Rethinking & revitalising tertiary education

The re-elected federal Coalition Government, and their state and territory counterparts, have some important decisions to make about the future of tertiary education.

Tertiary education includes vocational education and training (VET), which comes under the Minister for Employment, Skills and Family Business at a federal level, (who also has an Assistant Minister for VET and Apprenticeships), and various state-level Ministers; and higher education under the federal Minister for Education who also has various state counterparts.

To assist governments around Australia in making the difficult decisions ahead, they will have the benefit of a range of reviews and reports on: the Australian Qualifications Framework (AQF); the VET sector; the reallocation of Commonwealth Supported Places (CSP) for enabling, sub-bachelor and postgraduate courses; the Higher Education Provider Category Standards; and Performance-Based Funding for the Commonwealth Grant Scheme.

This paper argues that it will be imperative for both federal Ministers to work together, and with their state government counterparts, to take a holistic approach to these reviews in the face of huge challenges facing the Australian tertiary education sector.

The need for high quality universal & affordable tertiary education

We are in a world in which the vast majority of job growth will be in areas aligned to the skills, knowledge and capabilities produced by the tertiary education sector (AlphaBeta, 2018; Department of Jobs and Small Business, 2018). This necessitates universal and affordable access to quality tertiary education. It also means that students must be able to mix and match a range of opportunities from both VET and higher education to obtain the right blend of skills, capabilities and knowledge.

The challenge

Since the demand-driven system of higher education was introduced in 2012, while participation in higher education has grown:

• the dichotomy between higher education and VET, and lack of coherence across the tertiary sector has, if anything, become starker; and
• the overall participation in tertiary education has been in decline, because of a decline in participation in VET.

The reform agenda, therefore, that the federal Ministers need to pursue in partnership with their state counterparts is:

• Rethinking tertiary education, which means taking an innovative approach to ensuring that tertiary education responds to the increasing diversity of its students, and to the changing demands of the Australian labour market. Previous models of tertiary education are no longer suited to this task. Australia needs a more comprehensive, coherent and interconnected tertiary education sector that makes better use of both VET and higher education. This type of tertiary education will respond to challenges facing our students, rather than one based on outdated divisions between academic and vocational learning.
• Revitalising tertiary education, which means taking a strategic view of tertiary education participation trends, and ensuring that the sector achieves an economically sustainable level of participation that meets future workforce needs. This means reversing the downward trend in overall tertiary participation rates, supporting more students to make an investment in their education, and ending the fragmentation that sees different arrangements between higher education and VET.

Towards a cost-effective solution

This challenge is made greater by the fact that the federal government does not have in its current forward estimates the kind of growth in funding for tertiary education that would appear to be necessary to achieve these ambitions. Overall, state expenditure on VET has declined in recent years. Although some states have made VET a policy priority, there is no overall national commitment across the states and the Commonwealth to redress this funding decline.

While it is hard to imagine that governments will not need to find substantial extra funding to achieve these aims, realistically it does also mean that all stakeholders in the tertiary education sector need to work together to create a cost-effective, fit-for-purpose suite of tertiary education options for all students.

Rethinking tertiary education

Key policy ideas that can be pursued alongside any changes in financial arrangements include:

1. following from the COAG review of the AQF, making a shared commitment to act on its recommendations in a way that will help create a more coherent and interconnected tertiary sector, as part of a Commonwealth–State commitment to rethink and revitalise tertiary education
2. reforming the tertiary curriculum, especially in VET, to broaden the skills and capabilities of its students to better prepare them to adapt to a changing world, and to articulate into higher programs with more ease and more credit
3. reforming tertiary entry by promoting a range of pathways available to students to achieve their aspirations and take advantage of their individual aptitudes and interests, and diversifying entry requirements to recognise the diversity of knowledge, skills and capabilities students bring to tertiary education, besides their ATAR score
4. extending work-based learning and industry partnerships in VET and higher education, to improve student transitions from learning to employment
5. promoting local solutions by encouraging providers who collaborate with industry to provide locally relevant pathways that equip students to succeed in their own communities.

Revitalising tertiary education

The above five areas of reform would provide an excellent platform from which a revitalisation of tertiary education and growth in participation would become possible.

In order to support such growth, it will be necessary for federal and state governments to give very serious thought to the need to increasing investment in tertiary education.

Recognising that the fiscal outlook may not be supportive of a big expansion in investment in the immediate future, there are strategies that could help to contain the costs of raising tertiary participation, including:

1. a more comprehensive system of income contingent loans across VET and higher education that remove the up-front fees that many VET students currently face
2. VET provision growing faster than higher education provision, which would lower the average cost of supporting an increase in tertiary education provision
3. an increased proportion of the education received by higher education graduates being through VET pathways, made possible by qualifications and curriculum reform, and improved credit and articulation arrangements
4. an increase in “micro learning” (that provides credit towards AQF qualifications) to ensure cost-effective upgrading of skills in the workforce
5. an increased investment by industry in supporting the education and training of its employees, that should be more attractive to employers because of the enhancements in the offer made possible by the above reforms
6. as part of a Commonwealth –State commitment through the Council of Australian Governments (COAG) to rethink and revitalise tertiary education, following the review of the AQF with a review of federal and state government funding of VET and higher education, as well as student fees and industry contributions, to find a cost-effective way of achieving the higher investment required to increase tertiary participation.

A Commonwealth–State commitment to rethink & revitalise tertiary education

Many of the above proposed reforms will require a joint Commonwealth–State commitment to rethink and revitalise tertiary education. Further, we suggest that a Commonwealth–State commitment to rethink and revitalise tertiary education should explicitly address funding arrangements, and remove incentives to shift costs between the Commonwealth and states. In the COAG review of state and federal funding arrangements proposed above, specific incentives and commitments worthy of serious consideration include:

• a commitment to co-finance growth in VET enrolments
• a shared commitment to the revitalisation of TAFE through recognition of and funding for TAFE’s role as a public provider
• co-financing model (as proposed in (Noonan, 2016a) for VET — an agreed price per course agreed public and private contributions and an income contingent loan, at the national level — allowing for State and Territory governments to provide additional support to meet local needs where required
• the Commonwealth assuming responsibility for funding all AQF level 5 and 6 courses (which are offered in both VET and higher education) or courses where credit-based learning pathways are negotiated between VET and higher education providers
• expanding eligibility criteria for government supported VET places and confirming that learners can co-enrol in both higher education and VET without financial penalties and disincentives (though there may need to be some overall global constraints on the extent to which an individual can be supported, perhaps in the form of lifelong learning account).

Implications for higher education funding

Funding arrangements for higher education are, of course, the responsibility of the Commonwealth. But it will be important for them to take into account the interaction of Commonwealth–State arrangements for VET on their higher education policies.

This will include an understanding of whether the projected growth in funding for Commonwealth Supported Places (CSP) in higher education will be sufficient to raise participation rates (especially in areas of rapid population growth). This should be considered alongside the reforms to VET funding proposed above. This consideration may result in possible adjustments to the Commonwealth’s forward estimates for CSP funding.

This process will need to happen with a significant degree of urgency. Otherwise, the current decline in the tertiary education participation rate can be expected to continue well into the 2020s.

This would represent a significant threat to the future prosperity of Australian industry, the career chances of many thousands of school leavers, and the ongoing employability of large numbers of people in the workforce.

The return to public & private investment in tertiary education

We would argue that the range of reforms proposed in this paper should have the effect of increasing public and private returns to education and training, encouraging greater participation in tertiary education, enhancing the workforce, and promoting economic growth, while reducing the social costs of unemployment and underemployment. This in turn would generate more tax revenue for government and reduce its expenditure in dealing with unemployment and underemployment. This would justify an increased investment in tertiary education and training by governments, without imposing a fiscal burden.