Rebuilding a Sustainable, Fair and Productive Tertiary Education System for Australia

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The Covid-19 pandemic provides an opportunity to reflect deeply on what has gone before and how we should do things differently. In the article below, Stephen Parker presents his personal vision to rebuild Australia’s tertiary education system, improving its sustainability, fairness and productivity.

Sooner or later, every era seems to re-fashion its education system to meet its needs.

Each of the earlier industrial revolutions was accompanied by changes in the mode of education and the institutions that provided it. The school classroom, the worker’s institute, the civic, technological and research universities can all be matched with the needs of the times and interests of the powerful.

We are now entering a new industrial revolution – the so-called Industry 4.0 – a fusion of exponential technologies where silicon and carbon meet, which will prove to be as profound as the previous revolutions driven by steam, electricity and computing.

Yet we have struggled to think through what a sustainable, fair and productive education system should look like in an age of machine intelligence and robotics; an age which could greatly increase the gap between the haves and the have-nots.

Without the pandemic, we might have drifted on for another decade using piecemeal reviews to admire the problem. Now, the emergency and the innovation that will be forced upon us have brought forward the future, exposed our fault-lines and provided opportunities to shape the future decisively.

What’s Gone Well, and What Hasn’t

There is much to celebrate about the last half century of Australia’s tertiary education system.

University education has expanded massively, improving participation and attainment rates amongst the young.

Fee-paying international students from the early 1990s have brought revenue and a global outlook, and then returned to their home country as rising leaders, thinking well of Australia.

Australia’s research output and impact have been greater than our relative size as a population and economy. In fact productivity in both education and research increased between 2009 and 2019 at a greater annual rate than the Australian economy as a whole.

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Our higher education system ranks well against those of other developed countries. In the Universitas 21 ranking of Higher Education Systems 2020, Australia ranks 9th overall. When adjustment is made for levels of economic development it rises to 7th.

The vocational education and training system in Australia has had a less evenly successful past, and been “reformed” almost to death, with a reform on average every two and half weeks over 21 years. However the decades up until 2010 can be regarded as a heyday for public providers – the Technical and Further Education Institutes (TAFEs) – helping Australia adjust to the opening up of the Australian economy during the Hawke years.

Our success story did have tailwinds to help it, due to the acceptance of human capital, equal opportunity and meritocracy theories, plus the sheer buying power of middle classes in developing countries, particularly China.

Even Golden Ages have their less glittering aspects, however, and there have been failings along the way.

The sector may have boomed but, as Raewyn Connell argues, it has not always been a happy place for everyone to work in.

The Australian university system lacks internal diversity, compared with some other successful countries: a thesis propounded particularly by Glyn Davis. A single, secular model from the mid-nineteenth century has been developed, but not departed from.

Uniformity was actually strengthened by the Dawkins Reforms in the 1990s, when the Colleges of Advanced Education were merged into a unified national system, and which then chased the prestige associated with research.

International student fees have been used to subsidise research, which in turn drives up rankings and makes the institution more attractive to further international students. We are working through some predictable consequences of this Faustian business model now.

Our tertiary institutions have increasingly come to rely on casual and sessional staff. This is linked to the growth of international students, along with other trends in the economy. If a higher proportion of revenue is at risk or “soft”, the obvious mitigation measure is to make some of the payroll soft as well.

And, curiously, whilst we seem to have improved equity of access to tertiary education, income and wealth inequality have worsened over the same period. There are arguments that this is not a mere coincidence.

Perhaps the most striking failure of the period has been the decline of public vocational education and the dramatic fall in apprenticeships and traineeships.

Governments of both stripes embraced marketisation in the hope of greater efficiency in VET, leading to cherry-picking by private, for-profit providers and some outrageous rorting of a loans scheme. The uncapping of university places from 2012 also led to a huge influx of young people who would otherwise have gone to TAFE. If the plan had been to destroy TAFE (which it wasn’t), these were masterful policy settings.

Finally, there is the sheer cost of education. It has become expensive, not (in Scott Galloway‘s words) as “insanely” so as in some countries, but even in Australia, which pioneered the use of fair, income-contingent loan schemes in higher education (HECS), there are young people saddled with debt for years, beginning to wonder about the return on their investment.

In the period between FY06 and FY19, the average time to repay increased from 7.3 years to 9.2 years, with many more large outstanding debtors.

It’s a cliche, but something approaching a paradigm shift was becoming inevitable. The old theories were having increasing trouble fitting the new facts.

The Principles

Heeding these lessons from the past, we can lay down eight principles for the future.

The tertiary system needs to be designed: desirable change won’t happen spontaneously. There is something built into the university sector in particular that inhibits organic evolution; and there are no market mechanisms at work of the kind that lead to continuous adaptation in many other industries and sectors.

The system needs to be integrated, bringing higher and vocational education into a coherent whole, forging a new approach to tertiary education which balances knowledge, skills and experience.

The system needs to be diverse. Those countries which have real diversity of institutional type, mission and purpose have more options to build up institutions that meet contemporary needs and scale down those that do not.

The system needs to be frugal. We are entering a period of restraint, we owe it to the cohorts of graduates who will spend much of their working lives paying off public debt incurred because we did not see the pandemic coming.

The system needs to deliver value for students. The empirical evidence in Australia is still slight, but there are signs that the premium for an undergraduate degree is coming down in like countries which have had similar expansion, and the same may be happening here.

The system needs to be equitable. Even within itself, our university system is inequitable in that a far lower proportion of low SES students are admitted to Group of Eight universities than to most others. It is actually the regional universities and TAFEs that are doing the heavy lifting in tertiary equity.

More generally, enrolment by all disadvantaged groups is lower than the proportion of the population they reflect, and in some instances is declining as a share of the student population.

The system needs to be productive. A huge amount of money goes into tertiary education, from the taxpayer, students and their families, and industry. Yet, the Higher Education and Research Group seems to be alne in measuring productivity, in the sense of actual outputs for a given level of inputs. Somehow we have been so distracted by rankings, esteem factors and vague notions of quality that we have forgotten to divide one number into another and then make sense of it.

Finally, the system needs to be accountable. It is remarkable that bungles abroad and at home, where tax-payer money has been lost through disastrous campus ventures or failed back-office IT systems, seem to have so few consequences.

But leaving these aside, we still lack a mechanism to reward tertiary providers for being good at what we want them to be good at, and hold to account those that aren’t. Without the share price, shareholders and Annual General Meetings of the corporate world, and without the bracing experience of Senate Estimates appearances by public sector agencies, we have entities somewhere between the Market and the State, accountable to no one in particular.

The Possibilities

A designed and integrated system inevitably needs to be a national one, and in practical terms only the federal government is in a position to regulate and run it. Rather than hope that the spirit of the National Cabinet continues in post-pandemic times, public higher and vocational institutions need to be brought under the same, federal legislative structure, with funding and loan schemes that make sense against each other.

There is a case for a buffer body, such as an Australian Tertiary Education Commission, as has been proposed for many years, to keep political influence at bay and enhance accountability. At the least there should be an independent tertiary education pricing authority, drawing on thinking similar to that behind the Independent Hospital Pricing Authority and the New South Wales Independent Pricing and Regulatory Tribunal.

Such arrangements would also invoke the principles of frugality and value for money.

A diverse system will be promoted by removing a priori thinking about what defines a university or technical institute.

Providers should be accredited and quality assured against specific forms of qualification in the Australian Qualifications Framework (AQF) rather than what “type” of entity they are, and it should be up to them what mix of qualifications they then offer. There is a case for protecting business names like “university”, but there is no need beyond that to classify an entity as higher education or vocational education.

Various successful systems around the world just use “tertiary” or “advanced” rather than the confused (and inaccurate) binary division between “higher” and “vocational”. Funding, loan schemes and obligations should flow from the particular AQF award being offered rather than the idea of a provider type.

It also follows that we do not actually need elaborate regulation around “higher education provider categories”, which currently have the effect of requiring minimum levels of research in universities. We should welcome university institutions which focus on excellent teaching of courses within the AQF.

The combined effect of uncapping domestic higher education and a more generous loan scheme than for vocational education has been an imbalance, which has threatened the viability of TAFEs whilst increasing the attrition rate in universities as more students, for one reason or another, drop out at the end of first year.

A Year 13 idea should be examined where after the Year 12 certificate domestic students would have a voucher for the equivalent of a one year diploma outside a university. Thus, a student might choose to take a vocational course to Diploma level at a TAFE, for example, with no fee liability, or directly enter first year of a university bachelor degree and incur the HECS debt. The diploma would allow them to explore what they might be good at, and decide whether to commit to further training or study.

In practice, most universities would have to give credit for some or all of the diploma against a bachelor degree, reducing the overall cost of a degree to many students; assuming they do decide to go on to degree-level study.

The public cost of the free diploma stage would be partially offset by savings from fewer first year students in bachelor degrees. There would be further savings if the HECS debt for year one were for the full amount, so that the subsidy for university students (the Commonwealth Supported Place amount) only kicked in at year two.

The principle of frugality could be applied in many ways. A symbolic but practical first step would be to require that the remuneration packages of senior executives in tertiary institutions be set or approved by remuneration tribunals.

Few would think that the vice-chancellor of a public university should be remunerated above the Chief Justice of the High Court of Australia ($608,150) unless an independent and impartial tribunal agreed. At present, the vast majority are.

Rather than iconic buildings designed to impress dignitaries and create a sense of awe, we need to re-think campuses and the way that necessary physical manifestations of the education system are created. Inevitably, the day of digital transformation has arrived: the day of prestigious symbolism has passed. We should expect governing bodies of institutions to require management to show that every dollar of expenditure is necessary, not merely desirable.

A further possibility, which also invokes the principle of value for money, is to unbundle the cost of tertiary education, giving students more choice in what they are liable for. Taxpayer money for tuition should not be used for research, and the student should not incur a debt for it. This would immediately bring the cost to the student down.

Nor is there is a good reason why a wholly online student should incur the same fee liability as an on-campus student. It may well be true that the cost of high quality on-line learning is as great as high quality on-campus learning, but the latter students also have access to facilities and a particular experience.

More radical still would be the option of allowing enrolment for assessment only. We have long had an “audit” facility where (typically) mature age people enrol for classes but are not assessed. A reverse model would be where a student pays only to be assessed but has the choice of how they prepare themselves.

If, for example, a student who self-studies can achieve the same pass grades as a student who attends classes, why should they pay the provider for tuition? Precursors of this can be found around the world, notably the longstanding University of London external program.

One of the many consequences of this would be pressure on providers to offer value-adding, interesting teaching; the death of the dull lecture!

In terms of equity, the best single and relatively costless measure we could take is to scrap the Australian Tertiary Admission Rank (ATAR).

Its integrity as a measure can be questioned in the first place, with different jurisdictions meshing rank orders together. But the very idea of reducing to a single index the diverse abilities of a whole cohort of young people benefits those best prepared and advised rather than the innately most able.

The prestige market of universities gathers round it, producing the popular perception that the higher the ATAR the better the institution (at everything). Thus, elites try even harder to get their children into those institutions, and an inegalitarian spiral takes place.

The obvious solution, particularly with digital technologies that can bypass Admissions Centres, is to go by the individual marks of a student in subjects relevant to the particular degree, supplemented where necessary by sample work.

So, if a university decides it wants students who are good at specific areas, it should admit students who can demonstrate relevant ability, through marks or other evidence. No one actually needs to walk around feeling they have been defined by their ATAR. They should be defined by what they are good at.

Scrapping the ATAR along with a free diploma year 13 would go a long way to improving equitable access to tertiary education, particularly if reforms in the school system have their desired effect.

An obvious way of improving the productivity of the sector is to make the data about student numbers and research outputs per million dollars of expenditure transparent, and encourage improvement through reward mechanisms. This might change the public’s perceptions of the status of individual universities.

The most productive institutions – heroes in many respects – are not always the best known or prestigious. And some of the best known seem not to be relatively unproductive. Where is the money going?

Finally, accountability would be improved greatly by a complete overhaul of performance data and the ability to compare and contrast what are currently higher education institutions and vocational education institutions.

Data and analytics technologies from other sectors are barely in evidence within tertiary education, yet techniques are emerging to measure better the effectiveness of different teachers and teaching methods, the “learning gain” added by the institution, and the lifetime income gain.

The Prize

The prize at the end of this is a tertiary education system that equips adults of all ages for an economy that is fast-changing, whilst restraining the ability of elites to fashion that system in their own interests.

In about 350BC, Aristotle identified three types of knowledge which we could translate today as knowing why (episteme), knowing how (techne) and knowing what to do (phronesis). We have separated and stratified these knowledges through our class system and its manifestation in education structures.

We have an opportunity now to design an integrated, equitable and diverse system which allows the three knowledges to flourish in different mixes; adaptive to changing times rather than left stranded by them.

An earlier version of this piece appeared as a chapter in What Happens Next? Reconstructing Australia after Covid-19, Emma Dawson and Janet McCalman (eds), Melbourne UP (2020).