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Wednesday, 2 November 2011
Page: 12463


Mr FLETCHER (Bradfield) (12:21): I am pleased to rise to speak on the Higher Education Support Amendment Bill (No 2) 2011. It is uncontentious that the health and vigour of the higher education sector is of critical importance to Australia in 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 carriage of programs of important research in a whole range of areas. And it is critical to our national competitiveness and our national economic performance. Therefore, all Australians, and certainly all members of this parliament, have a strong interest in the performance of the higher education system, and particularly of our university system.

The bill before the House today builds on the recently passed Higher Education Support Amendment (Demand Driven Funding System and Other Measures) Act 2011. The aim of both pieces of legislation is, to a degree, to increase the amount of flexibility available to universities and make 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 much more that could be done to bring flexibility to this sector and that there would be considerable public policy benefits from doing so.

In the brief time available to me, I want to: firstly, illustrate the general principle as to the importance of the university sector; secondly, note that this bill forms part of a reform process which goes some distance towards improving the position of universities, to which extent it is to be welcomed; and, thirdly, make the point that there is 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 with the proposition that the university sector is of critical importance to our nation. If you look at the submission made by Universities Australia to the Bradley inquiry—it is now over three years old, but the broad dimensions still remain valid and are worth highlighting—it was 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 submission makes the point that the education sector is a very substantial generator of export earnings. Of course, the importance of the sector to our nation goes well beyond simply the generation of export earnings. It is of critical importance to national innovation and to national economic performance.

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 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 many industries 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 then we will be competing against many countries which have the capacity to offer employment at much lower rates 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 the career stages of individuals in the university system—education at the bachelor's degree level for those starting out on their careers, research work conducted by postgraduate scholars, and research and teaching work 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 and the legislation that went before it, particularly the Higher Education Support Amendment (Demand Driven Funding System and Other Measures) Act 2011, do go some distance towards improving the position of universities, which had become increasingly difficult. Particularly since the arrival of the Rudd-Gillard government, universities have faced very significant constraints on their ability to manage their own resources and to raise their own revenue. One of the early actions of this government was to create even greater difficulties for universities by abolishing their right to offer undergraduate full-fee-paying places.

Prior to the act of earlier this year, which will come into force on 1 January next year, universities were also under very severe constraints in relation to the number of places that they could offer and receive funding for. In essence, the number of places that they could offer was centrally controlled. This was poor policy. It was outdated policy. It greatly limited the managerial freedom of universities; it limited their incentive to bring to bear innovative and clever thinking in the way they conducted their own affairs; and it made it very difficult for the fundamental principle of competition to apply between different universities, because there were very few rewards for coming up with, for example, a degree program which better suited the needs of students than the degree programs of competing institutions. Because of the legislation passed earlier this year, from 2012 universities will be able to determine the number of students they admit to undergraduate courses, with the exception of courses in medicine.

The bill we are debating today adds to this new regime by updating the maximum public funds allocated to Commonwealth supported places as a result of projected increases in enrolments. It also provides for an increase in funding in line with indexation, as well as adding an additional year of funding for the 2015 calendar year. The reforms in the bill passed earlier this year, as well as in the bill before the House today, are 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. Nevertheless, it is plainly a sensible principle. I should also note that the bill before the House this afternoon makes changes to the HECS-HELP upfront discount and the HELP voluntary repayment bonus, reducing the discounts that apply in each case.

The third point I wish to make is that, while the direction in the bill passed earlier this year and the bill before the House today are to be supported, there is much more that could be done in this direction of increasing the freedom available to universities to manage their own affairs. 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 populations. In that competitive process the university system is a national asset of critical strategic importance. To maximise the capacity of universities to perform well, it is important that they are given the greatest possible managerial flexibility. In that regard I would like to commend the work of my predecessor as the member for Bradfield, Dr Brendan Nelson, during his time as Minister for Education, Science and Training in the Howard government.

I think it is instructive to look at the US system of higher education. The US is widely recognised as having the best research universities in the world. A very interesting book has been written by a man named Jonathan Cole, the former provost of Columbia University, 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 myself 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 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. Dr Cole has this to say:

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 with the US system we will see that there is much that we can learn. The US system is highly decentralised and competitive whereas our system remains heavily centrally controlled—notwithstanding some of the welcome changes in the bill passed earlier this year and the bill before the House today. The United States higher education system has multiple tiers, and there is a recognition that only a minority of universities in any system can be world class. By contrast, 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 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 which I cited earlier, 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 those institutions and their greater capacity to earn private income in addition to public funding.

The reforms in the bill before the House this afternoon—building on those in the bill passed earlier this year, now the Higher Education Support Amendment (Demand Driven Funding System and Other Measures) Act 2011—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, however, that that extent is still rather modest and limited. 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, to contribute to our national economic performance and to contribute to the personal wellbeing of those who are lucky enough to attend them. If we are truly to unleash the capacity and potential of the university sector, we need to go considerably further than the reforms contained in the bill of earlier this year, and the bill before the House today, advance things.