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Time to move beyond the higher/vocational education divide

Time to move beyond the education divide

Report urges federal responsibility for a national tertiary education system.


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Australian tertiary education and training needs a major overhaul to create a coherent national system that will better equip Australians for a changing world, a new report by KPMG Australia, published today, argues.

In Reimagining tertiary education: from binary system to ecosystem, KPMG proposes that the federal government should take primary responsibility for a single funding framework, to which states and territories will contribute, and aim to take us beyond the current outmoded binary division between the higher and vocational education sectors. Greater diversity of provision, a full demand-driven system and rewarding teaching to the same level as research are other key proposals in the report.

KPMG's report argues that the tertiary system needs to be ‘reimagined’ in order to meet the scale of likely change in society, economy and the future world of work. Its 10 recommendations also aim to re-enliven the reforms proposed by the 2008 Bradley Review, which argued for a more integrated tertiary education sector. The proposed revamp, based on recent expenditure, would cost an additional $1.7bn annually, it is estimated.

Professor Stephen Parker, KPMG Partner and Education Sector Leader, and principal author, said: “We have conducted discussions with over 50 experts in tertiary education and training. The striking thing was the sense that so many imaginative and ambitious ideas are currently being thwarted by rigid structures and policies, and divisions between federal and state governments. There is a sense of fatalism that necessary reform is not possible – but it is crucial for Australia’s future that, in an era about to be turned upside down by technological change, flexibility replaces rigidity in our tertiary education system. No-one knows exactly what the future holds so we must have more diversity in terms of providers and offerings. Quite simply, we need to move from a binary system – higher and vocational education – to an ecosystem.”

The report observes the perception that the university sector suffers from sameness, despite much marketing money being spent on differentiation, with many universities aspiring to similar goals, particularly improved rankings which come from the current privileging of research over teaching.

The report argues that the current approach also encourages universities to become comprehensive in scale and expand the range of qualifications that they offer students. Adding new study programs in disciplines that are already well-served nationally has become one of the surest ways for an Australian university to grow. This may contribute little to the overall depth and diversity of the tertiary education sector.

Tuition income is used to cross-subsidise research, and there is no direct financial reward for good teaching – a situation KPMG urges policymakers to address. The report proposes a teaching excellence framework to act as a counterpart to the current research assessment exercise. And to prepare the way for private, non-university providers to come within a unified tertiary loans scheme, public funding should be separately streamed for teaching, research and other intended purposes.

Stephen Parker said: “Our vision for a national system is one based on four principles: advancing innovation, fairness, efficiency and civil society. Arguably Australia will stand or fall in the future by how innovative we are – and innovation in tertiary education is vital if our students are to adapt to the changing world or work. Fairness can be addressed by a unified funding framework and policies to reduce the barriers that exist for disadvantaged people seeking access to courses which enjoy a graduate premium. Efficiency will be increased if institutions are incentivised to focus on those activities where they have a comparative advantage. Civil society is advanced by ongoing public support for history, languages, classics and ideas which the open market would not sustain.”

He added: “Our key recommendation is that we need a coherent national system. We think the Federal Government must assume primary responsibility for a unified funding framework, aided by an expert independent tertiary education pricing authority to assess the appropriate level of public subsidy for types of courses. We recognise that this will need to be negotiated with the states. It is essential, firstly that teaching activities required for each qualification are appropriately and reasonably costed and funded, and secondly that both governments and students make an appropriate contribution to the cost of each qualification.”

“In such a funding framework, loan finance would be available equitably for people to choose a VET option, more students will choose to undertake a shorter course than a bachelor level qualification lasting an average of 3.5 years, and the degree may become less dominant as a qualification. In our judgement the cost reductions in current higher education activity will outweigh the costs of expanding subsidies and loans at all higher education providers. In a coming world of automation, artificial intelligence and other transformative technologies, the key may be skills rather than discipline-based knowledge.

“The current system rewards those universities with high entrance requirements but this can operate to cement privileges of established elite institutions. If a ‘learning gain’ factor was rewarded, in effect the value added to a student, this could be an incentive to work hard to turn around the lives of disadvantaged students and trainees. A reversal in the trend of declining public support for the Vocational Education and Training sector is both socially and economically justified, and would help to ease Australia’s chronic labour market shortage of technicians and trade workers. But regulation must be tightened to ensure that all registered training organisations are of high quality and committed to the mission of education and training.”

“We should imagine the tertiary education ecosystem in the future not as a stratified, hierarchical one, but rather flipped on its side, with different types of providers each aiming to be the best in class”, he said.

KPMG Australia recommendations

  1. A national tertiary education and training system. A national tertiary education and training system should be introduced progressively through negotiation between the Australian Government, states and territories on the basis that the Australian Government takes primary responsibility for a single tertiary education funding framework for qualifications from Certificate level (AQF level 1) through to PhD (currently AQF level 10).
  2. A tertiary education system with a revised Australian Qualifications Framework at its centre. Australia’s tertiary education system should be structured, funded and regulated around a refreshed Australian Qualifications Framework, and not around a division between ‘higher education’ and ‘vocational education and training’. Legislative requirements must treat all providers alike.
  3. A unified funding framework – The Federal Government should restore the demand-driven funding model for higher education and extend it progressively to other tertiary qualifications.
  4. Greater funding transparency and accountability – The Commonwealth Government should ensure that the purposes for which grants are made to providers of tertiary education and student contributions are levied are clearly identified, particularly in relation to teaching and research. There should be clear accountability for the outcomes under each funding stream.
  5. Independent tertiary education pricing authority – The Federal Government should establish an independent tertiary education pricing authority. Working within overarching financial parameters set by the government, the authority would:
    ● determine the appropriate price for the teaching of various disciplines at different tertiary qualification levels; and
    ● set the maximum amount of that price to be paid through student contributions, having regard to the expected private benefit at different tertiary qualification levels.
  6. A unified tertiary education loan scheme – Students should have access to a single income-contingent loan scheme that allows them to borrow in respect of student contributions across the full range of tertiary qualifications.
  7. Regulatory arrangements – The Commonwealth Government should tighten regulation in the VET sector, ensuring that regulation is responsive to the circumstances of tertiary providers, and integrate the regulatory activities of ASQA and TEQSA over time.
  8. Valuing teaching excellence – The Federal Government should develop an instrument to appraise and recognise excellence in teaching, as a companion to the Excellence in Research for Australia instrument that recognises excellence in research. A component of funding allocated to providers to support teaching should be contingent on teaching outcomes.
  9. Improving information on tertiary education outcomes – The Federal Government should improve information available to support the operation of the tertiary education ‘marketplace’ and assist students to make good educational choices.
  10. Removing higher education provider categories – The use of the term university should continue to be restricted by law but not be based on a TEQSA classification of different types of higher education providers. Universities should no longer be compelled to undertake research that leads to the creation of new knowledge and original creative endeavour in at least three broad fields of study.

For further information

Ian Welch
KPMG Communications
0400 818 891

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