Will the Universities Accord unite or divide the sector?

Will the long-awaited Australian Universities Accord be a document that unites the sector or splits it in two?

We see four major areas of concern: Is the accord realistic? Does it point to a federalisation of tertiary education in Australia? Is the Higher Education Future Fund a tax on publicly funded higher education in all but name? And how will the objectives stated in the accord be funded? We will address each in turn.

Ambitious enrolment targets

Firstly, the ambition for 80% of Australians to be enrolled in tertiary education is a lofty one and there is much to commend it, particularly the focus on under-represented groups in regional communities throughout Australia.

However, when, in 1997, Tony Blair, then prime minister of the United Kingdom, committed to 50% of young people going to university in the UK, it was a very different time. “Things could only get better!” was the mantra. We are now faced with a post-pandemic reality, compounded by economic and geopolitical uncertainty.

Falling demand for university comes at a tricky time for Australian Minister of Education Jason Clare. He has explicitly stated that, within the next 25 years, he wants 55% of young people to hold a degree, at a time when the number of Australian students studying for a bachelor degree has fallen by more than 13% since 2016.

Peter Hurley, director of the Mitchell Institute at Victoria University, went as far as to say: “It makes me think that maybe we have reached peak higher education.”

Rising student debt and the booming jobs market are turning young people off higher education. Higher education expert Andrew Norton said for the federal government’s 2050 goal to be reached, everyone with an Australian Tertiary Admission Rank of 45 or higher would have to go to university. “On current levels of academic performance, large numbers of people don’t want to go to university,” he stated.

The major caveat here is that the 80% target includes vocational education, so technical and further education (TAFEs) will be front and centre if this objective is to be realised.

Another layer of bureaucracy?

Which brings us to our second point: the federalisation of tertiary education through the creation of a Tertiary Education Commission, bringing all tertiary education under the same umbrella. This has received little media attention to date.

To quote the accord: “The majority of the Australian Tertiary Education Commission’s functions will start in higher education, with additional priorities aimed at achieving higher levels of tertiary education system alignment, focused on student pathways, credit recognition and the Australian Qualifications Framework.

“The Australian Government should also negotiate with states and territories to expand the Australian Tertiary Education Commission’s role to focus on the whole tertiary education system, with governance arrangements reflecting the ongoing role of all jurisdictions in its future, and with expansion to take effect in the context of the next National Skills Agreement.”

The Group of Eight has already raised the alarm in their response to the interim report, indicating that “such a body is an expensive additional layer of bureaucracy that lacks the independence from government to provide evidence-based, long-term advice”.

We feel the Group of Eight may be more worried about universities’ financial autonomy, particularly with reference to the Higher Education Future Fund, rather than the commission itself.

The aims of the commission laid out in the accord would indicate vocational education being brought into the fold of higher education and could perhaps lead to mergers between teaching-focused institutions educating the lion’s share of under-represented groups and TAFEs.

It would also call into question the state’s role in promoting tertiary education. Right now, individual states are highly engaged, particularly with the internationalisation agenda, working closely with both the TAFEs and universities in their state. Will this be encouraged under this new federal regime?

What is abundantly clear is that under one federal body increased regulation of the whole sector will be within the government’s power.

Higher Education Future Fund

Then to the sticky issue of the Higher Education Future Fund, which, in no uncertain terms, represents the first tax on ‘untied’ income (non-government funding that universities have gained and currently spend on research, buildings and other institutional priorities) flowing into publicly funded higher education.

One cannot help thinking that the government is giving with one hand, allowing Tier 1 institutions to recruit significant numbers of international students through the immigration policy announced at the end of 2023, and then taking with the other, redistributing the revenue to regional institutions who are tasked with making Australian tertiary education more inclusive and therefore delivering on the objectives of the accord.

There are other issues with the future fund when it comes to its administration. Will the government tax net or gross ‘untied’ revenues? Depending on which, universities could in fact end up paying twice for international students, firstly taxed on the full tuition fee for each student and then having to give a percentage to the agent or commercial pathway provider that recruited the student on their behalf.

If the future fund is implemented, we are certain universities will have a much better understanding of the cost of acquisition of international students if the government is taxing the revenue. You would also think that the future fund would increase the motivation for universities to recruit international students directly, bypassing agents and middlemen.

The creation of the future fund also calls into question how transnational education revenue will be taxed: at source in the country of operation, for example, Malaysia, and-or back in Australia, when the founding institution has received the revenue from its overseas partners?

If, as the government claims, offshore education is a key facet of its new international education agenda, setting out the terms of reference when it comes to transnational education (TNE) and how revenue from TNE will be impacted by the future fund will be critical.

The Group of Eight Chair Mark Scott noted in a statement: “This [the Higher Education Future Fund] is extremely poor public policy, and taxing the very system the report identified as underfunded is not a solution.” Scott added that it could also undermine Australia’s “successes in international education and damage our global reputation”.

While we agree that the sector is underfunded in comparison to other G12 nations, unless the tax is passed on to international students in the form of increased international tuition fees, it may not directly impact international student recruitment in itself. Rather, higher education institutions will be directly impacted by a loss of financial autonomy and a percentage of their ‘untied’ revenue.

One thing is for certain: the Higher Education Future Fund will increase the cost of international student acquisition across the board to a greater or lesser extent, depending on how it is administered. Also, it will lead to institutions questioning commercial agreements with aggregators, agencies and pathway providers if they lose a percentage of this revenue to the government and it is then passed on to competitor institutions.

Paying for the reforms

Finally, funding needs to be considered. Words are all well and good, but unless they are transformed into actions, which will require significant increases in funding, they will not achieve the aims stated within the accord.

Our feeling on funding is that to reinforce and reinvigorate tertiary education’s social ambitions institutions must evidence the transition between higher education and employment and make it explicit.

What if institutions contracted with major employers to provide them with a talent pipeline, and were paid according to their success, in the same way that agents are when recruiting international students to higher education institutions?

If such relationships lowered the cost of acquisition for employers, providing them with a guaranteed pool of graduates year on year, with the specific skills they require, and employers provided a new source of revenue to fund higher education’s future, what’s not to like?

Plus, students would be the major beneficiaries of such an initiative, giving them a more certain path to employment and enabling them to choose their university with their future career in mind.

To make this a reality, universities must get to grips with their graduate outcomes and leading destinations both domestically and, importantly, internationally. With rising anti-immigration rhetoric in all the major study destinations globally, supporting the transition of international graduates to the workforce back in their home countries will become the new frontier of internationalisation.

First published on University World News, by Louise Nicol, at 9 March 2024, Will the Universities Accord unite or divide the sector?