Topics: Higher education funding
30 August 2017

Question: Minister, Joanna Mather from the Financial Review. The university sector has a very strong union and we’ve seen a fairly dramatic development in terms of Murdoch’s enterprise agreement being axed. Tell me, what barrier has industrial relations been to universities becoming more efficient as I think your Government would like to see them do?

Simon Birmingham: Look, thanks Joanna. And as always with the Fair Work Commission, the Government backs the findings and the rulings of the independent umpire, but in this case it’s certainly one that we back and welcome. We welcome it because it obviously will provide Murdoch with an opportunity in their case to deal with some of the challenges and pressures that they face and perhaps to find more efficient ways in which to structure their operations in future.

Certainly, university administrators have raised with me at various junctions some of the challenges they face in industrial landscape. And I recognise that essentially, as institutions that were built in some ways on public service models, we’ve seen cost structures embedded that are not always as efficient as possible. That’s certainly where we think there is some scope for the slightly lower rates of funding growth in the future to be able to be accommodated because some of those cost structures can be modernised, can be made more efficient, can be dealt with.

Now, of course, institutions rely on their human capital, on the hard-working lecturers and staff who provide the breakthroughs in research and knowledge and provide the enormous learning opportunities for students who are there. And these need to be done in a cooperative way, wherever possible. But I do think and hope that those universities who can – such as now Murdoch seems to be in a position to do so – will seize the opportunity to look at what modern approaches for workplace management, for the balancing and of teaching and learning responsibilities, with research responsibilities in an environment can best apply right across the university and indeed academic by academic.

Question: Can I ask, how much do you think this decision by the Fair Work Commission yesterday, can or should be a direct precedent for other universities in their bargaining with the academic union?

Simon Birmingham: Well, I certainly urge universities to think about what is in the best interest for the long-term of their institution. And to do so with the reality check of not every academic, who may have a research component to their work, is necessarily doing research. That the type of structures that have been accepted wisdom for a long, long period of time in the ancient history of universities don’t always hold truth in terms of the best approach for the future. And so, I think the opportunity, if Murdoch has it, to break some new ground in terms of modern and flexible approaches that reflect reality of teaching in campuses, of what is actually occurring in terms of the work of individual academics, is something that should be seized and hopefully and can be replicated elsewhere.

Question: Conor King, Innovative Research Universities..

Simon Birmingham: No identification needed, Conor.

Question: Well, you might know me but not everyone in the room necessarily does. If I could ask you a return question, it is in essence, what has the Government, – why has the Government’s position changed between Mr Pyne’s package and yours? You’ve asked us why did we support fee increases before but not now. The simple reason there, as you well know, is that money came to us before if we chose to raise the fees; this time money goes to you. Last time, Mr Pyne at least argued that universities did need the extra revenue to do what you as a government want, so therefore something seems to have changed there.

That’s the main picture from the university end. Some of the figures, we can argue dodgy figures back and forth and you talk to us and other things. The indexation, the real increase one, really gets me in the sense that, and you can quote Julia Gillard, I think I did write Julia Gillard’s quote, the indexation system intentionally is under-indexed for efficiency since at least the mid-1990s. And you’re just about to change it, which is meant to be a saving, so I presume even more so. So I really am intrigued how there is a real increase, because you have a factor in there.

And then the figures you released about that, to Tim Dodd and others here, every single one of those numbers was an estimate, an adjustment or a guess. So, none of us are playing around with those figures because they involve a lot of assumptions. But then – I’ll finish with this point – pretty much every one of the universities I represent – now seven – is going through or has gone through a major restructure in the last three or four years, we’ve reduced a lot of staff numbers. So I’ve listened to that pressure, I hear your general figures and I’m trying to interpret across them.

And I guess I’ll come back to that first point, why has the Government previously thought yes, universities do need a real level of investment, they need to deliver good quality education to the full suite of people we now enrol, which as you noted, has gone up and it needs to have gone up. What has changed for that that you now need to take that fiscal saving? We understand the big picture there, but this is a driver for potential future prosperity?

Simon Birmingham: Thanks, Conor. Well there was a lot in that question and I won’t try to address every point that you’ve made, but I’ll take the, I guess, substantial element of your question. Yes, the reforms that Christopher advanced in the Abbott Government sought to provide an extension of autonomy. Sought to provide rationale around demand-driven system and said well if you’re going to have deregulated place numbers, you should also have a commensurate deregulation in fees that can make it operate in a more market-driven sense.

Now, as we know, the Senate didn’t support that. As we also know that there were concerns, and I think some genuine concerns about whether the deferred payment arrangements and income-contingent loans actually meant that you’d get a market reaction. Certainly the experience of the awful VET-FEE-HELP environment was that where students don’t have to make any contribution upfront, they lack any price sensitivity and that that was a threat, a risk in terms of full fee deregulation.

What I’ve sought to do in the reforms that we’ve brought forward, is without having that fee liberalisation, do you still say well how do we make the demand-driven system work? And in consultations that we undertook, nearly every university – there were a couple of notable exceptions – argued they wanted to see the demand-driven system maintained. Now, I thought it was, firstly, incoherent that we had a demand-driven system purely for bachelor level qualifications, which is why we worked through a structure as to how we might extend that to sub-bachelor and indeed work through a structure as to how we might have a more student-centred model for allocating postgraduate places.

I also thought that it was a reality that we had to face that if there was to be such complete autonomy in terms of enrolment numbers in whatever disciplines universities choose, that we ought to make sure that there was some lever to drive performance, hence the performance funding aspect of the changes, which I’ve emphasised time and again, we want to build the model of that with the sector. It’s also a reality that the growth in funding that was driven in part by the demand-driven system, driven as well by growth and we can dispute the numbers, but I’d say growth in terms of the per student level of funding that came with that growth in the number of students created a contribution to the budget problems the Government has; and that it’s only reasonable that there is therefore a contribution to fixing those budget problems in the most reasonable way possible. And what we’ve tried to structure is the most reasonable way of doing that and I think that’s where we’ve landed, notwithstanding the fact that I know that not everybody loves it.

Question: Thanks very much. Paul Saintilan, I’m CEO of Collarts and Macleay colleges. On behalf of private colleges, I think we perceive that there is an inequity in terms of the student- the 25 per cent loading on the student fee HELP support, and I know ACPET, COPHE would have raised this before with you, but I’m just wondering where we’re sitting in relation to addressing that issue?

Simon Birmingham: Thanks, Paul and because as you know, under previous versions there was a consideration to eliminating all such fees. We’ve not being able to advance that at present, I am sympathetic to the argument of the inequity for students in those circumstances, but in tackling the budget considerations we’ve got, we can’t do all such things at once. That is something, though, that we certainly I have said to COPHE to ACPET, and to individual private higher education providers. And I apologise to those of you who are here for the lack of attention you got in today’s remarks. But absolutely hoping to be continuing discussions and seeing where, perhaps at a better time down the track, we might be able to look at some of those inequitable arrangements of some students facing a fee to access the income contingent loan scheme and others not.

Question: Minister, Trish Mullins from the University of New South Wales. Thank you for your talk. It’s clearly a talk that is not going to be a huggable, loveable talk to the sector. You have a passion for the sector – that’s obvious. You could be forgiven for thinking that at the end of your speech and narrative that the whole message is that the sector are not contributing to the economic solution and future, that we need to listen to your message that we need to help, we need to pull our belts in, we need to give, and that we are not having enough efficiencies or measures of efficiencies. If you look at the sector on – and Connor made a good point about the efficiencies, the Productivity Commission and various others have looked at the efficiencies that we’ve given, we are the largest service income generator, we’re the third largest income generator. Then, the narrative didn’t include the contribution that the sector makes to the future innovation, to the 160 billion that we bring to the sector in our research in our ongoing annual impact to that sector. We have given, we’ve lost EIF, we’ve lost CDP, we’ve lost a whole range of funding that we used to have. We are not a private profit-making sector. All the money we give, all of our passion is to making improvements in skills, making improvements in research, making improvements in innovation, helping our regions – we’re passionate about our regions – that is what we’re giving. So my challenge to the Government- my question to the Government and yourself would be why is that not enough? Why would you chop a leg off the golden goose?

Simon Birmingham: Thanks Trish. And it’s never possible in every speech to cover everything, and many of my speeches have talked passionately about the contribution that the sector makes to individual lives, the transformative impact it has on individuals, the transformative impact that is has on regions and on our economy overall. And that is delivered in a range of ways of course the knowledge and research breakthroughs, the enhanced collaboration that we’re seeing and want to keep incentivising with industry for innovative purposes as well as the individual advancement of having more people, more highly qualified, more highly skilled able to make bigger and better contributions to our economy in the future, and the services export aspect of international education.

Which again, I’ve spoken very passionately about on many occasions as not just an economic driver, but of course, something that in long-term advances our diplomatic interests, our security interest as well as our economic interest in terms of the collaboration that we will see from Australian businesses, international businesses in future as a result of these international student numbers. So, a range of areas where we should absolutely celebrate the sector. That’s why the type of reforms we’ve put forward aren’t radical overhaul. They aren’t ending demand driven system. They aren’t changing the fundamentals because the fundamentals are strong. I don’t accept your proposition that we’re chopping the leg of; I think we’re trimming a toenail or two in terms of what it is that is being achieved in the budget savings relative to the financial position.

Again, come back to the fact that if you look at the various government-supported aspects of funding that will flow into the sector in future years – CGS payments, government-supported and subsidised student contributions, research funding and so on – there’s around 23 per cent growth forecast in the sector over the next four years. That’s not chopping a leg off; that is showing strong support, strong commitment.

Yes, we’re asking the sector to make a contribution to budget repair. It’s not easy to ask any area that the Government supports to make a contribution to budget repair. You’ve seen that debate waged now over the last four years at least. That is a challenging thing to go out and say to any different area where the Government has invested money and created systems and circumstances to say: we need to reduce the rate of spending growth in this area so that we can get the budget back into balance. But the alternative, the alternative which our political opponents put forward, is a high-taxing alternative that I assure you will see, ultimately, were it to be advanced, six new taxes generating around $150 billion worth of extra tax revenue for the Government, may or may not see them keep their promises to universities.

As I said, they put an efficiency dividend on the table when they were last in government too, they just didn’t have the guts to legislate it, but what it will leave is a circumstance where there will be fewer good jobs for graduates, where there will be fewer businesses in Australia actually seeking to engage and cooperate in research undertakings with universities, because we will have a weaker economy as a result of being a higher-taxing, less competitive nation. That’s not an alternative we want to see. We want to make sure that graduates have an opportunity to get good jobs, that there is a strong economy here for businesses to engage and collaborate with universities, and that’s the type of environment we want to create, and that’s why our approach to bringing the budget to balance is a cautious one; one that seeks to still grow the economy, one that seeks to deal with areas that have seen large growth in government spending, and trim that back to something slightly more sustainable.

Question: Minister I think the last question from Trish echoed probably the message from Garton made regarding yesterday from the sector. The sector saying it already it makes a big contribution, its contributing to the economic and social wealth of the nation, why would you want to cut that back? And you’ve said that the sector shouldn’t show blanket opposition to the proposals of the cut back you are proposing. But rather than blanket opposition should you, what would you expect the sector to say – well yes we welcome the cut backs? Or would you say the sector, should be pushing for things that enable us to compete better, to deal with those cut backs, such as pushing again for some form of fee deregulation? Do you want the sector to push on those sort of areas?

Simon Birmingham: Look, I am absolutely an open door to the sector talking to us about other things that don’t come at significant cost to the budget that can help you, that can strengthen you, can work for the future, and I don’t want that to reopen the door for a full-fee deregulation debate. We, again, posed those questions quite honestly, in terms of are there alternatives to full-fee deregulation that would give some fee flexibility put forward in the options paper in the 2016 Budget. The range of alternative suggestions that we received from the sector was pretty slim pickings –if indeed, lacking in any real enthusiasm for any such alternatives or pursuit in that space – but we are open to discussions about any other areas the sector wants to discuss around how we can enhance the contribution that you make.

As I said I think the fundamentals are strong. That’s why we’re not overhauling the fundamentals. We back-in those fundamentals by ensuring they’re more sustainable for the future, and I think that is an important thing to consider in terms of the propositions the Government’s put forward, but I also hope that if we can resolve these issues through the Parliament this year, that then we start with a clean state in terms of engagement on all of the other important areas of reform. As I alluded to at the end, the implementation of our International Education Strategy, the National Innovation and Science Agenda and the work that’s being done to further incentivise research, and yes, other things in terms of how we can help you to further modernise teaching and learning that changes the structural changes that you’re discussing here that are happening globally that will put new challenges and new opportunities to the sector, in terms of the way students access higher education, the type of courses they want to reach and learn. These are big, big challenges for the future, and they’re the ones that I hope we can have a real discussion about in months and years to come.