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.
This first post looks at the student contribution’s relationship to overall public funding, and whether it is intended to offset total government expenditure on higher education, or the cost of the student’s own course.
Course cost student contributions have been considered, but not implemented
The Whitlam experiment with free higher education ended in the late 1980s because the Hawke government wasn’t willing to pay the full cost of expanding enrolments. But then and since people have disagreed about whether students should contribute to their own costs or more broadly to the system’s costs.
Funding for Commonwealth supported bachelor degree students has been capped since the end of 2017, so this might seem like just a formality. But in reality the repeal involves a major structural change, one that could undermine important higher education policy objectives.
Even though section 30-27(1) of HESA 2003 created a power to cap, section 30-27(3) required that the capped amount be at least the previous year’s funding level. The only way that a university could get less money than the previous year was by enrolling too few students, reducing their payment under the demand driven funding formula (section 33-5(5)). In effect, the link to previous Commonwealth payments created a funding floor that the government could only lower with parliamentary approval.
Based on last year’s portfolio budget statement, which requires some averaging of years, under status quo policies the Commonwealth Grant scheme will increase by about the rate of inflation. As Commonwealth contributions are indexed to inflation, and universities are already delivering more student places than needed to get their maximum grant, the 2021 CGS funding increment would not require any additional student places.
Under the Tehan reform scenario, starting in 2021 the government will add ‘growth places’ that are partially linked to population increases in the 15-29 age cohort. But these places will not increase Commonwealth Grant Scheme funding compared to 2020. Rather, the maximum CGS payment is first reduced and then slightly increased by the growth places. The lost funding would be recycled in a proposed industry linkage fund, but this puts new constraints on university spending rather the freeing up funds for new student places.
This post examines how student places for undergraduates might increase under the Tehan reforms. For general readers, the first section on major sources of additional places includes the key policy changes. Read on after that part if you need to know the detail of higher education policy.