Legislative Assembly

18163 LEGISLATIVE ASSEMBLY Wednesday 7 November 2001 ______ Mr Speaker (The Hon. John Henry Murray) took the chair at 10.00 a.m. Mr Speaker offered the Prayer. UNIVERSITIES LEGISLATION AMENDMENT (FINANCIAL AND OTHER POWERS) BILL HIGHER EDUCATION BILL Bills introduced and read a first time. Second Reading Mr AQUILINA (Riverstone—Minister for Education and Training) [10.00 a.m.]: I move: That these bills be now read a second time. The Government is committed to modernising and strengthening the regulatory framework in which the New South Wales higher education sector operates. This legislative package delivers on that commitment. It comprises the Universities Legislation Amendment (Financial and Other Powers) Bill and the Higher Education Bill. The two bills are essential to underpin New South Wales universities' core mission of promoting scholarship and academic excellence. The legislation will also help to secure public investment and public confidence in higher education. These bills are responsive to the needs of the higher education sector and to the people of New South Wales. They are necessary because governments must deal with the demands and tensions now facing the sector in Australia. The bills recognise not only the value of teaching and research but also the need and capacity for our educational institutions to produce knowledge, and to use it. They reflect the Government's commitment to ensuring that the New South Wales higher education sector is a vital participant in the knowledge economy. The two bills will serve to ensure high standards and quality delivery of higher education in New South Wales and support the development of our universities as strong, effective and vibrant public institutions in the face of significant funding challenges, competition and uncertain times. Our 10 public universities, together with campuses of the national Australian Catholic University, play a crucial role in advancing our economic wellbeing as well as our social wellbeing. Together, they currently enroll some 224,000 students—195,000 local students and 29,000 from overseas. In addition to our public universities, there are 30 private higher education institutions in New South Wales, catering for a further 20,000 local and overseas higher education students. The bills are complementary in their focus. The Universities Legislation Amendment (Financial and Other Powers) Bill will ensure that New South Wales universities have the necessary powers and controls in place to enable them to prudently undertake commercial activities consistent with their core missions of quality of teaching and research. The Higher Education Bill will align New South Wales legislation with a new national framework for the accreditation and quality assurance of Australian higher education. Trade in education services was the nation's eighth largest export in 2000. The value of the New South Wales share was in the order of $1.4 billion, about 40 per cent of the national total. The flow-on effect to the wider Australian economy is immense. The annual value of the economic impact of universities has been estimated recently at around $10.6 billion of expenditure by universities and their students in the community. These benefits are particularly apparent in regional New South Wales. It is estimated that New South Wales regional universities and their students inject a total of $817 million of direct expenditure into regional economies each year. When the flow-on economic impacts are taken into account, this expenditure results in value adding of $1.1 billion in regional New South Wales each year, generating more than 28,000 full-time equivalent jobs. The passage of the Higher Education Bill will add to the value of international education provided by New South Wales institutions. The implementation of this bill, together with the underpinning national quality 18164 LEGISLATIVE ASSEMBLY 7 November 2001 assurance framework, will strengthen the reputation of New South Wales higher education in the international market and will provide assurance to Australian students regarding the standing of the higher education they receive. Over recent years our universities have been subject to cuts in the real value of operating grants and research funding by the Commonwealth Government. Commonwealth Government funding per student has declined by some 6.5 per cent over the past five years. This has led to difficulties in containing expenditure within available funding, greater reliance on overseas and domestic student fees and the pursuit of other commercial ventures. These factors have made increased engagement in commercial activities a necessity for universities across the country and have created tension between the traditional role and nature of universities and their increasing commercial imperatives. In turn, these trends have given rise to public debate concerning the operations of universities, their exposure to financial risk and their use of public assets. All New South Wales universities have powers to undertake commercial activities. These powers are longstanding. They are crucial to universities' financial viability and their capacity to compete both nationally and internationally. They are central to universities' research and development roles, their links to industry, and to State and regional economic advancement. Because universities' commercial activities involve significant use of public resources and directly impact on economic and social development, these activities must be undertaken subject to prudent financial management requirements, transparent processes and accountability measures. Greater Commonwealth Government investment in higher education is crucial if Australia is to keep pace with its competitors. While the increasing pressure on the financial capacity of our public universities represents a major threat to the continuing delivery of quality higher education to the people of New South Wales, we in this place can only seek to influence those in Canberra to more adequately finance our universities. What we must do is ensure that the regulatory frameworks governing university operations reduce the risks of any major failures in quality service. New South Wales leads the nation with the proposals contained in the Universities Legislation Amendment (Financial and Other Powers) Bill. The measures in this bill will serve the needs of modern public universities and State responsibilities for accountability, and protect the public interest. The bill represents the culmination of extensive consultations with universities and the New South Wales Vice-Chancellors Conference. All New South Wales universities have indicated their support for the bill. For example, I was pleased to see a recent letter from the Vice-Chancellor of the University of Western Sydney which applauded several aspects of the bill and acknowledged its ability to balance greater flexibility with accountability. The Universities Legislation Amendment (Financial and Other Powers) Bill updates and clarifies university powers and more effectively addresses issues of commercial risk and consequent threats to the delivery of universities' core missions. The bill removes universities from the more general Public Authorities (Financial Arrangements) Act 1987, commonly referred to as PAFA, and includes new provisions within university enabling Acts to govern universities' financial arrangements. This makes it possible to tailor requirements to more appropriately reflect the State's role and universities' needs. Consultations began last year in response to concerns raised by New South Wales universities with regard to the impact of the August 2000 amendment to PAFA. Members will recall that the Public Authorities (Financial Arrangements) Amendment Act 2000 made PAFA the principal source of legal power for public authorities to enter into financial arrangements. PAFA, however, is not appropriate to the contemporary requirements of financial regulation of New South Wales universities. Universities are unique public entities. They are established by State legislation but are reliant on the Commonwealth Government for substantial public funding. They serve essential public purposes and use substantial public assets, namely State property, but remain essentially autonomous in their academic and administrative affairs. Their unique nature requires a custom-designed regulatory regime that reflects some of PAFA's characteristics but allows for a more flexible approach that is consistent with universities' contemporary missions, challenges, and nature. Greater reliance on university Acts requires a number of changes that in part reflect existing PAFA provisions. The bill proposes amending investment provisions in universities enabling Acts so that governing bodies' investment powers would be conferred solely by a university's Act. As a result, a university's governing body would be authorised to invest the funds of its university in any manner approved by the Minister with the concurrence of the Treasurer. Similar provisions to those contained in section 25 of PAFA are proposed to enable universities to appoint or retain approved funds managers. These amendments also address concerns 7 November 2001 LEGISLATIVE ASSEMBLY 18165 raised in the New South Wales Auditor-General's report to Parliament for 1999, Volume 2. For example, this bill introduces provisions in universities enabling Acts to limit the powers of controlled entities to those of the parent university. The way in which universities'

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