As the federal government continues its higher education policy negotiations with cross bench Senators, state vocational training systems continue with market changes, and the debate on the future of the Federation hots up, I think an op ed I wrote last November for the Australian Financial Review is still very current.

At the time, David Kemp and Andrew Norton had been commissioned to review the so called demand driven system in higher education. I wrote that policy reform needs to help students find the best, most cost-effective education option for their needs rather than push them towards a degree, which is often inappropriate and more expensive.

Among other reforms, the Kemp Norton Review recommended the expansion of sub-degree options from a range of providers to be incorporated into the higher education system. I support this approach and would go further by shifting funding responsibility for much of vocational education to the Commonwealth.

Funding reform is vital to improve higher education

First published in AFR, 25 November, 2013 

When the Rudd and Gillard governments unleashed the demand-driven system in our universities, its designers knew that the higher education reform job was not over. They understood that the powerful forces of student choice, together with deregulation, would profoundly change the higher education landscape and set up pressure for more change.

This is the opportunity now presented to David Kemp and Andrew Norton in their review of the system.

Australian Catholic University’s vice-chancellor Greg Craven and University of Melbourne’s vice- chancellor Glyn Davis have provided a timely summary of the state of play (AFR, November 18).

As vice-chancellors who have grown and re-shaped their universities in response to the new marketplace, Craven and Davis have a deep appreciation of the strengths and weaknesses of current policy settings. They are right to call for fine-tuning to improve what we have.

The focus Australia now has on growth, participation, quality and the recognition of higher education’s social and economic contribution is refreshingly bipartisan. And with the former Labor government finally embracing choice and markets (consistent with its approach in other areas of the economy), a key part of the means to achieving these goals is also bipartisan.

When Julia Gillard was deputy prime minister she notably spoke of “removing the foot of government from the throat of universities”. By setting up the demand-driven system, Labor got some way toward achieving this aim, although it back-pedalled during the course of its six years. Now, more needs to be done.

One critical area of unfinished business, that has implications for the quality of education experience for students and the economics of providing tertiary education for all, is the balance between higher education and vocational education and training (VET).

At the same time as higher education has been transformed by the market, a parallel but poorly connected overhaul has been taking place in our state-based VET systems.

While the model varies a bit from state to state, systems have been deregulated, and funding to support student choice has been introduced.

Whatever we call it – an interconnected tertiary system, distinctive but linked higher education and vocational education sectors, or just plain post-school education – the promise is that we can provide all our young citizens with the opportunity and choice for a quality education and training experience in the years beyond schooling.

Focusing on the public interest, with a fair combination of public funding and individual payment, we can afford to pay for it.

Already, students and our public and private higher education and VET providers are working out ways to achieve this, even though they have to navigate confusing and contradictory policy settings and financial arrangements. Davis and Craven point to seven universities that have restructured their offerings, but there are many other examples of TAFEs, private providers and universities, either separately or together, moving to offer a range of diploma, associate degree and degrees to meet student and industry demand. In the process, new provider types and provider partnerships, unlike anything we have seen before, are emerging, and different price-points are on offer.

The problem is that our system’s design – especially with its federal-state division – does little to help students or education providers find the best fit, the best quality or most cost-effective option.

Institutions and students are encouraged by higher subsidies, more availability, more favourable financing arrangements and cultural bias to go for the degree model every time.

So we are driving everyone to the more expensive, and not necessarily the best-quality, option.

A great way to kick-start reform would be to shift financial responsibility to the Commonwealth for all programs where VET and higher education link – at least all diploma, associate degree and degree programs, and probably certificate level 4 programs as well.

It would focus the energy and resources of one government on the most effective and efficient way to meet the education needs of all tertiary students, and end the process where one level of government pulls its funding and policy levers without regard to the impact on the other.

A sensible, complementary shift would be to transfer financial responsibility and public funds for schooling to the states and territories, clarifying the funding shambles that also exists in that sector.

This is where the agenda of the Kemp-Norton review could meet with the agenda of another important Abbott government review, the Commission of Audit.

Public money would be better spent and better services provided, all in the public interest.

Feature Image Courtesy of Chisolm Institute.