Second reading speech - higher education and research reform amendment bill 2014

Introduction

Today I introduce the Higher Education and Research Reform Amendment Bill 2014.

The Reform Bill gives effect to some of the greatest higher education and research reforms of our time.

The Reform Bill will spread opportunity to more students, including disadvantaged and rural and regional students, equip Australian universities to face the challenges of the 21st century and ensure Australia is not left behind by intensifying global competition and new technologies.

The passage of the Reform Bill will enable Australia to achieve the best higher education system in the world and have some of the best universities in the world.

We live in a time of constant change. The international economy is evolving, the employment market is shifting and tomorrow’s jobs demand different skills to the jobs of today.

Currently our universities are at risk of being left behind and overtaken by the growing university systems in our region and across the globe as these systems increase their capacity and new forms of online and blended delivery take hold.

We must aspire to not only keep up with our competitors, but keep ahead of them.

The Government’s changes will give Australian universities the freedom and autonomy to work to their strengths, be internationally competitive and manage economic and social changes to the best of their abilities.

Students will benefit most. They will enjoy improved teaching and learning in innovative and creative courses that compete for their interests. They will be able to choose from a wider range of options and will have better information to help them make decisions about where, how and what to study.

In addition to increased international competition and a rapidly changing environment, the nation faces significant challenges in higher education and research that were not addressed by the previous government. These challenges include budget deficits and ballooning debt, and funding cliffs for essential research fellowships and research infrastructure.

The Reform Bill meets those challenges head-on in ways that are fair to both students and taxpayers.

Universities Australia, the body representing all university vice-chancellors, fully supports the need to deregulate and free-up higher education in Australia. Deregulation is the only way to respond to what students and employers want. It is the only way to set our universities free to ensure they can deliver what we need. It is the only way to ensure Australia is not left behind. It is a one-off opportunity.

If we don’t act, and act now, we risk Australia’s higher education system falling into a downward spiral towards mediocrity. Universities Australia made this abundantly clear prior to the Budget with its Keep It Clever campaign. We must not be left behind.

Fortunately, we won’t be. With the passage of the Reform Bill, we will have the right conditions to transform the Australian higher education system and give it the freedom to be the best in the world.

Australian Technology Network Executive Director Vicki Thomson has said:

to reject the [deregulation] legislation out of hand … would be to sign the death warrant on a globally respected higher education system.

The Vice-Chancellor of the Australian National University, Professor Ian Young, said at the National Press Club regarding the Government’s higher education reforms:

it would be a great tragedy for our nation, for our universities, for our future generations, if our Senators passed up this opportunity.

Spreading opportunities to students

This is not only about quality, however; it is about opportunity. This Bill will see an additional 80 000 higher education students per year supported by Government subsidies by 2018. These students will include more people from disadvantaged backgrounds, more students from rural and regional communities, Australians who require extra support to succeed at university and workers whose skills need to be updated.

Regional students and regional higher education institutions will benefit significantly as we expand the demand driven system to enable study in more places in more ways.

Universities, TAFEs and private providers will have new incentives and opportunities to develop innovative partnerships, particularly in outer‑metropolitan and regional areas, where they can work together to offer the skills and knowledge that local employers want in their employees.

Many regional institutions have warmly welcomed this opportunity. They are frustrated by the restrictions which prevent them from developing creative solutions that directly meet the needs of their communities and prevent them from marketing unique learning experiences to those who live in cities. They see the potential in these changes, including to market opportunities to study in the fields in which they teach especially well.

There have already been some moves in this direction – last year the University of Ballarat and what was previously Monash University’s Gippsland campus joined to create the Federation University Australia, providing greater educational opportunities to the communities of regional Victoria.

This Bill reflects the change in the name of the University of Ballarat to Federation University Australia.

The Government’s reforms will give institutions greater freedom to explore these kinds of opportunities while strengthening the service they offer to their communities.

Through these reforms students who choose to study higher education diplomas, advanced diplomas and associate degrees in their own right or as a pathway to university will be supported.

Students studying for higher education undergraduate qualifications at TAFEs, private universities and private higher education institutions will be supported.

Students who come from low socio-economic backgrounds – many who are first generation university students – will be big winners from this extended support. We anticipate the nation will see improved success rates and reduced drop-out rates for undergraduates.

This Bill provides a level playing field for students, no matter what their study choices are. It removes the punitive loan fee of 20 per cent for VET FEE-HELP – helping tens of thousands of Australians undertaking VET courses – and gets rid of the 25 per cent loan fee for FEE‑HELP for those who study with private institutions. It removes the lifetime limits on all Higher Education Loan Programme (HELP) schemes and discontinues the ineffective HECS-HELP Benefit.

In addition, this Bill allows certain New Zealand Special Category Visa holders to access the HELP scheme. This will assist a small number of New Zealand citizens who moved to Australia as children and deserve to be treated in the same way as Australian students in support to undertake higher education.

Equity and access

To support equity and access for Australian students, the Reform Bill also introduces a new Commonwealth Scholarship scheme to support students from disadvantaged backgrounds, including from regional Australia. This is one of the most important and valuable elements of the reform package in the legislation. Higher education institutions with a Commonwealth supported equivalent full-time student load of 500 or more will be required to allocate one dollar in every five of additional revenue to this new scheme.

With this investment, institutions will be able to provide tailored, individualised support to help disadvantaged students, including help with costs of living while they study, something regional students and families will especially welcome. The scholarships will also be able to cover fee exemptions and mentoring, tutorial support and even relocation expenses.

The Commonwealth Scholarship scheme will be complemented by the Higher Education Participation Programme, which provides funding, irrespective of fee revenue, to allow universities to conduct outreach activities and undertake initiatives to support disadvantaged students.

Student support

There has been much debate about the measures in the Reform Bill to improve the sustainability of the higher education system and the HELP scheme in particular. It is worth remembering how much support the taxpayer provides to higher education students.

Most university students occupy a Commonwealth supported place. The taxpayer subsidises the fees that these students pay to the tune of 60 per cent – on average, students pay around 40 per cent.

And that’s not the full extent of the taxpayer’s contribution.

Most students take out a HELP loan so they don’t have to pay for their share of the tuition fees up front. The Government – the taxpayer – pays the institution the student’s contribution upfront, on their behalf.

The student doesn’t have to pay a cent back for their education until they are earning more than $50 000. In years when they are not earning this amount, they don’t need to make any payments.

The student might also receive income support – Youth Allowance or Austudy – while they are studying.

We want a system that embodies the idea of a fair go – where there are no financial barriers to participating in higher education. We want all Australians who have the ability and the ambition to participate in higher education – this will help create a strong, vibrant economy and assure our future standard of living.

But running such a high level of support comes at a cost. In 2014:

• The cost of subsidising degrees is more than $6 billion.
• The value of HELP loans is more than $5 billion.
• Student income support for higher education is more than $2 billion.

The amount of funding the Government provides through HELP loans is going to double over the next few years. In 2017 we will be lending students $10 billion.

In a deficit environment the Government needs to borrow the money that it lends to students. Because the Government currently lends to students at less than it costs the Government to borrow the money, there is an additional subsidy from taxpayer to student. Given the scale of costs now present in the higher education system, it is time students picked up a fairer share of the tab for these interest charges. This is why we are changing the indexation rate for HELP debts from the Consumer Price Index to the Treasury bond rate (safety capped at six per cent).

Most people would agree that HELP is the best loan you would get in your life – for the best investment that most people will ever make in themselves.

It’s a good deal. It’s the best deal an Australian will ever get. Australian university graduates on average earn up to 75 per cent more than those who do not go on to higher education after secondary school. Over their lifetime graduates may earn around a million dollars more than if they had not studied at university. It is only fair that they pay a reasonable share of what it costs.

For students who were enrolled as Commonwealth supported students on the day of the Budget, existing arrangements for Commonwealth and student contributions will apply until they complete their study, or the end of 2020 – whichever comes first. This includes those who had commenced a course, or deferred commencement, or accepted an offer of a Commonwealth supported place on or before 13 May 2014.

From January 2016, with new levels of funding for Commonwealth supported places and with the commencement of deregulation of the higher education system, new university students will go on to contribute, on average, around 50 per cent of the cost of their higher education, up from 40 per cent. But only when they earn enough to cover it.

Equipping universities for change

In a competitive global economy we need to make sure Australian higher education keeps pace with the best in the world. And currently, as warned by Universities Australia, Australia’s universities risk falling behind.

The Shanghai Jiao Tong index released a few weeks ago lists eight Australian universities in the world’s elite 200. Universities in China, Hong Kong, Taiwan, and Singapore are rising strongly through the ranks. Five years ago there were no Chinese universities in the top 200, now there are six. In five years.

We need a relentless focus on the quality and impact of our higher education system.

We need to ensure Australian higher education institutions do not stand still.

The Reform Bill gives higher education institutions the freedom and the confidence to face the future and be the best that they can be.

The Reform Bill will allow Australian higher education institutions to choose what courses they offer, what fees they should charge, which students they want to attract, what teaching methods they should use, what scholarships they provide and what other support services they give.

International education

The new freedom for universities outlined in this legislation will position our universities to attract the best and brightest students from across the world. We have done well so far, but this is not something we can take for granted. International students bring different views and cultures that enhance our nation’s knowledge and skills. They contribute to Australia’s education export industry, which is earning around $15 billion per year.

International students also impact on local economies. They shop in our corner stores, travel to our towns and cities, spread the word about Australia to their friends and families, and buy our goods while they are here. The former government took all that for granted, and so wiped $4 billion off our export income, which hit our economy and our universities hard. We cannot let that happen again.

Competition and better information

Quality is everything – for our students, for our institutions and for our international competitiveness. Students must know their qualifications will lead to a job. To assist students to make informed choices about where and what they study, new information will be provided through the Quality Indicators for Learning and Teaching – known as QILT – detailing the performance of each private and public higher education institution.

Students and their families will be able to access this real and vital information about the quality of courses and institutions they are considering. There will be better information about previous graduates’ success at finding jobs and what other students and employers think of the course they are planning to do.

This information will also help Australian institutions compare their performance with other nations, and continually improve.

Research

The Government’s broader changes to higher education and research will safeguard a strong, competitive research system.

World-class research requires high-quality facilities and talented researchers. Yet the previous government left us in a state where there was not a single dollar set aside for the National Collaborative Research Infrastructure Strategy beyond 30 June next year. Nothing.

There was no provision for any new awards for the Future Fellowships programme that supports mid-career researchers to undertake world‑class research in Australia. Not a cent.

As part of the higher education reform package, the Government will invest $11 billion over four years in research in Australian universities, including $139 million for the Future Fellowships scheme and $150 million in 2015-16 to continue the National Collaborative Research Infrastructure Strategy. Labor abandoned both.

The Reform Bill amends the Australian Research Council Act 2001 to index annual appropriations to increase funding for the Australian Research Council, and to apply a one-off efficiency dividend. We are providing for 100 four-year Future Fellowships each year, and making this an on-going programme.

The Government’s commitment to ARC funding for Future Fellowships, where the previous Government left a funding cliff, means that ARC funding is increased by this legislation well above what was proposed by the previous Government in forward estimates. Funding for Future Fellowships and for the National Collaborative Research Infrastructure Strategy are integral parts of the Government’s higher education reform package, and depend on the passage of this legislation.

The Reform Bill will also allow universities, if they wish, to require Research Training Scheme (RTS) students to make a small contribution to the cost of undertaking a Higher Degree by Research course. The Government will expand HELP to allow eligible RTS students to defer paying their contribution until they are earning a decent wage.

Indexation

The Reform Bill will support the Government-wide decision to streamline and simplify indexation for programmes. The Consumer Price Index will be applied to payments administered under the Higher Education Support Act 2003.

Consultation

The Reform Bill is the result of extensive national discussion and consultation before and after the Government announced its higher education and research reform package.

There has been widespread debate in Australia over many years about the kinds of reforms that are necessary both to expand opportunity for students and to ensure that we are not left behind internationally.

The Government’s reforms as presented in this Bill respond to the findings of the Review of the Demand Driven Funding System by the Hon Dr David Kemp and Mr Andrew Norton, which received over 80 submissions. The legislation also addresses issues raised in submissions from universities, their peak bodies and non-university higher education providers to the National Commission of Audit.

Since the Budget, we have undertaken extensive further consultation with stakeholders, including through the Legislation and Financing Working Group chaired by the Vice-Chancellor of La Trobe University, Professor John Dewar, and the Quality, Deregulation and Information Working Group, chaired by the Chancellor of the University of Western Sydney, Professor Peter Shergold AC.

Consultations have taken place with all vice-chancellors, all universities groupings and all non-aligned universities. There have also been meetings with non-university higher education institutions.

The Government has listened to views from across the community and is confident that this is a fair, balanced and necessary package of reforms.

Conclusion

The passage of the Reform Bill will spread access and opportunity to higher education to more Australians, including disadvantaged and rural and regional students.

The passage of the Reform Bill will equip Australian universities to play to their strengths and face the challenges of the 21st century.

The passage of the Reform Bill will ensure Australia is not left behind by intensifying global competition and new technologies.

The passage of the Reform Bill can enable Australia to have the best higher education system in the world with some of the best universities in the world that are magnets for students everywhere.

The Reform Bill is essential for the future prosperity of our nation.

I commend the Bill to the House.