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Thursday, 23 June 2011
Page: 7090

Mr FLETCHER (Bradfield) (10:51): I am pleased to rise to speak on the Higher Education Support Amendment (Demand Driven Funding System and Other Measures) Bill 2011. It is uncontentious, I think, that the health and vigour of the higher education sector is of critical importance to Australia in so many ways. It is critical to the enrichment of the lives, the opportunities and the earning prospects of those who study at universities. It is critical to the importance of the higher education system as a place where extremely important research in a whole range of areas occurs, and it is absolutely critical to our national competitiveness and our national economic performance. Therefore, all Australians and certainly all members of this parliament have a critical interest in the performance of the higher education system, and particularly the university system.

This bill, to a degree, increases the amount of flexibility available to universities and, to a degree, makes it easier for universities to respond to student demand. To that extent, we on this side of the House support that broad direction. But we also make the point that there is so much more that could be done to bring flexibility to this sector and that there would be very considerable public policy benefits from doing so. In the brief time available to me, I want to first of all illustrate the general principle as to the importance of the univ­ersity sector; second, note that this bill does go some distance towards improving the position of universities, and to that extent it is to be welcomed; and, third, make the point that there is so much more that can and must be done if we are to maximise the capacity of universities to contribute to our national life, our national economic performance and our national competitiveness.

Let me start closely with the proposition that the university sector is of critical importance to our nation. If you look, for example, at the submission made by Universities Australia to the Bradley inquiry, it is now some three years old but the broad dimensions still remain valid and are worth highlighting. In that submission it is pointed out that the university sector is worth in excess of $15 billion. There are around a million students and around 100,000 employees. The point is made, amongst other things, that the education sector is a very substantial generator of export earnings. Of course, it is important to our society in so many ways beyond simply the generation of export earnings.

The critical importance of the university sector to national innovation and in turn, therefore, to national economic performance cannot be overstated. Over the years we have seen some fine examples of the comm­ercialisation of Australian innovations based upon their initial development in the research sector. I think all Australians look with pride at the performance of companies like Cochlear, which is a world leader in the hearing implant devices sector. In a related area, the communications sector, many mob­ile phones around the world embody technology which was developed, as it happens, not by universities but by the CSIRO, but I think the same general point remains—that the research activities carried out in Australian institutions are of enormous economic importance. It is evident that scientific and technical research is critical to the performance of so many industries that are central to the Australian economy, including agriculture, mining and manu­facturing.

It is also evident that as our economy transforms it is increasingly important that we are world competitive in the quality of our thinking, in the quality of our innovation and in the quality of our research. We must be a knowledge economy if we are to survive and prosper. We will not compete success­fully on the basis of low-paid jobs, and if we seek to do that we will be competing against many countries which have the capacity to offer employment at much lower levels than is consistent with Australian expectations. Therefore, we need to survive and prosper in the world based upon our capacity for innovation and clever thinking, and the university sector is critical and central to that.

The importance of the university sector passes through all stages of the career of individuals within the university system—the importance of education at the bachelors degree level for those starting out on their careers, the importance of research work being done by postgraduate scholars, and the importance of research work and teaching work being done by full-time academics. So the role of the university sector is absolutely critical in building a highly skilled pop­ulation and in underpinning an economy which prospers based upon innovation.

The second point I wish to make is to acknowledge that this bill does go some distance towards improving the position of universities, which has become increasingly difficult. Universities have faced, partic­ularly since the arrival of the Rudd-Gillard government, very significant constraints on their ability to manage their own resources and to raise their own revenue. Indeed, one of the early actions of the Rudd-Gillard government was to create even greater diffi­culties for universities by abolishing their right to offer undergraduate full-fee-paying places. But presently, prior to this bill passing into law, it remains the case that universities are under very severe constraints in relation to the number of places that they may offer and receive funding for. In essence, the number of places that they may offer is centrally controlled. This is poor policy: it is outdated policy and it greatly limits the managerial freedom of univ­ersities; it greatly limits the incentive for them to bring to bear innovative and clever thinking in the way they conduct their own affairs; and it makes it very difficult for the fundamental principle of competition to apply between different universities, because right now there are very few rewards for coming up with, for example, a degree program which better suits the needs of students than do the degree programs of other institutions. Under the bill that is before the House, from 2012 universities will be able to determine the number of students they choose to admit to undergraduate courses, with the exception of medical courses. This is consistent with the recom­mendation in the Bradley Inquiry that we move to a 'student demand driven system'.

It might be thought rather curious that a full-scale review was required to arrive at the recommendation that we ought to move to a system that was driven more by student demand than it presently is. The mere fact that a major change in thinking was required reminds us how institutionalised the instinct towards detailed centralised control has become in the university sector, as in so many other sectors. But, nevertheless, it is plainly a sensible principle. Of course, there are significant limits to the extent to which the Gillard government has been prepared to implement the principle of a student demand driven system—for example, by excluding both undergraduate medical students and, at this stage, all postgraduate students.

The third point I make is that, while the changes in this bill, to the extent that they increase the degrees if freedom of universities, are to be welcomed, there is much more that could be done in this direction. We must remind ourselves that Australia is in a fierce, international comp­etition for people of talent and ability. Similarly, there is fierce competition between nations and their effectiveness in making the best use of the talents and capacities of their existing population. In competing in that process, the university system is a national asset of critical strategic importance. To maximise the capacity of universities to perform well, it is so important that they are given the greatest possible managerial flexibility. I commend the work of my predecessor as member for Bradfield, Dr Brendan Nelson, during his time as Minister for Education, Science and Training in the Howard government.

I think it is worth considering the model of the United States higher education system. The US is widely recognised as having the best research universities in the world. Jonathan Cole, formerly Provost of Colum­bia University, recently wrote a very interesting book entitled The Great American University: Its Rise To Preeminence, Its Indispensable National Role, Why It Must Be Protected. I cite this book not just because I hold a degree from Columbia University, as well I might add as two from Sydney University, but because it is relevant to the broader policy issue of how we best unleash the potential of the Australian university sector. In his book, Dr Cole notes that 40 of the top 50 universities in the world are in the United States, according to the research based assessment from the Shanghai Jiao Tong University. Since the 1930s, roughly 60 per cent of all Nobel prizes have gone to Americans, and a very high proportion of leading new industries in the United States, perhaps as many as 80 per cent, are derived from discoveries at US universities. Dr Cole says:

These universities have evolved into creative machines unlike any other that we have known in our history—cranking out information and discoveries in a society increasingly dependent on knowledge as the source for its growth.

If we are honest when we compare our university system in Australia with the US system, we will see there is much we can learn. The US system is highly decentralised and competitive, whereas our system is heav­ily centrally controlled—notwithstanding some of the welcome changes in this bill. The United States system has multiple tiers and recognises that only a minority of universities in any system can be world class. In Australia, following the dreadful reforms instituted by John Dawkins when he was Minister for Employment, Education and Training, we persist in pretending that all 39 universities are equal and that all can be world class. Our system is too heavily dependent on government funding, and universities are not given sufficient freedom to go out and earn additional revenue

Returning to the Universities Australia submission to the Bradley review, it is interesting to look at a chart that compares funding to universities in Australia and the United States as a share of gross domestic product. While that chart notes that public funding in the US is greater than ours, what really stood out to me is that private funding in the US for the university system is greater by a factor of 119 per cent than private funding in Australia for the university system. That is a very significant difference. I would suggest to the House that the success of the system of great research universities in the United States is at least in part a consequence of the much greater managerial flexibility afforded to those charged with the management of these institutions and their greater capacity to earn private income in addition to public funding.

The reforms in the bill before the House, to the extent that they allow universities a greater degree of freedom, autonomy and capacity to plot their own course, are welcome. I do note, though, that that extent is modest and there is a great deal more that can be done if we are to pursue a policy framework which allows our universities to maximise their capacity to contribute to our national wellbeing, our national economic performance and the personal fortunes of those who are lucky enough to attend them. If we are truly to unleash the capacity of the university sector we need to go considerably further than this bill takes the matter.