Senator for Victoria


Speech - Higher Education and Research Reforms Amendment Bill 2014

Wednesday, 29 October 2014

I rise very proudly tonight to speak to the Higher Education and Research Reform Amendment Bill 2014. I also rise to speak as the chair of the Senate Education and Employment Legislation Committee. We conducted a very comprehensive inquiry into this piece of legislation. There were over 169 submissions and four days of hearings, and I would like to congratulate all of those who took time out to make a submission to the inquiry and indeed to attend our hearings and give us very good evidence. I would also like to place on the record, on my behalf, particularly, our thanks to the secretariat for their tireless work in producing what I think is quite a comprehensive report, in which we traverse the history of higher education in Australia, which lands us at the place we are today: the reality we have to deal with if we want to continue to have and to increase the excellence of our higher education system while continuing its strong accessibility.

I just want to briefly quote Nelson Mandela: 'Education is the most powerful weapon which you can use to change the world.' So, for the first five minutes, I absolutely adored everything Senator Carr had to say about higher education, the role of universities in society et cetera. They are absolutely crucial. That is why they have to be financially sustainable and accessible to all—which is exactly what this government is doing through this education reform agenda.

When the credit card statement arrives, the responsible thing to do is to actually pay the debt, just as this government is setting out to do, having inherited Labor's hefty credit card bill. A commission of audit took place, and ministers were told to find savings within their portfolios. A package of higher education reforms was the result of Minister Pyne's deliberation, striking a fair balance between careful savings and strategic investment—strategic investment by this minister. The ultimate goal is to spread opportunity to more students, drive creativity and innovation, and ensure that our universities are equipped to face the challenges of the 21st century and that Australia is not left behind. The higher education sector gets it, and supports the government's planned reforms contained in the bill that we are speaking to tonight—reforms which directly benefit higher education providers, students and communities, whilst driving economic growth and productivity.

The key element of the reforms is fee deregulation. That will give universities the longed-for freedom from government control, allowing them to make independent choices, not just about fees but about teaching methods, courses to be offered, scholarships and other services, in response to the market. And let us face it: 'the market' in this conversation is students, and they are not all young people leaving year 12. There is strong evidence that fee deregulation will lead to greater competition, and with greater competition comes greater choice. And, contrary to the rowdy views of a small number of critics, the higher education sector welcomes it. What bemuses me is the failure of our critics, including Labor, to acknowledge that fee deregulation already exists for postgraduate and international students, and that most higher education providers see full deregulation as the next logical step in the evolution of our higher education system.

In fact, students have been progressively making increased contributions to the cost of their higher education under successive governments since the 1980s. Even in Whitlam government years, there was no 'free education' because, in reality, university costs were funded by the taxpayer. Cabinet papers also later revealed Gough Whitlam's free tuition had little impact on the composition of student intake, with a continued overrepresentation of students from wealthy backgrounds.

A decade on, faced with the financial strain of a free education, and greater pressure to expand education opportunity for the growing number of students completing year 12, the Hawke government introduced the HEC Scheme. In a speech at the Victoria University of Technology a few years later, the then Treasurer, Paul Keating, said: 'There is no such thing, of course, as a free education. Somebody has to pay. In systems with no charges, those somebodies are all taxpayers.' He added: 'This is a pretty important point. A free higher education system is one paid for by the taxes of all, the majority of whom have not had the privilege of a university education.' So I think we all need to ask ourselves if that is a fair thing.
Bob Hawke, in an interview in 1988, stated: 'I do not have any problem with the concept of fees. In fact, one of the greatest stupidities was the proposition that the Whitlam Labor government introduced a free education. There is no such thing as a free education. It is a question of who pays and how it is paid for.'

The Howard government introduced a partial deregulation of student fees and domestic full fee-paying undergraduate places that were later abolished by the Rudd-Gillard government, without adequate compensation for universities. The Rudd-Gillard government went on to introduce a demand-driven system, whilst cutting funding by more than $2 billion. In fact, the previous Labor government announced a number of 'savings measures'—in plain speak, cuts—to higher education grants and student support, totalling $6.65 million from 2011-12 to 2016-17. Labor's Senator Carr vehemently opposed this whenever it was raised during the inquiry hearings, despite it being fact, in black and white, in the budget and MYEFO papers. 

It was an odd approach for a Labor government, led by a Prime Minister, Julia Gillard, who advocated diversity and specialisation in universities. Julia Gillard reflects in her new book: 'I am particularly proud of our decision to unchain Australian universities, to enable them to define their own mission and educate more students.' This is precisely what the coalition government's reforms seek to achieve. And she adds: 'As a result of the new system, while students continue to compete for places, universities increasingly have to compete for students. A better run, better quality university can attract students who might be considering other universities.' Fee deregulation is all about making universities compete for students. One wonders what Julia Gillard thinks of her party's apparent shift in direction. 

Claims of skyrocketing fees, made by student unions, Labor and the Greens, as a result of deregulation of fees also lack substance. The reliability of the methodology behind two of the most referred-to studies, from the NTEU and NATSEM, has been questioned more broadly.
I just want to go to those assumptions because, as anybody who appreciates a good mathematical model knows, the assumptions underpinning the model are actually what we need to go to before we start screaming about $310,000 degrees for social work, as was claimed this morning. The assumption under the modelling that was used is that we did not go to what the actual fee may be. There has been only one university, the UWA, that suggested a fee setting, and evidence throughout the inquiry from vice-chancellors and all, even some of the Labor Party—even Professor Quiggin came—was that universities are going to charge differently for different things. UWA has decided to do a broad-brush fee across all their courses.

Other universities are not going to do that. CSU, for example, with the fabulous vet degree, might choose to charge a premium for that particular product and a different fee for some of their other offerings. But when we go to the assumptions underpinning that modelling, they jump straight to the international fee, setting the highest fee you can charge within Australia for undergraduates. They then charge the six per cent bond rate over 20 years. Bearing in mind the bond rate for the last 10 years has been only 3.8 per cent. They then factored in some time off, presumably to have some children or to travel. That got us to the worst case scenario for a social work degree, which was $310,000. In the best case scenario, using those same assumptions, which I have actually poked some holes in, that same social work degree costs $42,000. It is a scare campaign, because it is affecting the students and families who are not seeing higher education as an investment—the first generation, particularly, need to be convinced that it is an investment worth making and they can do their social work degree for $42,000 rather than the $310,000 quoted. So it is an absolute furphy. It is scary and they have to stop saying it, because it is actually not true, even using their own modelling. 

The NTEU admits in their report that not every university degree at every university will cost $100,000, but we do not hear that in the public debate and discussion, and that is morally reprehensible, particularly when we are talking about increasing access to higher education for those we need to get through the door. NATSEM modelling is based in the University of Canberra, and that is understood to be the only university in the whole country that does not appreciate or is actually opposed to fee deregulation. 

The groups representing universities have issued a variety public statements and modelling showing that universities can be relied on to act responsibly in setting fees. Analysis from the Australian Technology Network, Innovative Research Universities, and the Group of Eight, and assurances from the Regional Universities Network all show this. Member institutions of the Council of Private Higher Education have also confirmed that 'whatever they receive in Commonwealth support for students will be passed on to students through reduced tuition'. So, for Senator Rhiannon to stand up here and say that nobody has talked about lowering fees does not actually go to the evidence. Let us talk about the evidence and the facts, not fear.

Nor is there any basis to comparisons with other deregulated higher education systems. The rhetoric throughout has been of an Americanisation of our system. A directly comparable system does not exist. Australia's higher education system is unique in comparison, as the reform package will ensure that for all students, irrespective of their means, there are no up-front financial barriers to accessing higher education. So for Senator Carr to talk about merit and about financial impact as being a barrier, our system still offers an income-contingent loan scheme that is the ideal of the world. This was evident based on expert views to the Senate inquiry hearings. Professor John Dewar, Chair of the Legislation and Financing Working Group, explained that the US system was not one national system, as would be the case here. Rather it has extremely complicated and diverse. So to say that we are having an Americanisation is false. Similarly, a submission from the Group of Eight explained that debt burdens like those in the US are simply not possible in Australia. In Australia, our HELP system of student loans means that graduates only repay when they earn enough to be able to do so, whereas in America the crippling debts are incurred by graduates because they do not have a provision for such loan support.

Further deregulation will drive a more competitive environment for universities, so charging exponentially higher fees will only result in empty lecture theatres and tutorials. Australian students are not idiots. They will go elsewhere. As the Australian Technology Network's Vicki Thomson logically explains, it would be untenable from a business perspective to do so. Vice-chancellor after vice-chancellor reiterated that there were not going to be $100,000 degrees hither and thither. There is strong evidence supporting the view that fee deregulation will boost equity and innovation. While providers will be able to determine course costs, they will have to compete on price and quality in order to attract students.

There is also strong stakeholder support for extending funding to sub-bachelor courses as well as to private universities and other higher education providers, with considerable benefits for regional students. We do not hear about these students. We do not hear about this absolutely fantastic access and equity aspect of this reform package. Universities, colleges and TAFEs in the regions will be able to offer more courses with qualifications leading to careers or further study. The idea has merit, with a growing number of universities and TAFEs having already forged partnerships across regional Australia—for example, Federation University Australia at Ballarat and La Trobe University, in my home state of Victoria. These universities and TAFEs are also targeting first-generation students from families that did not previously have such opportunities, and nor could they afford it. By 2018, more than 80,000 additional students nationally will benefit from these increased opportunities—coming from the regions, disadvantaged and Indigenous backgrounds, mature age students and those with low ATAR scores. In the regions we have incredibly low year 12 completion rates, which means that you cannot easily go to university. These reforms seek to improve student mobility, while giving private and non-university providers flexibility to specialise and differentiate from one another.

The Kemp-Norton review of the Demand Driven Funding System found that expanding access to sub-bachelor pathway courses would lead to the improved efficiency by better matching students with appropriate courses. TAFE Directors Australia also endorsed these reforms, saying: Commonwealth funding is required to support the increasingly important role TAFE plays in broadening student choice and access, strengthening the capacity and reach of the system, particularly in regional areas, and addressing critical shortages of higher skills in the Australian economy.

I want to go to the report, because while we hear a lot from NUS students, predominantly who attend Go8 universities I have to say, they always end up here in this place or in the other place. That is fine. I love hearing from students. But I did not hear Senator Carr nor Senator Rhiannon talk about the students who attend private institutions, or the TAFE students, who will be the beneficiaries of so much of our reform package.

Going to the report where the Chisholm Institute explained to the committee that they built their degrees on industry strength - these are higher education providers that have very clear and direct links with industry, there are a certain cohort of students who appreciate that but who do not necessarily want theoretical philosophy degrees. They want to realise that the education they are getting at their local TAFE or local institute is going to result in a job. Right now, degrees at these institutions are costing $22,000 or $32,000.
I want to go to Miss Sara Moad, a second year Bachelor of Dance student with a private provider, that Senator Rhiannon does not want to see have the benefit of being treated equitably with other such students. She chose a career in a profession that is not well represented in our public universities, and I will quote her:
If and when the bill is implemented, I will have already graduated, with a debt of $56,000, of which $11,000 is an administration fee of 25 per cent—which our legislation actually seeks to get rid of—more than I need to save for a house deposit. Compare this with my brother, who will have completed a three-year degree in design at a public university, with a HECS debt of around $15,000. I will pay more than three times the amount … How is that equitable? Professionals in the performing arts have the ability to share so much with their communities and build culture, and often do so despite earning a lower income compared to other professions. Senator Rhiannon and Senator Carr want to ensure that Miss Moad continues to pay $11,000 more than her brother and it is simply not fair when we want to go to equity. 

I want to briefly touch on the Commonwealth Scholarship scheme. Those institutions with more than 500 enrolled students will be required to put 20 per cent of the revenue raised through increased course fees towards scholarships targeting students from disadvantaged backgrounds. Again, Senator Rhiannon, you went to complain about the Go8 universities' under-representation of that cohort of Australians, in their university lecture halls. This measure will ensure that that proportion increases. So I really would appreciate your support in getting that increase in the Commonwealth Scholarship scheme so that we can get more disadvantaged students into the great universities in many of our capital cities.

There has been a lot of debate about regional students and the effect on them, but many country students do not opt to study at a regional campus. In fact, evidence is that most of them do not choose to do so. We can talk about the Regional Universities Network, but I am also talking about regional students—regional kids—and their future and, by default, our future in regional Australia. They do it for a lot of different reasons. Steps must be taken to ensure that they can overcome the very real financial barriers to them accessing a quality education of their choice that currently their parents or they themselves have to bear. Our bill seeks to do this. Our Australian education system is unique because it remains cost free at the point of delivery, contrary to Labor's scaremongering. 

The Minister for Education, Christopher Pyne, has pointed out that, because the government currently lends to students at the bond rate, it is fair for them to be charged that. The committee inquiry report showed, I think, overwhelming evidence that that may need to be revisited. I am confident that the minister will consider the report and the evidence we received as we move forward.

The bill will see $11 billion extra funding for research—and I think that is fabulous—and $139 million to the Future Fellows program. That is not in the Labor Party's dissenting report; they do not want to keep that. They do not want to ensure that we are leading the world in research and can underpin that going forward. 

I support the bill and I recommend that the Senate does the same.

© Senator Bridget McKenzie 2014 | Authorised by Senator Bridget McKenzie, National Party of Australia, Bendigo Victoria 3550
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