House of Representatives

Higher Education Support Amendment (2009 Budget Measures) Bill 2009

Second Reading Speech

Ms Gillard (Minister for Education, Minister for Employment and Workplace Relations and Minister for Social Inclusion)

-I move:

That this bill be now read a second time.

The government is launching a reform agenda for higher education that will transform the scale, potential and quality of the nation's universities and open the doors of higher education to a new generation of Australians.

It is an integrated policy approach-an approach that provides for structural change and improves the financial sustainability of our universities, an approach that guarantees quality in a system that delivers funding for growth and participation by students from all walks of life and recognises the vital importance of research by our best and brightest.

The bill amends the Higher Education Support Act 2003 to implement the Australian government's reform to the higher education system as announced in the 2009-10 budget.

It responds to the Review of Australian Higher Education, which affirmed that the reach, quality and performance of a nation's higher education system will be the key determinants of its economic and social progress.

The bill also amends the act to give effect to measures to address key findings and recommendations of the Review of the National Innovation System and the recent House of Representatives inquiry into research training and workforce issues. It augments the existing Research Infrastructure Block Grants Scheme and introduces new measures to address the gap in funding for the indirect costs of research.

This is one of a number of measures designed to provide the sector with certainty, to provide funding for both growth and improved quality and to reform an indexation formula that effectively cut public investment in the sector over time.

With this bill a decade of underfunding will come to an end. The national scandal of declining public investment in higher education as a proportion of gross domestic product will come to an end. The era of political interference and micromanagement by ministers and officials will come to an end.

A new approach to higher education funding is needed, one that acknowledges the primary importance of students and their learning. The bill introduces the first stage of a new student centred funding system for higher education, which will have an estimated cost of $491 million over four years. For 2010 and 2011 the cap on overenrolment for Commonwealth supported places will be lifted from five per cent to 10 per cent in funding terms.

The limit on funding under the Commonwealth Grant Scheme for 2012 will be removed to reflect the fact that there will be no overall limit on the number of students that table A higher education providers will be able to enrol from 2012 onwards.

These are crucial steps towards a higher education system with students at the centre, where there is a Commonwealth supported place for every eligible undergraduate student accepted into a course at an eligible higher education provider. The student centred system will include a range of measures to ensure quality, address Australia's skill needs and the broader public interest and support achievement of our higher education attainment ambition. This ambition is that, by 2025, 40 per cent of all 25- to 34-year-olds will hold a qualification at bachelor level or above.

The bill introduces landmark measures to improve the rate of participation in higher education by students from a disadvantaged background.

The bill amends the act to provide for an increase in funding to address Australia's historically poor record in increasing participation by low SES students. The government has announced a commitment to ensure that, by 2020, 20 per cent of higher education enrolments at the undergraduate level will be of people from a low SES background.

This goal will be directly supported by the injection of additional funding for universities to support the low SES participation targets.

The major barriers to increased higher education participation by students from low socioeconomic backgrounds include previous educational attainment, low awareness of the long-term benefits of higher education resulting in little aspiration to participate and the need for financial assistance and academic and personal support once enrolled.

International experience shows that interventions or outreach in the early years of secondary schooling are highly effective in increasing the aspirations of students to attend university.

The government has therefore allocated $108 million over four years for a new partnerships program, to link universities with low SES schools and vocational education and training providers. The intention is to create leading practice and competitive pressures to increase the aspirations of low SES students to higher education. The government is putting in place systemic reasons for universities to be engaged with improving the quality of school education.

Funding will provide schools and vocational education and training providers with links to universities, exposing their students to people, places and opportunities beyond the scope of their own experiences, helping teachers raise the aspirations of their students. Programs might include scholarships, mentoring of teachers and students, curriculum and teaching support or hands-on activities run by university staff in schools.

Once students from disadvantaged backgrounds have entered university the likelihood of them completing their course of study is broadly similar to that of the general higher education population. Often, however, they require higher levels of support to succeed, including financial assistance and greater academic support, mentoring and counselling services.

The government has therefore allocated $325 million over four years to be provided to universities as a financial incentive to expand their enrolment of low SES students and to fund the intensive support needed to improve their completion and retention rates. The existing Higher Education Equity Support Program will be replaced and incorporated into these new funding arrangements.

Better measures of low socioeconomic status will be developed which are based on the circumstances of individual students and their families and performance funding will be based in part on how effective institutions are in attracting these students.

The steps to improve low SES student participation will impact on and benefit Indigenous students. They are significantly under-represented in our universities and face distinct challenges. The government will support a review of the effectiveness of measures to improve the participation of Indigenous students in higher education in consultation with the Indigenous Higher Education Advisory Council.

At the same time the government is also introducing major reforms to student income support to assist the access and retention of low-SES students.

The bill amends the act to provide funding for the continuing elements of the Commonwealth Scholarships Program. Existing Commonwealth Education Costs Scholarship (CECS) recipients will continue to receive the scholarships under current arrangements. Commonwealth Education Costs Scholarships will be replaced by the Student Start-up Scholarship of $2,254 in 2010 and indexed thereafter, which will be provided as an entitlement to all university students receiving income support and those under veterans schemes. The new scholarship will be funded under income support arrangements, so funding is not included in this act.

Existing Commonwealth Accommodation Scholarship (CAS) recipients will continue to receive the scholarships under the current arrangements. Commonwealth Accommodation Scholarships will be replaced by a new relocation scholarship in 2010. This scholarship will assist Youth Allowance and Abstudy students at university who are dependants who have to live away from the family home for study as well as independent students who are disadvantaged by personal and relationship circumstances. The Relocation Scholarship will provide $4,000 for students in their first year at university and $1,000 in each year thereafter and will be indexed.

Indigenous students will continue to receive scholarships under the Commonwealth Scholarship scheme in the future.

A central feature of the reform agenda will be an increased focus on quality. This will be especially important in a period of expansion, when institutions will need to attract students who have not traditionally considered going to university. The bill reflects the new arrangements for quality and standards which will be initiated during 2009-10, when work to establish a new standards based quality assurance framework will commence. Funding under the act for the Australian Universities Quality Agency will be replaced with new arrangements to support the development and establishment of the Tertiary Education Quality and Standards Agency by 2010.

Increased indexation will reap significant rewards in terms of participation and quality and will provide a valuable incentive to institutions to invest in their future development. It will also help to improve their financial sustainability. Revised indexation arrangements for all programs under the act will commence in 2012, including grants for teaching and learning and research, the OS-HELP maximum loan amount and the FEE-HELP borrowing limit. Maximum student contribution amounts will be subject to revised indexation arrangements from 2011, which will deliver increased revenue to universities.

The bill will amend the act to increase the maximum annual student contribution amount for students studying education and nursing units from the current national priority rate to the band 1 rate. The increase will apply to commencing students from 1 January 2010. Existing students will continue under existing arrangements.

The act already includes provision for the HECS-HELP benefit to reduce eligible graduates' HELP repayments. The HECS-HELP guidelines made under the act will be amended to extend this benefit to graduates of initial teaching and nursing degrees who go on to work as teachers or nurses. This will apply to people who graduate from second semester 2009 onwards.

The bill will amend the act so that from 1 January 2010 students who receive an OS-HELP loan will no longer incur a 20 per cent loan fee. The 20 per cent loan fee has limited the effectiveness of the loan program. The removal of the loan fee will assist universities in encouraging students to undertake part of the studies for their Australian qualification at an overseas institution. This will improve the productivity benefits to Australia of students undertaking overseas study.

To ensure that Australia's reputation for quality remains high, this bill introduces new performance funding under the Commonwealth Grant Scheme. In 2011 this will be through conditional funding as a transition to increased indexation and new performance funding in 2012. It will ensure that Australia's reputation for quality teaching and learning remains high by providing universities with real incentive to ensure they are providing the best possible learning opportunities for students.

In 2010 the government will work with the higher education sector to develop a robust set of performance indicators. The indicators will include measures of success for equity groups as well as measures of the quality of teaching and learning.

Universities will be required to negotiate and agree on specific performance targets that are challenging but appropriate for their circumstances and that will contribute to the achievement of system-wide goals for participation and quality.

From 2012 universities will receive performance funding if they meet their targets and agree to new targets for the forthcoming funding period. The Tertiary Education Quality and Standards Agency will provide an independent assessment of whether universities have met their targets.

The bill also includes a new structural adjustment fund to support continuing transformation in the sector. The Structural Adjustment Fund will be available to universities and will enable them to develop diverse missions. This funding will promote long-term sustainability in the sector by assisting individual universities in making strategic decisions about their future mission and ways to enhance their place in the new higher education environment. It will replace the existing Diversity and Structural Adjustment Fund.

In particular, the new fund will lay the groundwork for the provision of more sustainable higher education in regional areas ahead of decisions being taken on a better model of longer term funding for regional delivery.

The higher education sector will need time to adjust to the new post-Bradley environment. The government will undertake further work to better identify the issues facing regional provision, taking account of changes in the operating environment, including the impact of the move to a demand-driven system. The government will consult with the sector in undertaking this further work.

Universities play a pivotal role in the national research and innovation system through generation and dissemination of new knowledge and through the education, training and development of world class researchers.

The government will commit $512 million over four years for a new Sustainable Research Excellence in Universities initiative to address the gap in funding for the indirect costs of research. The new measure will augment the existing Research Infrastructure Block Grants (RIBG) Scheme, with the aim of raising the average support for the indirect costs of university research to 50c per dollar of direct competitive grant funding by 2014.

A second measure, joint research engagement, will complement the additional funding for the indirect costs of competitive grant-funded research by transforming the existing Institutional Grants Scheme into a funding stream more closely focused on collaboration between universities, industries and other end-users.

The bill also amends the act to increase funding for Australian postgraduate awards and other research grants. The government has acknowledged the importance of supporting our best and brightest postgraduate students through its commitment to double the number of Australian postgraduate awards (APAs) by 2012. Building on this commitment, the value of the Australian postgraduate awards stipend will be increased by more than 10 per cent from $20,427 in 2009 to $22,500 in 2010.

The bill moves funds currently delivered through the Improving the Practical Component of Teacher Education program to the Commonwealth Grant Scheme. This will increase the Commonwealth contribution amount for education units of study and remove unnecessary and time-consuming reporting requirements.

The bill also moves funds from the workplace reform program into the Commonwealth Grant Scheme base grant. This will increase the Commonwealth contribution amount for all funding clusters.

The bill amends the act to account for the cessation of the Learning and Teaching Performance Fund and the workplace productivity program, which are being replaced by new funding arrangements.

Measures in this bill are complemented by additional investments of $2.1 billion from the Education Investment Fund for education and research infrastructure and $1.1 billion for the Super Science initiative.

These reforms are designed to support high-quality teaching and learning, improve access and outcomes for students from low socioeconomic backgrounds, reward institutions for meeting agreed quality and equity outcomes, improve resourcing for research and invest in world-class tertiary education infrastructure.

These investments are a strategy for future prosperity, educational excellence, and social inclusion for the nation.

I commend the bill to the House.

Debate (on motion by Mr Coulton) adjourned.