP loans;
- Adjusting the proposed Commonwealth Scholarship Scheme in order for it to meets the needs of students who are disadvantaged;
- Abolishing the reduction in funding to the Research Training Scheme;
- An adjustment package to support students, communities and universities to transition in response to the proposed.
University of Technology Sydney (UTS) urges the Senate Education and Employment Committee to consider:
- Affordable fees and access for any student who merits a place in higher education. The Senate should ensure that a pricing regime is designed and implemented that does not exclude thousands of Australians who are financially constrained or have marginal means to support large long-term loans, from undertaking further study, both for their own.benefit and for the productivity and prosperity of our country, or in any way risk shrinking the potential pool of talented people.
- Supporting the UA position and calling for a reduction in the overall cuts to education in the package – which in total are approximately 30%, (including the announced 20% cut to CGS, cuts to EIF, RTS and indexation). The proposed cuts will dramatically impact the quality of our universities at a time when our international competitors, particularly in Asia are enjoying major boosts in Government.
- Moderated deregulation. Deregulation is a major structural change and any implementation should be rigorously planned. In a particularly opaque and non-transparent market, the opportunities for pricing distortions are high. The impact of the proposed cut of 30% (once all budget measures are included) with unconstrained fee deregulation could lead to substantial increases in the cost of a undertaking a degree. A moderated pricing mechanism is needed to avoid price shocks and protect affordability.
- A strong and generous scholarship scheme for ALL low SES and disadvantaged students regardless of location. Universities should control their own Scholarship funds and places, allowing students from low SES and disadvantaged backgrounds a wide choice of study Strong HEPP funding is essential for the infrastructure and services that are vital in supporting students from low SES backgrounds.
- Supporting the UA position and rejecting as regressive the application of the 10- year Australian Government Bond rate to the repayment of outstanding student This measure should be scrapped in favor of less regressive alternatives.
- An appropriate period of consultation to consider both potential changes and transition mechanisms. It would be unprecedented to massively restructure one of Australia’s leading industries in just six A 12 month period was recommended by the Federal Government’s Commission of Audit.
The Australian Research Council advises that the amendments in the Bill result in altering three existing financial year funding figures and extend the forward estimates, resulting in additional spending of $760 million for the period 1 July 2014 to 30 June 2018. The Bill allows additional investment in research through the Future Fellowships scheme. As part of the 2014-15 Budget, the Government announced that it would provide $139.5 million over four years to support research under the Future Fellowship scheme. The scheme would be funded on an ongoing basis.
The Bill also amends the ARC Act to apply a one-off efficiency dividend, applies indexation to existing appropriation amounts and adds an additional forward estimate amount of $736.972 million for 2017-18.
The ARC considers the Future Fellowship scheme to be an effective and beneficial component of the National Competitive Grants Program (NCGP) that enables the ARC to achieve its outcomes. Mid-career researchers often face uncertain employment circumstances. Many face employment in short term, casual positions increasing the risk that they will either leave the research profession or pursue opportunities overseas. The Future Fellowships scheme was introduced to reduce these risks, build research capacity and support excellent research.
The Department of Education says the package of reforms announced by the Government in the 2014-15 Budget, most of which are enabled by the Reform Bill, aims to spread opportunity to more students, including disadvantaged and rural and regional students, equip Australian universities to face the challenges of the twenty first century and ensure Australia is not left behind by intensifying global competition and new technology.
The Reform Bill aims to create opportunities and choice for students through expansion of the demand driven funding system to sub-bachelor places at all institutions and bachelor level places at private universities and non-university higher education providers registered by the Tertiary Education Quality and Standards Agency (TEQSA). It will also create a new Commonwealth Scholarship Scheme to assist disadvantaged higher education students with the cost of their study. Higher education institutions will be required to allocate one in every five dollars of additional revenue raised from student contributions to this new scheme.
The proposed reforms aim to provide the opportunity for more students to access the right type of higher education for their personal circumstances, with a greater number and a wider diversity of study options for students, including at the sub-bachelor level.
The Reform Bill will give higher education providers more freedom to work to their strengths and respond to the changing economic and social environments in which they operate. Institutions will be able to make independent choices about the courses they offer, the fees they charge, the teaching methods they use, the scholarships they provide and the other support services they provide. This will enable institutions to access the resources they need to deliver world class education, ensuring Australia is not left behind at a time of rising performance by universities around the world.
The Higher Education Loan Programme (HELP) will be maintained, meaning that eligible students still need not pay a cent up front for the cost of their tuition, and the loan need not be repaid until the student earns over an estimated $50,638 in 2016-17. Students will benefit from the removal of the HELP student loan fee of 25 per cent for FEE-HELP and 20 per cent for VET FEE-HELP, and removal of the FEE-HELP lifetime limit. To maintain the sustainability of HELP, the indexation rate for HELP debts will be changed to reflect the cost of Government borrowings (10 year bond rate), to a maximum annual rate of six per cent.
The Business Council of Australia (BCA) says that, on balance, the reform package creates the right platform to build the higher education sector we need for the future by:
- Introducing market mechanisms of competition, choice and deregulated fees, which should lead to innovation, differentiation and
- Extending uncapped funding to private providers, which will allow them to offer more customised education products, such as work-based learning or direct pathways into employment, in the government-subsidised This will benefit students, employers and the sector more broadly.
- Extending uncapped funding to diplomas, advanced diplomas and associate This demonstrates the value of these qualifications in their own right. It brings them to an equal footing with undergraduate qualifications in terms of their importance to the labour market.
- Maintaining HECS for all.
- Maintaining a strong focus on access, fairness and equity by expanding uncapped funding to diplomas, advanced diplomas and associate degrees, and introducing the new Commonwealth Scholarship.
- Establishing transition arrangements for students and
Taken together, these changes will mean institutions focus on their strengths, which will lead to more responsive and flexible providers. It should also result in a sector that is more dynamic and offers greater differentiation and specialisation.
The extension of uncapped funding to private higher education providers, and to diplomas, advanced diplomas and associate degrees is a fundamental component of the package. The addition of new providers and courses to the uncapped funding market creates the environment for competition where fees can be deregulated. These two changes will work together and therefore need to be implemented at the same time.
While supporting the overall intent of the package, BCA says there are three areas that require additional work:
- market design, including the transition arrangements for small and medium providers – BCA recommends the government establish an oversight role to monitor the market to minimise the potential for long-term costs to government, overpricing and poor value for money and recommends it intervene, if necessary, in thin
- the need for more effective market information – BCA recommends the government identify and implement a way to significantly improve market information in the transition to the introduction of the new model in
- the appropriateness of the indexation rate – BCA recommends the government adopt an indexation approach that removes the inequities associated with the bond rate while limiting the potential long-term costs to government.
TAFE Directors Australia (TDA) submits that the reforms proposed in the Bill will not only address the current inequitable situation that blocks Commonwealth subsidies to TAFE students, they will stimulate broader choice, innovation and diversity across the tertiary sector. This will have significant flow on effects for Australia’s industries, enterprises and workforce productivity and importantly, will enhance the relevance of Australia’s tertiary education in our Asia-pacific region. The reforms will also bring greater alignment with many of our major international higher education competitors.
TDA makes three recommendations:
- The Committee support the expansion of the demand driven system to non-university higher education providers and sub-bachelor degree programs in order to address funding inequities in the current This reform will have significant flow on effects for Australia’s industries, workforce productivity and Australia’s standing in international tertiary education markets;
- The Committee support the establishment of a Commonwealth Scholarship Scheme based on clear principles that stipulate how scholarship monies will be distributed;
- The Committee review the implications to students should the 10 year government bond rate be applied to their Higher Education Loan Program (HELP) TDA prefers alternatives approaches such as the hybrid of indexation and a loan surcharge on HELP loans proposed by Professor Bruce Chapman and Timothy Higgins.