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.
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.
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 legislativeinstruments.
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.
From the start Australia’s universities served multiple purposes, with on-going tensions between knowledge for its own sake, typically most strongly supported by academics, and meeting practical needs, typically most strongly supported by governments.
At the 1920 meeting that Croucher and Waghorne mark as the start of a national organisation of universities, University of Sydney Chancellor Sir William Cullen warned against ‘adopting too enthusiastically the current preoccupation with ideas of “national efficiency”‘.
As the policy name ‘Job-ready Graduates’ suggests, the main stated reason for changes to student contributions is to promote graduate employment outcomes. Or as the JRG discussion paper puts it ‘incentives in the current funding system could encourage sub-optimal choices for students and institutions, leading to poorer labour market outcomes and returns on investment in higher education.’ The assumption is that if arts becomes more expensive students will instead choose a course with lower student contributions and better employment prospects.
Employment outcomes can be measured in many ways, but every method shows that graduates in fields typically taught in Arts faculties are at an elevated risk of disappointing outcomes.
How performance funding will work under Job-ready Graduates remains unclear, to me at least. Some recently published FAQs on Job-ready Graduates, which are a cut-and-paste from a previous statement, indicate that performance funding will continue:
From 2021, the PBF scheme will be adjusted to make approximately $80 million amount of growth funding per year contingent on performance requirements. Performance funding will grow each year to a total equivalent to 7.5 per cent of funding for domestic, non‑medical bachelor places to incentivise university performance. This measure is in line with the PBF model implemented in 2020. [emphasis added]
Is performance funding a condition of other announced CGS increases?
The difficulties of introducing new money into a transitioning system
Between them, the two new allocations total about $550 million over the next four years, with the short course money lasting for two years.
The question is how this relates to the Job-ready Graduates transition fund. This fund is designed to leave universities with the same Commonwealth student-related funding for the next three years as if JRG had never happened.
The draft Commonwealth Grant Scheme Guidelines released at the end of last month set out how the transition fund will work. The Guidelines have several unclear and seemingly contradictory elements, which I discuss in a footnote.* But this is the basic formula for transition funding:
Update 30/9: The minister has announced $326 million over an unspecified period, but starting in 2021, for additional student places. This would have a a significant effect on the calculations below. I will update again when I have more detail.
Over the longer-run, there are multiple mechanisms in JRG that could require or encourage universities to deliver more student places than now. However, the Department does not explain how it arrived at most of its numbers. They do explain the assumptions behind their 2021 forecast. For the reasons given below, I doubt that these justify a claim of additional places compared to status quo policies remaining in place.
Of the 15,000 additional funded places, 7,000 are said to come from ‘increased flexibility for universities within the funding envelope’. This refers to ending three separate Commonwealth Grant Scheme grants for sub-bachelor, bachelor and postgraduate coursework places. Instead, universities would have a single ‘funding envelope’, within which they could freely move resources between qualification levels.
In this post, I argue that status quo policies can deliver similar outcomes in meeting student demand over the next few years, while causing much less disruption to the higher education sector.
The government says that it will ‘fund more bachelor‑level Commonwealth supported places (CSPs) at universities from 2021.’ Some universities will receivenotional allocations, and regional Indigenous students will get demand driven places. But at a system level I don’t believe that direct Commonwealth funding will increase student places in the coming years, beyond what could be delivered under status quo policies.
In the first post in this series on the conceptual and philosophical thinking behind student contributions, I argued that successive governments have primarily used them to limit system-level public expenditure.
Once the public spending constraint is achieved, this approach leaves room for other methods of setting student contributions. This post looks at giving universities a role in deciding what level of student contribution to charge.
For fiscally-constrained governments, part of fee deregulation’s attraction is its scope to further reduce public expenditure. Universities can compensate for public spending cuts with increased student charges. But fee deregulation also has a more positive agenda.
The bill as introduced has a clear fix of this problem – but from 2025: amending section 30-27(3)(b) of the Higher Education Support Act 2003 (HESA 2003). From then, the minister cannot reduce the university’s maximum basic Commonwealth Grant Scheme funding for higher education courses below what it was the previous year.