Evolutionary change needed in higher education

by Andrew Norton

Published by The Australian, Higher Education page 28, Wednesday 18 September 2013

In his February speech to Universities Australia, Tony Abbott promised “relative policy stability” for higher education. There is little reason to doubt this broad intention. In opposition, the Liberals supported Labor’s key reforms, the demand-driven funding system and the national regulator. Liberal statements on international students, research priorities and study abroad differ from Labor in detail rather than broad direction.

But conservatives have long argued that prudent changes can enhance stability. Evolution can avoid the need for radical reforms. Abbott recognised pressures for change by appointing Liberal MP Alan Tudge to chair a backbench committee on online higher education. Tudge’s newspaper articles set out a reform agenda that could help the system adapt to new students, technologies and business models. Much of this requires reform of the higher education standards enforced by Tertiary Education Quality and Standards Agency.

As the recent red-tape review showed, there is widespread sector support for less prescriptive higher education regulation. Most university leaders are more concerned about compliance costs than the principles behind current regulation. But Jane den Hollander and Jim Barber, vice-chancellors of Deakin University and the University of New England, who are already trying out new ways of delivering higher education, have called for new rules.

The new minister will have an early opportunity to revise the standards. The Higher Education Standards Panel is due to report later this year on revising the requirements all higher education providers must meet. They have said they intend to focus on outputs and outcomes rather than processes wherever possible. Their report should give scope to start a reform process. More flexible standards would permit new higher education services, but reforms to the funding system would encourage their spread. Only public universities can participate directly in the demand-driven system, so any other higher education provider must compete against rivals that enjoy significant per student subsidies.

With spending on the main tuition subsidy program forecast to hit $7 billion in 2016-17, an increase of more than 50 per cent since the demand-driven system was announced, fiscal caution is understandable. Yet opening up the system may not be as expensive as it seems. Using 2012 student numbers, it would cost about $250 million to give tuition subsidies to undergraduate students currently enrolled outside the public universities. Many of the affected higher education providers would probably stay outside the government-supported system as it stands.

To compete successfully with the public universities, Bond University and most non-university higher education providers have done so with strong product differentiation rather than price competition. They typically offer small classes that cannot be delivered on commonwealth-supported place revenues. A report commissioned by the Australian Council for Private Education and Training showed that private higher education providers could lose $50 million in revenue if they swapped full-fee places for commonwealth-supported places.

The deals public universities are doing with other organisations to deliver commonwealth-supported places show that new ventures are possible.

Reforming higher education standards and opening up the funding system would not cost large amounts in the forward estimates period, and would not create any significant instability. Both are sensible evolutionary measures that would help Australia’s higher education system adapt to changes already under way.