Speech to Universities Australia 2017 conference

Simon Birmingham: Thank you very much Belinda for that welcome and good morning and ‘ninna marni’ and ‘hello how are you?’ in the language of the Kaurna people from the Adelaide Plains, my home. In doing so I acknowledge and thank William for your welcome to country and acknowledge all of the Ngunnawal and Ngambri in the Canberra region and all of Australia’s Indigenous peoples, and thank them for their work with all of us as we continue to work to build a richer, better Australia. 

Thank you Universities Australia for the chance to be with you today. For starting your conference a little earlier than you would otherwise have done so. And thank you for the work that you continue to do and the engagement we continue to have. In that engagement I particularly acknowledge, you Belinda of course as Chief Executive. Barney Glover, your Chair, Barney. We’ve enjoyed working closely with you and engaging with you over the last few years, and your leadership at the Universities Australia. And of course we look forward to working with Professor Margaret Gardner as she takes up the reigns as chair of Universities Australia later this year. To other vice-chancellors, distinguished guests, ladies and gentlemen; thank you so much for the opportunity to address you this morning and for coming along. 

Higher education is and must be transformational. It transforms the lives of individual students, who gain knowledge, skills, and new opportunities. It transforms our society, via the provision of highly skilled labour. A generation of new ideas, an expansion of our horizons. Our shared responsibility as government policymakers and as leaders of our most important higher education institutions is to optimise the transformational potential of higher education in the most effective and efficient ways possible. For nine years Universities Australia, in this forum, has been bringing together experts to share best practice, identify opportunities, and brainstorm solutions to the sector’s challenges. 

This is my second opportunity to address this event. Luckily for, as you know, this year you escape an after dinner lecture from the Minister, in favour of what I understand to be a significant announcement about Indigenous education. Unluckily for me, as you know, by the time you are raising your glasses tonight, I will be about three quarters of the way through 14 hours of questioning at Senate Estimates. So please have a drink of South Australia’s finest for me tonight. We have come some way since this event last year, but the journey has much further to go. 

In last year’s budget the Turnbull Government confirmed we would not proceed with full fee deregulation. And as you heard we released the discussion paper, Driving Innovation, Fairness and Excellence in Australian Higher Education. Since then I have met widely, consulted widely, spoken with many of you following your submissions, and have been working hand in glove with a panel of experts, to finalise policies that achieve our shared objectives of excellence, transparency, equity and sustainability. 

We have a world class higher education system. That was highlighted last week with the release – not just of statistics showing a further 10 per cent growth in international student numbers – but also demonstrating in excess of 90 per cent international student satisfaction. That Australia is the destination of choice for record numbers of students from more than 200 nations is thanks to many of you who have helped to create a reputation of a warm, friendly, safe and high quality education destination. 

All of you appreciate the benefits. Export earnings at $21.8 billion. Support for 130,000 jobs across Australia. A richer, more globalised learning environment for domestic students, researchers and businesses. Millions of future friends and informal ambassadors for Australia scattered throughout the world. And of essential importance, the enhancements of capacity and capability in home nations that will create a more prosperous region and world. Various geopolitical factors create new possibilities for Australia to further grow the number of students who travel here to study, and our Government stands ready to work with you to seize those opportunities, just as when we’ve successfully done so together over recent years.

However, I know we are all acutely aware this success must never be at the expense of domestic students. Rather it must complement and enrich their learning opportunities. Happily, 80 per cent of all students continue to express satisfaction with the overall quality of their educational experience. 82 per cent satisfaction with teaching quality, and 81 per cent satisfaction with skills development. Importantly, this satisfaction translates into labour market success. Higher education graduates still enjoy a sustained 2-3 per cent advantage in unemployment rates. But a system that sits still, goes backwards. As students begin to enjoy greater choice than ever, with new types of qualifications and institutions both ancient and never yet heard of, all just a click away. Adaptation, agility and continuous improvement is essential. Collaboration between universities and employers is necessary to deliver the returns, both students and society expect of higher education. This holds deeply true in research. 

Our research quality is unquestionably world class. But the type of research we’re doing must be the best we can offer to Australian society and our economy. The new engagement and impact assessment will measure the impact on university research, including how it engages the interests of business and industry. I am pleased the voluntary rollout, the voluntary trial has begun with cooperation from the sector, with a full rollout next year. Research, both pure and applied, will continue to be a critical part of Australia’s ongoing economic transformation. The Turnbull Government is providing $76 million in additional support to university research block grant funding this year. Taking the research funding in the education portfolio to some $2.7 billion and funding for research across the entirety of the Federal Government to $10.1 billion over the year. 

While we will use measures such as ERA and new impact assessment, to drive excellence in research investment. As well as the highly competitive grants processes. A key question is how we equally incentivise similar excellence in teaching and learning. Universities represent a substantial investment, both in our national wealth and of our national income. Last year our Government invested $16.5 billion in higher education, including student subsidies, subsidised student loans and research grants. The smallest of our universities was entrusted with $110 million in public money. The largest received around $880 million. In our demand driven system for undergraduate students, competition for those students should be one driver of excellence. However this competition is far from what economists would describe as a pure market. Accordingly I am very focused on how we best leverage other factors like standards and payments, to ensure the highest return on investment for both students and taxpayers. 

Well-functioning markets thrive on information and transparency. Information that is easy to find and understand is essential for prospective students to make informed decisions about their future studies and career paths. Transparency helps to drive universities to be their best. Our policies must incentivise universities to make optimal decisions about who to enrol, how many students they enrol, and what they enrol them in. Universities must be accountable for the outcomes of those students with the value they derive from their investment in the university education. Are they successfully completing their courses? Are they getting a better job when they finish than would otherwise have been the case? Are they entering the workforce job ready? Are graduates collectively meeting the economic needs of Australia?

They have the right to know their prospects of gaining entry to a university, to help decide which courses are right for them and what their employment and earnings are likely to be when they graduate. That is information that we are increasingly providing Australian students. 

We’re implementing together all 14 recommendations of the Higher Education Standards Panel, made as part of their review of admissions transparency. And I am confident they will deliver more comparable information to prospective students on entry requirements and alternate pathways, while enabling more scrutiny of university decisions.

Some important steps have already been taken including Universities Australia and the sector signing up to the need for greater transparency. Go8 and its universities are all publicly publishing data and a sector-led working group, working to develop simpler pathways for the publication of that data. 

More information has been included on the QILT website with more to come. Last year we increased investment in QILT and I am determined that over time it will increasingly be driven by real data, enabling students and competitors, regulators, media and policymakers to see the comparative strengths and weaknesses of performance across the sector. I also must confess I envisage a name change to QILT at some stage in the future. Something a little catchier, a little prone to images of us all lying under a doona. 

Transparency and information, along with the way we finance universities should drive equity too. My background drives my values on equity. A student from a low SES urban fringe high school, neither of whose parents attended university, I personally appreciate the transformational values and qualities of higher education. 

We will continue to ensure that Australian students do not pay $1 up front to access higher education. We have one of the most generous and fair higher education systems and I intend to continue to build on this, ensuring fair access for students entering university next year, next decade or in two decades time. The demand driven system has opened the door to university to more young people with over 37 per cent of 25 to 34 year olds now having a bachelor degree.

We have witnessed strong enrolment growth, increasing participation from previously under-represented categories. Between 2010 and 2015, the number of domestic undergraduate students at public universities rose by 23.6 per cent. Over the same period at those universities, the number of Indigenous students rose even faster by 46.7 per cent and the number of low SES students rose by 34.7 per cent.

However, as you heard from Belinda, there is still more to do as these groups continue to be under-represented in higher education. 1.6 per cent of domestic undergraduate students are indigenous, compared to Aboriginal and Torres Strait Islander peoples making up around 2.8 per cent of the general population. 18.8 per cent of domestic undergrad students are from regional areas compared to 26.4 per cent in the general population and 18.2 per cent of domestic undergrads are low SES compared to 25 per cent of the general population.

But when I talk about equity and fairness in higher education I have not only participation in mind, but also ensuring successful completion, resulting in improved employment outcomes. Further, equity of access and optimisation of labour market outcomes requires choice right across the tertiary landscape., choice of institution, choice of qualification, choice of academic or skill discipline. While we finalise policy responses on questions of how best to provide that choice, how best to enhance equity of access and incentivise excellence, all of those questions have a common question attached to them. How do we pay for them in times of budget constraint? 

Wherever we may all differ, I suspect this room harbours broad agreement that policy settings need to give us a system that is structurally and financially stable in the long term. Big spending promises without any inkling of how to pay for them have saddled us with a legacy that we can either deal with now or leave future generations to struggle with. 

Since 2009, taxpayer funding for Commonwealth-supported places has increased by 71 per cent, more than twice the increase in nominal GDP over the same period. Taxpayers contribute an average or 58 per cent of the current costs of higher education through non-refundable grants as well as paying universities the remaining fees up front via the highly subsidised income-contingent HELP loans. Total HELP debt now stands at over $50 billion or 12 per cent of total Commonwealth gross debt. Under current policy settings an estimated one-quarter of this will never be recovered which is an unsustainable position from which to maintain our world leading student loans program.

We must face up to the significant budgetary pressures which do make changes in our higher education settings a necessity. I, at least, am being honest with you about this reality. Unlike others who when it comes to budget deficit will pretend that there’s nothing to see here. Perhaps even others you’ll hear from today. 

I hope that you too would rather confront budget challenges honestly and strategically rather than wake up in a few years to see a repeat of a surprise $6 billion in higher education cuts that Labor announced in their last few years in power. Strategically tackling those challenges is one of the reasons why I commissioned the Cost of Delivery study undertaken by Deloitte last year. I thank UA and many universities for your participation in this work, including under some tight time pressures. 

It has produced some interesting findings, such as showing that universities spent approximately 85 per cent of their funding for bachelor-level courses on teaching and learning in 2015, compared with 94 per cent five years earlier in the findings of the 2010 base funding review. And that between 2010 and 2015, average costs of delivery per student have increased by 9.5 per cent, while over the same period per student funding to universities has increased by around 15 per cent.

This finding appears to suggest universities have become more efficient over time with teaching costs growing more slowly than revenue. This is perhaps unsurprising given the opportunity to take advantage of economies of scale with undergraduate student numbers growing by a near 200,000 from 790,810 in 2009 to 979,426 in 2015. 

The evidence is in, analysis has been undertaken, options canvassed, consultations engaged in and decisions ahead of the next budget are being made. I will continue to consult and engage with you all. We will be fair for students and universities as well as taxpayers. 

Our policies will embed the pursuit of excellence in all its forms and equity driven by factors of transparency and accountability, student choice and long term budget sustainability. These factors are not easy to balance. Many of you acknowledge that as you wish me luck when you leave your meetings with me. We cannot make everybody happy but we must balance priorities to do what is in the best interests of Australia and the people we are here to serve and I know that requires long term sustainable, strong universities. 

I hope that you will continue to be as constructive with me as you have been to date. I hope that when fully briefed on the directions we are taking, even though you may not like all of them, that you will encourage a bipartisan approach to give the long term certainty and transformational opportunities that we all aspire to create.  As you discuss Gen Next today, I look forward to taking the next steps in our journey together and I thank you very much for your time and support. 

Thank you, good luck.