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.
Enabling courses are niche product of the Australian higher education system. Although quite diverse, they aim to improve academic preparedness for higher education study. Enabling courses often target general academic problems, but also discipline-specific gaps.
Public universities can offer enabling courses on a full-fee basis with a FEE-HELP loan, but most enabling students are in Commonwealth supported places they get for free. In 2018, universities had nearly 22,000 CSP enrolments, who used just under 12,000 EFTSL (most enabling courses are short).
CSP enabling places are funded from a mix of the normal discipline-based Commonwealth contribution and an ‘enabling loading’ in lieu of a student contribution. Both funding sources come from the Commonwealth Grant Scheme.
From 2011 to 2019, enabling places came from an allocation for sub-bachelor places, but with an implied enabling allocation, the set number of places that received the loading. The ‘fully-funded’ loading was about $3,400 per student place in 2018, but due to over-enrolments – students above the allocated number – it averaged about $2,700. This compares to a weighted average student contribution of $8,100 if these had been charged.
The submission does not have a lot in it that people who have read this blog since June will not have seen before. But the submission overview summarises what I see as the three key policy errors that make Job-ready Graduates not well designed to achieve its own objectives. I have copied it in below.
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.