The competitive education market for workers updating their skills

In 2019 I wrote a series of posts on declining participation in formal education and training by people already in employment. Falling enrolments ran counter to claims that technology-driven disruptions to work would make further education more necessary than in the past.

The 2019 blog posts identified nine sources of survey and administrative data that should be trending up if the workforce disruption analysis was right. All seven data sources on individuals were instead trending down, while two employer surveys respectively showed a small increase in informal training and a larger increase in online training.

Informal training is not or is poorly measured in the individual person surveys. If it is increasing while structured learning is decreasing then this may signal a change in how people educate themselves after their initial formal education.

Prompted by this week’s release of new data on one of my trend indicators – ATO self-education expense claims – this post updates my 2019 analysis. Most indicators show signs of recovery but on the latest available data three are still trending down.

Postgraduate education

Postgraduate coursework education returned to growth in 2019. Commencing on-campus numbers continued to decline but were offset by online commencements. People moving straight from undergraduate to postgraduate study complicate my analysis, as they are trying to start rather than advance their careers. On the publicly available data I cannot distinguish the two groups.

Postgraduate numbers for 2019 remain below their earlier peak, but I expect 2020 and especially 2021 to be growth years. This is partly because I see postgraduate education as counter-cyclical, with COVID labour market disruptions in 2020 encouraging further study. If this hypothesis is right data noise complicates analysis of longer-term trends, but convenient online postgraduate options are attracting students.

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The ‘model code’ on academic freedom and freedom of speech and higher education law

In his speech to the Universities Australia conference yesterday, Education Minister Alan Tudge expressed frustration that some universities had still not, after 26 months, complied with the model code on academic freedom and freedom of speech devised by Robert French. He told delegates that:

If it becomes apparent that universities remain unable or unwilling to adopt the Model Code, I will examine all options available to the Government to enforce it – which may include legislation.

This post updates an earlier one on the relevant law and legal options around academic freedom and freedom of speech. It argues that, at this point, the government cannot legally require full implementation of the model code. Additional legislation is therefore needed.

A policy on academic freedom and freedom of speech

The most important legal change since my summary last September is that the Higher Education Support Act 2003 has been amended to remove a requirement for universities to have a policy on the undefined concept of ‘free intellectual inquiry’ and instead have one on ‘academic freedom and freedom of speech’. The amended section reads:

19‑115  Provider to have policy upholding freedom of speech and academic freedom

 A higher education provider that is a *Table A provider or a *Table B provider must have a policy that upholds freedom of speech and academic freedom.

Table A means the public universities, Table B is the other universities. The amendment also includes a definition of academic freedom:

academic freedom means the following:

                     (a)  the freedom of academic staff to teach, discuss, and research and to disseminate and publish the results of their research;

                     (b)  the freedom of academic staff and students to engage in intellectual inquiry, to express their opinions and beliefs, and to contribute to public debate, in relation to their subjects of study and research;

                     (c)  the freedom of academic staff and students to express their opinions in relation to the higher education provider in which they work or are enrolled;

                     (d)  the freedom of academic staff to participate in professional or representative academic bodies;

                     (e)  the freedom of students to participate in student societies and associations;

                      (f)  the autonomy of the higher education provider in relation to the choice of academic courses and offerings, the ways in which they are taught and the choices of research activities and the ways in which they are conducted.

This is a revised version of the definition of academic freedom that appears in the French review. It does not, however, include all the issues covered in the model code.

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International students and permanent residence

A Grattan Institute report released last night calls for big changes to the criteria for gaining permanent residence. While recognising that migration and higher education links may have benefits for Australia, the report questions giving permanent migration preference to former international students through points for Australian and regional university degrees, the professional year, and use of skills shortage lists. Instead they recommend permanent residence priority for employer-sponsored people earning more than $80,000 a year.

Major changes to PR rules would make international students nervous. And whatever the general merits of Grattan’s proposal, after Job-ready Graduates and border closures now probably isn’t the time to inflict another big problem on the higher education sector.

But reading the Grattan report (which I saw in draft) highlighted to me that I did not know how many former international students eventually achieve PR. The work for this post was an only partially successful attempt to remedy this situation. I’m not a migration expert and I may have missed or misunderstood things, but FWIW my key findings are below.

Total numbers of former international students with permanent residence

Counting former international students with PR is not a straightforward exercise, since there are many direct and indirect routes to permanent residence. A 2018 Treasury paper based on detailed immigration data identified 5,500 routes from a temporary visa, of which student visas are the largest category, to a permanent visa.

Taking all of these routes into account, of the 1.6 million people who had arrived on a student visa between 2000-01 and 2013-14 the Treasury paper calculated that 16 per cent, or about a quarter of a million, had achieved PR.

This number, however, is not consistent with an earlier Productivity Commission analysis, which on my reading of the relevant chart gets us to 300,000 international student conversions to PR just counting arrivals between 2000-01 and 2005-06.

The ABS Characteristics of Recent Migrants survey estimates how many people who first arrived on a student visa in the last 10 years have achieved PR or citizenship (a further step on from PR). The 2013 and 2016 surveys show growing numbers of former international students with PR or citizenship. By 2019, however, the numbers had fallen back below the 2013 level.

All the ABS numbers in the chart are below what we might expect from the Treasury or Productivity Commission figures. Policy changes a decade ago made it harder to transition from a student visa to PR just by holding a qualification in an area of alleged skills shortage. So an underlying downward trend is quite possible. There are, however, important differences between the ABS numbers and earlier statistics.

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Can performance penalties reduce university maximum basic grant amounts?

The current university funding agreements change the nature of performance funding. Previously performance funding was configured as a reward scheme, providing additional funds in exchange for meeting performance-related criteria. Now it is a penalty scheme, deducting money from teaching grants if universities don’t meet performance criteria. The performance benchmarks are assumed to align with the pre-Job-ready Graduates performance funding policy, but this has not been publicly confirmed.

This post explores whether a performance deduction from teaching grants is legally permissible under the Higher Education Support Act 2003. It is clearly not the kind of performance incentive envisaged by HESA 2003, and there are grounds for thinking that a court might find that it is partially or entirely invalid.

The maximum basic grant amount and the performance penalty

The most important grant provision in HESA 2003 is the maximum basic grant amount (MBGA) for higher education courses. This establishes the maximum amount the government will pay from the Commonwealth Grant Scheme (CGS) for Commonwealth supported student places in coursework courses, other than demand driven enrolments for regional and remote bachelor-degree Indigenous students and medical courses. The total value of this grant for 2021 is about $6.8 billion.

Under HESA 2003 each university is to be paid the lesser of the higher education courses MBGA, as set out in their funding agreement, or the total Commonwealth contribution value (relevant discipline funding rates * full-time equivalent students) of student places delivered. Any enrolments above the cap are funded at the student contribution rate only.

The funding agreements include total MBGA amounts for the next three years. The example below is from Macquarie University’s funding agreement, but all agreements have the same or similar formats.

Another clause in the funding agreements, however, purports to take away an element of the MBGA in the event of poor performance. The example below is again Macquarie but all other other agreements have the same format.
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The Budget and higher education

The Commonwealth Budget has triggered confusion about higher education funding. How much does the government spend? Has there been a cut or not?

The Budget documents understate government higher education expenditure

The only summary statement of higher education expenditure in the Budget documents is in Budget Paper No. 1, which reports spending on the higher education ‘sub-function’ (sub- of education generally).

But what is in the higher education sub-function? I’ve collated as much information as I can from the Budget papers and I think it means grants administered under the Higher Education Support Act 2003. I can’t exactly replicate it but my numbers are very close – slightly less in every year. I lack expenditure on the Indigenous Student Success Program, which HESA 2003 funds but PM&C rather than DESE administers.

The ‘higher education sub-function’ significantly understates Commonwealth assistance for higher education. As the top line in grey in the chart below shows, using numbers from Budget Statement No. 4 on agency resourcing, it doesn’t even cover money flowing under HESA 2003 itself. The difference is money lent through the HELP loan scheme. Although the Budget papers don’t specifically quantify HELP lending this is likely to become the single largest source of funding for higher education, as international student revenues collapse and the Commonwealth Grant Scheme stagnates.

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New allocations of money and student places in the university funding agreements

Last month I wrote an overview and critique of the new university funding agreements. This post looks at new allocations of funding for student places, while a subsequent post will look at total funding allocations. Not all my numbers match previously announced total funding for the relevant program, so that is a caveat on both posts.

Under Job-ready Graduates universities are free of sub-bachelor and postgraduate student places being allocated by funding cluster, but the funding agreements show that universities have significant additional work to do in applying for and reporting on a range of small programs.

Numbers of universities getting different allocations

Job-ready Graduates introduced several new or substantially revised pots of money. Not all universities receive each of these. As the chart below shows, programs driven by criteria or formulas set out in legislative instruments (NPILF and transition funding) or the legislation itself (demand driven funding for Indigenous students from regional and remote areas) benefit the largest number of universities. Apart from the general grants for higher education courses (sub-bachelor through to masters coursework, except medicine), the ministerial/departmental discretion programs benefit fewer universities.

Short courses funding

According to the funding agreements, 27 of the 37 public universities have received once-off 2021 funding for undergraduate certificate and/or graduate certificate short courses. When a university’s funding agreement reported $0 for short courses I cross-checked against CourseSeeker with its ‘short course’ filter on and found three more universities. I am not sure whether this is because those universities adopted the ‘short course’ brand without a specific funding allocation, or because their funding agreements are yet to be updated, or because CourseSeeker is wrong. My adding up of the value of funding agreement short courses gets me to $213 million, out of the $252 million allocated for 2020-21 in the October 2020 Budget.
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How many jobs are there in higher education?

COVID-19 has been bad for jobs in higher education. Last October, the NTEU estimated that since March 2020 more than 12,000 jobs had been lost. According to Universities Australia in February 2021 at least 17,300 jobs were lost in 2020. But how many jobs were there to begin with?

This is a surprisingly difficult question to answer. The official DESE staff statistics give us a headcount as at 31 March each year of people employed on an on-going or fixed term contract at public universities and Bond, Notre Dame, University of Divinity and Avondale University College. At the end of March 2020 these institutions had just over 130,000 employees.

But as the chart below shows, the full-time equivalent count is always higher than the on-going or fixed term headcount, because it includes casuals. On a FTE basis, about 18 per cent of all staff are casuals, including nearly a quarter of academic staff. But DESE does not collect headcount data on casuals.


While DESE does not provide a casual headcount, two datasets that include higher education providers, produced by the Australian Charities and Not-for-profits Commission and the Workplace Gender Equality Agency, include casual figures.

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Academic freedom as a principle and a practice (a review of Open Minds: Academic Freedom and Freedom of Speech in Australia)

Open Minds: Academic Freedom and Freedom of Speech in Australia is an accessible overview of the subjects in its sub-title. It covers rationales for academic freedom and freedom of speech, the current law, historical controversies, and emerging threats.

Its authors are two law academics, Carolyn Evans and Adrienne Stone, with Evans now a vice-chancellor. Jade Roberts, a legal researcher, assisted them.

As a general concept few people are against academic freedom. Nobody is calling for powerful figures – ministers, bureaucrats, or vice-chancellors for example – to direct the detail of what Australian academics research, teach or say. Yet the historical chapters of Open Minds report many cases through the decades raising issues of ‘academic freedom’. People regularly see exceptions to this otherwise widely-supported idea.

In judging disputed situations first principles can help. Yet these are also the subject of disagreement and grey areas. Academic freedom is not a clear and unchanging principle but instead a practice that has evolved over centuries, originally as institutional autonomy from church and state, with the current idea of academics personally having freedom developing from the late 19th century.

Only this year, after Open Minds was published, have the precise words ‘academic freedom’ with a definition been inserted into university funding legislation. Until then, as the Open Minds chapter on law explains, the language was of ‘free intellectual inquiry’, with universities and regulators left to decide what that meant. Even this terminology is recent, dating from 2011 in funding legislation and accreditation regulation, with ‘free inquiry’ used from 2000 in national legal definitions of a university. Australia has had universities since the 1850s.

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Has Job-ready Graduates increased the number of commencing students?

This morning the government released the first enrolment data of the Job-ready Graduates. The published data covers only 25 of the 40 full universities (including private universities). No information is available on which universities are in the 25, but based on previously published first-half-of-the-year enrolments I estimate that they enrol just over two-thirds of domestic students.

The government had previously published tertiary admission centre applications data, which based on previous years would represent just under two-thirds of all applications.

As each source has significant missing data any conclusions must be tentative. The chart below lines the two sources up by field of education. Each of demand and supply is up about 7 per cent, but there are significant differences between the two at the broad field of education level.

Apparent trends to date

Demand for IT, science and engineering is up, but supply is up by much more. It is possible that the idiosyncrasies of what is in each of the demand and supply datasets explains some of this discrepancy, but also that the national priority places and short courses allocations, which have a policy bias to these fields, are driving up supply more quickly than demand.

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University-Commonwealth funding agreements and the rule of law in higher education

The 2021-23 funding agreements between universities and the government, the first of the Job-ready Graduates era, were put on the DESE website earlier this year. In this post I compare them to the pre-JRG agreements.

My main concern is that the funding agreements are being used for matters that should be based on clear legal rules, not DESE discretion based on a one-sided ‘agreement’.

My concern reflects both the general political principle that policy decisions should be subject to parliamentary scrutiny and the practical problems caused by lack of certainty. Important funding conditions or criteria are not included in any legal document and DESE is given wide scope to interpret vague terms.

A broader scope

The most immediately obvious change is that the new funding agreements include more content than previously. They contain an overall summary of Higher Education Support Act 2003 institutional funding, including the Commonwealth Grant Scheme (CGS) funding that is the legal purpose of the funding agreements; rules around course closures, professional training, and the provision of information on costs and admissions; research, engagement and equity funding; and some background information and principles. The research, engagement and equity material is new and derives its legal standing from separate legislative instruments.

Putting key information in one place is helpful, and I would encourage the government to collate the summary funding tables combining teaching, research, equity and engagement funding for each university into a publication. But funding agreements with parts of varying legal status are not desirable. A mixed document makes it less clear for universities what they must do according to law and what is just the government/Department taking advantage of the sector’s culture of compliance. With such a large share of their income depending on their funding agreement, universities are reluctant to push back against the government’s demands.

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