The University of Newcastle Response to Higher Education Support Legislation Amendment A More Sustainable, Responsive and Transparent Higher ...

 
The University of Newcastle Response to Higher Education Support Legislation Amendment A More Sustainable, Responsive and Transparent Higher ...
Higher Education Support Legislation Amendment (A More Sustainable, Responsive and Transparent Higher Education System)
                                                       Bill 2017
                                                    Submission 30

            The University of Newcastle
            Response to Higher Education Support Legislation Amendment
            (A More Sustainable, Responsive and Transparent Higher Education
            System) Bill 2017
            Executive Summary
            The University of Newcastle (UON) welcomes the opportunity to provide a submission to the Senate
            Committee on the proposed Higher Education Support Legislation Amendment (A More Sustainable,
            Responsive and Transparent higher education system) Bill (the Bill). UON welcomes a number of positive
            aspects of the Bill and commends them to the Senate, particularly those which support the capacity of
            students from regional Australia and from disadvantaged groups to participate in and succeed in higher
            education.

            UON welcomes the opportunity to discuss these recommendations further to ensure that the Bill
            supports the continued provision of high quality education, research and innovation in communities
            across Australia, while minimising any unintended consequences on equity, student access or the
            economic resilience of regions.

            A: Impacts of reforms on students
            The University of Newcastle (UON) is a global top 225 university with a mission of delivering equity and
            excellence to its cities, communities and regions. The communities that UON serves in the Hunter,
            Central Coast, Mid North Coast and across NSW are characterised by significant disadvantage and lower
            levels of educational attainment than metropolitan counterparts. Higher education attainment rates in
            regional Australia remain significantly below those of the metropolitan population, with rates of bachelor
            level attainment in Greater Sydney more than four times those in the Hunter Valley.

            Through sustained commitment and effort, UON has made remarkable strides in supporting students
            from a range of backgrounds to succeed at university. In 2015, 24.9 per cent of UON undergraduate
            enrolments were from low-SES backgrounds, the sixth largest proportion of low-SES students in an
            Australian university, and 52 per cent were first in their family to attend university. Indigenous students
            made up 3.6 per cent of enrolments, with the milestone of 1000 Indigenous students reached for the first
            time in 2016. Breaking cycles of disadvantage and creating intergenerational mobility is at the heart of
            UON’s mission as an institution for its regions.

            Recommendations
            Against this backdrop, UON makes the following recommendations to ensure that the burden of the
            changes proposed by the Government does not fall unduly onto the next generation of Australians who
            will be responsible for navigating Australia through the economic transition, particularly those in regions.

                1. Changes to the Higher Education Participation and Partnerships Program should be supported as
                   essential measures to support the aspiration and achievement of low SES students in higher
                   education. These include the introduction of a new demand-driven low SES student loading
                   amount and the establishment of a $9.5 million National Priorities Pool for research and
                   evaluation.

                2. UON recommends that further consultation take place with universities about the design of the
                    proposed $13.3 million performance-funding component of HEPPP, particularly how
                    performance against improvements of low SES and Indigenous outcomes will be assessed. This
                    consultation should ensure that the accountability measures do not inadvertently work against
            UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
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                    institutions such as UON which have done substantial work to lift rates of participation, success
                    and completion for these equity groups.

                3. The expansion of the demand-driven system to approved sub-bachelor courses at diploma,
                   advanced diploma and associate degree level should be strongly supported as a reform that
                   addresses a longstanding gap in the funding system for tertiary education.
                       a. Consideration should also be given to the interaction between enabling places and other
                           sub-bachelor places to ensure that students who would be more appropriately
                           supported through an enabling program continue to be supported through an enabling
                           place to gain the requisite preparation for entry into university.

                4. The proposed changes to the funding and distribution of enabling places should be reconsidered
                   given the potential impacts on equity and the capacity to act as a disincentive for the most
                   disadvantaged Australians to access higher education. In particular, UON recommends:

                    a. Regional workforce needs and institutional strengths should be considered in determining
                       both the total number of enabling places available and the criteria for distribution.
                    b. The proposed student contribution for enabling courses should be removed and the loading
                       re-instated, given the high representation of equity groups in enabling cohorts and the
                       higher price and debt sensitivity of these groups.
                    c. UON would be pleased to work closely with the Department on potential models for
                       allocation of enabling places across Commonwealth and the application of full-fee
                       categories.
                    d. If HEPPP is to be used to support enabling students, the mechanism should be for the HEPP
                       loading for low SES students also to apply to low SES students in enabling programs, rather
                       than being redirected from existing HEPPP funding.
                    e. The impact of any changes should be subject to a review process three years after
                       implementation to identify any unintended consequences.

                5. The impact of the proposed increase in student contributions should be reassessed to identify
                   disproportionate impacts on students in regions and in equity groups. A 7.5 per cent increase in
                   student contributions by 2021 will have real impacts on the affordability of university study for
                   students, particularly in regions such as the Hunter, in which lifting educational attainment and
                   skilling the future workforce is critical. In combination with other student-focused measures such
                   as the introduction of a fee for enabling programs and the reduction in HELP repayment
                   thresholds, UON is concerned that these changes will place university out of the reach of many
                   Australians, particularly those cohorts with higher debt aversion such as mature-age and low SES
                   students.

            B. Impact on economic transition of regions
            Universities such as UON also play a critical role in the economic and social transformation of their
            regions – not only as educators of the future workforce and major employers but also drivers of the
            knowledge, innovation and entrepreneurial activities that support transition to new industries. As a
            research-intensive university located in a region, UON acts as a point of convergence for the
            development of new industries and markets and a catalyst for change in its communities.

            Independent modelling by the Hunter Research Foundation showed that UON is expected to contribute
            $5.5 billion to the Hunter economy in the next decade (including $1.3 billion from the Newcastle CBD
            campus development). An additional $1.3 billion is projected from activities on the Central Coast,
            including the Central Coast Medical School and Health and Medical Research Institute.

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            The Government has strongly supported the role of regions in driving innovation and economic
            transition. It is not in the interests of the national economy or taxpayers that a gap in jobs, productivity,
            and innovation should emerge as a result of the proposed changes to higher education.
            Recommendations
                1. UON supports the correction of the anomalous historical distribution of postgraduate CSP places
                   should be corrected, particularly in the context of emerging workforce needs in regions which
                   are transitioning toward advanced industries.
                2. UON recommends a robust consultation process with the sector regarding the eligibility criteria
                   for the proposed scholarship scheme, which should include some measure of consideration for
                   equity, the workforce needs of regions and regional students.
                3. UON supports investment in the regional study hubs and recommends that the development of
                   the hubs be undertaken in close collaboration with universities in regions to identify areas of
                   particular education and workforce needs.
                4. The introduction of Commonwealth support for work experience in industry placements should
                   be supported, with a particular focus on engaging with regional employers to identify
                   opportunities for placements in areas of national priority and regional needs.

                C. Impact on financial sustainability of higher education
            UON holds a unique place in the Australian higher education sector as a university not only in the top
            quartile nationally for research excellence but also for equity of access. This commitment to excellence
            and equity has contributed to strong outcomes for UON graduates and delivered economic and social
            benefits for our communities.

            UON is disappointed that the government has chosen to place this record of performance at risk by
            proceeding with further cuts to university funding, in the form of the 2.5 per cent efficiency dividend on
            Commonwealth Grant Scheme (CGS) funding to be imposed in 2018 and 2019. To place this in context,
            the proposed efficiency dividend will remove $100 million from UON’s capacity to invest in students, staff
            and facilities between 2019 and 2029. This will force UON to consider whether it can continue to offer a
            comprehensive mix of academic programs with the same level of engagement and support.

            Recommendations

                1. The 2.5% efficiency dividend on Commonwealth Grant Scheme funding should be removed from
                   the Bill.

                2. The proposed performance-contingent component of 7.5 per cent should be withheld from the
                   Bill pending further consultation with universities on appropriate measurements for
                   performance in the context of universities’ differential missions and demographic profiles
                        a. In this context, UON recommends that measures of completion should be taken at 4, 6
                            and 9 year time-points to ensure that the performance of mature-age and part-time
                            students is appropriately reflected.

            UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
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            About the University of Newcastle
            The University of Newcastle (UON) is a research-intensive university ranked in the top 1% of global
            universities with a mission of delivering equity and excellence to its cities and regions. With more than
            39,000 students studying at campuses in the Hunter, Central Coast and Mid North Coast of NSW, the
            University also delivers programs across regional New South Wales, via a Sydney presence, and at its
            Singapore campus. The University also supports wider communities through a range of online
            postgraduate and enabling education offerings.

            Founded in 1965, the University is committed to excellence and equity. During its first half-century, the
            University has developed into a leading centre for research and education in engineering, health and
            medicine, and energy and resources, with emerging strengths in a range of areas including social sciences
            and creative disciplines.
            UON is ranked in the top quartile in Australia for research income and the top 8 in Australia for research
            rated at well above world standard by the 2015 Excellence in Research for Australia evaluation. The
            University is also in the top 10 in Australia for the quality of its teaching as measured by the Student
            Experience Survey.
            The communities that UON serves in the Hunter, Central Coast and Mid North Coast are characterised by
            significant disadvantage and lower levels of educational attainment than metropolitan counterparts.
            Higher education attainment rates in regional Australia remain significantly below those of the
            metropolitan population, with rates of bachelor level attainment in Greater Sydney more than four times
            those in the Hunter Valley.

            Role in regional transformation
            As regional economies across Australia begin to feel the effects of the mining slowdown, it is more
            important than ever to establish the ecosystem and networks to support the new industries and
            collaborations that will shape the jobs of the future. PricewaterhouseCoopers estimated that an
            ecosystem based on innovation and digital technologies has the potential to increase Australia’s
            productivity and raise GDP by $37 billion in 2024. Longer term, the contribution to GDP could be as high
            as 3.5 per cent, or $136 billion in 2034. Universities play a critical role in fostering the connections and
            networks for innovation, and in developing entrepreneurial and innovation-capable graduates.
            Universities such as UON also play a critical role in the economic and social transformation of their
            regions – not only as educators of the future workforce and major employers but also drivers of the
            knowledge, innovation and entrepreneurial activities that support transition to new industries. With
            campuses in the Hunter, Central Coast and Mid North Coast regions, as a research-intensive university
            UON acts as a point of convergence for the development of new industries and markets and a catalyst for
            change in its communities.
            Independent modelling by the Hunter Research Foundation showed that UON is expected to contribute
            $5.5 billion to the Hunter economy in the next decade (including $1.3 billion from the Newcastle CBD
            campus development). An additional $1.3 billion is projected from activities on the Central Coast,
            including the Central Coast Medical School and Health and Medical Research Institute.
            Aside from the opportunity cost that may arise if the proposed higher education reforms impact
            participation rates in these regions, and the flow on effects to research productivity as a driver of
            innovation, cuts to higher education funding may have significant impacts on the realisation of these
            direct benefits to the regional economy.

            UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
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            Delivering on equity and excellence
            Through sustained commitment and effort, UON has made remarkable strides in supporting students
            from a range of backgrounds to succeed at university. Breaking cycles of disadvantage and creating
            intergenerational mobility are at the heart both of UON’s mission as an institution for its regions and its
            NeW Futures 2016-2025 decadal strategy.
            The demand-driven system has provided opportunities for more students than ever to attend university,
            and UON has delivered in lifting access for students from equity groups and in providing the targeted
            support to ensure that they succeed at university once they arrive. Participation by equity groups in
            education at UON is well above sector and state averages, reflecting UON’s considerable investment in
            and commitment to supporting these students to succeed. Key achievements include:
                •   24.9 per cent of UON undergraduate enrolments in 2015 were from low-SES backgrounds, the
                    sixth largest proportion of low-SES students in any Australian university
                •   The participation rate for Indigenous students at UON was 3.2 per cent in 2015 – double the
                    sector average of 1.6 per cent and substantially higher than the NSW average of 1.8 per cent
                •   In 2016, UON’s Indigenous student numbers exceeded 1000 enrolments for the first time, and in
                    2015 UON recorded the largest number of Indigenous students (by both enrolments and EFTSL)
                    at any Australian university.
                •   52 per cent of undergraduate enrolments in 2016 were the first in their family to attend
                    university.
            This commitment has also translated into strong outcomes for students, with success rates for students
            from equity groups rising steadily over the period 2012-2016 (per Figure 1).

                                                      Success
             90%
             88%
             86%
                                                                                                    2012
             84%
             82%                                                                                    2013
             80%
                                                                                                    2014
             78%
             76%                                                                                    2015
             74%                                                                                    2016
             72%
             70%
                       Disability      A&TSI      Prior enabling   First in Family   Low SES

            Figure 1: Success rates for equity groups, 2012-2016
            Across the same period, UON has continued to improve its performance in research and in global
            university rankings systems, rising more than 70 places in the prestigious QS World Rankings Universities
            to be ranked in the top 1 per cent of universities worldwide (2017/2018 QS World Rankings). This
            research performance translates into strong collaborations with industry and business, with UON
            generating more than $36 million in industry income in 2015 and ranked by AusIndustry as the top
            university in Australia nationally for its 2016 Industry Connections program.

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            Commentary on specific measures
            1. Higher Education Participation and Partnerships Program
            UON warmly welcomes the confirmation that the Higher Education Participation and Partnerships
            Program will be secured in legislation. This funding pool is a critical mechanism to support the aspiration,
            access and achievement in higher education of students from low SES backgrounds, and the continuation
            of the program will ensure that the gains made in previous years in participation and success can
            continue for some of our most disadvantaged cohorts of students.
            UON also welcomes the establishment of the National Priorities Pool of $9.5 million for research and best
            practice, particularly the opportunity to conduct research projects over a longer time period. This means
            that greater understanding of more complex equity issues that have national significance can be
            developed and disseminated to inform practitioners and policymakers.
            UON supports in principle the loading of $985 per eligible student to replace the current system of
            allocations, subject to resolution of the issues in relation to performance funding measures as outlined
            below.
            Recommendation: Changes to the Higher Education Participation and Partnerships Program should be
            supported as essential measures to support the aspiration and achievement of low SES students in higher
            education. These include the introduction of a new demand-driven low SES student loading amount and
            the establishment of a $9.5 million National Priorities Pool for research and evaluation.

            Performance funding for HEPPP
            The proposal to introduce a HEPPP performance funding pool of $13.3 million requires further
            investigation, particularly in relation to how performance against improvements of low SES and
            Indigenous outcomes will be assessed.

            Holding universities to account for lifting outcomes for low SES and Indigenous students is important if
            the gap in participation and attainment for these students is to be closed. However, it will be critical to
            ensure that the accountability measures do not inadvertently work against institutions (such as UON)
            who have done substantial work already to lift rates of participation, success and completion for these
            equity groups to well above sector averages.

            UON is comparatively rare in the sector in delivering not only high levels of participation for students
            from low SES and Indigenous backgrounds but also strong retention outcomes. For example, Figures 2
            and 3 below highlight the sector performance of institutions in both participation and retention of
            Indigenous students; UON (highlighted in blue) is the only institution in the top quartile of the sector for
            both measures. Similarly, UON is also the only institution in the top 15 of the sector for both participation
            and retention of low SES students.

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                                              Indigenous Students Participation Rate 2015
                                        8
               Participation Rate (%)

                                        6
                                        4
                                        2
                                        0

                                               Sunshine…
                                                  Griffith
                                                 Victoria

                                                Adelaide
                                             Federation
                                                 Divinity

                                                 Flinders

                                                     CQU
                                                      UTS

                                                     ACU
                                                    RMIT

                                                  Deakin
                                                   UNSW

                                                     ANU

                                                    UWA

                                                   UniSA

                                                     UTas

                                                      JCU
                                             Swinburne
                                                 Torrens

                                                UniMelb

                                                     UNE
                                             Macquarie

                                                   Curtin

                                                    Bond
                                            Edith Cowan

                                               Canberra
                                                     WSU
                                                Monash

                                                La Trobe
                                                    USyd

                                                     UON
                                                       UQ

                                               Murdoch

                                                     CDU
                                                      CSU

                                                      SCU
                                            Notre Dame

                                                     QUT
                                                    UOW

                                                     USQ
            Figure 2: Indigenous Students Participation rate 2015

                                              Indigenous Students Retention Rate 2014
                                        100
               Retention Rate (%)

                                         80
                                         60
                                         40
                                         20
                                          0

            Figure 3: Indigenous Students Retention Rates 2014

            An assessment of performance against existing institutional baselines that does not take account of these
            nuances may have the unintended impact of disadvantaging universities working the hardest to close the
            more complex and intractable gaps in achievement. This issue must be resolved before the introduction
            of the measure, as well as the proposed mechanisms for redistribution of any funds if relevant
            performance is not met.

            Recommendation: UON recommends that further consultation take place with universities about the
            design of the proposed $13.3 million performance-funding component of HEPPP, particularly how
            performance against improvements of low SES and Indigenous outcomes will be assessed. This
            consultation should ensure that the accountability measures do not inadvertently work against
            institutions such as UON which have done substantial work to lift rates of participation, success and
            completion for these equity groups.

            2. Expansion of demand-driven system to approved sub-bachelor courses
               (diplomas, advanced diplomas and associate degrees)
            UON strongly supports the expansion of the demand-driven system to approved sub-bachelor courses at
            diploma, advanced diploma and associate degree level. This reform ameliorates a longstanding gap in the
            funding system for tertiary education, as identified in the Bradley Review and subsequent sector-wide
            reviews, and provides additional avenues for students to gain access to higher education at a level
            commensurate with their preparation and experience.
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            UON recognises the value of sub-bachelor qualifications to students, employers and to the national
            economy. In this context, UON recommends that the determination of approved sub-bachelor courses
            should consider not only current employer and workforce needs, but also emerging industries and
            opportunities to prepare graduates more broadly for the future workforce.

            Recommendation: The expansion of the demand-driven system to approved sub-bachelor courses at
            diploma, advanced diploma and associate degree level should be strongly supported as a reform that
            addresses a longstanding gap in the funding system for tertiary education.

            It is also important to note that while sub-diploma level qualifications will provide a viable pathway to
            study for many students (as well as a standalone qualification aligned with industry needs), there remains
            a need for more specialised engagement with some students to prepare them for study.

            UON estimates that, given previous levels of educational attainment and the time elapsed between
            previous studies, the proportion of current UON enabling students who would meet the AQF 5 threshold
            for diploma level study could be as low as 40 per cent. This is because admission onto a diploma level 5
            qualification assumes a set of skills these students did not gain in school (due to interrupted or
            foreshortened secondary education) or have not used for many years. In addition, the compressed study
            period for a diploma may not enable them to develop the skills and confidence required for success in
            higher education.

            UON has demonstrated that with the right support, students from a range of backgrounds and levels of
            preparation can succeed at university. Enabling programs have been critical to this success, as outlined
            above, and it is important that the (welcome) reforms to sub-bachelor programs do not inadvertently
            affect the positive outcomes for students and the community.

            Recommendation: Consideration should be given to the interaction between enabling places and other
            sub-bachelor places to ensure that students who would be more appropriately supported through an
            enabling program continue to be supported through an enabling place to gain the requisite preparation
            for entry into university.

            3. Enabling courses
            UON holds significant concerns about the proposed changes to the funding and distribution of enabling
            programs, in that they fail to take into account the differential demand and need for enabling education
            in areas where low levels of education attainment are compounded by regional disadvantage in terms of
            employment opportunity. We see this as having a significantly negative impact on the future
            participation of students from equity groups in higher education.

            A national leader in enabling education, the University of Newcastle (UON) has developed a suite of
            programs and partnerships that provide pathways to higher education to address social and economic
            disadvantage in our region. Approximately 40,000 students have completed UoN enabling programs since
            the innovative Open Foundation course began in 1974. Around 13 per cent of the country’s
            Commonwealth funded enabling students (EFTSL) study at Newcastle, and 85 per cent of those
            completing UoN enabling programs enrol in higher education. The University’s range of pathways for
            entry into higher education support students from a range of backgrounds succeed in their aspirations to
            enter a degree:

                •   NewStep program supports students aged 17-20 into higher education
                •   Open Foundation is aimed at mature-aged students over 20
                •   Yapug program supports Indigenous students transitioning into university.
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            Study opportunities are flexible and distributed, available on campus or at a distance using partnerships
            with local libraries and education partners.

            The demand-driven system has been crucial to engaging underrepresented cohorts in higher education;
            UON enrolment data show that over the five-year period from 2012 to 2016, first in family and prior
            enabling cohorts had the largest increase in participation, with increases evident also for low SES and
            Aboriginal and Torres Strait Islander groups.

                                            Participation
             60%
             50%
             40%
             30%                                                                      2012
             20%                                                                      2013
             10%
              0%                                                                      2015

                                                                                      2016

            Figure 4: Participation increases for equity groups, UON 2012-2015

            With this expansion has come a greater need to support preparation of these groups for university-level
            study and to meet their specific needs. Students enrolled in enabling programs are more likely to be
            mature-age and to be a member of a recognised equity group. They often face multiple axes of economic
            and social disadvantage which have contributed to their level of preparation for university study, as well
            as work and family responsibilities.

            Enabling programs do a lot of the ‘heavy lifting’ for the higher education sector in supporting students
            from equity groups to enter and succeed at university. As highlighted in the recent review by the National
            Centre for Student Equity in Higher Education of the efficacy of enabling and sub-bachelor pathways, “a
            greater proportion of students enrolled in and transitioning via enabling pathways are from recognised
            equity groups than any of the other sub-bachelor pathways examined.”

            However, it is also the case that these students require intensive and structured support to allow them to
            reach their potential and succeed at university, including additional preparation for study. In this context,
            the proposed changes to the funding and distribution of enabling places presents significant issues for
            UON and for our regional communities.

            Recommendations:

                i.       The proposed changes to the funding and distribution of enabling places should be
                         reconsidered given the potential impacts on equity and the capacity to act as a
                         disincentive for the most disadvantaged Australians to access higher education.
                ii.      The impact of any changes should be subject to a review process three years after
                         implementation to identify any unintended consequences.

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            A track record of preparing students to succeed at university
            Structured support through enabling programs translates into successful transition into university and
            broadly comparable rates of retention and success once they are here. In 2016, 19.8 per cent of UON’s
            domestic undergraduate enrolments – or 4,153 students - came to university via a prior enabling
            pathway, demonstrating the success of our pathway programs. This proportion is even higher in regions
            such as the Central Coast of New South Wales, where 24 per cent of commencing enrolments were
            admitted to UON via one of our enabling pathways.

            National evidence also shows that enabling programs work better than other pathways to position
            students for success at university, with the NCSEHE report finding that ‘students from recognised equity
            groups who articulate via an enabling program generally experience better first-year retention rates than
            those articulating via most other sub-bachelor pathways’, including VET.

            Introduction of student contributions may threaten this success
            In line with its equity mission, UON has always offered our preparatory programs to students free of
            charge. UON has also historically offered significantly more enabling places than its funded allocation
            from the Commonwealth – effectively absorbing a substantial financial loss in order to support students
            from our local communities to receive the preparation and support they need to be able to succeed at
            university.

            In 2016, UON received funding for 1627 EFTSL but supported 1694 EFTSL, with the unfunded gap of 67
            EFTSL reflecting the demand for this type of preparation in our regions. This ‘open door’ approach – in
            combination with the lack of an upfront fee - has been a critical success factor in helping students to
            overcome the internal and external barriers that they face in making the decision to go to university.

            However, the intent to charge students fees for their enabling program effectively re-establishes this
            barrier. To put this in perspective, under the government’s proposed changes a student completing a
            one-year enabling program in 2018 will pay $3,271 more than they would have in 2017, as well as up to
            $4000 in increased student fees over the life of their program once they get to university (depending on
            their degree program). This ‘double whammy’ effect for some of our most disadvantaged students is
            surely an unintended consequence of the proposed reforms.

            In addition, while UON welcomes the stated intent of improving completion rates for enabling programs,
            it is by no means clear that implementing fee-paying programs would contribute materially to this goal.
            The cited higher completion rates for fee-paying enabling programs (61 per cent, compared to 52 per
            cent for Commonwealth-funded enabling programs) do not take account of the SES background of
            students in these programs or the much smaller quantum of students (only 334 EFTSL, compared to
            nearly 12,000 EFTSL for Commonwealth funded enabling places).

            In light of the major potential risks to the participation of students from equity groups in higher
            education, UON cannot support the introduction of a student contribution for enabling programs. If this
            measure is introduced, UON would be pleased to work closely with the Department on potential models
            for allocation of enabling places across Commonwealth and the application of full-fee categories.

            Recommendation: The proposed student contribution for enabling courses should be removed and the
            loading re-instated, given the high representation of equity groups in enabling cohorts and the higher
            price and debt sensitivity of these groups.

            UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
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            Competitive tendering – increased provider risk and insecure funding environment
            The proposal to allocate enabling places via competitive tender – potentially away from regions of need
            to private providers lacking a longstanding commitment to equity and track record of success – also
            places this trajectory of success at risk. Insecure funding for the delivery of enabling places also impacts
            on universities’ capacity to budget and plan effectively.

            It is unclear how many enabling places will be available in total under the new scheme, and how
            substantially numbers of enabling places will be reduced to take account of the expansion of the
            demand-driven system to sub-diploma places. It is also unclear what the criteria for the tender process
            will be and whether equity considerations have been adequately addressed.

            Any redistribution of places must take into account the needs of regional areas where participation in
            higher education is low, and the potential impacts on equity if there is any reduction in the number of
            enabling places available.

            Recommendation: Regional workforce needs and institutional strengths should be considered in
            determining both the total number of enabling places available and the criteria for distribution.

            Cross-subsidisation of enabling gap through HEPPP funds
            It has been suggested in discussions with the Minister that one option for universities could be to
            subsidise any shortfall in enabling funding from its institutional HEPPP allocation. UON holds some
            concerns about this approach.

            While both HEPPP and enabling support - in broad terms - aspiration and achievement in higher
            education for underrepresented groups, it would be counter-productive to reallocate funds designated
            for equity to cover any gap in funding of enabling programs. HEPPP-funded programs are complementary
            to enabling education but cannot (and should not replace) the academic and support provided by
            structured pre-university preparatory programs. For example, part of UON’s HEPPP-funded community
            outreach initiatives in recent years has been to provide pre-enabling support and skill development to
            adults in marginalised communities through partnerships with local libraries and education centres.

            In addition, under the legislation as proposed, HEPPP funds may only be used to support programs with a
            focus on low SES students. While low SES students form a substantial proportion of UON’s enabling
            cohort (around one third of total enrolments in 2016), other equity groups – such as first in family,
            Aboriginal & Torres Strait Islander, and disability – also have higher representation in enabling cohorts
            than in the undergraduate student population more generally.

            Recommendation: If HEPPP is to be used to support enabling students, the mechanism should be for
            the HEPP loading for low SES students also to apply to low SES students in enabling programs, rather
            than being redirected from existing HEPPP funding.

            4. Rise in maximum student contributions
            It is also disappointing that the government has elected to increase student contributions by 1.8 per cent
            each year, building to 7.5 per cent by 2021. Any disincentive for students to come to university has real
            impact on regions such as the Hunter, in which lifting educational attainment and training the workforce
            of the future is critical as the region transitions away from a traditional resource-based economy.

            Higher education attainment in UON’s primary catchment regions remains lower than state and national
            averages, and is closely correlated with median household income per Table 1 below.

            UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
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                                                                                         Percentage Of People With
                                                       Median Total Household
                             Region                                                      Bachelors Degree Or Higher
                                                          Income(Weekly)
                                                                                                Qualification
             Newcastle and Lake Macquarie          $1,133                              16.5%
             Hunter Valley (excl.
                                                   $1,158                              9.8%
             Newcastle/LM)
             Central Coast                         $1,003                              11.9%
             NSW                                   $1,237                              20.7%
             Australia                             $1,237                              19.7%
             Greater Sydney                        $1,447                              40.5%
            Table 1: Household income compared with higher education attainment rates
            While the HELP scheme may blunt student debt aversion, it remains the case that particular cohorts of
            students within our regions - including mature-age, low SES and first in family students – have higher
            levels of price sensitivity and are likely to be disproportionately impacted by the uplift in student fees.

            In combination with other changes that may affect these groups – such as the lowered HELP repayment
            threshold and the proposed introduction of a student contribution for enabling programs – UON is
            concerned that the combined impact will have a substantial negative impact on participation and
            engagement in higher education for our regions.

            Recommendation: The impact of the proposed increase in student contributions should be reassessed
            to identify disproportionate impacts on students in regions and in equity groups. In combination with
            other student-focused measures such as the introduction of a fee for enabling programs and the
            reduction in HELP repayment thresholds, UON is concerned that these changes will place university out
            of the reach of many Australians, particularly those cohorts with higher debt aversion such as mature-
            age and low SES students.

            5. Direct allocation of postgraduate CSPs to students vis scholarship places
            In 2015, UON was allocated 285 EFTSL of postgraduate CSP, primarily in education, nursing and allied
            health. This constitutes less than 0.75 per cent of the total 38,129 postgraduate CSP EFTSL allocated to
            the Australian higher education sector in that year and reflects historical allocations.

            UON supports correcting this anomalous historical distribution of postgraduate CSP places, particularly in
            the context of the increasing need for postgraduate qualifications in many fields of employment and in
            regions which are transitioning toward knowledge-based economies that require more advanced
            skillsets. However, it is not clear that the proposed scholarship scheme will achieve the desired outcome
            of appropriately redistributing places to areas of current demand without imposing significant levels of
            administrative complexity for students and for institutions. We would also be concerned to ensure that
            the proposed eligibility criteria for postgraduate scholarships (which are yet to be determined) take into
            account the future employment needs of regional communities and some measure of consideration for
            equity.

            If these design and equity issues can be resolved, UON considers that the proposal for allocation of
            postgraduate CSPs via a scholarship scheme may offer an opportunity for more equitable distribution of
            these places for the benefit of students and the nation.

            UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
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            Recommendation: UON supports the correction of the anomalous historical distribution of
            postgraduate CSP places should be corrected, particularly in the context of emerging workforce needs
            in regions which are transitioning toward advanced industries. UON also recommends a robust
            consultation process with the sector regarding the eligibility criteria for the proposed scholarship
            scheme, which should include some measure of consideration for equity, the workforce needs of
            regions and regional students.

            6. Efficiency dividend of 2.5% on CGS funds in 2018 and 2019
            UON is disappointed that the government has chosen to place this record of performance in education,
            research and innovation at risk by proceeding with further cuts to university funding, in the form of the
            2.5 per cent efficiency dividend on Commonwealth Grant Scheme (CGS) funding to be imposed in 2018
            and 2019.

            This measure represents a substantial reduction in funding for UON of around $10 million per annum,
            compounded by the permanently lowered base amount from 2020. To place this in context, UON faces
            $100 million in funding cuts between 2019 and 2029 – a difficult position for a regional university with
            strong obligations to its cities, regions and communities.

            Financial performance of universities – unpacking ‘surpluses’
            It is troubling that the stated justification for the efficiency dividend has been the sound financial
            performance of universities since the introduction of the demand-driven system, specifically the
            generation of surpluses that are subsequently reinvested into the university for the benefit of students,
            staff and the community. Reinvestment generates public value, not profit for universities or
            shareholders.

            The perception that universities can simply ‘absorb’ a further cut – on top of the $3.9 billion that
            universities and students have already contributed to budget repair since 2011, and combined with
            potential funding shocks through performance-based funding – is not borne out by the evidence,
            particularly for institutions operating in regions of significant disadvantage.

            As highlighted in the 2016 Grant Thornton Australia report on university finances, while the majority of
            Australian universities are currently achieving a surplus of more than 6 per cent, “income growth has not
            translated into higher surpluses…the trend in declining surplus as a per cent of income suggests that the
            number of universities achieving such surpluses greater than 6% will continue to decrease” (Health check:
            The financial health of Australian universities, Grant Thornton Australia, 2016).

            UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
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            The NSW Auditor-General’s report into NSW universities also belies the perception of universities being
            ‘awash with cash’, finding that in 2016 five universities (out of 10) had expenditure growth exceeding
            revenue growth. The Auditor-General cautioned that ‘there may not be sufficient resources to fund
            normal operations and maintain existing assets over the medium to longer term when expenditure
            growth rate exceeds revenue growth’. However, the Auditor-General highlighted the work already being
            done by universities to find efficiencies and constrain expenses – an important factor that has not been
            considered in the determination of whether an efficiency dividend should be applied.

            Capacity to support infrastructure and regional campuses
            The cuts will also place increasing pressure on the capacity of universities to meet the needs of students
            and staff for contemporary, technology-enabled teaching and research infrastructure. The report of the
            Higher Education Infrastructure Working Group (HEIWG), commissioned by the Government and chaired
            by Phil Clark AO and Professor Denise Bradley AO, found that universities were managing their financial
            resources responsibly and well, reinvesting generated surpluses directly into teaching and research
            infrastructure (physical and virtual).

            The report also succinctly captured the dangers of ‘short-termism’ in higher education policy and the
            importance of strong financial performance in responsibly securing institutions’ future viability:

                    The continuing ability to generate sound operating surpluses lies at the heart of universities’
                    capacity to make the infrastructure investments necessary to support high quality teaching,
                    learning and research…Funding shocks that increase risk and erode university operating results
                    and balance sheets will reduce self-financing capacity. That may lead to forced reliance on
                    external capital sources if universities are to continue to make infrastructure investments. At the
                    same time, institutions’ capacity to borrow on favourable terms will be reduced if their balance
                    sheets come under too much pressure from funding shocks (HEIWG Report, 2016).

            Without being able to generate strong operating surpluses to support essential infrastructure – and in
            the absence of federal education infrastructure programs such as the now-defunct Education Investment
            Fund - universities will be forced to make difficult decisions about the future of key programs, services
            and facilities for students.

            For UON, $100 million in cuts over the next decade – coming on top of previous efficiency dividends, the
            dismantling of the Education Investment Fund and the ongoing issue of underinvestment in research -
            will place profound pressure on our capacity to continue to deliver world-class education, research and
            innovation to our regions. Like many institutions, UON will be carefully considering whether it can
            continue to operate regional campuses (often in areas of higher need) and to offer a comprehensive mix
            of academic programs with the same level of engagement and support.

            Recommendation: The 2.5% efficiency dividend on Commonwealth Grant Scheme funding should be
            removed from the Bill.

            7. Introduction of performance-contingent funding
            UON holds significant concerns about the proposal to make 7.5 per cent of CGS funding – which
            translates to around $17 million for UON in 2018 – contingent on performance against benchmarks.

            The precise nature of these measures from 2018 onwards remains unclear, and the combination of this
            lack of clarity (including the interaction with the existing quality framework in place through TEQSA, the
            AQF and the comprehensive QILT comparators) with the large quantum of funds at stake places
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            universities in a difficult position.

            It is also critical that any methodology used is sufficiently nuanced to take into account the demographics
            and mission of individual institutions. For example, if applied crudely (eg on a four-year basis) a measure
            such as completion will disproportionately affect institutions such as UON, which tend to have larger
            proportions of students who are mature-age or part-time (factors known to affect completion).
            Completion rates at UON reflect the characteristics of our student profile and regional demographics,
            which per Figures 6 and 7 includes a substantially larger proportion of non-school leavers than the sector
            average, many of whom study part-time and work.

            Figure 6: UON and Sector Percent undergraduate commencing from non-secondary education, 2010-2015

            Figure 7: UON and Sector part-time proportions, 2010-2015

            We know that, while these cohorts of students do succeed at university, their life circumstances and
            modes of engagement mean that they take longer to complete their programs. Part-time attendance
            extends the completion time of a program; it is therefore to be expected that completion rates at UON
            are lower over the short term than the sector average (42.0 per cent compared to 45.0% for students
            commencing in 2011), but improve over the six and nine year time horizons.

            This is reflected in the Department of Education and Training’s cohort analysis of completions (published
            in 2017) which shows that the four-year Completion Rate for UON is 51.9 per cent for students

            UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
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            commencing in 2006, but this rises to 77 per cent in the nine-year Completion Rate data. Internal UON
            data also indicates that between 4 and 6 years after commencing study, completion rises by 20 per cent,
            with more than 70 per cent of students having completed their programs by 6 years. A four-year
            completion metric would therefore significantly obscure the real outcomes and success of UON students,
            as well as placing the funds to support these students at risk.

            Table 2. Completion Rates at UON & Sector – Commencing 2005

                                                Four year                         Nine Year
             UON                                51.9%                             77.0%
             Sector                             46.7%                             73.5%

            Even for equity groups, whose performance is often affected by intersecting axes of disadvantage, the
            positive nine-year outcomes for UON are demonstrably higher than the sector, reflecting UON’s
            substantial commitment to lifting achievement in these groups.

            UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
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            Table 3. Equity Group Completions in any year within 9-year period
                    Equity group             Commencing year                            Sector                    UON
                                                    2005                                58.5%                     61.1%
                25 and over
                                                    2006                                58.1%                     61.2%
                                                    2005                                46.6%                     59.8%
                Indigenous
                                                    2006                                47.3%                     62.1%
                                                    2005                                68.9%                     72.1%
                Low SES
                                                    2006                                67.9%                     71.5%
                                                    2005                                69.8%                     77.1%
                Regional
                                                    2006                                69.0%                     75.5%

            It would be a perverse policy outcome for funds to be withheld from institutions actively working to lift
            success and improve graduate outcomes for equity groups, while institutions without a similar
            commitment to equity or student demographic profile benefit by achievement of the relevant
            ‘performance’.

            Similarly, measurement of graduate outcomes such as graduate salaries would need to be moderated by
            the relative opportunities and employment within regions such as the Hunter and Central Coast, where
            median household incomes are on average 25 per cent lower than metropolitan counterparts.

            Mechanisms for redistribution
            Finally, while UON notes the government’s stated commitment to redistributing within the higher
            education sector any withheld funds from universities who do not meet performance thresholds, the
            draft legislation does not reflect this intent or provide any detail on relevant mechanisms for distribution.

            Given this complexity and the need for universities to have sufficient certainty to support their planning,
            it may be more appropriate to delay the introduction of outcomes-based performance-based funding for
            one or more years until these issues can be resolved and a more considered system designed in
            consultation with the sector.

            Recommendation: The proposed performance-contingent component of 7.5 per cent should be
            withheld from the Bill pending further consultation with universities on appropriate measurements for
            performance in the context of universities’ differential missions and demographic profiles. In this
            context, UON recommends that measures of completion should be taken at 4, 6 and 9 year time-
            points to ensure that the performance of mature-age and part-time students is appropriately reflected.

            .

            UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
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