THE UNIVERSITY OF SUBMISSION TO THE ACT GOVERNMENT ON FUTURE COLLABORATION WITH THE CANBERRA

BACKGROUND

UC approaches its future with considerable confidence. It will finish 2011 with over 11,000 full-time equivalent students: by far the largest in its history and above the budgeted estimate. Despite a downturn in international students across the Australian tertiary sector, UC’s international numbers have continued to increase. On 23 September 2011 our acceptances by new international students for the start of next year were 14.72% higher than on 24 September 2010, suggesting that UC may be one of the universities to buck the national trend.

Staff morale and support is high. In July, 81% of our continuing and fixed-term staff chose to complete a confidential Staff Survey, administered by an independent external organisation, using an instrument which is also used by over 30 other Australian universities. UC’s 2011 results have improved across the board since the previous exercise in 2009. On most measures they are above the University sector average. In particular, support for UC’s mission and values is expressed by 84% of staff (up from 73% in 2009). Support for UC’s organizational direction is at 75% (up from 72% in 2009, and 14% higher than the sector average). Teamwork is amongst the most valued aspects of work at UC, and 92% of staff agreed with the proposition “I have good working relationships with my co-workers”. This is up from 87% in 2009.

Satisfaction by students with the units they study and with the overall experience of taking a course at UC is at a record high. The Good Universities Guide 2012 awards UC the maximum 5 stars for “Graduate Employment” and “Positive Graduate Outcomes”.

The University’s audited research outputs in 2010 are also at a record high, and the value of research contracts already signed in 2011 is the highest in our history.

These results make us optimistic about our future, and also cautious about any structural changes that might interfere with it. Nevertheless, the University has publicly supported, in principle, recommendations for the merger of CIT with UC contained in the Hawke Report in February and the Bradley Report in August. We believe that potentially a merger is in the long-term interests of tertiary education in the Territory.

Any negotiations between the owner of CIT (the ACT Government) and the University will be negotiations between independent parties. The is a self-governing entity originally created by Commonwealth legislation, which transferred to ACT legislative jurisdiction in 1996. Its governing body, the Council, comprises a Chancellor, eight external members appointed by the Chief Minister of the ACT and six internal members. The vast majority of UC’s government funds come from

1 the Commonwealth. In 2010, only 0.3% of its revenue was provided by the ACT, in contrast with 60.2% from the Commonwealth and 22.1% from full-fee students.1

GENERAL POSITION ON MERGER

A coming together of UC and CIT under the name the University of Canberra would potentially create a strong tertiary institution well-equipped to meet future challenges. Advantages of a combined institution over the separate evolution of each include:

1. The creation of a new model tertiary institution which will be a leader in Australia and internationally, offering new curricula to meet the needs of new economies that are based on services and innovation; 2. The “future-proofing” of UC and CIT ahead of deregulation and market-based reforms in tertiary education which have already begun but which will accelerate after January 2012 with the introduction of demand-driven funding in the university sector; 3. The re-balancing of tertiary education within Canberra so that the two institutions with headquarters in the ACT (ANU and UC) are of more equal size and reach whilst having distinctively different and complementary missions.

The University quite understands that there is some opposition to a merger, or at least misgivings about it. This is inevitable with a change of such magnitude. There may be concerns, for example, about preserving the vital role of trades training. There may be concerns about one institution’s culture prevailing over the other. And there are sensitivities over the possible loss of an institution’s name, and therefore some of its identity and heritage. The University believes that these concerns can be met, but only through an early process of negotiation, which has not even yet begun. The University will, however, only agree to a merger if its name remains unchanged.

The University also understands that some would prefer further or more detailed investigation into the consequences of a merger. From the University’s perspective, however, this is an issue which has been around for 20 years. In the last 12 months, the Hawke and Bradley Reviews have recommended merger. The ACT Government decided to add an 8 week consultation period to the timeline recommended by Professor Bradley. Any further period of investigation would, in the University’s view, go over old ground: but more importantly it may miss the point. The point is to focus on what the future will look like rather than how the past has been. The future of the higher education and vocational education and training sectors is one of deregulation, competition, demand-driven funding and the potential collapse of institutions which cannot meet the challenges of the market. The decision to be made is what will maximise the prospects of UC and CIT in that environment, not what a merger might have meant in an environment now past. In commissioning Professor Bradley to advise it, the ACT Government has had all the expert advice it could need on the big question of what the future holds.

1 The breakdown of 2010 Consolidated revenue was 60.2% Commonwealth; 22.1% student fees; 3.7% upfront HECS contributions; 0.47% State and Territory; 13.53% other (such as from commercial activities and non- government research grants).

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This general position has led the University to adopt a clear basis for negotiations with the ACT and to insist that if a merger is to occur the basic decision should be made promptly and legislation enacted without delay. Otherwise, the University wishes to focus on international student recruitment, the demand-driven funding system that commences domestically on 1 January 2012, the strategic goal of becoming a world-ranked university by 2018 and generally on charting its own destiny.

Set out below is the only basis on which the University is willing to negotiate with the ACT Government over the transfer of CIT. The position outlined below was adopted by the University Council on 23 September and follows extensive consultation with staff, students, alumni and other external stakeholders.2

BASIS FOR A MERGER BETWEEN UC AND CIT

Subject to satisfactory resolution of due diligence and transitional issues referred to further below, the University will agree to a merger with CIT on the following basis:

1. The ACT Government must announce before the end of November 2011 that it will introduce legislation to bring CIT into UC with effect from no later than 1 July 2012. 2. Section 8 of the University of Canberra Act3 should be amended to include the Canberra Institute of Technology as one of the constituent parts of the University of Canberra. It may well be that the TAFE division of an enlarged UC should continue to be called the Canberra Institute of Technology. Students who are taking courses solely at CIT might continue to regard themselves as attending CIT; and the certificate or testamur at the end could reflect both the name of the institution formally granting it (the University of Canberra) and the part of the University that the student attended (the Canberra Institute of Technology). The use of dual names is commonplace in some parts of the world. 3. Various other consequential amendments to the UC Act should be made, in particular to sections dealing with the functions, values, principles and powers of the University, and to sections relating to Council and Academic Board. 4. The Act should be amended to make clear that vocational education and training are part of the core functions of the University. Appropriate words should be drafted to entrench in the University’s values parity of esteem between the various functions and parts of the University. This might extend to parity of esteem between teaching and research as well as between vocational education and higher education. 5. The CIT Act should be amended correspondingly to handle transitional matters, with a view to its repeal when no longer required.

2 This includes two all-staff Vice-Chancellor’s Forums, eight separate breakfast meetings between the VC, faculties and research centres, a meeting of the professoriate, a business and trade union breakfast (jointly with CIT) and a public forum (jointly with CIT). In addition messages were sent to all alumni for whom we have e-mail addresses, encouraging them to make submissions to the ACT Government or give us feedback direct. 3 The section currently provides that the University contains “the faculties and other bodies that are decided by the council.”

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6. All functions of CIT should be transferred to UC, to enable CIT to continue operating in a comprehensive way across the different kinds and levels of vocational education and training. 7. Those assets which are to form part of the enlarged UC should be transferred to UC’s balance sheet on 1 July 2012, and an agreement as to what those assets are must be reached by the end of November 2011. In stating this position, the University acknowledges that it is for the ACT Government to decide which assets should be part of the new institution, but once that decision is made there should be a transfer, on the usual basis for state land grants to universities, that the assets cannot later be disposed of without the Government’s consent. In this way, the University is assured that no future Government could attempt to resume those assets, whilst the interests of ACT taxpayers are protected because the University could not unilaterally dispose of them. 8. A mechanism for transferring the employment contracts of CIT staff, immediately or over time, should be defined. 9. There should be a general principle that current students of both institutions must not be materially disadvantaged by the amalgamation. 10. It should be part of the express functions of the University, directly or through its controlled entities, to promote participation in tertiary education and training, particularly amongst under- represented groups. 11. There should be no compulsory redundancies as a result of the amalgamation during the transitional period referred to below. 12. The educational offerings of the enlarged UC should be reviewed during the transitional period, with a view to maximising the likely success of its vocational and higher education courses in the emerging environment of demand-driven and contestable funding, through ensuring that the offerings align with the needs of the community and employers. 13. The costs of effecting the amalgamation must be borne by government, whether the Commonwealth, the ACT or both.

In addition there are some due diligence requirements and transitional issues that must be settled between UC and the ACT Government in the period before 30 November, failing which the merger should not go ahead. These would include the duration of the transition period, a draft funding agreement between the ACT and UC covering the first three years of operation and the capital assets which are to transfer with CIT.

If the ACT Government accepts the above way of proceeding, four phases will effectively be laid down:

1. The period until 30 November, by which time a Heads of Agreement or equivalent is to be entered into, dealing with at least the matters above. 2. The period between 1 December 2011 and 30 June 2012. During this period legislation must be enacted, reflecting the agreed terms. 3. The period between commencement of the merger legislation (say, 1 July 2012) and the expiry of a transitional period, the duration of which is to be negotiated. A possibly expiry date is the end of 2013. In the intervening 18 months, or as the case may be, the basic changes to

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structure, operations and systems in UC should take place, and during this period there should be no compulsory redundancies attributable to the merger. 4. The period after the expiry of the transitional period when UC operates in an integrated way, even if integration continues to develop and mature over several years.

ALTERNATIVES

Professor Bradley ruled out the idea of a collaborative future between UC and CIT if they were to remain separate. She said that she did not “believe any further attempt by the ACT Government to encourage or mandate any greater cooperation between CIT and UC than currently exists is a realistic option”. She made this assessment in the light of a predicted future of intense competition within the Australian tertiary sector.

The University does not necessarily accept such an extreme view and would be willing to discuss new modes of cooperation, including the resumption of discussions with CIT, initiated by UC in 2010, over the joint establishment of UC Polytechnic.

Professor Bradley recommended that if the ACT Government elects not to prefer a merger of the two institutions then it should establish CIT as a body with levels of independence similar to those of Victorian TAFE Institutes by 1 January 2012, but if it chooses neither merger nor independence for CIT then discussion of mergers should be ruled out for five years.

Whilst it is not directly a matter for UC, the University can see merit in a period when CIT operates independently and, if Professor Bradley is correct, in a situation of greater competition with UC. During that period presumably CIT would become liable to payroll tax, from which it is currently exempt. In 2010, the University paid the ACT $7.2m in payroll tax; which was 12.6 times the amount of financial assistance received from the ACT. If there is to be competition between the two institutions in certain areas, the fiscal playing field should be level.

The University would also like to resume discussions with the ACT Government over a contestable funding scheme, as exists in Victoria and which appears to be on its way in and , and perhaps nationally. The University and CIT could then compete for funds, at least in relation to courses at Australian Qualifications Framework Level 5 and above (Diplomas and higher). Now that CIT offers bachelor degrees and postgraduate qualifications, a contestable funding scheme would seem to be a logical and fair consequence.

The Government might wish to note, however, some commentary about the prospects of Victorian TAFE Institutes since the Bradley Report was released, for example “Bleak Future tipped for TAFEs” by John Ross, The Australian, 7 September 2011. It was also reported in The Australian on 21 September that only two out of 19 TAFEs in Victoria reported a surplus last year (“Victorian TAFEs in financial trouble”, by Julie Hare). Most concerning from UC’s point of view is that the TAFE Division of Swinburne University reported the highest operating loss at $6.1m. Professor Bradley noted that an independent future for CIT would require “profound adjustments in culture, operations and , particularly at the more senior levels”. She went on to say that everyone, “Government, management, the Advisory

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Council and staff [of CIT], should accept that, to make this option work, major changes in internal operating arrangements will be required”. The example of Victoria suggests that these changes would have to be profound indeed.

CONCLUSION

This is a difficult issue for all concerned, and has been so for many years. The University wishes to end its submission on a positive and optimistic note. The University explicitly endorses the goal of the Tertiary Education Taskforce in January 2011 to make Canberra the best tertiary education city of any in the world. Done well, a merger between UC and CIT could greatly boost our chances of achieving this, but if the ACT Government, as the owner of CIT, does not wish to make a prompt and unequivocal decision on the matter, the University will move on and seek to build on its recent achievements whilst facing with enthusiasm a more competitive national and international higher education sector.

Professor Stephen Parker

26 September 2011

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