Australian higher education: how we can build for the future

Keynote address, Australian Financial Review Higher Education Summit 
Professor Margaret Gardner AO

Chair, Universities Australia
President and Vice Chancellor, Monash University

Tuesday 29 August 2017

First of all, I’d like to acknowledge the Gadigal people of the Eora nation and pay my respects to their Elders past and present.

I’d also like to thank the sponsors for this summit.

We in Australian higher education gather regularly in conferences and seminars like this to consider the future. Today and tomorrow, as on other days like this, people will propose ways that we could improve. They will bemoan aspects of our present, and laud or ignore our past selectively, depending on where the past fits in their proposals for better higher education in Australia.

And as part of these conversations we will contemplate the most recent government-proposed legislative changes to higher education funding and some of our operations. The changes, cuts and new schemes for accountability, are the latest ‘reforms’ proposed by government. Reform is a grand word. Our question should be: will these reforms serve grand objectives?

It is always worth asking, where can we improve? There is always room to challenge the current way universities are shaped and operate.

Australia’s universities regularly ask these questions, across the many areas in which they work. It helps to base this improving advice on accurate data, rather than on a broad sketch of anecdotal evidence. Where government looks to higher education we understand they always face choices about where and how they distribute public funding to achieve national objectives. We hope their choices are made in light of the best ways to serve our national objectives.

So let me begin by outlining some elements that should drive the concern to improve higher education. We should begin by understanding the shape of Australian higher education now and most particularly what we do well. No good future strategy is formed without understanding risks and opportunities, and where our capabilities lie. So, by understanding the current strengths of Australian higher education we can then turn to ways it can be built for a better future. And in that contemplation of a better future, my question is not only about what reforms would be better for higher education, but in the timeless Kennedy formulation, asking what we can do for our country.

First, the comparative strengths of Australian higher education.

The international window is from the various global rankings systems. Just this month, the Australian higher education sector ranked third overall with 6 of its universities in the top 100 in the Academic Ranking of World Universities (ARWU). The US was first with 48 universities in the top 100, and Britain, second, with 9. In the top 500 universities, Australia was fifth overall with 23 universities (after the US, Germany, Britain and China).

When the ARWU rankings first appeared in 2003, only 13 of Australia’s universities made the top 500 list.

This evidence of internationally recognised high quality universities is mirrored in other global rankings.

If we look across the results of 4 different global rankings schemes - that is the Shanghai ARWU, the THE (Times Higher Education), the QS (Quacquarelli Symonds) and the US News ranking - we can see variation due to the different weightings each scheme uses. We know that institutions rise and fall year by year, sometimes due to small changes in their profiles. And of course methodology matters when we are attempting to compare performance across the complexity of differently designed national higher education systems. But there is a broad level of stability in these rankings and the story they tell of university performance. Looking beyond the group of Australian universities that sit in or near the top 100, we have many universities in the top 300. And around half of all Australia’s universities land somewhere in the top 400 in the world. Australian policy makers and pundits must ask themselves how many other sectors of national endeavour match this breadth and depth of international performance. And before they attempt to ‘reform’, ask how these reforms will affect that performance.

The implications of this performance are twofold. Australian universities educate over 90 per cent of all our higher education students. This means Australian graduates, whether domestic or international, are more likely than the generality of students in other national systems to be educated in internationally recognised high quality universities. In the United States, less than one per cent of students attend an Ivy League university.

The second implication relates to the number of our universities in the top 100. In international education markets the benefits of this are clear.

International demand for education is driven particularly by the top 100 of our research universities.

Australian universities have used strong growth in our domestic and international enrolments to self-invest in research capacity, and this has helped our position in global rankings.

It is on this international research performance by higher education that Australia’s largest service export, education, is largely based. It isn’t our beaches; it isn’t our friendly people. It is this world-class performance. We cannot separate the international ranking of our research performance from the success of Australia’s higher education system.

This brings me to a second element of comparative strength, the Australian university sector’s attractiveness to and willingness to enrol international students.

Reflecting on our success, and on the mix of conditions that supported its continuance, a Deloitte report in 2013 dubbed international education one of the 'fantastic five' industries on which Australia’s future could be built. At the time that report noted that the export income generated by international education in 2010 was $15 billion a year.

Overall, onshore international education became a $22 billion-dollar export industry in 2016, with universities accounting for around two-thirds, about $15 billion. That figure will likely be even larger in 2017.

Australian higher education now educates over a million domestic students, along with over 350,000 international students, a remarkable ratio in world terms. In fact, there is no system in the world that has a similar ratio. International students who come to Australia spend more in the wider economy than on tuition fees.

Overall this makes international education the nation’s third-largest export. In some states, it is the largest export. Along with these direct and visible economic benefits come indirect benefits. Not least of these are the stronger cultural ties and joint projects and ventures created between Australia and its neighbours in the Asia-Pacific region especially.

A great deal of mutual understanding and trust accrues across very different cultures through the channel of higher education. These kinds of connections and understandings will be vital capabilities for future generations of Australians as they navigate a more dynamic and uncertain, yet more closely connected world.

This brings me to a third comparative strength by looking at OECD comparisons of tertiary education attainment.

As the Department of Education and Training noted recently, Australian attainment levels for 25-34 year olds are among the best of OECD countries, particularly when we focus on Bachelor degree attainment. This has been driven most recently by the uncapping of undergraduate places.

The social and economic benefits of higher participation and attainment involve a more highly skilled and educated workforce, able to adapt to a rapidly changing world of work. The win-win-win aspect of this is greater labour productivity to support the nation’s continuing economic development, lower public costs associated with the unemployment of under-skilled citizens, and most importantly, wider opportunities for people to shape their own futures and live healthy, productive and fulfilling lives.

The clearest system comparison to Australia’s strong levels of tertiary attainment is the UK, which has a higher education system that is similarly heavily weighted to Bachelor degree attainment.

Some countries, such as Denmark, France or Norway, have higher education systems that focus more on Masters level attainment, where a Bachelor degree becomes a stepping-stone or exit point. Many countries have stronger Masters level attainment than Australia. Our average of 8 per cent lags the OECD average of 14 per cent.

Meanwhile Canada, which has a very strong and well financed tertiary system, has greater focus on sub-bachelor attainment through its system of community colleges. While Australia is stronger in Bachelor degree attainment, in Canada overall tertiary attainment is stronger than ours, which in turn is above the OECD average.

Canadian universities are better funded per student than ours, but situated in a differently shaped tertiary system.

This is to say there is more than one way to design and finance a tertiary education sector to suit national needs, but that in its own terms Australian attainment levels are high.

So this is the 'now' of Australian higher education - internationally competitive research and education; a major services export; and the foundation of national capabilities for future innovation and resilience.

This 'now' has been built on strategic policy decisions and investments made by governments and by universities in the past. Arguably many of the outcomes we see today flow from decisions made since the late 1980s – that was the watershed moment for what we see today.

If we are to set future national goals and policy for higher education in Australia, building on this strong platform, what would and should be our first priorities? That is the question we need to ask.

Australian higher education today is a mixed economy. It has evolved in response to an historical collage of policy shifts and funding sources, market opportunities, and institutional strategies.

Today I want to deal with three key elements on which its current successes rely:

First, HELP, once HECS, has been a generally safe, successful and flexible policy instrument for financing successive waves of system expansion to lift access and attainment in Australia. The Gillard government changes uncapped Bachelor degree places on this subsidy-plus-student-loan basis. The current proposed budget cuts attempt to redress what is perceived to be unacceptably high total government expenditure into this uncapped higher education system. The uncapping of Bachelor places has also had unintended effects, by lowering demand for vocational programs in the wider tertiary sector.

In contrast, in vocational education, VET-FEE-HELP was opened to private-for-profit providers as well as the public not-for-profits, with similar aims to higher education: to widen access and allow wider competition. Here both volume and price were deregulated, for-profit entrants were under-supervised, and as we know it has been an expensive policy, as well as a market failure. So it matters, understanding what those successful policy foundations are.

Second, the success of higher education has also relied on the regulatory regime, including TEQSA, and the government-funding regime (Table A providers) that has restricted access to government funding to a smaller pool of providers in the higher education market. This has maintained both the quality and international reputation of the whole Australian university (and therefore higher education) system.

Third, the strategic decisions made by universities themselves on the basis of their autonomy and self-accreditation within the regimes outlined at 1 and 2 – HELP and regulatory environment. In the midst of relatively constant policy and market shifts, over the past three decades universities have learned to compete and collaborate, partner and outsource; they operate on campus, online and offshore; they earn public and private income (increasingly more private than public); they run facilities and programs that incur losses but for which there is demand or community need, and which they support with cross-subsidies; they serve many communities beyond their students or graduate employers; they accept responsibility for solving societal and global problems; they perform multiple duties of care, locally and internationally. I remind you of this: they are among the most complex public agencies in the nation, because they serve multiple objectives and purposes. They are not single purpose agencies.

The three elements outlined above have been critical to the current demonstrable international success of Australian higher education. Where do they fit in the shaping of future policy directions?

Instead, in public policy conversations, discussion of presumed inefficiency trumps investigation of the sources of increased productivity and efficiencies in universities; the fruits of scholarly enquiry struggle for recognition, although scientific invention and medical innovation do garner public kudos; and the disruptions of technology are seen through the single lens of their potential unraveling of our universities, rather than through the role of universities as the generators of disruption for themselves as well as others. That’s what research is. It’s disruption.

Like the nation itself, universities face a volatile social, economic and geopolitical world, where both work and learning are in flux. To survive and succeed, universities must take risks and be entrepreneurial. One consequence is that as other countries build capacity in their own university sectors, the exposure of ours to missteps in government policy and funding regimes, and any downturn in a major international student market, is considerable. That is where the risk is.

Recent reviews have considered various aspects of the higher education sector: base funding, the demand-driven system, the growth of HELP debt, the costs of teaching, and the level of student attrition. Recent policy changes have given rise to unexamined risks and unintended consequences, none of which were subject to policy deliberation. Tertiary education has become a site for piecemeal reform and policy experimentation, often without sufficient design thinking or open deliberation about what goals we are seeking to achieve, and what new circumstances we really face.

Indeed one is tempted to say that rather than look first at the construction and contribution of Australian higher education to the future when proposing change, it has been an afterthought.

Recurring themes of recent reform attempts have been quality and value for money. But the subtext, writ large in recent years, has been fiscal constraint and Budget repair due to rising costs in other areas of government spending.

The policies and funding changes now proposed through the education portfolio are directed to ‘saving’ something else that is bedevilling government, whether it is Budget deficit or funding the NDIS.

The nation-building contribution of higher education is often lauded in the portfolios of industry, science and innovation, in health, in foreign affairs and trade. And in all these areas Australian universities travel the world for, and with, government talking of the advantages higher education research and education will bring.

But the real test of government policy intention can be seen in its legislation - when national research infrastructure has no forward funding; when the Education Investment Fund of 2008 is to be closed as part of the Nation Building Funds Repeal Bill; when funding per student will be cut and students asked to pay more for a less well-resourced education; when schemes requiring more funds into administration are proposed as ways to ‘improve’ education.

The combination of a damaged vocational education sector, a higher education sector under threat of further funding cuts, and the prospect of administrative intervention in student load planning and enrolment processes creates a good deal of potential instability for tertiary education in Australia. A number of institutions in higher and vocational education will be at greater risk, creating uncertainty for their staff and students, the communities they serve and the markets in which they operate.

Absent a compelling nation-building strategy and a clearer view of the roles, structures and governance settings of tertiary education, the risk is this: our university sector will continue to be seen by governments mostly as a site for further savings for Federal Budgets, driven by extraneous budget repair priorities. Policy starting from the view that the sector can always be made to wear cuts, or can export more to counter any future funding shortfalls. And that current internationally strong performance can be taken for granted.

What is the underlying vision? And what should it be?

Standing here, it sometimes appears as if it is assumed that what is done in the education portfolio to higher education has no implications for the outcomes being sought for Australia in industry, science and innovation, in health, in foreign affairs and trade.

And more - that it is not worth having a vision of where and how one of Australia’s few comparative international strengths, higher education, might be built to provide greater outcomes for all of Australia.

Where to from here? How will we build for the future? Not only the future of Australian higher education but also the future it can help to provide?

We need to consider where higher education can develop and deliver a vision for our future. Increasingly such a vision requires partnerships with industry, community and government – but it is not a vision that can be conceived somewhere else, or found or copied from somewhere else. A vision for the sector needs co-creation, but must also rely on universities drawing on the expertise of their educators and researchers.

From those educators and researchers come understanding of possibilities for transformation of fields of knowledge, of occupations and professions, of the way new discoveries might develop and translate. From them also come ways of drawing on underpinning philosophies, values and rights to evaluate the implications of the societal changes the future brings.

There are two major areas where big questions must inform a vision for higher (and indeed for tertiary) education for the future. Without a serious discussion of Australia’s objectives, then policy and programs will appear without a roadmap, without a notion of interdependencies, without the commitment that is needed beyond Ministerial and electoral cycles.

Tertiary education for the workforce of the future is the first.

- Future types of tertiary capabilities, credentials and delivery channels. What kinds of knowledge, skills and learning capabilities will be needed for the kind of nation Australia wants to be in decades to come?

- In a future where workplace and technology changes will require periodic reskilling, what types of post-Year 12 credentials will be needed? Having gained a credential that certifies what tertiary graduates know and can do, how often might they expect to return to some form of tertiary study for further development of capabilities?

- If periodic return to study is to become the norm over an expected 40-50 years in the workforce, how should our current tertiary qualifications post Year-12 change? What mix of delivery channels do we need?

- For employment, what will be the most widely recognised supplements to common workforce entry qualifications, as these are currently defined?

There are lots of questions but they are big questions about what sort of tertiary education we think we are going to need for our future. And what we think we are going to provide for the world around us. And they are not one in the same.

Research and innovation as core roles for a 21st century university sector.

- Future research funding and infrastructure. What types of research and innovation programs will be needed to ensure that the nation’s innovative capacity will meet future economic and social needs? How might we foster further the creativity of our researchers to tackle the grand challenges of our time? Surely we should that they do.

- The climate for commercialisation and research development What types of public and private sector support should be sought for research and innovation programs? How do we encourage development in key areas should occur in Australia for the future?

These big questions need systematic review, discussion and consultation. They will raise issues about:

- The future profile of the tertiary education system

- System design and financing options

- Models of governance and oversight

These are matters not of the detail of how universities operate but of the factors that will shape the sector, and the framework for tertiary education and the research and innovation systems within which they work.

Assaying the big questions about the future of our sector is no small task. It must begin by recognising what has been successful and outlining the scenarios and roadmaps for possible changes – recognising interdependencies and the timelines that allow for iteration of changes.

When I look at the now of Australian higher education I see little public discussion of what is necessary for continuation or acceleration of the successes evident today. Why isn’t that the first thing you ask?

Nor that starting from that investigation is critical to plotting future success. I see little understanding of where, in universities, the efficiencies have been made, the innovations seeded and implanted, the risks taken, and those risks that still need to be taken.

Yet when I look at universities’ enabling statutes, and the vision, mission and goals of Australia’s universities as expressed in their strategic plans, I see big visions of contribution to their regions, their nation, and indeed the world. In universities I see graduates infused with big aspirations, educators with big hopes for their students and their impact, researchers with grand designs for a better world. We should be arguing about what will make the current success of Australia’s universities greater, and what more benefits Australia might gain from our research and education.

And yet these are the very discussions we are not having.

Unlike the Mr Micawber of Dickens’ imagination I do not confidently expect something to turn up. I know that the fine line between success and misery that Micawber so eloquently outlined “Annual income, 20 pounds. Annual expenditure, 19 pounds. Result? Happiness. Annual income, 20 pounds. Annual expenditure, 21 pounds. Result? Misery.” is perilously close for too much of Australian higher education.

There is a path that builds on the current success of Australian higher education and how this will bring a better future for our nation, but it will not come by chance. It will not come if we cannot work out what is worth preserving, what is a foundation for excellence, and what big goals are within reach. It is a project not only worth doing, but one that should galvanise partners in the community, in industry and in government; in the same way I see university alumni from around the world see the possibilities of their universities. But if it is going to happen it will not start from the reform proposals before us now. We in higher education cannot and should not abdicate to others the shaping of this debate.

It is in our hands. It is our mission to seek to define the future, not just for our universities but for that better future to which university education and research is committed; that is our goal. It is the big challenges, the big questions, and the bold goals that should be the focus of a university system on whose strength Australia can rely.