What happens if the Job-ready Graduates bill is rejected?

The Innovative Research Universities lobby group says that rejecting the Job-ready Graduates bill is ‘not an option’, while proposing several amendments to it. But its rejection by the Senate is still an option. What happens if it is rejected?

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.

Student places

The government says that it will ‘fund more bachelor‑level Commonwealth supported places (CSPs) at universities from 2021.’ Some universities will receive notional 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.

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How should student contributions be set? Part 2: Letting universities set their own prices

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.

Liberal plans for fee deregulation

The idea that universities should set their own fees on top of a government subsidy has a long Liberal lineage. Plans to lift controls on fees were in the 1991 Fightback! package, David Kemp’s 1999 leaked Cabinet submission, and in Christopher Pyne’s unsuccessful 2014 higher education reform proposal.

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.

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Notes on the Job-ready Graduates bill, as introduced

The Job-ready-Graduates bill was introduced in the House of Representatives this morning. A couple of points on the funding floor and the social work/mental health deal with the National Party:

Funding floor

One unpleasant surprise in the draft Job-ready Graduates bill of earlier this month was that, with each funding agreement, the minister could reduce a university’s funding without parliamentary scrutiny or approval.

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.

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How should student contributions be set? Part 1: Should student charges contribute to system costs or the student’s course costs?

This is the first of a series of posts looking at the conceptual and philosophical issues underlying debates about student contributions since the late 1980s.

The series is prompted by Dan Tehan’s proposed changes to student charges, but not limited to them.

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.

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Universities should have a Commonwealth funding floor

Update 27/8/20: A funding floor has now been inserted in the Job-ready Graduates bill, albeit with some remaining issues.

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As expected, the legislation for Dan Tehan’s higher education policy would formally repeal the Higher Education Support Acts bachelor-degree demand driven funding provisions, with a small exception for regional Indigenous students.

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.

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Should students lose Commonwealth support for failing to complete subjects?

Post updated 1/01/22: Clarifying that the rules apply to non-completion of subjects as well as academic fails, updating to take account of amendments, and removing now irrelevant 2020 content.

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On 1 January 2022 a further element of the Job-ready Graduates package commenced, which restricts Commonwealth support for students who fail to complete at least half the subjects they have taken.

General rule – failing to successfully complete more than half of subjects leads to loss of funding entitlements for that course

The general rule is that students who fail to successfully complete more than half their subjects in a course will lose their entitlement to Commonwealth support: section 36-13 of the Higher Education Support Act 2003 (HESA 2003) for Commonwealth supported students, for FEE-HELP students section 104-1A . At public universities, FEE-HELP borrowers are mainly postgraduates, as they cannot offer undergraduate full-fee places except in narrow circumstances.

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Checking that students are on track to pass – the government’s proposal

My previous post argued that some university students needlessly incur HELP debts and fails on their academic record. This post looks in more detail at several measures proposed in new legislation to alleviate this problem.

Although these measures arrived without warning they have a history. With some amendment and addition, they extend to public universities rules applying to non-university higher education institutions since the 2017 provider integrity legislation. In turn the 2017 non-university provider legislation imported vocational sector rules intended to avoid a repeat of the VET-FEE HELP debacle.

Provider marketing and student motivations

The issues in VET FEE-HELP and higher education are, however, quite different. The offering of inducements, misleading statements about HELP, and cold calling that would be restricted or banned for public universities by the new legislation never or rarely happen in higher education.*

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2021 will be a competitive year for university applicants

Whether the Tehan reforms pass the Senate or not, in 2021 universities face a recession-induced spike in demand. This post looks at the system’s capacity to respond under each policy scenario.

Commonwealth Grant Scheme

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.

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How will the number of student places increase under the Tehan reforms?

Although I don’t support the Tehan plan to steer student demand to ‘national priority’ fields, from day one I have supported increasing the number of student places.

According to the Department’s discussion paper on the reforms, they will ‘support an additional 39,000 university places by 2023 and almost 100,000 places by 2030’. These additional places are needed to meet previously unexpected demand due to the COVID-19 recession and, from the mid-2020s, the ‘Costello baby boom’ cohort (although the former Treasurer perhaps should not get too much credit for them).

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.

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Commonwealth and student contribution reforms create a harder cap on ‘priority’ than ‘non-priority’ courses

My previous post examined how, for many disciplines, price signals to students and universities contradict each other under the Tehan reforms. Without demand and supply incentives lined up, enrolment patterns by discipline may not match the government’s ‘national priorities’.

The overall price signal for the university, the total per student funding rate for each full-time equivalent enrolment, is made up of two components. These are a Commonwealth contribution, paid out of the Commonwealth Grant Scheme, and a student contribution, a university charge paid by students up to a legislated maximum amount. Most students use HECS-HELP loans to pay their student contributions.

This post looks at what separate effects the Commonwealth and student contributions might have on university behaviour, independently of how they combine to form a total funding rate.

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