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Wednesday, 5 March 2014
Page: 1699

Mr FLETCHER (BradfieldParliamentary Secretary to the Minister for Communications) (13:18): I am very pleased to rise to speak on the Tertiary Education Quality and Standards Agency Amendment Bill 2014, an important bill which will give effect to some clear policy priorities of the Abbott government including to reduce some unnecessary regulation in the higher education sector.

In the time available to me today I want to make three points: firstly, higher education, the tertiary education sector in particular, is critical to our national competitiveness especially in the areas of research, development and innovation; secondly, there was extensive criticism from within the university sector about the way in which TEQSA was formerly operating; thirdly, I want to highlight the fact that the legislation today will bring about a more efficient approach to the way the tax operates.

I turn to the first proposition, that higher education is critical to our national competitiveness. Several years ago Universities Australia made a submission to the Bradley inquiry and, while the numbers are now a little out of date, the broad dimensions remain valid and worth citing. At the time of that submission, Universities Australia pointed out that the sector was worth in excess of $15 billion. There were at that time around one million students and around 100,000 employees. The education sector was at that time and remains a very substantial generator of export earnings.

The sector is important not only in its own right but in the way it underpins research, development and innovation, which is vital across the entire economy. There are many Australian companies which have succeeded in developing markets based on innovation. One of the most impressive examples is Cochlear, which is a world leader in the hearing implant devices sector based on the commercialisation of technology developed in Australia. That company now has a revenue in the order of $800 million to $900 million a year and is privately funding R&D now in the order of $100 million a year.

In another sector, the communications sector, critical technology underpinning Wi-Fi, very widely used around the globe, was developed by CSIRO—part of the research sector if not necessarily the university sector. But the fundamental point remains that research activities carried out in Australian institutions are of enormous economic importance not just to the institutions in which they are carried out but more broadly across the economy. Indeed one can cite many critical industries in the Australian economy where scientific and technical research is of vital importance, be it agriculture, be it mining, be it manufacturing.

One of the key points here as to why higher education and the research universities are of such importance is the way that the economy is transforming, not just in Australia but globally. It is common, indeed it is trite, to speak of a knowledge economy. But I think the real point is that the entire economy is now a knowledge economy. It is therefore increasingly important that in Australia we are world competitive in the quality of our thinking, in the quality of our innovation and in the quality of our research.

Indeed, for a nation like Australia to remain successful, we need to be a knowledge economy if we are to survive and prosper. We cannot expect to compete on the basis of low-cost jobs and that would not be a prudent or viable strategy. We, therefore, need to survive and prosper in the world based upon our capacity for innovation and for clever thinking, and the university sector is critical and central to that.

If we want to be able to earn in the competitive world economy the high wages that Australians are used to, then we need to be able to justify that premium and we need to be able to compete in areas of relative strength, including areas such as research and higher education.

As to the scale of the economic importance of the tertiary education sector—and these numbers are slightly outdated but they remain absolutely valid in their broad direction—in 2010-11 coal and iron ore were the two largest generators of export revenue for Australia, as is well known; but the third-largest generator of export earnings in that year was education, earning almost $16 billion. So our major research universities are vital national assets, and it is critical that we encourage them to be active, innovative and internationally competitive.

It is also worth making the point that the university sector has a tremendous impact on the careers and the career stages of individuals who pass through the system, be that education at the bachelor degree level for those just starting out on their careers, research work carried out by postgraduate scholars, or research and teaching work done by full-time academics. Therefore, the role of the university sector is absolutely critical in building a highly skilled population and in underpinning an economy which prospers, based on innovation.

I think it is instructive to look at a nation that is admired around the world for the excellence and distinctiveness of its higher education system, and I refer of course to the United States, a country widely recognised as having the best research universities in the world. I want to quote from a very interesting book written by Jonathan Cole, the former Provost of Columbia University, The Great American University: Its Rise To Preeminence, Its Indispensable National Role, Why It Must Be Protected. I think there are some important points in this book which are relevant to higher education policy in Australia. In his book, Dr Cole notes that 40 of the 50 top universities in the world are in the United States, according to a 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. So Cole has this to say about the American university sector:

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.

I think there are some important lessons for the Australian education sector—and the higher education sector in particular—in the observations made in that book, in the importance of our higher education sector to our national competitiveness.

My views in this area have only been confirmed—or my convictions have only been increased—by the benefit of a recent visit to Silicon Valley, where, amongst other things, I had the opportunity to attend a presentation by Coursera—the well-known, although relatively new, company established by two Stanford computer science professors—which is now allowing millions of students to take courses online from well-known academics at Stanford and other prestigious universities around the world, including Melbourne University, University of New South Wales and University of Western Australia. These are exciting developments for these universities but they mean that every university, including those that may be less well-known internationally, needs to think very carefully about its competitiveness, its position in the market and how it sustains that position.

Against that backdrop, let me now turn to the question of the way that TEQSA was operating under the Rudd-Gillard-Rudd government. It is no exaggeration to say that TEQSA created enormous frustration in the tertiary sector in the way it was operating, with an extraordinary degree of bureaucratic interventionism. I was alerted to this in a particular week in 2012 when I happened to meet on two separate occasions with vice chancellors of two universities, both of whom protested in extremely vociferous terms about the inefficiencies, the cost burdens and the compliance burdens that TEQSA was imposing on their institutions; and diverting resources away from the core missions of those universities.

Let me quote from something that was said on the record by the then Dean of UNSW Law, David Dixon, who was reported in The Australian in 2012, describing TEQSA as 'overreaching, excessive and ill-informed'. He went on to say that 'invaluable time and energy is being diverted into worthless compliance exercises'. So there was a clear degree of concern in the tertiary sector in Australia about the degree of close supervision which was being imposed on the sector by TEQSA, and of course enthusiastically following the political direction it was given by its political masters in the Rudd-Gillard-Rudd government—unqualified enthusiasts for regulatory overreach in every aspect of the operations of the economy.

One example that Professor Dixon quoted was that TEQSA was seeking to impose specific requirements on law schools; if they were to award an honours degree, they would need to require an extra year of study. Professor Dixon made the point that this imposed a burden on Australian universities seeking to compete in the international marketplace for postgraduate students, and the requirement to add an extra year made the Australian degree less attractive compared to the degrees offered by competitor institutions in other jurisdictions.

The evidence is very clear that the operation of TEQSA under the previous government imposed excessive regulatory burdens on universities—this absolutely critical sector of our economy—and in doing so diverted focus and resources from the priorities of those universities, which are of the highest national importance to our competitiveness.

The third point I want to come to is the solution, which, by means of the bill before the House this afternoon, the Abbott government and in particular the Minister for Education are putting in place to address these well-understood and well-complained-of problems in relation to the operation of TEQSA.

The DEPUTY SPEAKER: Order! The debate is interrupted. In accordance with standing order 43. The deabte may be resumed at a later hour, and the member will have leave to continue speaking when the debate is resumed.