IssuesOfOurTime-Text.x:IssuesOfOurTime-Text.x 14/1/08 12:08 PM Page 34 The Future of Australian Higher Education Glyn Davis n September 2007, IBT Education Limited, Australia’s only Istock market-listed provider of higher education, held its annual general meeting. Investors had every reason to be pleased. Profits were $54 million, a very healthy surplus on takings of $283 million. IBT Education had recorded a higher revenue than 13 public universities, and a better surplus than all but four of Australia’s of public universities. A newly emerging private sector is becoming an important part of the education story. Yet the success of IBT is not just a case of private providers challenging the public sector. Many students enrolled in IBT colleges across the country rely on FEE-HELP, a government loans scheme for full-fee students that defers the cost of education until graduates earn $40,000 a year. The number of IBT students taking out FEE-HELP loans increased by 80% between 2005 and 2006. At public universities, domestic enrolments increased by 1% over the same time period. Thus boundary lines between public and private tertiary education are changing. A private provider relies on a government loans system to grow. In turn, IBT can offer places to students who might otherwise miss out on places in higher education; the available data suggests several IBT institutes attracted a larger share of students from low socioeconomic background than did the public university sector. 34 ISSUES OF OUR TIME IssuesOfOurTime-Text.x:IssuesOfOurTime-Text.x 14/1/08 12:08 PM Page 35 THE FUTURE OF AUSTRALIAN HIGHER EDUCATION IBT Education is still a small player in the context of the entire higher education system. Many of its operations comple- ment the public higher education system, by offering pathway programs rather than competing directly. Yet IBT’s strength and growth are a sign of the way tertiary education is changing. As certitudes and hierarchies fall away, what will this mean for the future of Australia’s public universities? Several challenges emerge through the IBT story. First is the question of diversity and competition, of a domestic student base no longer growing quickly. Students have more choice. They can be more selective, and demand more varied forms of higher education than public universities now offer. Second is the challenge of finance. Like IBT, public universities rely on student fees rather than income from government to survive. They are no longer “public” in the sense of being overwhelmingly funded by Canberra. Instead they too must adapt to markets, and remain vulnerable to a downturn in student enrolment. Third is the challenge of making higher education more accessible to people of low socioeconomic backgrounds. The system of subsidies and price controls long used in Australia to ensure access to higher education more equitable has not fundamentally altered the socioeconomic make-up of univer- sity enrolment. A fourth challenge does not come directly from IBT or any of the other private colleges or universities. It is the challenge of maintaining Australia’s international research strength, with our position now subject to the annual evaluation of global rankings. Many of these challenges are interlinked, so this chapter will describe each before concluding with policy suggestions and political strategies. Diversity and Competition Forty years ago, Australian had a diverse higher education system. Though the new universities established in the 1960s all adopted the orthodox Australian view that universities are both ISSUES OF OUR TIME 35 IssuesOfOurTime-Text.x:IssuesOfOurTime-Text.x 14/1/08 12:08 PM Page 36 GLYN DAVIS teaching and research institutions, with qualifications from bachelor degree through to PhD, and a range of disciplines tending to the comprehensive, that was not true of the non- university tertiary sector. It supported an array of institutional types — colleges, institutes, conservatoria of music. Some were multi-disciplinary, but many specialised in fields such as nursing, teaching, agriculture or the arts. Institutional size varied from vast, multi-campus enterprise players such as RMIT to small colleges with just a few hundred students. Ownership and governance were equally diverse, from autonomous institutions to units within state education departments. Over time, almost all that diversity was lost, most dramati- cally in the late 1980s and early 1990s as then Education Minister John Dawkins created a “unified national system”. Minister Dawkins turned colleges of advanced education into universities and amalgamated most small institutions out of existence. By the time the Dawkins wave of mergers concluded in the early 1990s, 63 higher education providers had become 36 universities, many with multiple campuses. The Dawkins mergers were controversial at the time, and many lamented the loss of institutions offering distinctive educa- tional experiences. The large post-Dawkins universities may have achieved the hoped-for economies of scale, but at the price of narrowing the range of institutional options open to students, and sacrificing the benefits of specialisation, of a single-minded focus on doing one or small number of things very well. Until the last few years, though, there was little political or policy pressures to recreate diversity. Once turned into universi- ties, former teaching-focused institutes and colleges had no desire to return to the past. Their staff and students want the research opportunities and status that come with being a university. Unsurprisingly, the pressure for change came from outside public universities, from the small private higher education sector. Private higher education is not new in Australia, but unlike in the United States it has never enrolled more than a small share of the student population. With subsidies from government, the free 36 ISSUES OF OUR TIME IssuesOfOurTime-Text.x:IssuesOfOurTime-Text.x 14/1/08 12:08 PM Page 37 THE FUTURE OF AUSTRALIAN HIGHER EDUCATION or cheap education offered by public universities let them dominate any field that they entered. The private higher education sector largely concentrated on niche fields of study of little interest to public universities, such as theology, natural medicine, and specialised areas of professional training, particularly in banking and finance. Only two Australian private institutions have univer- sity status, and both offer courses in similar fields to public univer- sities. These are Bond University, established on the Gold Coast in 1989, and the University of Notre Dame, which began operating in Fremantle in 1990. Though small, the private higher education sector did provide diversity. It expanded the range of fields of study on offer, or gave a theological perspective to courses taught elsewhere, such as the teaching courses offered by the Seventh-Day Adventist affil- iated Avondale College or the multi-denominational Tabor College. Bond University offered low student:staff ratios unavail- able at public universities, and pioneered year-round teaching, so students could finish undergraduate courses in two rather than three years. By the late 1990s, a number of private higher education providers were lobbying the federal government to remove what they saw as the unfair treatment of their students compared to students at public universities. Some of them have secured Commonwealth-supported places in “national priority” teaching and nursing courses, but the key policy change they sought, and in 2005 received through the FEE-HELP scheme, was the extension of income-contingent loans to their students. Income-contingent loans are an Australian policy innovation that has now been adopted in other countries. These loans began with the introduction of the HECS scheme in 1989, which re- introduced tuition charges at public universities but let students defer repayment until their annual earnings reached a threshold. Students repaid through the tax system, with rates varying accord- ing to earnings. FEE-HELP is a version of HECS, now renamed HECS-HELP, for full-fee students. ISSUES OF OUR TIME 37 IssuesOfOurTime-Text.x:IssuesOfOurTime-Text.x 14/1/08 12:08 PM Page 38 GLYN DAVIS Under FEE-HELP, students enrolled in approved higher education providers are able borrow up to $80,000 from the federal government to finance their studies. They repay on the same basis as students with HECS-HELP debts from studying in a Commonwealth-supported places. Since FEE-HELP became available, the number of institutions approved to offer it to their students has increased rapidly. The initial group of 34 able to offer FEE-HELP in first semester 2005 had more than doubled to 71 by October 2007. Though most of the institutions approved for FEE-HELP are long-standing private providers, it has not been restricted to this group. Six TAFEs are now offering FEE-HELP supported full-fee higher education courses alongside their traditional vocational programs. The Box Hill Institute of TAFE in Melbourne, for example, offers degrees in applied music, biotechnology, computer systems, and hospitality management. Its Bachelor of Biotechnology and Innovation combines biotechnology subjects with business units, to aid commercialisation of scientific ideas. Box Hill TAFE claims this is a unique combination in Australian higher education. It also offers associate degrees, so students can exit after two years but still receive a qualification. FEE-HELP has also been made available to the first overseas university to set up a campus in Australia, the Pittsburgh-based Carnegie Mellon University, which opened in Adelaide in 2006. Carnegie Mellon offers American rather than Australian degrees, a potentially significant development. In a global economy we can no longer assume a local degree will be preferred, even by Australian students. Major Australian employers are familiar with qualifications from other countries. More than 60,000 Australians in professional or managerial occupations leave Australia on a long-term or permanent basis each year. For them, an American credential may be an advantage.