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 ...
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
8 JUNE 2017                                                                                           1
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.

UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
8 JUNE 2017                                                                                                 2
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
8 JUNE 2017                                                                                                     3
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
8 JUNE 2017                                                                                                    4
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.

UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
8 JUNE 2017                                                                                                   5
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.

UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
8 JUNE 2017                                                                                                   6
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.
UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
8 JUNE 2017                                                                                           7
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.
UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
8 JUNE 2017                                                                                                8
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.

UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
8 JUNE 2017                                                                                                 9
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
8 JUNE 2017                                                                                               10
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
8 JUNE 2017                                                                                                11
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
8 JUNE 2017                                                                                                   12
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
8 JUNE 2017                                                                                                13
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
UNIVERSITY OF NEWCASTLE – SUBMISSION TO SENATE EDUCATION AND EMPLOYMENT COMMITTEE
8 JUNE 2017                                                                                              14
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
8 JUNE 2017                                                                                             15
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
8 JUNE 2017                                                                                             16
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
8 JUNE 2017                                                                                               17
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