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Speech to the Curtin Institute Public Policy Forum: [Perth]: 24 July 2006



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Speech

Curtin Institute Public Policy Forum

24 July 2006

Today I will speak about diversity in higher education.

Since my appointment as Minister 6 months ago, I have taken every opportunity - in discussions, speeches and interviews - to talk about why I think the sector - assisted, encouraged and, where necessary, guided by the Australian Government - must pursue greater diversity.

My views on where the sector should be headed have been influenced by a range of factors, including: personal experience -

z as a graduate from Adelaide University in the mid 1970s; as

an international student at Harvard Business School in the mid 1990s, living amongst and studying with 180 senior business people from over 35 countries; and as a member of Murdoch University Senate; and z from my many communications with our higher education

sector including Vice Chancellors, Chancellors, academics, students and business people over recent months.

And from my observations on where higher education is going at an international level: at personal meetings with the Chinese Education Minister, with the US Secretary of Education and representatives of US Commission on Higher Education, and with the UK Minister for Higher Education; as well as meeting with over 20 Education Ministers at the inaugural Asia Pacific Education Ministers in Brisbane in April; and with 29 Education Ministers at OECD Ministers Meeting in Athens in June.

I want to see a sector that provides a world class education of the highest standard for our students, that equips them with the skills employers will seek for the jobs and professions of the 21st century, with universities that create new knowledge to underpin our innovation and competitiveness, that are accountable for their performance, transparent in their operations and efficient in their administration to ensure they are affordable to students and the taxpayers that sustain them.

And that means I want to see the development of a diversified

higher education sector, made up of universities which differ from each other in terms of mission, discipline mix, course offerings, modes of delivery, management and in academic structure.

It is an objective I will pursue through every mechanism at my disposal.

The benefits of diversity are obvious:

z it gives greater choices for students;

z it increases competition and excellence among institutions;

and z it increases innovation and invention.

It is essential to the sector’s pursuit of excellence and vital to each institution’s domestic and international competitiveness. And I am convinced that this can be achieved - and over the past two weeks, the stars have begun to align with the:

z acceptance by the States and Territories, at the Australian

Government’s insistence, of the revised National Protocols for Higher Education which will, for the first time allow specialised Universities in this country, and z with the acceptance by the ALP in its recent policy statement

of my calls for greater diversity - we have bipartisan agreement at last!

Before outlining how I believe this will be achieved it is worth reflecting on where we have come from.

The higher education sector has gone through enormous change over the past five years. The Australian Government has transformed the way in which it funds universities with the move from block grants, that were largely historical to a more transparent and accountable arrangement based on clear funding rates for places in broad discipline clusters.

In our pursuit of reform we have been guided by four objectives: quality, equity, sustainability and diversity. It is evident that we have made substantial achievements against the first three.

Australia enjoys one of the highest quality higher education systems in the world. It was apparent to me at the OECD meeting that we lead the world in many ways, including through the Australian Universities Quality Agency, which monitors quality assurance processes for all Australian universities whether operating in Australia or overseas.

The Agency has an enviable reputation throughout the Australasian region, and has served the sector well in terms of identifying areas of weakness and focusing institutions on the need for continuous improvement.

The Institutional Assessment Framework, as a key point of discussion between the Government and the sector, is another mechanism to focus attention on quality and to drive change.

In its second cycle of audits to commence in late 2007, the Quality Agency’s role will be strengthened and its audits will become even more rigorous. While not ranking universities, it will focus much

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more on benchmarking, standards and outcomes, and through its assessments we will have a much clearer view of the relative excellence of our universities.

We have an equitable and accessible system of higher education. This year, unmet demand - that is the number of people who wanted but couldn’t get into university - was at its lowest rate in decades.

More than 90% of eligible year 12 students got a place at university. Over the last two years, unmet demand has been slashed by more than 60%.

Just over a week ago, the Prime Minister announced the allocation of new higher education places in medicine, nursing, mental health nursing, clinical psychology and other health areas. Most of these places are part of the Australian Government’s contribution to the Council of Australian Governments’ Health Workforce and Mental Health packages.

Today, I am announcing the allocation of further new places, bringing the total of new commencing places to 4,668 for 2007. In deciding where to allocate these places, I considered favourably applications from universities that are clearly pursuing their strengths and I allocated to areas of skill needs.

In WA the 435 places will grow to over 1,170 by 2010, thus boosting our graduate workforce in key areas.

Since 2004 we have created over 18,000 new places. The low level of unmet demand is a significant achievement - compare the situation in 1992 when more than 100,000 eligible applicants could not get a place at university!

In terms of equity, there is more to achieve. The participation rate of low socio-economic status students in higher education has remained relatively stable over the past decade, and there has been slow progress in terms of indigenous participation in higher education.

However, more work is underway and last week I announced a $1.7 million initial response to the Indigenous Higher Education Advisory Council report on higher education to build working partnerships between universities, schools and registered training organisations to get more Indigenous students into university - as well as academics and staff.

Sustainability has been the major achievement of our 2003 Backing Australia’s Future reforms. Over the five years between 2004 and 2009 the Australian Government will provide an additional $2.6 billion to the sector.

Over the decade, $11 billion will be added to the system. In the last budget, the Government added a further $560 million to that total, providing funds in particular for investment in much needed infrastructure.

Diversity

Back in the late 1980s universities were forced into a one-size-fits-

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all mould - dubbed the Dawkins reforms after the Labor Minister. The reforms took a range of different educational institutions and forced them into being multi-disciplinary, comprehensive, research

led, universities.

Today, I announce that the Dawkins Era is over.

The need for diversity is obvious. We are a country of 20 million people with 37 public universities and three private universities including the new Carnegie Mellon campus in Adelaide. We have neither the population nor sufficient high-quality academic staff to maintain 37 comprehensive universities which are all undertaking teaching, scholarship and research across a broad range of disciplines.

The sector must stop trying to be all things to all students.

Many countries enjoy a diverse higher education system. The most obvious example is the United States, where a system of stratified universities and colleges provides a wide range of two and four year qualifications to a very diverse student body. The system is strongly market based and highly decentralised.

Continental Europe enjoys an even more varied system. For example, France has a series of comprehensive, generic universities, supplemented by high quality, high prestige, privately run specialist professional institutes.

Germany, by contrast, has maintained the Humboldt styled universities, but has developed a series of exemplary vocational and technical institutes which are on a similar standing as its universities.

In Switzerland there are four types of higher education institutions. State universities offer a fairly broad range of disciplines including arts, economics and social science, law, natural sciences, medicine and theology. Two federal institutes of technology concentrate on engineering and the natural sciences. A number of smaller university-level institutions, usually referred to as university institutes, offer studies in a single discipline.

Our system, by contrast, appears almost monochrome.

As part of the Crossroads Review which my Department undertook in 2002, the following snapshot was provided:

z Most of Australia’s 37 publicly funded universities offer more

than 40 fields of education;

z ‘business and management’ is offered at each of the 37

universities;

z ‘studies in human society’ (history, anthropology) and

‘behavioural science’ is offered at 36 universities; and

z Every university in New South Wales, for instance, offers

courses in ‘business and management’, ‘sales and marketing’, ‘banking, finance and related fields’, ‘studies in human society’, ‘law’, ‘communication and media studies’

and ‘performing arts’.

As a result of this relentless pursuit of sameness, we miss some of the great heights of our international competitors.

We have no Harvard or MIT in Australia, nor do we have their great tradition of philanthropy which support such institutions with the capacity for well-funded risk taking. But we also lack many of the specialised high quality education institutions which exist with fewer resources in the more diverse systems. For example:

z We have no Swiss Federal Institute of Technology which

specialises in engineering, natural sciences, architecture and mathematics.

z We have no Aeronautical school such as that in France

(ENSICA) which delivers courses in aerospace engineering and related courses to a mere 400 students

z We have no University of Arts, which in London teaches

24,000 students in the disciplines of art, design, printing, fashion, communication and the performing arts.

z We have no Wellesley College - an undergraduate liberal arts

college for women in Massachusetts offering four year baccalaureate degrees - ranked as one of the top five US liberal arts colleges, and the top women’s college in that category.

z We have no Rockefeller University which is an independent

(not-for-profit), specialised institution located in New York which is devoted exclusively to Medical Research.

z And, significantly, we have no University of Phoenix - an

online university which caters to working professionals by offering programmes that are convenient and accessible - with more than 180 campuses across the US, Canada, Mexico and Puerto Rico and three delivery modes: campus delivery; online delivery; and FlexNet, a combination of campus and online delivery.

Not all these institutions would be appropriate for Australia and some of them would not find a market here. But others would flourish, and meet the needs of students which are only being half-met through our “one-size-fits-all” obsession.

There is obviously a place for fully comprehensive, generic universities which meet the skills needs of the nation and of their regions across a broad range of disciplines. There is a place for perhaps a dozen universities like that, particularly in the major metropolitan cities and some distinct regions.

Diversity does not mean more universities. Indeed, I hope over time it will mean either the same number, or, perhaps, fewer universities.

I do not propose to force universities into mergers. These marriages must be voluntary, but I encourage universities to look at their future, and determine which direction to take - merge or

reform. Standing still is unlikely to be an option.

There is great obvious potential for diversity in Australia, and I recognise that some universities are already taking steps in that direction. Curtin University is moulding itself into the University of Minerals and Resources, James Cook University is recognised as the University of Marine and Tropical Sciences.

University of New South Wales is seeking to return to its role as this country’s premier innovative scientific and professional university. ANU enjoys a unique role as an institution of research and postgraduate training.

And Melbourne University has embarked upon the most ambitious plan of all - to create a comprehensive university offering generalist undergraduate courses followed by graduate professional qualifications.

I note that the University of Western Australia has signalled that it may follow Melbourne’s lead and I look forward to further discussions with the Vice Chancellor of UWA.

However, I would not want all, or indeed, any university to simply copy this model. Melbourne enjoys a particular place in the higher education market . It aims to be one of the best universities in the world. It sees this plan as a way to do it. I wish it well, and support its moves.

The challenge for the sector is - how to achieve greater diversity, based on individual strengths and which are relevant to the economic growth of their regions and in the best interests of their students.

One of the challenges for the Australian Government is to urge the sector out of its one-size-fits-all mentality, a mentality which had developed, it might be argued, from the last two decades of heavy handed regulation from Government.

There are a number of tools available to promote diversity:

z The $47 million collaboration and structural reform fund;

z The $250 million learning and teaching performance fund,

z The allocation of higher education places;

z The development of a Research Quality Framework;

z The framework we have put in place that allows for a

thriving private education sector which can compete with the traditional public universities; z The way in which we deal with the new meaning of unmet

demand in the sector, that being, not enough students for too many university places; and importantly z The revision of the National Protocols for Higher Education

Approval Processes.

Beyond these levers, there are a number of other areas I wish to look at including third stream activity, knowledge transfer, cluster funding and regulation, or more importantly deregulation, of the sector. Let me look at these in turn:

Collaboration and structural reform fund

The Collaboration and Structural Reform Fund is designed to achieve better higher education outcomes in teaching, learning, research and innovation by promoting structural reform and collaboration in the sector.

In the coming months, I will be making further allocations under the Fund to drive diversity and specialisation, giving priority to proposals which make real changes to the operation of universities.

Learning and teaching performance fund

Our focus on the learning and teaching side is the $250 million Learning and Teaching Performance Fund under which $54 million was allocated last year and $82 million will be allocated to universities this year.

Two weeks ago I announced significant changes to the Fund for 2007. These changes sit firmly within my broader views on the need to diversify the sector.

This year’s decision to focus on broad discipline areas, rather than on field of education or particular course, reflects the limitations of the current data we have available to measure universities’ performance in teaching and learning. At some stage we need to focus on discrete discipline areas rather than broad ones.

Research quality framework

The Research Quality Framework will drive diversity as universities pursue excellence in research. Many will need to focus in pockets of research excellence. There won’t be the financial incentive for

any university to undertake research outside its areas of strength.

This process will diversify purpose and content as institutions shift their research focus to those disciplines in which they are at the forefront nationally and internationally and for which they extract significant benefit for their communities, as we measure quality and impact.

A thriving private sector

The steady development of a thriving private sector as a result of the introduction of FEE-HELP has made Australian universities realise the university name isn’t everything.

There is also significant growth beyond the university sector. There are now 43 Higher Education Providers approved to offer FEE-HELP to assist their domestic students pay tuition fees.

This success brings into question the argument that university reputation is a necessary attribute for success. Students, more savvy about quality and employment opportunities, are voting with their feet and show every sign of being satisfied with their choices. Competition from the private sector will drive diversity and efficiencies within our public universities.

National Protocols for Higher Education Approval Processes

Just on two weeks ago, the Australian Government led the States

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and Territories to make a number of important revisions to the National Protocols for Higher Education Approval Processes.

The protocols have long forced universities into the one mould of comprehensive research and teaching institutions operating within a breadth of fields.

As a result of the decisions we made, for the first time Australia will be able to welcome specialist universities which will offer teaching and research in only one or two fields of study.

The new Protocols will facilitate diversity in a number of ways:

z They will lower barriers for establishment of new ‘greenfield’

universities, including setting lower research requirements for the first 5 years of operation.

z They will also facilitate the entry of overseas higher

education institutions with appropriate international standing by clarifying the requirements that these providers need to meet.

z There will be scope for more institutions to become self-accrediting where they have a strong track record in higher education delivery and quality assurance.

z They will make possible the emergence of specialist

universities concentrating their teaching and research efforts in only one or two broad fields of study.

z They will provide a pathway for new universities to develop

from provisional “university colleges” under the sponsorship of an established university.

This outcome falls short of the expectations of some, especially in relation to the requirement that universities necessarily undertake both teaching and research. On the whole however, I believe that the revised protocols will foster greater diversity in Australian higher education without us delving further into the teaching vs research debate that has dominated the diversity issue over recent years.

Knowledge transfer

If we adopt a Knowledge Transfer approach, I envisage that it could reward the application and transfer of research undertaken as part of the university’s defined research mission.

Arising from the consultations around the RQF last year, a debate was initiated around the issue of what is known in the United Kingdom as ‘third stream funding’.

I have spoken at length on knowledge transfer at the Knowledge Transfer & Engagement Forum in Sydney and more recently at the Australian Universities Community Engagement Alliance seminar in Perth. At both events, I invited stakeholders in the higher education sector and elsewhere to build a case for knowledge transfer.

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Unfilled places

Turning to what I call the new paradigm: the situation where the notion of unmet demand has shifted from meaning too many students and not enough places, to too many places and not enough students.

Rather than students lining up for a place, universities are entering a phase of intense competition for students, who are often more discerning and more demanding than those in the past - competition is not just local, it is national and international.

In a climate of less than 5% unemployment, it is not surprising to find unmet demand at the lowest level for decades. According to the Australian Vice Chancellors Committee, unmet demand is estimated to be 14,200 this year.

Compare this to 1992 when more than 100,000 eligible applicants could not get a place at a University.

According to the Vice Chancellors committee, today it is 14,200. But according to individual Vice Chancellors, unmet demand is negligible.

How else do you explain the decision of 13 universities not to bid for new places for 2007?

How do you explain the likely return of hundreds if not thousands of places this year from at least half a dozen universities?

In my response to this new phenomenon of unfilled places I can pursue further diversity. Strictly speaking, universities which cannot fill places this year are required to return the value of those places to the Government. This is simple accountability

Rather than return all the cost, I am looking at whether universities should be able to keep some part, not all, of their funding, for it to be used for agreed purposes between the university and the Australian Government. This will involve universities identifying and pursuing their strengths, and making some hard decisions about what their institution should look like in 5 to 10 years.

Cluster funding

Finally I turn to one of the hardest nuts of all to crack: cluster funding.

Many in the sector would say that the Australian Government has forced universities into a “one-size-fits-all” model through our “one size fits all” funding and regulation.

It has been argued to me many times, that while a university may want to pursue a specialisation in a particular group of disciplines such as health, or engineering and sciences, it is financially forced to keep offering places in disciplines such as marketing, business and IT to cross-subsidise its other activity in more expensive disciplines.

I recognise the potential difficulties in reviewing cluster funding, but I am not averse to hard decisions and difficult arguments. Some decisions can be made within the walls of my portfolio, others may need to be made in the walls of cabinet.

While we are enjoying the brief respite in the eternal debate of “more places more places more places”, there is no time like the present to argue for further, meaningful reform which will build diversity within this sector.

Regulation

Turning to the ubiquitous issue of government red tape - I am happy to listen to sensible suggestions as to how I can remove impediments to diversity and increase flexibility. As a result of the AVCC’s report on red tape, I have agreed to consider the abolition of the Student Learning Entitlement which measures a student’s consumption of commonwealth supported education.

More can be done and I am happy to consider changes to regulations, legislation and funding mechanisms, if an argument can be made that it will lead to meaningful, worthwhile changes which result in greater competition and quality in the sector.

The future

As we move into an era of competition for students both domestic and international, with the prospect of online Universities and broad band driven innovations, and the advent of efficient private sector institutions, our universities must reinvent themselves.

And while the higher education sectors of our region, notably China, Singapore and Korea, are investing heavily and building powerhouses of tertiary education, it is time for us to do what we, as Australians, have always done - grow smarter and innovate, keeping ahead of the pack in our own unique, practical and dexterous ways.

I strongly encourage universities to come to me with visions for their future. Visions which involve some tough decisions of what to pursue, and what not to pursue, and I will respond positively and offer support wherever possible.

Together we can create a more vibrant diverse and responsive sector that will best meet the needs of future Australians and the exciting world they will inhabit.

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