Funding rules, not national need drive higher education*

Campus Morning Mail
22 Feb 2021

The unified national system has grown haphazardly over 33 years. It has become increasingly complex, without a governance framework to drive mission (purpose), management and organisational processes, and develop the knowledge, expertise and skills of people who work within it.

Governance, such as it is, is driven ostensibly through the terms and conditions of Commonwealth government financial assistance and support, and an ever-widening application of Commonwealth and state government laws, regulations, rules, and control of university activities.

The system covers 183 providers, multiple funding agencies, numerous regulators (in addition to TEQSA), auditors, lobbies, staff associations (unions) that negotiate employment terms and conditions, professional accreditation bodies, bankers and financial advisers, property consultants and developers, journalists and policy commentators, 130,000 staff members and, of course, the 1.6 million students currently in the system receiving an education.

This multiplicity of stakeholder involvement and regulatory oversight makes the higher education system a very complex operation.

Despite this complexity, the system operates on a regulatory premise of “one-size-fits-all” with the same rules and controls applying to all institutions. This might ensure consistency but it works against innovation and developing a system that would address the diverse education requirements of students, employers, and industry, as the economy becomes more diversified and complex and communities crave a broad range of educational opportunities and experiences.

There is no operational distinction between the higher education system and the research system, tightly coupled with the national innovation system. There is growing concern about how the education system cross subsidises research. There are also concerns about the effectiveness of links with vocational education and training.

Over the years, the higher education system has accommodated ever-changing funding arrangements with ever-more detailed rules, processes, and controls over education delivery. This complex rules-based system has emerged due to a desire to ensure responsibility, accountability and compliance with funding intent. It is a far cry from times when funds were allocated to support institutions for doing their job.

It is a case of Gresham’s law where process requirements drive out commitment to strategy. The most recent example of this rules-based process approach and the accompanying complexity is the Job-ready graduates package.

For example, the amount of time spent ensuring compliance with the Job-ready rules detracts from time that could be allocated to developing education strategies that genuinely meet student, industry and community needs in the market that a higher education institution is working in.

In other words, funding rules, rather than national policy and strategy, drive higher education action. The focus on rules leaves wide-open scope for interpretation of what policy and strategy are and debates about what they should be. This scope for interpretation follows from the absence of a consistent or coherent governance framework for the system.

System governance would be concerned with setting a mission (purpose), goals, and objectives and ensuring that scarce resources are used efficiently, effectively and appropriately. System governance would set the framework and parameters for how institutions within the system decide what to do and how to do it.

Due to the complexity of the higher education system, there is a clear need for policy and governance leadership that would set the system’s direction and priorities over the medium to longer term. These would address education, economic, social, and industry outcomes.

In the science, research and innovation area, Industry Innovation and Science Australia was created in 2015 as an independent statutory board of entrepreneurs, investors, researchers and educators to advise the Commonwealth government on policy and strategy in these areas.

The time is now opportune to create a parallel organisation to address higher education policy and strategy. Reincarnating the former Tertiary Education Commission has been canvassed, but an organisation with a broader remit is required.

The TEC provided advice regarding financial assistance to universities and other continuing education institutions. The commission was abolished on 1 July 1988, with its responsibilities passing to the Department of Employment, Education and Training (DEST).

The National Board of Employment, Education, and Training (NBEET) was created as a statutory body in July 1988 to provide coordinated, independent advice on employment, youth affairs, education, training, and research. It was abolished in June 1996.

The abolition of NBEET removed a significant source of independent and expert advice regarding Australia’s higher education system’s financing and evolution. Universities Australia (then the AVCC) sought to fill the gap by publishing regular policy statements about the goals and needs of higher education, independent of the government and the government bureaucracies.

Over the ensuing years, Universities Australia became quite an active policy advocate and lobby organisation to the point of instigating aggressive public relations and media campaigns. As a result, a gap in independent strategic policy advice for the higher education system and higher education industry emerged.

A new higher education policy organisation would address the current system failure by setting a long-term strategy and articulate priorities for growing a sustainable higher education system that delivers required education outcomes and a higher education industry that generates exports and creates jobs.

In particular, the body would advise on creating a diversified system that acknowledges the different (and complementary) roles of different provider categories and the need to develop different funding and investment approaches tailored to specific outcomes within and between categories.

The body would work within a framework that acknowledges that the development and implementation of a university strategy is fundamentally the responsibility for university governing bodies, operating autonomously and independently under their statutes, to address their own missions, goals, and priorities. The Commonwealth Government cannot intervene in the development of university strategy or endorse it.

Nonetheless, universities require strong guidance on what governments (at all levels), industry and the community wants in the context of a national higher education system in working in an economy built on the generation and application of knowledge. The present Commonwealth Government has failed to provide leadership in providing this guidance.

Analysis such as it is, tends to be partial (coming from within the system itself), interested (coming from consulting firms with a commercial interest), or contested (advocacy from a particular point of view).

A new higher education body would advise on policy, strategy and the allocation of funds. It would draw on the existing players, but more significantly, its work would be based on partnership and trust with providers, with transparent processes, agreed outcomes, accountabilities, and reporting arrangements.

*This is a synopsis of chapter 7 in John Howard’s recently published book Rethinking Australian higher education.