Domini Stuart reports on how changes announced in the May federal Budget are triggering change in the boardroom discussions at universities.
Professor Ed Byrne AO, former Vice-Chancellor and president at Monash University, believes that the reforms proposed in the recent federal Budget could trigger the greatest change in the structure of Australian higher education for more than half a century. He is also optimistic about the outcomes.
“The key aspects are the uncapping of fees and the open entry of private providers,” he says.
“I believe this will lead to a much more differentiated system with high-quality providers playing to their particular space and that, eventually, with good will and competent leadership, we’ll have a better higher education system than we do now.”
Professor Stephen Parker, Vice-Chancellor and president of the University of Canberra, is less optimistic.
“My governing body is conscious that we might now move into a new super-competitive environment which may entail re-examining fundamental issues about our mission,” he says.
“At the moment, the reforms have not been legislated and there is significant opposition to them. I personally regard them as the worst piece of social policy in my 27 years in Australia.”
He is concerned that older universities have decades of public investment to leverage.
“They have built a brand and world ranking on the public purse and will now presumably gouge tomorrow’s students,” he says.
“I also assume that that the private sector will move in and cherry pick the high margin, low capital-intensive courses.”
All universities compete for students and Professor Ann Brewer FAICD, Deputy Vice-Chancellor (Strategic Management) and CEO of the Centre for Continuing Education at the University of Sydney, and CEO of professional education provider Sydney Learning, fears that the new measures could intensify this.
“Some smaller universities may be swallowed up if they cannot provide real value to their regional communities,” she says.
“A policy change such as this demonstrates the growth of the sectors for higher and further education, nationally and internationally, and the potential for pathways between them.
“This will require greater collaboration, and perhaps less competition, at the institutional level than there is at present.”
However, David Gonski AC FAICDLife, Chancellor of the University of New South Wales, predicts that the changes will have only a limited effect on the issues raised at the council level of the larger Australian universities.
“We’re already competing for good students locally and, in seeking to attract the best students from overseas, with universities all over the world,” he says. “We’re also competing for funding in terms of research grants and donations as well as discretionary monies from sources such as sponsorships, so I don’t think that the deregulation of fees is going to make a large difference in the way the board addresses these kinds of issues.
“In our council room we already spend a lot of time talking about the funding of universities. That’s the nature of the job.”
Finding an equitable balance
Today’s universities have much in common with large, commercial enterprises.
“Monash has a turnover of $2 billion a year – if we were a publicly-listed company we would be well up in the S&P/ASX 50,” says Byrne.
“We have to be very aware of providing a high level of service to our students, or customers, and this requires exactly the same level of diligence and commitment that you would see on a commercial board for an enterprise of this size.”
However, universities also have a mission to pursue excellence in education, learning and research, which creates a far more complex challenge for their boards, or councils.
“The primary goal must be a higher education system with funding arrangements which don’t discourage anybody and especially people from poor families or underprivileged groups or who are thinking of entering less remunerative careers such as teaching and nursing, which also has gender implications,” says Byrne.
Gonski is confident that an equitable system can be achieved with scholarships and a properly-implemented Higher Education Contribution Scheme (HECS) system as long as graduates can make a good and sustainable living as they pay back their debt.
“There’s much discussion about when graduates have to start repayments, how much they have to pay and, of course, the interest rate,” he says.
“In my opinion, these details need to be sorted out with a generosity of concept.
“We need to encourage people to do courses at university because the resulting increase in productivity is of benefit to the country as a whole.”
Ramping up the effort
Before the Budget, most universities were already on a path to providing the best in learning, teaching and research as they strove to integrate services and maximise efficiencies. But they may need to ramp up those efforts.
“Individual directors need to question their appetite for risk and to balance this against the rise in innovation and growth while, at the same time, ensuring the sustainability of investments in the current strategy,” says Brewer.
“They need to question how much is being spent on research and development, education, infrastructure and processes and whether this is sufficient and appropriately allocated in the light of the Budget package.
“Without letting ‘groupthink’ set in, balanced optimism is an important discipline for boards,” she says.
The focus of the board’s strategic thinking will depend on factors such as the courses on offer, the role of research, whether the university serves regional and disadvantaged communities, the relative mix of undergraduate and postgraduate students and how many part-time and mature-aged students they enrol.
“Universities are likely to build on their existing strengths, but may also look at expanding into new areas – for example, ways of combining digital and face-to-face teaching to maximise effectiveness and minimise costs,” says Belinda Robinson GAICD, CEO of Universities Australia.
“The combination of less public investment, more providers of higher education, public subsidies for private providers and changes to student loans fundamentally changes the operating environment, so every institution will be looking very carefully at its comparative strengths and its place in a profoundly different higher education ecology.”
Byrne foresees a final move away from the Dawkins reforms of the 1980s and the idea that all Australian universities and higher education colleges should have widespread research and education functions.
“This has been very difficult to sustain in a country of our size and with our level of resources and, in the main, it has not been successful,” he says.
“I think we have to get used to the idea, which is prevalent in the US and increasingly in the UK, that universities have many different missions that are all equally worthwhile and important for the nation.
“I believe that a balance of great research universities, great regional universities, great technical universities and great education-focused universities is the optimum system for an advanced western country and that, unless we move towards that, ours will fall off the page internationally.
“Each institution must know which sandpit it wants to play in; there’s no room at all for lack of clarity of mission.”
Recent years have seen dramatic changes to the composition of university boards.
“Many now include a rich mix of government, academic and industry expertise,” says Vicki Thomson (Twitter @ThomsonVicki), executive director of the Australian Technology Network of Universities (ATN).
However, Brewer believes that the depth of the proposed changes require the board to be much more nimble than in the past.
“Boards will also need to engage in some entrepreneurial thinking, including what drives educational innovation and, indeed, entrepreneurship around education itself,” she says.
She believes that each director should be able to hold the institution accountable without micromanaging or imposing self-interested or narrow sectional interests on its leadership.
“To ensure optimal governance, directors should also regularly take time out to reflect hard on their own capability and motivations for seeking office,” she adds.
Robinson is concerned that universities are being asked to act with what might be considered unreasonable speed on changes which have yet to be confirmed.
“It is far from ideal to be unable to inform students considering enrolling in 2015 what the fees will be in and beyond 2016,” she says.
“Universities are still hoping that, in the interests of fairness, that the government will consider allowing students who enrol in 2015 to be exempt from the new arrangements.”
At the same time, boards must remain ready to respond to broader changes in educational philosophy and delivery.
“We’re seeing a revolution in the way information is being presented and also in the use of e-education and online learning,” says Byrne.
“The currency of university education is also much more short-lived than it was. For example, it used to be reasonable to presume that an undergraduate degree in medicine would carry you through a professional lifetime. Now I’d say the currency is about five years, even less in other areas, so the need for regular, intensive, lifelong re-learning is more major than ever. I believe these kinds of changes are much more transformative than local funding arrangements and, as such, must not be allowed to slip from the agenda.”
As one of the most globalised western nations, Australia is well placed to benefit from a continuing increase in the number of international students.
“At the moment there are close to three million people around the world studying in a country other than their own and that number is set to rise to 10 million over the next few years,” says Byrne.
“In Australia we have a unique opportunity to capitalise on that as the world’s middle class transitions so strongly from Europe and North America to Asia, and China in particular.”
A recent dip in the number of overseas students studying in Australia proved to be short-lived.
“As an industry, international education generates nearly $15 billion in exports annually and supports around 127,000 jobs, 88,000 of which are outside the education sector,” says Brewer.
“And, according to the OECD’s 2012 Education at a Glance report, Australia is third only to the US and the UK as a destination for international tertiary students.”
“Australian universities have spent decades forging international relationships and building their reputations so they, like all businesses, know their market well,” adds Thomson.
“As in all industries, there is some degree of volatility from time to time but the most recent news is positive, with higher growth in both university entry courses and in pathway providers.”
Continuing to thrive
Despite his misgivings, Parker says he and his colleagues will do whatever they need to do in order to thrive if the changes are implemented. And Robinson says she is seeing a widespread commitment from university Chancellors and council members to understanding the changes and the impact they will have on their institutions.
“They’re working closely with their Vice-Chancellors and management teams on strategies, processes and structures to ensure that they are as well-placed as they can possibly be to survive and thrive in this brave new world of Australian higher education – that is, once they know what it looks like,” she says.
Already a member?
Login to view this content