House of Representatives

Higher Education Support Amendment (Indexation) Bill 2010

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 Higher Education Support Amendment (Indexation) Bill 2010 amends the Higher Education Support Act 2003 to deliver on this government's commitment to sustainable funding for our higher education system.

The amendment gives effect to the recommendation to increase indexation made by the Bradley review.

Under new indexation arrangements, the safety net adjustment, which makes up 75 per cent of the current index, will be replaced by the Professional, Scientific and Technical Services Labour Price Index (discounted by 10 per cent) published by the Australian Statistician.

This index is considered to better reflect wage price increases in the higher education sector and best replaces the discontinued Labour Price Index (Professional) proposed in the report of the review. The remaining 25 per cent of the index will continue to be the Consumer Price Index.

From 2012 the revised indexation arrangements will apply to all amounts subject to indexation under part 5-6 of the Higher Education Support Act 2003. This includes all programs funded under the act, maximum student contributions, the OS-HELP loan limit and the FEE-HELP loan limit as well as the new SA-HELP loan limit which is subject to the passage of the Higher Education Legislation Amendment (Student Services and Amenities) Bill 2009.

Programs which will benefit from the improved indexation, in both education and research, are:

Commonwealth Grant Scheme
the new equity programs
performance funding
the Capital Development Pool
the Open Learning Initiative
the Structural Adjustment Fund
the JCU dental school
the Quality Initiatives program
the Australian Learning and Teaching Council
the Indigenous Support Program
the Transitional Costs Program
Joint Research Engagement program
Research Infrastructure Block Grants Scheme
Research Training Scheme and
Australian Postgraduate Awards program.

In 2011 universities will receive additional funding equivalent to the increase in indexation on teaching and learning if they sign on to the government's new performance indicators. Student contributions will also be indexed at the new rate from 2011 delivering an increase in revenue to universities.

At a time when, in response to the global financial crisis, some countries are reducing their expenditure on higher education, this government has acted to provide substantial additional resources to the sector.

Take for example two comparable nations like England and the United States of America.

In England there have been deep cuts to higher education spending. The Higher Education Funding Council for England (HEFCE) grant available for the 2010-11 financial year has been reduced by £449 million (A$740.9 million) compared with the previously announced plans.

And in the US the experience has been mixed. In many states the push to address historic budget gaps has resulted in cuts to state government support. While there has been additional investment at a federal level to offset state cuts, this has not always been enough to prevent severe measures to address funding shortfalls.

This is particularly the case in California where state budgets for higher education have been cut by US$8 billion.

To deal with these funding cuts, both the University of California (UC) and California State University (CSU) have eliminated spring enrolment in 2010 which means that many students who would have transferred across from a community college will not have the opportunity.

According to the American Association of Community Colleges, California's community colleges may turn away up to 200,000 students this fall in the United States.

In contrast to these approaches the Australian government has made a massive investment in the tertiary education and research sectors.

This is because we know that Australia's universities have a critical part to play in making this country smarter, fairer and more prosperous.

In order to meet our economic and social ambitions we need to make sure that our universities are properly resourced and able to tackle the problems, and teach the workforce, of the future.

Our new system brings in a range of institutional and regulatory reforms, which, coupled with substantial additional resourcing, will allow more students from across the community to achieve a higher education qualification and find a rewarding job in the knowledge economy.

Our reforms will also dramatically strengthen the nation's research effort and the national innovation system, which is so vital to building productivity.

And, importantly, this amendment puts the government's commitment to a much higher rate of indexation into legislation.

The importance of providing this resourcing is made even more salient because we know that other forward thinking nations, such as many of the developing nations in our region are already increasing their investment.

Over the five years from 2003 to 2007, China and India both invested heavily to increase total tertiary enrolments in all programs by an average of 16 per cent and 7.2 per cent per year respectively.

This makes it even more important to invest in the knowledge and skills of our people if we are to thrive in the competitive global economy.

My department estimates that this new, higher indexation rate will deliver over $2.6 billion in additional resourcing to universities over the five calendar years from 2011 to 2015.

This comes in addition to the funding we will be providing for the student-centred system. The additional funding for extra student places is now $1.3 billion up from the $437 million estimated at last year's budget, over the budget forward estimates period. And of course, universities also receive additional resourcing from student contributions. This increase in funding is resulting from the 9.9 per cent overenrolment above-target places this year and continuing pipeline, far in excess of budget projections.

This funding is in addition to the $7.1 billion of additional funding already committed to higher education, which is made up of:

Almost $4.2 billion of other funding announced for higher education and research in the government's response to the Bradley and Cutler reviews;
$1.1 billion announced on higher education infrastructure in the December stimulus package, and
$1.8 billion announced at the 2008-09 budget when the government came to power.

This government has a massive reform agenda in higher education.

Enrolments driven by student demand and informed choice, performance based funding, mission based compacts-all of these reforms will give universities an entirely new degree of control over their own destinies.

There is a great deal of work to be done and by entrenching the new, higher indexation formula in legislation the government is clearly demonstrating that we are committed to driving reform backed by sustainable funding for the long term. I commend the bill to the House.

Debate (on motion by Mr Andrews) adjourned.