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Universities could soon be facing major funding changes as the biggest review of the sector in decades calls for a radical reshaping of the tertiary education sector.
The Australian Universities Accord has recommended funding be delivered on a needs basis, similar to primary and high school funding, where extra loadings would be provided based on student and institutional disadvantage to make the system more accessible.
Its call to boost university attainment rates nationally to 80 per cent would effectively create a demand-driven system for disadvantaged students.
The review provides the federal government with a blueprint for long-term changes as it seeks to tackle skills shortages in health, child care, science, education and manufacturing.
The Universities Accord said failing to increase student numbers would "do lasting damage to Australia's prospects of national economic success" as well as damage social cohesion by locking out certain groups from higher-paid jobs.
Also among the recommendations are calls to double the number of university places, force institutions to pay those doing compulsory placements, increase the tertiary attainment target to 80 per cent by 2050 and abolish the former Coalition government's "failed" Job-Ready Graduates policy.
What is the Universities Accord?
The Universities Accord is a review of the entire sector, looking at everything from how to make unis more accessible, to student safety and the role the sector will play in Australia's future.
It lays out a blueprint for a widespread overhaul of a sector that teaches and employs thousands.
The federal government commissioned the review to inform the changes it will be making to tertiary education.
Equity central in funding recommendations
Increasing access to university education for under-represented groups is key to the review's vision for Australia's tertiary sector.
Those under-represented include students who are First Nations, from poor backgrounds, have a disability and/or come from a regional, rural or remote area.
"Australia needs to recognise that people from groups under-represented in higher education on average require greater support to succeed, often due to experiencing educational disadvantage," the panel said.
"The review recommends the introduction of a needs-based funding model that acknowledges the cost of this additional support and the locality of the institution they attend, and includes bonuses to providers for student completions."
The model proposed by the panel would function similarly to the Schooling Resource Standard used to fund primary and secondary education, with each university receiving a base level of funding with extra loadings added on top based on disadvantage and location, along with a completion bonus.
"The [funding] model would include a needs-based system that covers the costs of providing courses, taking into account the higher costs of educating equity groups and providing regional education."
Alongside funding changes, the panel has recommended participation targets to increase the number of students from under-represented backgrounds to achieve parity by 2050 and additional medical course places for regional universities and First Nations students.
The panel said increasing equity in tertiary education would not only ensure no-one was left behind but also help bridge major skills gaps that were already facing the community.
"The current funding model does not provide for sufficient growth in enrolments to meet the nation's skills needs, with growth occurring in unplanned, unmanaged and under-funded ways that can have unintended consequences for the breadth and quality of courses," it said.
Mary O'Kane, who led the review, said ensuring all Australians got a fair chance at university education was key.
"Equity is so central to this review," she said.
"When you look at who's going to university and who's not going to university, you find that students from various equity groups are going to university at much lower percentages than other people who don't have those disadvantages.
"So if we're going to have growth, the growth is going to have to rely heavily on equity students wanting to go to university and being qualified to go and succeeding at university, and that's why we need the need-based funding to manage that."
Report calls for increased regulation
To drive the change in areas such as sexual assault and staffing, the accord panel recommended a new cop on the beat, to be called the Australian Tertiary Education Commission (ATEC).
It would fold in the existing regulator, called the Tertiary Education Quality and Standards Agency (TEQSA), as well as the Australian Research Council (ARC).
"The tertiary education system is too important to Australia's social, economic and environmental wellbeing to leave its future to the uncoordinated action of individual institutions," the panel found.
The new body would also set pricing and be better resourced to ensure teaching standards.
It would also include a First Nations council and a centre for excellence in higher education and research.
The commission would require legislation to be established and the panel proposed reviewing its performance every five years.
Fees from international students in the spotlight
When the panel handed down its interim report last year, one recommendation that faced resistance was a tax on universities with the most international students.
The panel is not proceeding with an international student levy but is proposing a higher education future fund (HEFF) with contributions matched by the government until they reach $10 billion.
That revenue will be generated from international fees as well as investments and alumni donations.
"Australia's oldest universities enjoy the benefits of many decades of taxpayer support and the best geographical locations, leading to greater prestige and reputation, and hence more ability to raise revenue from diverse sources," the panel notes.
Australia's wealthiest universities, known as the Group of Eight, have already flagged their opposition on the record.
The panel argued the HEFF would ensure infrastructure funding was available to all universities.
It also recommends changes to the way universities recruit international students.
Instead of universities having free reign to recruit, institutions would be given guidance on diversifying the countries they recruit from to lessen shocks from changes overseas.
It also proposes higher standards for English language proficiency.
"Providers need to apply rigorous testing and admission benchmarks to ensure international students have the appropriate English language level to succeed in the classroom and beyond, and provide tailored support where required," the panel wrote.
It notes the pressures on infrastructure and says the changes are necessary to ensure the social licence to operate remains.
This is code for addressing longstanding complaints from domestic students that universities have put revenue ahead of educational outcomes as well as competition for rental accommodation.
The panel also took aim at the practice of regional universities setting up central business district campuses solely to recruit international students.
Universities until now have relied on funding from international research to bankroll research, which brings us to our next big topic.
Changes to research funding
The report notes that for decades Australian universities have had to match research funding grants from their own coffers.
As of 2020, Australian universities were paying more than half of the cost of research, with international student fees their main source of funds to foot the bill.
Universities have long called for this to be fixed and the panel's strong recommendation to do so will give vice-chancellors an incentive to temper the objections they may have to other parts of the report.
The panel calls for this to be fixed by 2030.
It also proposes establishing a new research fund called the Australian Challenges Strategic Fund to reward universities undertaking work in areas of national need.
It also calls for grants longer than five years by overhauling the Australian Research Council to encourage "blue sky thinking".
Overall, it notes Australia's spend on research and development is unsustainably low.
"Australia's gross domestic expenditure on R&D (GERD) peaked at 2.25% in 2008–09 and has continuously declined to 1.68% of GDP in 2021–22," the panel wrote.
Accord recommends scrapping Job-Ready Graduates scheme
A program which aimed to steer students towards courses in areas of skills shortage via reduced course fees has failed and should be replaced, according to the review.
The Job-Ready Graduates Program was introduced by the Coalition government in 2021 as a way of addressing skills shortages in areas such as nursing or teaching, but the accord found only 1.5 per cent of students changed their courses as a result of the scheme.
Furthermore, it created an inequitable student loan system whereby students who undertook courses in the humanities, arts or communication were slugged with larger loans that would take longer to pay off.
"It has left some students facing extremely high student contributions and large HELP debts that do not reflect their future earning potential, and tilted the overall cost burden of higher education further on to students and away from the Australian government," the accord said.
The review recommends an overhaul of the Higher Education Loans Program (HELP — also known as HECS), starting with job-ready graduates who have been disadvantaged because of their course choice.
The changes were needed to "modernise" the student loans system "to make it fairer and simpler", the review said.
As part of the overhaul, student contributions would be changed to reflect future potential earnings so people studying in lower-paid areas of skills shortages were not lumped with huge debts that continued to grow with indexation.
The review also recommends keeping indexation in line with either the consumer price index or wage price index — whichever is lower of the two.
It also says the current indexation time line — which is applied before compulsory withheld repayments are removed from overall debt — is unfair and should be changed.
Earlier this month, the Australian Tax Office was asked at Senate Estimates whether it had been asked by the government to canvas changes to the indexation system. It said changing the time line of indexation would require new software and would be costly and complex.
Report calls for better income support and paid placements
Courses such as nursing, teaching and midwifery require several hours of unpaid work experience a week in order to complete the requirements of the degree, but students say the requirements are burdensome and contribute to low completion rates.
The Universities Accord has recommended entirely scrapping unpaid fees, and requiring workplaces to sign a code of conduct to ensure the placements are necessary and up to scratch.
"The code should ensure that any accreditation requirements are evidence-based and proportionate to the gain they provide and that placement requirements ensure that students gain industry relevant skills and experience without imposing onerous placement length and conditions," the review said.
Under the proposal, the federal government would pay for placements in areas of skills shortages such as nursing and teaching, while the public and private sectors would pay for placements in other fields.
The review highlights the need for greater income support, particularly for students from disadvantaged backgrounds.
"Income support payments for students have not kept pace with wages or the needs of students — resulting in a smaller proportion of students now receiving income support — and need to be adjusted to prevent cost-of-living pressures deterring people from studying," the report said.
It recommends creating the role of jobs broker to help students find part-time work in areas relevant to their study, and increasing income support.
To do that, it recommends increasing the threshold for income parents can earn before affecting Youth Allowance payments from roughly $58,100 to nearly $69,000, offering pro-rata payments for people who study part-time and relaxing the criteria for support payments to help students relocate.
The report acknowledges that changing income support arrangements is complex, and it requests the ministers for education and social services work together on a plan and report back by early 2025.
Government to identify top priorities
In June, when the accord panel delivered its interim report, the federal government immediately acted on all four interim recommendations.
But this time, it will not be able to move so quickly.
Education Minister Jason Clare said following through on the recommendations of the accord would require substantial funding from the federal government and reshaping parts of the sector.
"My job now is to work through that report with my colleagues and identify what are the top priorities that we need to implement first," he said.
"That can help to make sure that we build the skills that we need, that we grow together not apart, that we help more young people from poor families and the suburbs and the bush to get a crack at university and get a chance to go to TAFE and to make sure that we are also helping students today with the cost of living."
The federal government has repeatedly flagged it is facing tight budgetary constraints, with any big spending changes likely to be announced in the federal budget come May.