House of Representatives

Higher Education Support Amendment (Demand Driven Funding System and Other Measures) Bill 2011

Second Reading Speech

Mr Garrett (Minister for School Education, Early Childhood and Youth)

I move:

That this bill be now read a second time.

The Australian government is committed to transforming the scale, potential and quality of higher education in Australia.

When we came to office in 2007, we understood very clearly the transformative potential of higher education.

We understood that new investment and reform was required to allow our nation's universities to meet the increasing demand for higher qualifications from students and employers, to meet our nation's future workforce needs.

In 2008, the government commissioned a wide-ranging review of Australian higher education, known as the Bradley review.

This review was the catalyst for the major package of reforms 'Transforming Australia's Higher Education System', announced in the 2009-10 budget.

The Higher Education Support Amendment (Demand Driven Funding System and Other Measures) Bill 2011, which I am introducing today, will implement more of the reforms announced in that package.

Fundamental to the government's reforms has been the understanding that the Australian economy today-and the Australian economy of the future-will require more Australians to be degree qualified.

The demand for ever more sophisticated goods and services will require higher levels of innovation and skills in our workforce.

In Australia today, the demand for professionals, managers, and community and personnel services workers is outstripping demand for clerical workers and labourers.

More professionally qualified people, engineers and managers will be needed by 2015. We will need them in the healthcare sector. We will need them in the mining sector. We will need them to respond to future challenges that arise across the breadth of the Australian economy.

This is why the government has made a commitment to the expansion of a high-quality university sector to educate the graduates needed by an economy based on knowledge, skills and innovation.

This approach is essential if Australia is to participate fully in and benefit from the global knowledge economy.

The government has set an ambitious goal for national attainment. It is seeking to increase the proportion of 25- to 34-year-old Australians with a qualification at bachelor level or above to 40 per cent by 2025.

This was one of the major reasons the government committed to demand-driven funding for undergraduate student places at public universities.

We are committed to funding growth in undergraduate student places and to opening the doors of higher education to a new generation of Australians.

The bill being introduced today gives effect to that commitment. The bill reforms the Commonwealth Grant Scheme which provides the Australian government's financial contribution to a student's place at university.

Australian universities will no longer be asked by the government to ration Commonwealth supported student places among students competing to get a bachelor degree.

The government will make its financial contribution to the cost of educating all students admitted to undergraduate courses of study.

The government will no longer set the number of undergraduate places that a university can offer.

From 1 January 2012, universities will have greater flexibility to respond to student demand, and employer and industry needs.

The Commonwealth Grant Scheme is to be changed so that universities will be funded, not on the number of places which the education minister decides they will be given, but based on the number of places they provide.

The legislated cap on the Commonwealth Grant Scheme is being removed by the bill.

By 2012, the government will have increased higher education expenditure on teaching and learning by 30 per cent in real terms since 2007.

This year, the government will fund more than 480,000 undergraduate places at public universities.

With an anticipated four per cent growth, next year this will rise to over half a million places-a 20 per cent increase since 2008.

To fund this historic expansion of opportunity, the government provided an additional $1.2 billion in this year's budget, bringing the total demand driven funding to $3.97 billion over successive budgets.

The government recognises that it will continue to have a role in the national oversight of our higher education sector.

It will retain some powers to assist achievement of those outcomes and to enable it to respond to national imperatives.

Higher education providers will continue to be required to have a funding agreement with the Commonwealth in order to be eligible to receive Commonwealth Grant Scheme funding. The bill amends some provisions relating to these funding agreements.

The most significant of these amendments relate to the specification of maximum basic grant amounts.

These changes are required by the change to the method of calculating the amount of grant a university will receive under the Commonwealth Grant Scheme.

In addition, there may be circumstances in which the Australian government needs to limit the extent of future growth in unallocated undergraduate places. The minister will be able to do this by specifying a maximum basic grant amount for these places in a university's funding agreement.

Significantly, the minister will not be able to specify an amount that would reduce the funding for undergraduate student places that a university receives from one year to the next.

The government will not be specifying any maximum basic grant amount for unallocated undergraduate places in any funding agreement for 2012.

It also does not plan to do so in future years, but the government does wish to ensure that growth in undergraduate courses is sustainable, does not involve excessive risk and that the government's fiscal position is properly managed.

The government is not uncapping funding for student places in postgraduate and medical courses. It will continue to allocate Commonwealth supported places in these areas.

The government will be maintaining each university's current target for postgraduate student places in 2012. It will also be ensuring that postgraduate student places that have been provided within the existing allowance for overenrolment continue to be funded.

The bill provides that the government can specify in a university's funding agreement a maximum basic grant amount for allocated places that is higher than the amount for the university's target load.

The government's forward estimates of expenditure provide sufficient funding to ensure that there is no contraction in the level of Commonwealth supported postgraduate student places. It will be working with the sector to establish a framework for funding postgraduate places into the future.

The outcomes of the base funding review will also be taken into account when considering future arrangements in the postgraduate coursework area.

In recent years, there has been a major expansion in the number of medical schools.

The number of domestic medical graduates is projected to rise from around 1,900 to over 3,100-an increase of over 60 per cent.

This has placed significant pressure on the availability of clinical training places and internship opportunities. These are vital to maintaining the quality of graduating doctors.

For these reasons, the government will not be removing the controls on student medical places at this time.

The government will be monitoring demand and supply for graduates in all disciplines in the early years of implementation of the new funding system.

The bill ensures that the government has the capacity to respond to any new skill shortages and, if necessary, to the oversupply of graduates in particular areas.

Amendments to the Higher Education Support Act 2003 will ensure that the government retains powers to allocate places for particular disciplines.

The bill allows the minister to declare a course of study to be a designated course of study. This will provide the minister with the capacity to allocate places for those particular courses.

The bill provides that such a declaration must be tabled in both houses of parliament and is a disallowable instrument.

The government believes that the measures contained in this bill for demand driven funding of undergraduate places provide for much needed investment in higher education.

As a result of these reforms, universities will be able to grow with confidence and diversify in response to student needs.

Consistent with the shift to a demand driven funding system, the government agreed in its response to the Bradley review that the student learning entitlement (SLE) provisions of the act would be abolished from 2012.

The SLE currently limits a person's ability to study at university as a Commonwealth supported student to the equivalent of seven years full-time study, subject to exceptions specified in the act which allow for further periods of 'additional' SLE and 'lifelong' SLE to be allocated.

Application of the SLE has resulted in instances of hardship for particular students-for example, where a student who completes a three-year undergraduate science degree subsequently goes on to re-enrol in a six-year medical degree. In cases such as these, students can exceed their SLE and no longer be eligible for a Commonwealth supported place.

The bill repeals part 3-1 of the Higher Education Support Act and amends other provisions of the act to remove the SLE and its role in the various funding schemes under the act.

The bill amends the Higher Education Support Act to require that each Table A and Table B higher education provider enters into a mission based compact with the Commonwealth. Compacts will provide for Commonwealth oversight of the teaching and research missions of the universities.

Mission based compacts provide an important process of dialogue and communication between universities and the government.

Compacts provide assurance concerning the alignment of university missions with the Commonwealth's national goals in the areas of teaching, research, research training and innovation. They do so in a way that recognises that the objectives of government and universities are often shared.

In preparing compacts for the 2011-2013 period, the government has been made aware of universities' growth strategies, their intentions for maintaining the quality both of teaching and the student experience, and their contributions to the government's attainment targets.

As a consequence, the government is better informed about the future research directions of universities, their strategies to advance innovation and of their efforts to train Australia's research workforce.

The Australian government will continue to work cooperatively with higher education providers through compacts to ensure that individual university missions serve Australia well in teaching, research, research training and innovation. It will continue to monitor developments, progress and achievement across the sector.

The bill will amend the Higher Education Support Act to promote free intellectual inquiry. Free intellectual inquiry is an important principle underpinning the provision of higher education in Australia. It is one that the government has committed to include in the act.

Free intellectual inquiry will become an object of the act. The government's funding arrangements should not be used to impede free intellectual inquiry.

Table A and Table B providers will be required to have policies that uphold free intellectual inquiry in relation to learning, teaching and research. This will be a new condition of funding.

Most universities already have such policies and I know they all wish to support research and teaching environments which promote free intellectual inquiry. It is fundamental to the scientific method and rigorous scholarship. It is necessary to enable evidence to be challenged, competing theories to be debated and facts to be established. It provides the foundation for our understanding of the world and the accumulation of knowledge.

This bill reflects the government's continued commitment to invest in Australia's universities and to expanding opportunities for Australians to obtain a higher education degree.

As a consequence of this bill and our investment in higher education, more Australians will have the opportunity to gain a university education.

In this next generation of students, there will be many people who will be the first in their family to embrace the opportunities that a university education can offer, with the promise of a high skilled, high paid job when they graduate.

Our industries will get the university educated workforce they need. Our regional communities and industries will share in the benefits.

Australia will have a growing and sustainable higher education system which meets the needs of our nation.

I commend the bill to the House.

Debate adjourned.