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Financial Sustainability and Financing Reform

Matt Brett, Senior Manager Higher Education Policy

11th Governance and Regulation ConferenceSeptember 2016

Is Australian higher education financial sustainable?

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Source: Key financial metrics on Australia’s higher education sector. Selected insights – April 2016. TEQSA 2016

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Additional reference points for financial health of higher education

- Good financial position

- Financial sustainability pressures growing

- Public financing enabled growth

- Some variation across the sector

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Source: Key financial metrics on Australia’s higher education sector. Selected insights – April 2016. TEQSA 2016

How do we interpret the anomalies?

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Sector growth is above CPI and population growth

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Can the sector continue its growth trajectory?

Source: Department of Education Finance Reports 2009 - 2014

Can the Government support continued growth?

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Budget Repair

Jobs &

Growth

$$$

$$$

Higher education and the Turnbull policy agenda

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Budget Repair

Jobs &

Growth

$$$

$$$

Innovation

Research

Teaching

Policy Consultation

Policy Implementation

The tension will be more significant for teaching than research and innovation

Watt

NISA

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Research and Innovation Policy Agenda and Implementation

Largely Resolved

- Research Block Grants

- NCRIS

- CRCs

- Industry Growth Centres

- Clear increase in industry focus

Unresolved / In-progress

- Engagement and Impact Assessment

- R&D tax incentive

- Extent of industry reciprocity

Innovation

Research

Policy Implementation

CRCs Industry Growth Centres

Watt

NISA

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Teaching policy agenda and consultation

Teaching

Policy Consultation

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Core issues

$3+ billion in savings

What is a CSP Funding clusters

Who gets a CSP NUHEPs, sub-bachelor, postgrad

HELP integrity Loan limits, recovery options

Resource quality Flagships

Transparency Quality, cross-subsidy

Equity HEPPP review/Regional

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Core issues

$3+ billion in savings

What is a CSP Funding clusters

Who gets a CSP NUHEPs, sub-bachelor, postgrad

HELP integrity Loan limits, recovery options

Resource quality Flagships

Transparency Quality, cross-subsidy

Equity HEPPP review/Regional

SignificantLegislative

Change

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Future Financing Scenarios

- Good financial position

- Financial sustainability pressures

Funding cutsNo offsets

- Diversify revenue- Cost management- Partner

Accommodating Senate

- Curriculum innovation- Quality- Employability*

Policy Stasis

- Market share- Scale- Cost control

Flagships / HECS / Transparency

2016 – NSW Auditor General Findings

2017+

GrowSurvive Innovate

Policy Scenario

Strategic Implications

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HELP Integrity

HECS HELP FEE-HELP

No Loan Fee Loan Fee

Reassess assumptions around student behaviour

How might governance processes prioritise timely impact assessment and response?

Financing Significance

Recovery options- Deceased estates- Repayment thresholds- Loan Fees

Transparency, Loan limits

Budget Savings (Omnibus) Bill 2016 first salvo in reform of HELP

Education – ATO data integration may be a game changer for transparency

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What is/who gets a CSP?

Commonwealth Contribution

Student Contribution

60% 40%

Funding ClustersContribution

bands

Reassess assumptions driving strategy and budget

Universities NUHEPS

How might governance processes prioritise timely impact assessment and response?

BachelorSub-Bachelor/Postgraduate

Financing Significance

Efficient pricing study will be a key factor in design and implementation of CSP reform

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How might governance processes prioritise timely impact assessment and response?

What is a flagship?

Commonwealth Supported Place

Flagship Place

Level of Commonwealth subsidy?

Fee limits?

Net change in resourcing / regulation

Price regulation?

Financing Significance

Flagship criteria?

Different to the concept of flagships recommended in Base Funding Review

Go8 – “cautious”ATN – “serious concerns”IRU – “shares concerns”RUN – “major blow”

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Final Thoughts :Gallagher, M (2015) A Memory of Elephants on the Modern Campus

1. How resilient is the national higher education system to change? “A monolithic system of single-type institutions will necessarily lack the diversity necessary for adaptation to changing environmental conditions.”

2. How sustainable is the current funding framework? “Rather than continuing with a bureaucratically-managed model…it would be better to focus on principles for good market design.”

3. How well do current policies fit the emerging higher education landscape?“Current policy favouring established, comprehensive public universities with a research mission, under conditions of fixed pricing for their core business… promotes quantitative expansion at the risk of educational quality and at disproportionate costs for government.

Source: http://www.lhmartininstitute.edu.au/insights-blog/2016/03/225-a-memory-of-elephants-on-the-modern-campus

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Questions

How might governance processes prioritise timely impact assessment and response?

Thank you

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