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<br><EM><FONT size=4>Questions and Answers on our Submission to the Senate Committee Inquiry on Higher Education, October 2003<BR></FONT></EM><BR> <B><A name=_Toc53458766>Table of contents</A></B>
<P></P>
<P><A href="#_Toc53458767">Blind spot about outcomes: Possible reasons for it 2</A></P>
<P><A href="#_Toc53458768">Commonwealth Grants Scheme provides opportunities. 2</A></P>
<P><A href="#_Toc53458769">Community representation: Role of university councils. 3</A></P>
<P><A href="#_Toc53458770">Diversity of outcome beats diversity of mission. 4</A></P>
<P><A href="#_Toc53458771">Efficiency is still important: The national governance protocols. 4</A></P>
<P><A href="#_Toc53458772">Functions of universities. 5</A></P>
<P><A href="#_Toc53458773">HECS rises – differential effects. 6</A></P>
<P><A href="#_Toc53458774">HECS rises – overall effects. 6</A></P>
<P><A href="#_Toc53458775">Linkages. 7</A></P>
<P><A href="#_Toc53458776">Needs analysis: National priority reviews versus a continuing mechanism.. 7</A></P>
<P><A href="#_Toc53458777">Quality: Influences upon it 8</A></P>
<P><A href="#_Toc53458778">Shortages of professions. 8</A></P>
<P><A href="#_Toc53458779">Supply and demand for professions. 8</A></P>
<P><A href="#_Toc53458780">University-Community Consultative Councils. 9</A></P><B><A name=_Toc53458767>Blind spot about outcomes: Possible reasons for it</A></B>
<P><I>Q. Why do you think there is this missing component in the Government’s approach to higher education (i.e. the blind spot about outcomes and impacts upon the community)?</I></P>
<P>A. It is difficult to say. There may be something in the history of the way the different departments and agencies have developed: education and employment being together then split, agencies like CTEC and NBEET coming and going, etc. </P>
<P>It is worth comparing two areas of work done by the Department of Education, Science and Training. We think the <I>Crossroads/Backing </I><I>Australia</I><I>’s future</I> treatment of skills development was inadequate. </P>
<P>This is covered in our submission at paras 77-84 and we conclude there that ‘[b<EM>]etween a rather “highbrow” and generalist vision of university education and an apparently TAFE-centred view of VET, education for the professions seemed to be squeezed out’. On the other hand, </EM>the DEST submission to Senator Campbell’s skills inquiry explicitly mentions the nursing, teaching and vets reviews as important analyses of the skills development issue. The connection was made there but not here.</P><B><A name=_Toc53458768>Commonwealth Grants Scheme provides opportunities</A></B>
<P><I>Q. How will your proposals improve the Commonwealth Grants Scheme (CGS)?</I></P>
<P>A. In a nutshell, by dealing the community back into the game. It has been said by some commentators that the CGS initiatives – because they will make it necessary for the Commonwealth and the universities to agree each year on course mix and number of places – will put the Commonwealth in the box seat to direct the future development of universities. We want a better approach than that.</P>
<P>Our proposals for consultative councils will bring the community back into the game, both at the national level and at each university. Both sides of the CGS negotiating table will have access to community input and commissioned research about needs and priorities. </P>
<P>There seems to be this assumption in <I>Crossroads</I> and <I>Backing </I><I>Australia</I><I>’s future</I> that tertiary education is too important to the nation to be left to universities. It is also too important to the nation and to individual communities to be left to government, or even to government and universities. </P>
<P>The reason we are so concerned about this is essentially about supply and demand. We want to ensure that professional graduates go to the communities where they are needed in Australia (for example, that there is no glut in the cities and shortage in the regions), and that the mix of professionals matches community needs (for example, that there are not too many architects and too few dentists, either nationally or in particular areas).</P>
<P>There is a risk that CGS as proposed will become a top-down, bureaucratic imposition of government (essentially, DEST) views on universities. We know that the Opposition, for example, is very concerned about this and so, too, obviously, are the vice-chancellors. </P>
<P>PA believes that bringing the community into the CGS process strengthens the rationale of CGS. It links mission diversity more firmly to outcomes. Diversity should be based on catering for the differing needs of the particular communities that universities serve and, by extension, on catering for the needs of the ‘national community’. </P>
<P>We believe CGS should start from the assumption that universities are trustees of the community. The increased influence CGS offers for government in universities should be balanced by institutionalising community influence.</P>
<P>A CGS with proper community involvement could ensure that the funding and course mix for each institution reflects the needs of the community in which it is located and that universities across the nation cater to the needs of the broader national community.</P><B><A name=_Toc53458769>Community representation: Role of university councils</A></B>
<P><I>Q. Don’t university councils fulfil the community representation tasks you have in mind for the consultative councils?</I></P>
<P>A. It’s true that some university councils have this element. We have seen a figure that about one-third of council members are community representatives. But the thrust of the corporate governance protocols is to look for slimmer councils with an emphasis on corporate and financial skills. Our fear is that this will drive out the community representation element. Our proposal would counteract that.</P>
<P>The governance protocols are essentially ‘best practice’ governance arrangements that might apply in any corporation that undertakes commercial activities. But, to follow the corporate analogy, the principles nowhere require the members of university governing bodies to take account of the interests of their ‘shareholders’, the members of the community which the university serves. </P>
<P>This deficiency should be remedied. The effectiveness with which a university serves its community should be addressed just as explicitly as is the efficiency with which it spends its money. </P>
<P>In any case, we think there is likely to be a different quality to the information about needs coming from an independent consultative council than what has come from community representatives on university councils.</P><B><A name=_Toc53458770>Diversity of outcome beats diversity of mission</A></B>
<P><I>Q. Can you address the Minister’s concern with diversity issues?</I></P>
<P>A. Diversity of mission is less important than diversity of outcome. In fact, the former should grow from the latter. </P>
<P>Diversity should not be something that grows fortuitously from some arm-wrestling in ‘the market’ where the bigger institutions go in for predatory pricing to force smaller institutions to close down competing courses.</P>
<P>We know that diversity is a key aim of the Government’s package. But ‘diversity arising out of differentiated missions’ (the way the Minister has phrased it) does not guarantee good outcomes. </P>
<P>Differentiated missions have to be derived from consideration of community needs. Good outcomes means catering for the differing needs of the individual communities that universities serve and for the developing needs of the nation. That is the sort of diversity we are after.</P>
<P>PA notes that a key element of the package can be written as follows: </P>
<DIV style="BORDER-RIGHT: windowtext 1pt solid; PADDING-RIGHT: 4pt; BORDER-TOP: windowtext 1pt solid; PADDING-LEFT: 4pt; PADDING-BOTTOM: 1pt; MARGIN-LEFT: 0cm; BORDER-LEFT: windowtext 1pt solid; MARGIN-RIGHT: 1cm; PADDING-TOP: 1pt; BORDER-BOTTOM: windowtext 1pt solid">
<P>Performance-based incentives → differentiated missions → diversity.*</P></DIV>
<P>PA would reformulate this as:</P>
<DIV style="BORDER-RIGHT: windowtext 1pt solid; PADDING-RIGHT: 4pt; BORDER-TOP: windowtext 1pt solid; PADDING-LEFT: 4pt; PADDING-BOTTOM: 1pt; BORDER-LEFT: windowtext 1pt solid; PADDING-TOP: 1pt; BORDER-BOTTOM: windowtext 1pt solid">
<P>Performance-based incentives <I>plus community input</I> → differentiated missions → diversity.</P></DIV>
<P></P>
<P><I>[* </I>Backing Australia’s future<I>, page 11: ‘Diversity will be encouraged through the creation of performance-based incentives [e.g., presumably, CGS, HECS flexibility] for institutions to differentiate their missions.’]</I></P><B><A name=_Toc53458771>Efficiency is still important: The national governance protocols</A></B>
<P><I>Q. Are you denying that it is important that the taxpayer’s money be well spent?</I></P>
<P>A. Certainly not. One of the key bits of evidence for that is that we do not oppose the proposed national governance protocols. </P>
<P>Cost efficiency – the input side – is obviously important. The community’s dollars <I>should</I> be well-spent. Universities <I>should</I> be accountable to the governments that are responsible for much of their funding (despite HECS). </P>
<P>But we believe it would be the height of irony if the result of implementing the national governance protocols was that universities were more efficiently spending an increasing flow of money <I>in the wrong direction</I>. That is why we stress the importance of community input about needs and skill shortages.</P>
<P>Efficiency is great, but the continuing lack of focus in higher education discussions on outcomes, on <I>effectiveness</I> – how universities make a difference – is a matter of concern to us at PA.</P><BR style="PAGE-BREAK-BEFORE: always" clear=all>
<P>Just looking for a moment at the national governance protocols, as they stand, the protocols require universities to tighten up strategic planning, specify the duties of governing body members, ensure that some of them have financial expertise, ensure that they undergo professional development, improve reporting, effectively oversee controlled entities, and so on. </P>
<P>The principles are essentially ‘best practice’ governance arrangements that might apply in any corporation that undertakes commercial activities. But, if you follow that corporate analogy through, the principles nowhere require the members of university governing bodies to take account of the interests of their ‘shareholders’, the members of the community which the university serves. </P>
<P>PA believes that deficiency should be remedied. That is where our community consultation requirements come in. The effectiveness with which a university serves its community should be addressed just as explicitly as is the efficiency with which it spends its money. </P>
<P>We believe the community consultation requirement should be written into the national governance protocols applying to each university. We propose an explicit requirement to consult the individual university’s U-CCC (community consultative council) on matters of university policy and planning that affect the courses taught at the institution and their funding. </P>
<P>And finally on the protocols, it is worth noting that by favouring reduced size of councils (limit of 18) they could be taking out the community representatives and community input that we believe is essential. Our consultation proposals counteract that.</P><B><A name=_Toc53458772>Functions of universities</A></B>
<P><I>Q. What do you say to the idea that the key function of universities should be teaching and research rather than keeping up the supply of professionals?</I></P>
<P>A. It is possible to have both perspectives. We would see teaching and research – or teaching, learning and research, preferably – as the <I>operations</I> of universities while ensuring the supply of professionally qualified graduates is a key <I>function</I> of universities. </P>
<P>Teaching and research are <I>what</I> they do and the supply of graduates is <I>why</I> they do it, how they impact on the community. There are other impacts, too, such as increasing the capacity of the Australian economy in the information age, improving our ability to compete internationally, etc. </P>
<P>We don’t think it has ever been true that universities have been these ivory towers, concerned only with teaching and research. People like the Vice-Chancellor of the University of Sydney make disparaging remarks about universities ‘not just being TAFEs’ or ‘not just being skills training centres’ but this tries to write off the very reason why the great bulk of people seek a tertiary qualification and it tries to write off the key impact that universities have on their community. </P>
<P>Putting aside the unhelpful rhetoric about TAFEs and skills centres, this imparting of skills and development of competencies in professional disciplines is one of the key operations of universities and it goes toward the function of ensuring the supply of professionally qualified graduates to serve the community.</P><B><I><BR style="PAGE-BREAK-BEFORE: always" clear=all></I></B><B><A name=_Toc53458773>HECS rises – differential effects</A></B>
<P><I>Q. What do you think the HECS changes will do to enrolments for particular courses?</I></P>
<P>A. On the positive side, the decision on teaching and nursing <I>may </I>boost the flow of qualified people in these professions into the community. Beyond that, there is a big question mark on the extent to which fees policy can contribute to the achievement of what we see as the key goal of professional education goal – <I>to ensure a supply of qualified professionals to serve the community across </I><I>Australia</I><I>. </I></P>
<P>We believe partial fee deregulation could lead to ‘predatory pricing’ by the wealthier universities – undercutting on prices leading weaker competitors to drop courses as demand falls. If this were to mean wealthier universities having monopolies in particular courses, it could have severe impacts on the equitable supply of professionals across Australia.</P>
<P>The opportunities provided by HECS flexibility could make universities go for the money in all fields rather than tailoring HECS premiums to help produce student mixes that address community needs for graduates in particular professions. We believe there is a real risk that greed will push aside need.</P>
<P>There is an issue also about ‘brand image’, using cost of courses as a proxy for quality which, as we say in the submission could lead to an over-supply of, say, prestige-chasing Sydney University-trained lawyers when what the community needs more of may be University of Western Sydney-trained teachers. </P><B><A name=_Toc53458774>HECS rises – overall effects</A></B>
<P><I>Q. Do you have concerns about the HECS reforms which will enable universities to charge a premium?</I></P>
<P>A. We have noted a lot of the comments by student organisations and by professional bodies, such as the Law Council and the law school deans. There have been comments also from the ALP. </P>
<P>We were concerned at the suggestion that some relevant research material on the effects of HECS changes was being suppressed. It remains to be seen whether the new HECS models and provisions (e.g. FEE-HELP and changed thresholds) and proposed funding of additional places and scholarships will counter the effect of fee deregulation. </P>
<P>Having said that, we are leaving arguments in this field mainly to others and focusing our attention instead on the differential effects – the impact of HECS flexibility on flows of students into particular professional streams. That links, of course, to our concerns about supply and demand.</P>
<P><I>[Note: DEST report quoted in </I>Australian Financial Review<I>, 10 July 2003: universities’ <U>income</U> from student fees and charges grew from $2 billion in 2001 to $2.46 billion in 2002; HECS charges for domestic students plus other student fees, represent 37 per cent of university <U>income</U>, compared with 25 per cent in 1996; federal support has dropped to 41 per cent; NB also from Nelson release of 5 March 2003: ‘Taxpayers contribute about 75% of students’ course costs. Students pay around 25% of the cost, for which they are provided an interest-free loan from the Government through HECS.’]</I></P><B><A name=_Toc53458775>Linkages</A></B>
<P><I>Q. We see from the press that you are against linking funding to workplace relations practices. What linkages, if any, would you substitute?</I></P>
<P>A. We propose an amendment to the Higher Education Support Bill at subdivision 33-B, line 33-15, to delete the link between additional monies under the Commonwealth Grants Scheme and compliance with workplace relations policies. (See <I>Attachment</I>.)</P>
<P>The workplace relations link elevates a secondary issue to primacy and, we believe, will have very little effect on outcomes. </P>
<P>On balance, we accept the link to the national governance protocols with a proviso that we will come to in a moment. </P>
<P>The ‘missing link’ is the link to the community and this is what our proposed amendment is designed to address. We propose implementing the link in two ways; making additional funding contingent upon evidence that effective community consultation has taken place; writing the requirement for such consultation into the national governance protocols applying to each university.</P>
<P>On the funding link, we believe that a community consultation requirement, and monitoring compliance with it – for example, by requiring reporting on consultation in the university’s annual report and that evidence of consultation be provided in the CGS annual negotiations – will contribute more to the achievement of educational objectives than will any link to workplace relations policies.</P>
<P>We believe the community consultation requirement should be written into the <SPAN> national governance protocols applying to each university. We propose an explicit requirement to consult the individual university’s U-CCC (community consultative council) on matters of university policy and planning that affect the courses taught at the institution and their funding. </P>
<P>The extent and nature of consultation and how it actually affected university decision-making should be reported in the university’s annual report. </P><B><A name=_Toc53458776>Needs analysis: National priority reviews versus a continuing mechanism</A></B>
<P><I>Q. The Government has recently held reviews of nursing, teaching and veterinary science. The first two led to decisions designed to increase the flow of people into these professions. Isn’t this what you have in mind?</I></P>
<P>A. The approach on nursing and teaching is welcome, though we have a couple of reservations about it which are set out in our submission. (Essentially, how far price signals can be effective when there are individual vocations in play.) But we don’t believe these initiatives should be done on an exception basis. </P>
<P>There should be a mechanism built in to consider side by side supply and demand issues for a range of professions not just on an ad hoc basis. </P>
<P>We were taken by the remark of the consultant David Phillips, who has a lot of experience in this area. We quote him at para 60 of our submission:</P>
<P>Both the National Review of Nursing Education and the Australian Council of Deans of Education have emphasised that it would be in the national interest for a more coordinated workforce planning and policy development approach to be taken to ensuring the supply of nurses and teachers. While the Commonwealth has given a commitment within the <I>Backing Australia’s Future</I> package to consulting with States and Territories about their workforce needs, it has not proposed any <I>specific new strategies or mechanisms</I> to address the concerns that have been raised about the lack of a national whole-of-government approach.</P><B><A name=_Toc53458777>Quality: Influences upon it</A></B>
<P><I>Q. Does your submission address quality issues as well as supply issues?</I></P>
<P>A. One of the five key questions we pose in our submission is: Do universities produce professionals who are adequately qualified? At around para 42 of the submission we look at quality issues.</P>
<P>We are particularly concerned with the effects on quality of worsening staff: student ratios. We look also at things like mentoring, use of adjunct professors, and accreditation by professional bodies as influences on quality.</P>
<P>We welcome the material in <I>Backing </I><I>Australia</I><I>’s future</I> on learning and teaching, workplace productivity ($27 million to support this in universities) and collaboration between institutions. We would like to see more detail on, for example, the productivity initiative and on collaboration. The latter – collaboration – should be about better outcomes, not just about saving money.</P><B><A name=_Toc53458778>Shortages of professions</A></B>
<P><I>Q. What evidence is there about shortages of particular professions in the community?</I></P>
<P>A. We have some information in the submission and since then we have looked at some of the submissions put in to Senator Campbell’s skills inquiry. </P>
<P>Most of the information in the submission is around paras 57 about physiotherapists and then paras 63 on about podiatrists, audiologists and other ‘small enrolment’ courses – small but important, just think for a moment about late onset diabetes in an ageing population, foot problems and podiatrists – specialist engineering professions and veterinarians.</P>
<P>You also have submissions from the dentists and from the engineers. </P>
<P>We have noted also the information supplied by DEST and DEWRSB to the Campbell inquiry and highlighted in the ALP’s <I>Aim higher</I> document. This covers professions like nurses, dentists, pharmacists, occupational therapists, physiotherapists, radiographers, teachers, and computer professionals.</P>
<P>The government has made a start with nurses and teachers. We believe more needs to be done and it needs to be done more systematically.</P><B><A name=_Toc53458779>Supply and demand for professions</A></B>
<P><I>Q. Can you say a little more about the supply and demand issue as you see it?</I></P>
<P>A. The theme of our submission is that the aim of professional education is to ensure an equitable supply of qualified professionals across Australia. If you parse that, it naturally means this should be a key aim of universities since that is where, in large part, professional education takes place. </P>
<P>Obviously, universities can’t do this on their own. There is government funding and there may be initiatives needed (when you look at the ‘equitable supply <I>across </I><I>Australia</I>’ aspect) to support young professionals to relocate and/or set up practices. But that should be a key function of universities.</P>
<P>It really comes down to three aspects of supply and demand (submission para 55):</P>
<UL style="MARGIN-TOP: 0cm" type=disc>
<LI style="MARGIN-TOP: 6pt; MARGIN-BOTTOM: 3pt; tab-stops: list 36.0pt">supply and demand for all professions nationally;</LI>
<LI style="MARGIN-TOP: 6pt; MARGIN-BOTTOM: 3pt; tab-stops: list 36.0pt">supply and demand for all professions in individual communities; and</LI>
<LI style="MARGIN-TOP: 6pt; MARGIN-BOTTOM: 3pt; tab-stops: list 36.0pt">supply and demand for individual professions in individual communities.</LI></UL>
<P>It is important to break it down in this way. We are conscious again of the remarks of the Phillips Consultancy (quoted in our submission at para 56) that both the nursing and teaching reviews ‘have highlighted the complexity of the supply and demand dynamic for these professions and the evidence suggests that the drivers of both supply and demand differ considerably across States and Territories’. Having a good supply of qualified physiotherapists in Brisbane, for example, does not address a shortage of physiotherapists in Perth, if the Brisbane people do not want to move.</P>
<P>Finally, while we recommend a closer link between the funding perspective on higher education and the community impact perspective – between the inputs and the outcomes – we don’t think the outcomes can be addressed simply in gross national terms. It is more than statistics about labour markets and skills shortages. </P>
<P>We need to know about the impacts on rural and regional communities, for example, of not having a dentist or a pharmacist, of towns not having accountants who can do company audits, of elderly people not having access to a vet to look after their companion animal, and so on. </P>
<P>This is getting below the statistics and it is one of the reasons why our suggestion about community-consultative councils covers the level of the individual university as well as the national level. </P>
<P>We need to have universities in, say, North Queensland or Western Sydney, which have information about needs and shortages at the local level and can feed this into their negotiations with the Commonwealth under the Commonwealth Grants Scheme.</P><B><A name=_Toc53458780>University-Community Consultative Councils</A></B>
<P><I>Q. Can you go into a bit more how these would be set up and how they would work?</I></P>
<P>A. The best I can do is to go briefly through the relevant paragraphs of the submission, since we put some thought into this part and I want to make sure I get it right. I refer to paras 92 and following of the submission.</P>
<P>University-Community Consultative Councils (U-CCCs), as we call them, would channel the views of professional bodies, community groups, state and local governments, and other stakeholders into decision-making about the mix of courses and the funding of universities. They would ensure that information about needs was available or, where information was lacking, that research could be commissioned. </P><BR style="PAGE-BREAK-BEFORE: always" clear=all>
<P>U-CCCs would meet the criticism that the CGS and related incentive-based schemes run the risk that decision-making will be based solely on the not necessarily well-informed views of public servants and university administrators. U-CCCs would firmly ground mission diversity in the varying needs of individual communities, against the context of national economic and social requirements. </P>
<P>We propose that U-CCCs would be composed a little differently at the national and university level. The <I>national</I> U-CCC might comprise Commonwealth, state and territory government representatives, and representatives of the AV-CC, national professional associations such as PA, business, and the community. </P>
<P>The national U-CCC would influence the setting of national guidelines for administering CGS. It could take a national perspective on workforce supply and demand issues. It would have an independent chair reporting direct to the Minister. It could meet quarterly.</P>
<P>The national U-CCC would work with the university-based U-CCCs and other state and profession-specific bodies looking at workforce issues. But it would be important to preserve a degree of local autonomy for the university-based U-CCCs.</P>
<P>A U-CCC <I>for a particular university</I>, on the other hand, could include representatives of the university, representatives of state and local governments, local professionals supported by the resources of their professional association, and local community and business representatives. The composition would vary from institution to institution – obviously, a suburban university serves a different community from a regional university.</P>
<P>This U-CCC would feed information to its university about local needs for professional graduates in order to assist the university in its CGS negotiations with the Commonwealth. It would have an independent chair reporting to the national U-CCC chair. It would meet at least twice a year. </P>
<P>Finally, we say something in the submission about possible models for the national U-CCC. The former National Board of Employment, Education and Training, or NBEET, might be added to the list as a partial model. The recognition that there is a need for a mechanism is more important than the details of its constitution.</P>
<P>Having said that, we would counsel against the thought that the need can be filled by a so-called ‘Business Higher Education Round Table’, which we understand the Minister has in contemplation. </P>
<P>Many professionals are in private business, certainly more than half of them. But most of these are in small to medium-sized business. They are not well-represented by a number of the representative bodies of business and we would be very sceptical that a ‘business round table’ as traditionally understood could do the job we have in mind.</P>
<P></P>
<P>Contact:</P>
<P>Dr David Stephens</P>
<P>Policy Consultant</P>
<P>02 6251 5842</P>
<P>0413 867 972</P><B><BR style="PAGE-BREAK-BEFORE: always" clear=all></B><B>Attachment: Professions Australia proposed amendment to Higher Education Support Bill</B>
<P><I>Extract from Bill (Subdivision 33-B – Basic grant amounts) with proposed amendment shown by strikethrough and <B>bold italics</B>:</I></P>
<P><B>33-15 Increases in assistance for higher education providers meeting certain requirements</B><B></B></P>
<P>(1) A higher education provider’s basic grant amount for a year is increased under this section if:</P>
<P>(a) the Commonwealth Grant Scheme Guidelines impose on higher education providers either or both of the following:</P>
<P>(i) requirements to be known as the National Governance Protocols;</P>
<P><S>(ii) requirements based on the workplace relations policies of the Australian Government; and</S></P>
<P><B><I>(ii) requirements for consultation with the community served by the higher education provider; and</I></B><B><I></I></B></P>
<P>(b) the Minister is satisfied that the provider met those requirements as at a date, specified in the Grant Scheme Guidelines, in the year preceding that year.</P>
<P>(2) If subsection (1) applies to a higher education provider in relation to a year, the provider’s basic grant amount for the year is worked out as if the Commonwealth contribution amount for each funding cluster were increased by:</P>
<P>(a) if the grant year is the year 2005—2.5%; and</P>
<P>(b) if the grant year is the year 2006—5%; and</P>
<P>(c) if the grant year is a later year—7.5%.</P>
<P></P></SPAN>
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