June Update

It’s hard to believe we are nearly half way through the year and perhaps even harder to believe that in our perpetual higher education Groundhog Day, we still do not know what the future of higher education funding and policy will be. I will come back to this point.

Load

The significant good news at the start of this year is that based on the good results from first semester we are predicting an increase in commencing load this year of about 5%. This is the result of increased marketing activity, increased focus on conversions and I am sure the excellent performance of the University in terms of graduate outcomes. It has not been the case for all universities and I want to thank all the University’s staff for the work they have done to achieve this result.

Workforce of the Future

One of my side jobs is to chair the Executive Committee of AHEIA, the Australian Higher Education Industrial Association. At the end of last year AHEIA commissioned PriceWaterhouse Coopers to look at the future of the workforce in higher education. Although it sometimes said that universities are slow to change, we have seen enormous growth and change in the sector over the last 20 years. On my reckoning, one of the most significant changes is the degree of specialisation and casualisation in the academic workforce. Both of these, I think, have been in pursuit of increased productivity and the second has been a risk management approach. University funding has become much less certain as a more market-oriented approach has been taken by government. Acknowledging the growth in higher education funding as the system has grown, governments of both sides have raided the higher education budget to pay for other things. Labor was going to use it to fund Gonski and the Coalition have attempted to meet overall budget strictures.

What has been less talked about is the fact that over this period, full-time research and teaching academic positions have grown very little – about 8% between 1996 and 2014. I suspect that these staff members – particularly those at levels B, C and D – are still doing the bulk of the academic administration and management work for the now much bigger system. I therefore think that the complaints we hear about the pressures on academic staff have some justification. I believe it is time we rethought what we expect from academic staff and acknowledge that the academic management aspects are as important as teaching, research and engagement.   In the case of CSU, we revised our promotions policy in 2014 and we will be keeping an eye on this to ensure it is delivering the things we  want for staff and the University.

Federal Budget

In parallel with the Federal Budget, the Government released an options paper which, it seems, was meant to leave options on the table while also neutralising higher education policy as an election issue. Right up front I need to say that the Government’s budget shows that they still intend to cut 20% of government funding from higher education places. It is surprising to me that there is so far not very much commentary about this – which amounts to a $2bn cut across the forward estimates – but perhaps we have all got used to the idea. From the point of view of universities perhaps this is not so bad because – at first glance – it seems the revenue would be made up by increasing costs for students. Estimates vary on the impacts of this but currently students pay about 40% of the cost so we would be looking at an average increase of about 25% in costs to students.

The arguments that are usually advanced for doing this are:

  • the HELP system provides interest-free, indexed loans which means no-one has to pay upfront costs;
  • students bear an equal proportion of the cost because of the private benefits;
  • there is concern we are creating too many, or too many of the wrong sort of graduates and that increasing costs will help to make students think more carefully about choices; and
  • international and local evidence suggests it is quite difficult to deter people from studying because they understand how important higher education is to career advancement.

Arguments in the other direction are:

  • an awful lot of students are not school leavers and may in fact be making repayments because they are already working;
  • OECD studies show that the public returns to higher education in Australia already outweigh the private benefits;
  • one of the biggest costs of study is students’ time and they already have powerful incentives to take their choices seriously;
  • it’s difficult to deter students from studying, but loading the costs onto graduates alone is tantamount to increasing tax rates for them; and
  • there is legitimate concern about the impacts on equity as a result of increasing costs – acquiring a university degree does not reset your lifetime economic circumstances and there is a risk that this will have a disproportionate impact on lower-income earners.

I lean towards the second set of arguments, but I think we need a good debate about these issues. It was notable in the discussion about fee deregulation that the most enthusiastic advocates were those universities with students from the wealthiest backgrounds, I would be very worried if the higher education policy of either side of politics slipped through without scrutiny.

Murray Darling Medical School Bid

We have continued to push our medical school bid with the Federal Government and with other parties and candidates now that the election has been called. The proposal has been widely supported and government has acknowledged the value of it in addressing maldistribution of doctors in regional and rural areas. It is very frustrating that the Government has supported a new school in Perth at Curtin University and funding for a new node at Gosford for Newcastle University, both of which are in metropolitan locations and very close to existing schools. There is a strong suspicion now that the only thing that leads to a medical school being approved is electoral advantage as both of these announcements seemed to be linked to marginal seats. I trust that this is not the case, and that we will soon get an announcement on the Murray Darling Medical School. It is certainly not credible to argue that new medical schools cannot be approved and this reinforces the importance of continuing to fight for a solution for rural and regional people.

Strategy Development Process

We are currently going through a strategy foresight exercise to plan for our 2017 and beyond strategy. This has had involvement from a range people across the University, including Vice-Chancellor’s Forum. The process has developed a systems map of the external forces acting on the University and four particular scenarios are being developed which will be used to test our current strategic thinking and set the scene for the revised strategy. The aim of all this to deepen our understanding of our operations and environment so that we can face the future more confidently.

Three Faculty Structure

We are now approaching the cutover to the new three Faculty structure. Last week I met with the Heads of School and heard that, understandably, staff are feeling some apprehension as we approach it. This is a big change, and there is a lot of effort going into training staff and communicating the changes. As per the messages sent out to all staff by the DVC Academic, Toni Downes, the details will be communicated in the next couple of weeks as we run up to the change over. I want to thank all staff for their efforts to support this important restructure.

 

October Round Up

Service Improvement Program and Faculty Restructure

Over recent months we have been focusing on the change processes surrounding the Service Improvement Program and more recently the Faculty restructure. Change is never easy and there have been a range of comments on the process ranging from it not having happened fast enough, to there not having been enough time for consultation. Clearly, there have also been objections to the nature of the change as well as the process.

As I have stressed in presentations to the University community, while the proposals were crafted as carefully as possible before being released, the consultation process was genuine. We expected that the proposals would be improved by feedback received and in my view this is what has been achieved. In particular, the issues raised around support for research students in the Faculty structures have a lot of merit and the DVCs Academic, Professor Toni Downes and Acting DVC RDI Professor Mary Kelly have been working on proposals to address these concerns. I am also confident that we will have a set of good options for a three Faculty structure to be considered by Academic Senate at the end of October.

The higher education sector is now very much more competitive and we need to ensure we can deliver reliable and consistent service to students. This is what we need to get out of the restructure and we will work through this as rapidly as possible so that we can give certainty to staff, bed down the change and be able to concentrate on our teaching, research and engagement.

Updates to CSU staff on the process will be issued over the next few days.

International Comparisons and Global Rankings

Over the last few months I have attended a number of international conferences and events. These were the World Association of Cooperative Education Conference in Japan, an invited presentation to the South African Regional Universities Association Leadership Dialogue in Cape Town and the Talloires Network Steering Committee in New York.

There are several key messages out of these meetings.

  • Universities around the world are facing the same set of issues. In all countries, there is recognition that a well-educated workforce is critical to delivering economic productivity, good health outcomes and reforming the economy to meet environmental sustainability imperatives.
  • Online education is having a profound impact on pedagogy in all universities. Even if some universities have engaged little in this space, they are taking a very active interest now.
  • As access to higher education has expanded there is an international dialogue about the quality of education and research, and what funding models are required to allow universities to effectively meet social needs.
  • There is concern over whether universities are focused on their own selfish interests or are actually devoted to improving their societies and economies.
  • There is also concern about the place of global rankings systems in this and whether they are driving good outcomes. As noted in the previous blog post, the Talloires Network Call to Action in 2014 challenged the rankings providers to consider community engagement as part of their schema and Times Higher Education is considering how this might be done so hopefully we can see some progress on this front.
  • There is a lot of interest in Australia as a country. This is based on our long tradition of excellence in work integrated learning and distance education (and CSU is seen as a leader and exemplar in this). Other countries are also interested in the higher education policy settings in Australia. The HECS HELP income contingent loan scheme is widely regarded as world leading and of course people are interested in how the demand-driven system has played out and the Government’s fee deregulation proposals.

Out of all this, I continue to believe that CSU is extraordinarily well positioned to succeed over the coming decades. We have expertise and a track record in delivering the very things that governments and communities are asking for – expanded access, educational value-add and deep engagement with communities and industries.

The good news

As it’s been a while since the last blog post, I did want to note that CSU is once again the successful tenderer for the NSW Police Force education contract. This is for a further 5+5 years and means that all new NSW Police Officers will continue to graduate with a CSU Associate Degree in Policing Practice. This maintains CSU’s significant strength in policing and security education where we are one of the world’s largest providers.

Recently, the Centre for Customs and Excise Studies also achieved accreditation from the World Customs Organization, these are the only English language programs to be accredited by WCO.

Last week we received the news that we have accreditation for our new Law program which will be commencing in 2016. Along with Engineering, which will also commence next year, these programs are designed to be flexible and allow students to mix work and study. Both are aimed to be innovative, distinctive and to fill workforce needs in regional Australia. However, the programs will also skill graduates to be successful nationally and internationally. I would like to thank the teams involved in both programs for the enormous amount of work involved in their development.

Deregulation and Policy update

Last week the Minister for Education, the Hon Simon Birmingham announced that the Government will, at least for now, withdraw their legislation to cut government support to universities and deregulate fees and that this will not be reintroduced until after the election. Since it is far too late for the legislation to be implemented for 2016 in any case, this is very welcome news.

Federal Labor have also announced their policy structure for higher education which would guarantee per student funding and maintain the demand-driven system. The Minister for Education has announced that he will engage in consultation with the sector about policy futures.

This week, Universities Australia also released a policy blueprint for Higher Education.  This argues for investment in higher education and research for the future welfare of the nation.

I hope this will now be a chance to have a better debate about the future of the sector and how we can arrive at funding policy that will deliver the education, research and engagement that the country needs. We will be arguing strongly for the needs of regional communities and students over the months to come.

Student Numbers

While the higher education sector continues to be intensely competitive, we expect to finish the year around 2% up on 2014 student numbers. This is a testament to the work that has been done by staff across the University to promote CSU and its courses to students. However, projections still show load plateauing in subsequent years and hence the need to continue to focus on converting offers to acceptances in line with the strategic direction of the University to ensure a sustainable future. In any case, the success in the mid-year round is an encouraging sign for the future and 2016 is shaping up to be an exciting year for the University and its students.

 

 

 

 

 

 

 

 

Federal Budget Update

The big news for the last week has of course been the Federal Government’s budget proposals for Higher Education. I will come to these a bit further down but wanted to deal with some good news stories first.

The first thing I wanted to note was the changeover in Presiding Officer for Academic Senate. Professor Ben Bradley has now been replaced by Professor Jo-Anne Reid. Senate is a very important feature of a university because it is the mechanism through which the voice of the academy – separate to the corporate considerations of running the University as an organisation – can be distilled and articulated. This in fact is legislated as part of the Charles Sturt University Act. Senate achieved a lot in the period in which Ben was the Presiding Officer and Jo-Anne served as the Deputy and I want to thank them both for their contribution to the University through that. Naturally, I would also like to thank Jo and indeed all the members of Senate for continuing to perform this important work for the University.

Second, congratulations to Residence Life for winning the 2014 College/University Housing Operation of the Year. This is a terrific achievement and a testament to the hard work done by the staff in Residence Life. We count the students who are employed as Resident Advisers as part of that staff and having attended their training sessions for the last three years I have been really impressed with their enthusiasm and commitment. All the staff should be (and are) very proud of this and at a time when more than ever we need to focus on providing excellent services to students this is a great affirmation of what we do.

Third, congratulations to Charles Sturt Campus Services at Orange who achieved 1000 days without a lost time injury. This again is a terrific achievement – I have been very keen to encourage everyone to be vigilant about workplace health and safety and it is really good to see areas celebrating their achievements.

Fourth, I wanted to give a plug to the CSU Academic Women’s Association which is providing mentoring and support for academic women across the University. In common with most universities, women are under-represented at senior academic levels and one of the targets in our strategy is to improve this. I hope this will complement other initiatives to assist women to build their careers.

I would also like to note that this week is National Reconciliation Week. I think this has been rather overshadowed by the discussion of the Federal Budget. Having just written an acquittal of the University’s performance, one area where we have clearly been successful is in increasing Indigenous enrolments and Indigenous staff numbers. That I hope is making a continuing contribution to reconciliation.

So now to turn to the Federal Budget.

Here are my thoughts on the government’s proposals on fee deregulation, which are quite lengthy, but this is a critical set of reforms for the sector and for us.

Let me start by saying I do not argue that we need to balance the Federal budget over the longer term. I would also agree that we have probably been too generous in terms of personal tax cuts and tax relief. However, personally I would have preferred us to have had a decent conversation about the balance of taxation and welfare before the last election which would have allowed the electorate to make a more informed decision. This is not a particular criticism of the Government as neither Labor nor the Coalition really facilitated this conversation. In any case despite that we now have proposals which are acknowledged by the Minister to be the biggest reform in 30 years and I do not think he is exaggerating. What do they mean, what are the advantages and what are the potential problems?

The major aspects for me are:

1)   A deregulated fee market – universities are free to charge any amount for domestic tuition as long as it does not exceed international fees. My presumption is that this means that domestic fees at a university cannot exceed the international fees at that university.

2)   An average across-the-board reduction by 20% of government support for student tuition. This will shift the balance of average student contribution from 41% to about 52%. Note that because students were paying less, this means that the proportional increase for students is more like 27% – assuming the overall cost of education doesn’t change.

3)   HECS debt to carry a real rate of interest equivalent to the 10-year government bond rate capped at a maximum of 6%. This is an increase of something like 1.5% and means that, unlike now, if students are not paying off their debt it will be growing in real terms (assuming that inflation stays below 6%).

4)   If universities raise their fees beyond the amount required to replace lost government support, they will be required to put 20% of the money raised into a scholarship fund which will be available for use at that university.

5)   Sub-degree places will now be uncapped and covered by commonwealth support.

6)   Private providers and TAFE will also have access to commonwealth support. The government sees this as contributing to competition (the Minister talked about an ‘adrenaline jolt of competition’) in the sector.

7)   PhD students will also be required to pay a part of their tuition costs, which will also be supported via a HECS loan.

8)   Any student who enrolled after the date of the budget (13 May) will move onto the new fee arrangements from 2016. Anyone who enrolled before that date will stick with the existing fee arrangements until the end of their course, until they change course, or until 2020 whichever is the earlier of the three.

9)   The government has committed to an additional year of NCRIS (National Collaborative Research Infrastructure Scheme) funding and to fund Future Fellows for the foreseeable future.

A point of detail to note, there was early concern that there was a threat to our Dental school because of the budget changes. We did lose $15m that had been pledged by the previous government to build additional dentistry clinics in Taree, Kempsey and Port Macquarie. This would have allowed us to expand clinical placements and hence student numbers as well as working to reduce the public dental waiting lists in that area. The loss of this funding does not affect our existing operations but as noted will prevent any expansion of Dentistry or Oral Health on the Mid-North Coast.

The government’s view is that the suite of proposals provides a fair balance of costs between the private benefits that students receive and the benefit that the nation receives from higher education. Whilst many people have drawn comparisons to decades past where higher education was free, or substantially cheaper, that was a very different world. A very small proportion of the population attended university, there was very much less gender equity and very much less social equity. I do not think it is realistic to expect that we could make higher education free with the participation rates that we have now. That is unless we are prepared to pay a lot more income tax, which it seems we aren’t. So I don’t think we should be debating whether students and graduates should bear some of the cost, what we need to debate is whether policy settings will drive the kinds of social and economic outcomes we are looking for.

Good things in these proposals are that the demand driven system is retained, that sub-degree places are included and that the Government has committed support for NCRIS and the Future Fellows scheme. I think it is reasonable also that private providers be brought into the system, provided we retain some means of funding the social good part of public universities’ missions. I will talk more about the possible problems with fee deregulation below, but it has to be said that an unregulated market in the international space released a lot of creativity and entrepreneurialism from universities and grew international education substantially. Of course, that was bringing new money into the country, not redistributing existing money within the country.

So what’s likely to happen? The Minister has suggested some fees might go down. According to our calculations Mathematics and Humanities will be receiving more government support than they currently do and, if substituting commonwealth money with student fees is all we do, that would allow a reduction. Fees in all other areas would have to rise, simply to replace the money removed by the government. For CSU we calculate this to be an average of 23.5% across the board. Some areas would need to rise substantially. Science fees would need to be increased by 62%, Agriculture by 48% and Environmental Studies by 114%. Is it going to be as simple as this? I don’t think so because we will need to consider the totality of the fees we set so that we can do the best job for our communities and we will have to see how the market behaves, and what happens to student demand, when it starts operating in 2016. I will have a bit more to say about how fees might play out below.

So what are the potential concerns? My first concern is with the pretexts on which this is being pursued. The first pretext is that we don’t have enough diversity in the sector and that diversity is a good thing. I agree with the second proposition but not the first. Early last year I attended a workshop on the U-Multirank tool run by the LH Martin Institute. The conclusion of this workshop was that in fact the sector is already very diverse. Charles Sturt University is nothing like University of Sydney, nor does it wish to be anything like it. We have very different missions, cater for very different student demographics, have different levels of research intensivity and we employ different kinds of staff. We teach more than half of our students by distance education and USyd teaches almost all of theirs by face to face. I think what people from Group of Eight universities mean when they say ‘we don’t have enough diversity’ is ‘we don’t have teaching-only universities, and therefore we have to share our research money with universities that shouldn’t have it.’ This to me is not a good reason for seeking more diversity. I did my first degree at what was then Trent Polytechnic. The staff were mostly professional engineers with a couple of researchers thrown in. They took their teaching very seriously and they did a very good job. However, there was a bit of intellectual spice missing from the education and at the end I did feel a little bit like I’d had the creativity beaten out of me. That was probably OK in 1989 but given the way the world is changing I think we need more flexibility of thinking, not less and I think the inclusion of some research in the culture is important to that end. In both Australia and the UK the binary divide was abolished for a reason and we are better for it.

The second pretext is that fee deregulation will allow Australian universities to climb up the global university rankings. Noting that these are almost exclusively research rankings, I remain to be convinced that requiring students to provide increased funds is going to do the job. On the Times Higher Education rankings, our highest performer in 2014 is the University of Melbourne at 43. To make it into the Top 20 it would need to more than double its score to 14.9, and this at a time when particularly Chinese universities (from a country of one billion people, let’s note) are having mind-boggling quantities of funds injected by their government. On the ARWU rankings, Melbourne again is our highest performer at 54 with a score of 30.2. To lift itself into the top 20 on the ARWU, it needs to improve this score by about 50% and go past University College London and Imperial College as well as the Universities of Illinois, Toronto and New York. If the Go8 are serious about shrinking their student numbers to get more focussed, their undergraduates are going to be paying a very high price indeed for this kind of ambition. I have previously suggested we might be able to pull this off by merging Melbourne and Monash or Sydney and UNSW, selling one of each of their campuses and investing the proceeds in research. I hate to be a grouch, but personally I’m not even sure what, apart from national bragging rights, would be the advantage of having two universities in the Top 20 as opposed to six in the Top 100? What would be the benefit to the economy or community?

The second concern I have is with the impacts on workforce supply. In the existing system we have been able to boost the supply of skilled professionals in regional areas. I worry that this may be undermined by these changes as regional students are put off studying. It would appear that the current higher education market has saturated – that is that the demand for higher education at its current price has plateaued. Assuming that the higher education market operates like any other, we are now looking at a substantial increase in price and we would therefore have to assume that some students will decide not to come. Universities have many fixed and semi-fixed costs which, even if staff were shed to match the fall in students, would not scale down at the same rate. On top of this, note that the Minister’s intention is for universities to be better resourced as a result of these changes “education institutions themselves will be able to grow, to employ more people and invest more back into their local communities.http://budget.gov.au/2014-15/content/glossy/education/html/index.htm Both of these would suggest that fees will need to rise more than the simple replacement value. On top of this, it should be noted that in previous fee deregulations around the world, fees have risen. The most recent example of this is in the UK where fees tripled – almost all of them up to the cap. I find it very difficult to believe therefore that fees will not rise beyond the simple replacement value which is likely to deter even more people. The minister may be counting on private providers and TAFEs to provide enough competition to restrain price rises and to expand supply. However, if this does happen note that even if it’s good for students it will go against the idea that universities will be able to grow and invest more into their communities as suggested in the budget material above.

The third concern I have is with the scholarship fund. As currently planned, this requires 20% of the additional dollars raised above the replacement level to be put into a fund in each university for scholarships. Quite clearly, the most elite universities will be able to charge the highest prices and will therefore have the largest scholarship funds. Currently, these universities have the lowest level of low SES students. This therefore runs the risk that they will be incentivised to recruit students from regional Australia and if, as the Minister intends, competition restrains fees elsewhere in the market, the universities who currently support the most low SES students will be least able to do so. This is a fundamentally regressive proposal which in my view needs to be changed.

Other concerns follow for me, including knock-on macroeconomic effects like graduate wage inflation and the possibility that if the sector raises fees too enthusiastically there might be some rapid re-regulation. I mentioned regional work force above, there is also the possibility that the prices we set (because of the costs of programs like agriculture, veterinary science or engineering) are out of whack with student demand and we end up with even worse labour market shortages in regional areas than we already have.

What does it mean for Charles Sturt University and other regionally-based universities? It’s really hard to say. It seems almost certain to me that we will lose some students who have the least financial resources. We already know that some students struggle to attend university and this may be enough to deter them. It is possible that some students currently moving to capital cities to study may decide to stay in their regions instead. Perhaps it will increase the trend of some students studying for a year or two before moving to the city to finish their degree off and vary their experience. It is possible that more students may decide to move from metropolitan areas to regional areas to study. It is really difficult to do more than guess what the combined impacts may be. We have a great reputation for being entrepreneurial but I think we would be foolish to think that Charles Sturt University will be unscathed or significantly better off. I suspect we would at the very least be significantly different. It will take quite some time to fully work this through. I am hoping that compromise can be reached on the proposals as the budget makes its way through the Senate. Certainly at the moment Labor, The Greens and the Palmer United Party have said they are against it. We will begin to do contingency planning and work out how we will walk the path through the next few years as things unfold. I think this will amplify the existing trends of competition and privilege, much of which is based on history, in the sector.

As a final point, the Organisation for Economic Cooperation and Development (OECD) produces a regular report called ‘Education at a Glance’. One of the sets of tables in this gives a calculation of the private and public benefits of tertiary education. For Australia, the private rate of return is approximately 9% whereas the public rate of return is approximately 13%. I don’t know what difference these proposals might make to this (perhaps any economists reading can) but I think it does indicate that simply making the tuition costs 50-50 between students and the state does not necessarily give the full picture on the full benefits. My concern is that we do not unintentionally shrink the system and therefore undermine the benefits both to individuals and to our communities.

Finally, the changes in higher education policy are a very important step for our nation. I think our local Members of Parliament need to hear your opinions on this as they decide what to do about steering the budget through the Senate. The government has indicated it is willing to make compromises and it is important that they are informed about community opinion. You may be in favour of these changes, ambivalent, or dead against them and I would be very relieved to discover that none of our students is worried by these proposals. However, I think democracy would be served by sending an e-mail to your local Federal Member of Parliament to let them know your thoughts. They do take community feedback very seriously and it will help them to understand your perspectives and therefore hopefully make wise decisions.

For my part, I look forward to hearing your thoughts through the comments, or to vc@csu.edu.au if you don’t want to express them publicly.