The "Report of the Review of the Demand Driven Funding System" by Dr David Kemp and Andrew Norton was released by the Department of Education today (14 April 2014). The most significant of the recommendation in the report is to allow TAFEs and commercial Registered Training Organisations (RTOs) to compete with universities for government subsidised students. In my view this would be a very good change, as it would allow students to select more relevant vocational studies which would help them get a job (and help Australian industry). This will also accelerate the shift from classroom to on-line education, which will allow Australian universities to remain internationally competitive. However, this will also have the effect of reducing funding for university research, which may require some additional government funding.
The funding TAFEs alongside universities may see the reintroduction of a two tier system in Australian university education. Currently universities cross-subsidise their research programs from course tuition fees. Universities are required to undertake research in multiple disciplines and this increases the cost of university courses. TAFEs do not have this research requirement and so will be able to charge lower fees for the same courses.
TAFEs and other RTOs generally have more experience with the delivery of online courses, than do Australian universities. It should prove very attractive for students to be able to enrol in lower cost courses which they can study online and meet the same educational standard. The result may be a rapid expansion of such course offerings and the decimation of on-campus university courses. Such a move should be welcomed, as it will better prepare Australian universities to compete worldwide, as most university programs move to being delivered on-line in the next five to ten years. The alternative would see Australia’s universities suffering the same fate as the automotive industry and being put out of business within ten years, unable to compete for domestic or international students.
Those universities which have their own TAFEs, or an arrangement with a TAFE, may be best placed to respond to any demand from students. A common strategy is likely to be to offer the student the first one year to eighteen months of study at TAFE, a TAFE qualification, then transfer to university with award of a university degree. In my view it would be better for students to first acquire vocationally relevant qualifications, then when they have some work experience and some more maturity, return to tertiary education for further education. Most students would be studying part time, online.
However, the report does not address another anomaly in the funding of Australian Higher Education: grants for postgraduate research degrees. While course-work students are required to repay their student loan, postgraduate research students receive a scholarship which they are not required to repay. Presumably it is considered that the research the student undertakes will be of benefit to the community. However, there is no requirement for students to make their research results available free. Also there is an increased emphasis on vocationally relevant skills for all students. There seems no good reason why research students who are acquiring skills which will help them in a higher paying job should receive free tuition.
The report also recommends the "University Experience Survey" be extended to cover non-university providers and an improved website be provided to replace MyUniversity. However, I do not share the report's confidence that on its own the Tertiary Education Quality and Standards Agency can prevent sub-standard courses. Also while courses may be of academic merit, there may be no market demand for the skills they provide. I suggest that further measures will be need to prevent the sort of problems which have been experienced in the past in Australia with private higher education providers offering poor quality courses and also the US experience with low completion rates for courses of questionable vocational value.
The Summary of recommendations from the report (numbering added):
Here is the "Summary of findings" from the report (numbers added):
- Caps on the number of undergraduate bachelor-level places should not be re-imposed.
- All higher education providers should be eligible for Commonwealth supported places when they and relevant courses have been approved by the Tertiary Education Quality and Standards Agency.
- Non-university higher education providers accepting Commonwealth supported places should do so on the same basis as public universities.
- Sub-bachelor higher education courses should be included in the demand driven system.
- Caps on Commonwealth supported places should be removed from postgraduate courses with a combination of clear community benefit and modest financial rewards. Other postgraduate courses should be offered on an entirely full-fee basis.
- Decisions as to whether universities can deliver Commonwealth supported places at new locations should be made according to clear guidelines.
- There should be no higher education attainment targets.
- The government should not set enrolment share targets for low socio-economic status students.
- Higher education enrolment data systems should be updated so that they provide detailed and timely information on enrolment trends.
- The Department of Education should re-introduce an annual report on higher education policies and include summary information on performance trends.
- The MyUniversity website should be replaced with an improved student information website.
- General information on attrition and completion rates by ATAR and for different bases of admission to university should be easily available to prospective students.
- The University Experience Survey should be continued and extended to non-university higher education providers.
- Maximum per Commonwealth supported place funding rates in engineering and health disciplines should be reviewed in the light of cost pressures.
- The HECS-HELP benefit for graduates in designated occupations should be discontinued.
- Students at all higher education providers offering HELP loans should be eligible for OS-HELP.
- The provider category standards should be reviewed to consider their effects on innovation and competition.
- The Tertiary Education Quality and Standards Agency is a guard against sub-standard courses and institutions in an expanding higher education system.
- Active efforts over 20 years to improve teaching in Australian universities have contributed to a steady increase in student satisfaction with teaching. This has continued through the early stages of the demand driven system.
- The demand driven system has encouraged technology-based innovation in higher education.
- For commencing bachelor-degree students with ATARs below 50 attrition rates are high and have not been improving.
- Higher education providers are actively working to identify and better support less adequately prepared students.
- Pathway programs successfully prepare students for university study.
- The demand driven system has responded effectively to most recent skills shortages.
- Universities have responded to increases in aggregate demand with more places. In most fields of education, applicants are more likely to receive an offer. However, there has been only a small increase in the proportion of applicants receiving an offer for their first-preference course.
- In professional entry courses, declining employment opportunities have led to fewer tertiary admission centre applications.
- The rapid increase in science enrolments is leading to employment problems for graduates.
- The demand driven system has had little effect to date on low foreign language enrolments.
- The demand driven system is responsible for increased enrolments in higher education by low socio-economic status students.
- Low socio-economic status students would benefit from increased access to sub-bachelor courses.
- The demand driven system and associated reforms have increased higher education opportunities for people from regional and remote areas.
- The demand driven system and associated reforms have increased higher education opportunities for Indigenous Australians.
- Women aged 25–34 have already achieved 40 per cent higher education attainment. Given enrolment trends and continued skilled migration, the attainment rate will grow in coming years.
- The demand driven system has allowed online education to expand.
- A HELP loan fee could help ensure the fiscal sustainability of the demand driven system.