The 20,000 equity places that nearly weren’t allocated and that will probably never be delivered

At the 2022 election Labor promised up to 20,000 new student places in skills shortage areas for members of equity groups. The minister announced high-level allocations last October. The funding agreements implementing the promise for 2023 were published last month, providing additional but not complete detail. This a multi-year program and the current 2021-2023 funding agreements do not include 2024 commencing places.

This post describes the available information on student place allocation, highlighting the policy and legal flaws in distributing funding this way. The policy’s problems are exacerbated by the Job-ready Graduates Commonwealth contribution changes.

Allocations by funding cluster

When universities received their allocations many were surprised by student places they had not requested. These were in funding cluster 1, the law, commerce and most humanities cluster. Just over 30 per cent (3,026) of the 9,851 places allocated in this round are in cluster 1.

The Department of Education’s manoeuvre can be seen in the funding agreements, an example below, which are prescriptive about the use of cluster 2 and 3 places, following information in funding applications, but not cluster 1. Instead, another clause says ‘these [cluster 1] places are to be delivered in line with a separate agreement between the Provider and the Department.’ To stay consistent with the original guidelines the cluster 1 courses need to be in skills shortage fields. Accounting and auditing are on the skills shortage list, although universities could also find other ‘relevant industry needs or shortages’.

Why were universities given student places they had not requested?

Cluster 1 places were allocated because this was the only way to produce a nominal 20,000 place allocation, consistent with Labor’s election promise, within the available funding. Cluster 1 has the lowest Commonwealth contribution rate, of $1147 per EFTSL in 2023, and therefore produces the largest number of places for a given Commonwealth Grant Scheme amount.

As I argued in an Accord-related blog post last December, the widened differences between Commonwealth contributions as a result of Job-ready Graduates create difficult trade-offs. Putting places in a course with high Commonwealth contributions burns through a lot of the limited allocation of Commonwealth Grant Scheme funds that each university receives – or, in this case, the Department has to distribute. Putting priority skills areas in unnecessarily high Commonwealth contribution clusters (to offset reduced student contributions) was a major policy error.

Which universities received places?

Most universities and a few NUHEPs received allocations, without obvious major patterns in what type of university received the most places, although five of the Group of Eight are towards the lower end of the range. Six public universities received no places. (This and other data, which was helpfully collated by a colleague in the sector, is summarised in this spreadsheet.)

Will 20,000 additional allocated places turn into 20,000 additional delivered places?

Although the Department seems unable to provide enrolment numbers without a two-year delay, multiple other sources suggest domestic demand is weak. Domestic school leaver numbers, labour force survey tertiary student data, and student contribution liability data all support this conclusion.

JRG makes student contribution liability trends a less reliable proxy than before for what is happening on the Commonwealth contribution side,* but as of November 2022 all but three universities were down on 2022 student contribution revenue as estimated in December 2021. It’s likely that more universities than usual will be ‘under-enrolled’, delivering student places valued at less than their funding agreement allocation (normally this would reduce Commonwealth Grant Scheme payments, but 2022 and 2023 are still covered by Dan Tehan’s Higher Education Continuity Guarantee; the student contribution/HELP revenue is however lost).

The two universities worst affected by falling student contribution revenue did not get an equity places allocation. Presumably they did not apply because they could not use the funding entitlements they already had, let alone additional funding. But I wonder how many others genuinely believe they can use the extra allocation, rather than just signing up to every government program for political reasons.

As I noted in my earlier post on the 20,000 places policy, the more prescriptively the government allocates resources the less likely it is that a student can be found who matches all the criteria. The cut and pasted funding agreement extract above is UNE, so to use these resources someone must (a) want to go to UNE; (b) want to do one of this limited list of courses and (c) be a member of a listed equity group.

For a regional university this latter requirement won’t be hard to meet, as most of their prospective students will satisfy at least one of the regional home location, low SES, First Nations, first in family or disability requirements.

But other universities might get applicants wanting to do a skills shortage course but who don’t meet the equity criteria. Across the system there may be potential students who meet the equity criteria but do not want to go the university with additional places, or want to do a course aligned with their own career goals rather than the government’s skills projections.

By pursuing two separate goals in the one policy, meeting skills needs and increasing equity group participation, the government reduces the chance of success in either objective.

The combination of soft overall higher education demand and an overly-prescriptive allocation of funding means that it is very unlikely that this policy will result in 9,851 more commencing places in 2023 than would have been the case if nothing had been done.

The legality of this policy, again

I pointed out in my previous 20,000 places post that the government lacks statutory authority to allocate places in non-designated courses to Table A universities (the public universities). The relevant section of the legislation is highlighted below (only medicine is ‘designated’).

When confronted with this problem for its ‘short courses’ the previous government’s workaround was to name specific courses and give each a funding amount, which by amazing coincidence happened to be the relevant funding rate multiplied by a whole number. But for prudent legal reasons places were not mentioned.

As the UNE extract shows, the defiance of section 30-10 is now quite blatant, with the word ‘places’ and the relevant numbers specifically mentioned. This time the workaround is a prior statement that ‘quoted places are indicative only of commencing EFTSL implied by the allocated funding amounts.’

I realise that the Department was trying to keep Labor’s election promise made in the language of places. But sidestepping the intent of parliament as expressed in legislation is bad practice.

Update 7/3/23: In Senate estimates on 16 February the Department rejected claims of legal issues with the 20,000 places policy.

The bureaucratic hassle of micro-allocations

The 20,000 places policy devotes substantial bureaucratic resources to allocating relatively small sums of money. The cut and pasted tables from UNE above involve the university deciding to apply (probably VC level), choosing which courses to put forward consistent with the criteria, and justifying their choices in an application. Department of Education bureaucrats – having already created bespoke program guidelines – then assessed all applications, including from UNE, before determining how to distribute the available funding, sending their recommendations up the line to senior Education bureaucrats and the minister for sign off, before implementation including funding agreements being rewritten and re-signed (VC level again at UNE). Both parties need follow-up to identify and agree on unrequested cluster 1 place allocations that meet the original criteria. All, in this case, for 23 student places, 15 of which UNE had not asked for, and $137,000. UNE is subsequently going to have to prove that this money was used according to the funding agreement terms.

The Universities Accord panel should push back against this kind of inefficiency being part of any proposed new funding system.

*Because an enrolment share movement to low student contribution fields (eg nursing, teaching) will push up demands on the CGS. In normal years the funding determinations reveal CGS shortfalls directly, but due to the Higher Education Continuity Guarantee this is not happening.

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