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Monday, 11 August 2003
Page: 18038

Mr RUDD (7:54 PM) —Why are we concerned about higher education? Why are we debating these questions with some passion and, hopefully from time to time, with some reason? I would advance two underlying factors which drive us in this direction. The first is that higher education provides opportunity, ideally, for all kids of ability. Therefore, it is a fundamental tool of equity. The second reason is that higher education, equally, is a fundamental driver of the national economy. National economies with vibrant higher education sectors, be they in the sciences or the humanities, are invariably the most efficient across the OECD, not just because they release to those economies a pool of highly skilled human capital but because universities in themselves, particularly in the sciences, become drivers of economic activity in their own right—through the new sciences, through information technology, through biotechnology and through the new frontiers of the new economy.

Therefore, there can be no more important debate than that which we are having in this parliament tonight on higher education and the Higher Education Legislation Amendment Bill 2003. Higher education is the engine room of equity. It is the engine room of the economy because it is also the engine room of ideas. Australia needs a world-class university system. When it comes to this question of a world-class university system, the gap between the ideal and the reality is, in fact, a chasm. Professor Alan Gilbert of the University of Melbourne recently wrote:

The gap between the best universities in Australia and the best universities in the world is large. On any commonly adduced international measure of academic standing, the best universities in Australia are not among the world's top 75 universities, and probably not among the top 100. They have quality researchers, but few nodes of research activity able to build the `critical mass' research teams necessary to survive the loss of a few key individuals.

The impact of a table presented not long ago by the US magazine, US News and World Report, examining the characteristics of the top US doctoral-granting universities is remarkable. This table looks at Princeton, Harvard, Yale, the California Institute of Technology, MIT, Stanford, Pennsylvania State, Duke, Columbia, Dartmouth College and the University of Chicago. What is stunning is that when you go through these universities the level of funding per student is remarkable by any standard in this country. The top US universities for which data are readily available are funded at a rate between $US100,000 and $US150,000 per student, compared with $15,000 to $50,000 per equivalent full-time student unit at the Group of Eight—that is, the group of the most elite Australian universities of Adelaide, ANU, Melbourne, Monash, Queensland, Sydney, University of the New South Wales and the University of Western Australia. So the most obvious challenge which is alive in establishing a world-class university in Australia is plainly financial. Let us take the easiest case: the Australian National University. Research done by Griffith University says:

... it would take an extra $AU1.2 billion per annum for the ANU to achieve recurrent funding at the rate of $AU176,707 per EFTSU, and an extra $AU6 billion per annum—

just a little under the Commonwealth's total higher education funding—

would be needed to fund the University of Melbourne at the rate of the top US universities.

If we were to look at a comparison which was alive, say, for the University of Melbourne, one which has been hit upon in literature is an American university which is not in the top 10 but is, in fact, the 25th ranked US university—that is, the University of Michigan. Again, it was listed in that table I referred to before in US News and World Report. The University of Michigan at Ann Arbor has some 25,000 undergraduate students and 13,000 postgraduate students. It is similar in size to the University of Melbourne, which has approximately 27,000 undergrads and 10,000 postgrads. The universities have similar numbers of casual academic staff, at about 450 each. However, Michigan has significantly more full-time academic staff than Melbourne—3,408 in Michigan's case compared with 2,164 as far as the University of Melbourne is concerned.

Some 42.5 per cent of the University of Michigan's revenue was from government, only slightly less than the 49.8 per cent of the University of Melbourne's revenue being from government—a point which I think the member for Parramatta should bear in mind when making his next set of interjections in this debate. Some 28.6 per cent of the University of Michigan's revenue is from student fees, which again is only slightly more than the 20 per cent of the University of Melbourne's. But there is a considerable difference in the level of resources of the two institutions. The University of Michigan has revenues 3.7 times more than those of the University of Melbourne's. The total revenue of the University of Michigan—this is in US dollars—is $1.6 billion and the University of Melbourne's is $450 million. Revenue from government for the University of Michigan is $716 million compared with $224 million for the University of Melbourne. Revenue from fees is $480 million in the case of the University of Michigan and $90 million in the case of the University of Melbourne. Revenue from other sources, including grants et cetera, is $445 million versus $136 million.

On the government comparison alone, however, there is a ratio of about three to one. Something which our political opponents in this place never address in the macro debate on the future of higher education is that in the future it all lies in private sources of capital. They never address the fact that the fundamental driver in the US public university system and private university system lies in the provision of public investment. The Business Council in its study in 2002 drew this conclusion from the gap in resources between the University of Michigan and the University of Melbourne. It said:

Given the presence of at least some correlation between financial resource levels and performance, this revenue gap suggests that resourcing a top generalist university will represent a significant funding challenge in the Australian context. Perhaps a focus on having a number of world-class centres of excellence in particular disciplines within individual universities may be a more appropriate goal.

The purpose of that series of extracts is to demonstrate the dimensions of the challenge which lies ahead of this country if we are to have a world-class university system in the knowledge economy. The knowledge economy will be the central driver of the world economy in the century which lies ahead of us. When we look at the particular challenges which lie now within Australia, the dimensions of the task faced by government are truly enormous, particularly the dimensions of the crisis which now affects our university sector as a consequence of policies recently adopted by this government.

The government has slashed funding by $5 billion to Australian universities since it has been in office. Each year there are 20,000 qualified Australians who miss out on studying at a university and up to 15,000 young Australians miss out on a TAFE place because there simply are not enough places. Since 1996 there are 20,000 fewer fully funded student places in our universities and growth in TAFE places has all but stalled. The Howard government will not fund any new TAFE places under its current budgetary projections.

So, under these circumstances, who is picking up the financial pressure within the system? The first impact as far as financial pressure is concerned lies with the students themselves. The Howard government wants to let universities increase HECS fees by 30 per cent—that means HECS fees of up to $50,000 in the case of certain university disciplines. An arts degree would cost $15,000; a science degree, $21,000; and a law degree, $41,000. Under the Howard government's proposed changes, loans for postgraduate courses would attract a real interest rate of six per cent. A specialist nursing degree could cost up to $4,300 in interest alone. New fee hikes could see average student contributions increase by more than 100 per cent since 1996. Some courses like law and vet science could increase by over 240 per cent.

The impact here is significant, particularly when we look at the cost of higher education in this country relative to other OECD economies. A table which compares the international study costs by level of independence of the student concerned—that is, whether they are living with parents, living in a dormitory or shared accommodation, or living as an independent adult—further underlines this point. I refer to a table prepared by the International Comparative Higher Education Finance and Accessibility Project. It demonstrates that for low independent students—that is, for those living with their parents—Australia comes in at fourth out of 13 in terms of the degree of real expense to be borne by students undertaking a higher education in Australia relative to Hong Kong, the US, Japan—Tokyo and Osaka—the Netherlands, Singapore, New Zealand, the UK, Austria, Germany, France and Norway. For those students with a moderate degree of independence—that is, those living in shared accommodation—we come in as the third most expensive venue on that table. And for those with a high degree of independence—that is, those living independently—we come in as the second most expensive venue for obtaining a higher education. These are not our statistics. These are the statistics provided by the International Comparative Higher Education Finance and Accessibility Project. Its web site is www. for tho-se who are listening who may be interested.

Of course, that is not the only place where the financial gap is being met. There is a further one as well, and that lies in the government's proposal to create a system where money more than marks opens university doors, as the shadow minister for education noted in her recent policy release. Under this proposal, at the University of Sydney a full fee law degree would cost $85,000; at the University of Queensland a full fee vet science degree, $144,000; and the Vice-Chancellor of Melbourne University has priced a full fee medical degree at $150,000. The Howard government wants to increase the number of full fee paying places so that half of all university places would go to people who buy their way in, presumably including at the James Cook University in Townsville.

Funding pressures have to be met elsewhere in the system as well, given the overall withdrawal of net funds from the higher education sector under the Howard government. Over the last eight years we have seen $5 billion taken from our universities. We have seen individual universities losing between $20 million and $340 million in their federal funding. We have seen overcrowded classrooms, infrastructure in serious disrepair and insufficient student resources; they are all a problem across our university system.

If I could add a personal note at this point, my own daughter, who is studying at a university in Brisbane, told me recently that as part of her regular course the university, because of funding constraints, has had to reduce the tutorials associated with her university degree by one tutorial unit per week. The extent to which that is happening right across the country at the moment I think would be of concern to all parents and all students listening to the parliamentary broadcast this evening.

Of course, there is a further impact on the quality of the university courses being delivered. Fifty-four per cent of academics surveyed in Australia felt that degree standards have been dumbed down, 45 per cent said the quality of contact with students has declined, and the number of students per teaching staff has blown out by 22 per cent—at some institutions the increase has been as much as 70 per cent. We have all heard the anecdotal stories of students having to sit on the stairs and in the aisles of lecture theatres. None of this has been plucked out of the air; it is all borne out by the statistical data.

I turn to the independent study of the higher education review, stage 2, prepared by the Phillips Curran consulting firm in June 2003—the most recent analysis. It demonstrates that if you look at the overall components of university revenue by source from 1995 to 2001 and at where the shift has occurred, Commonwealth sourced funding to the university sector has declined by 9.9 per cent; HECS contribution to overall university revenue by source has increased by 70.5 per cent; fees have contributed to overall university revenue by 99.3 per cent; state governments have increased their allocation to universities by 49 per cent—itself remarkable, given that universities are exclusively a Commonwealth function, at least since the higher education reforms in 1974—and other funding is up from 1.5 per cent in 1995 to 14.1 per cent. I am uncertain where foreign fee paying students fit in that table. I suspect it is probably the third category I mentioned, which in this table is simply referred to as `fees'.

Overall, you see the plain pattern of a transfer of financial responsibility from government on the one hand, where we have seen virtually a 10 per cent collapse in Commonwealth allocations to universities' total revenue, and by contrast an increase in privately sourced finance for universities—a plain shift in responsibility. For those who think this has happened by osmosis, it has not. It is a product of a general philosophy of government which we see alive in the education sector and in the higher education sector, as well as in hospitals, in bulk-billing and in the attitude to Medicare. It is a consistent policy and philosophy on the part of the government.

We, however, do not propose to sustain this. Labor's policy has been released by the shadow minister and it indicates that we will be injecting a total of $2.34 billion into higher education over a four-year period. We intend to expand the opportunities for Australian young people to get a TAFE or university education, create 21,660 new full- or part-time commencing university places by 2008 and 20,000 new full- and part-time commencing TAFE places by 2008, and provide $35 million to support secondary school students from disadvantaged backgrounds to progress to university or TAFE. We also propose to ensure fair access to affordable tertiary education, with no increase to the Higher Education Contribution Scheme—HECS—no deregulation of HECS fees and no introduction of a real rate of interest on loans for postgraduate courses, and to abolish full fees for all new domestic undergraduate courses.

In terms of lifestyle affordability for students, we propose to extend rent assistance to Austudy recipients, reduce the age of independence for students on youth allowance to 24 in 2005 and 23 in 2007, and increase the HECS repayment threshold to $35,000 per annum in 2004. We also intend to address the national skills shortage by reducing HECS fees for science and maths students by $1,600 per annum, by funding an additional 3,000-plus full- and part-time undergraduate nursing places by 2008, by creating 500 additional new full-time HECS funded postgraduate nursing places, and by providing on top of that 1,404 bonded medical places by 2009—including 234 bonded medical places each year from 2004—and 4,600 new full- and part-time teacher education places by 2008. This will start in 2004, with 860 new full- and part-time places. On top of that again, there will be 500 additional new full-time HECS funded postgraduate teacher education places in areas of specialisation and professional development from the year 2005 onwards.

We regard these as important measures to deal with the practical problems which families and students face across the country. We also intend to provide a vision for investment and direction for a diverse, world-class Australian university system by establishing a competitive $450 million fund to encourage universities' transition to 21st century learning institutions, a $150 million community engagement fund to support regional, rural and outer suburban universities' leadership role in local communities, and a $150 million teaching and learning fund to recognise and reward teaching and learning excellence, including the provision of support for new university teachers.

These are the sorts of practical measures which we require not just for families and not just for individual students—these are the sorts of measures that we require for the country. Unless we seize by the throat this problem of the rundown in investment in our universities from the public sector, and unless we resolve as a country to create a world-class university system, we as a country and as an economy, as we approach and move our way through the 21st century, will have no foundation for our future. To kill this system, as is occurring at present, is frankly to kill the goose that lays the golden egg. We as a country must resolve instead to build a system based on our resources, our political commitment and our energies. (Time expired)