AUSTRALIA: Bradley: a short-term political patch-up

Last month saw the release of a report of the Review of Australian Higher Education, immediately dubbed the 'Bradley Report' after the chair of the four-person committee of inquiry, former University of South Australia vice-chancellor Professor Denise Bradley. The Bradley committee was established by the Kevin Rudd-led Labor Party government in March 2008 just three months after taking office. It had a broad mandate to address issues in the tertiary education sector and was expected to be the vehicle for implementing the Rudd government's much discussed 'education revolution'.

Under the previous neo-conservative Australian government led by John Howard (1996-2007) higher and vocational education experienced substantial reductions in government political and fiscal support. Between 1995 and 2004 total public funding of tertiary education rose by 49% in the average OECD country but in Australia public funding fell by 4%, though student numbers rose by a third.

Public funding per student, the primary source for the resources that support domestic teaching and basic research, fell by almost 30%. From 1995 government subsidies for domestic places were no longer subject to full annual indexation (a one-off decision of the outgoing Labor government that Howard installed as permanent) and there were additional reductions in the level of subsidy in the second half of the 1990s.

By the end of the Howard years, Australia had become a relatively low public investor in tertiary education at 0.8% of GDP in 2004 compared to the OECD country average of 1.0%. Australia was 25th of the 29 OECD countries for which data are available. Meanwhile institutions were encouraged to recruit international fee-paying students to fill the funding gap, and to deploy their basic research capacity in commercial projects for industry.

Private funding levels jumped. Driven by public under-funding, in that the costs of government subsidies and capped student contributions no longer covered the average cost of places for government students, international students numbers tripled in the Howard years, reaching 19% of all on-shore students, the highest level in the OECD.

This policy regime built Australia into the fifth largest exporter of education services with 6% of the world market, and a major player in transnational education programmes offshore in Asia. Education is now 5.9% of total Australia exports, reaping about US$10 billion per annum in tuition revenues and spending by international students on housing, transport, living costs and other expenses.

But the international education effort is unbalanced. Foreign enrolments have become increasingly dependent on China and India, and are concentrated in business and technologies at first degree and masters level.

Australia offers comparatively few scholarships to foreign doctoral students and policy on international research collaborations and staff and student exchange is largely decoupled from the recruitment of foreign students, which has become largely revenue-driven, especially in the Asia-Pacific region. Australia remains a modest player in the growing global competition for research talent.

The marked shift from public to private funding within Australia has become associated with the flourishing of entrepreneurial activity and world competitive levels of service provision while hollowing out material standards in teaching and research. Total funding per student has remained more or less constant but much of the new private revenues are assigned to the business costs of the burgeoning international education industry and the associated buildings and services.

The remainder of the new commercial revenues has been applied to prop up domestic funding levels but not enough to maintain resource levels; and the funding of teaching and learning resources for international students has been affected along with the rest.

The average student-staff ratio has jumped from 15:1 in 1995 to 20:1, the level and availability of finance for student living support dropped to the lowest level since the 1970s and three-quarters of full-time students are now working during the study semester, and the proportion of university research classified as 'basic' or 'strategic basic' has dropped sharply.

Domestic demand has been flat and the participation rate has grown more slowly than in most OECD countries. Sub-degree vocational education has been more under-funded than higher education, leading to growing pressures from business and industry to modernise training.

Hence at issue in the Bradley review was not only the state of the material infrastructure and the mode of tertiary system organisation, and the often-fractious government-university relations, which became poisonous during the Howard years, but the distinctive Australian model of tertiary education with its uniform set of incentives to generate export income, locked in by the funding regime of partial indexation, the unusual education export-dominated configuration and the primary international focus on revenues not research and partnerships.

Strikingly, Australia is both a positive and a negative example for policy-makers elsewhere. It is a government treasury's dream because of its almost unique capacity to generate direct economic benefits from tertiary education through the sale of services - the other such case is New Zealand.

On the other hand, the remarkable success of exports has developed partly at the expense of the 'public good' functions that tertiary education systems normally serve; and when research and domestic participation growth are taken into account, the long-term competitiveness of Australia as a global knowledge economy must be in question.

Australia has three universities in the Shanghai Jiao Tong top 100 for research but all in the second 50 and two of these must enrol 10,000 fee-paying international students simply to balance their books.

Within the current set of incentives there is little prospect of Australia being able to build and concentrate research activity as China, Singapore, Korea, Germany, France and other nations are doing. In contrast, most OECD countries that have increased private funding have also increased public investment.

The UK has also built a sizeable commercial industry in international education but has managed to maintain a more healthy policy balance, with relatively high levels of subsidy for basic research in the leading universities. British research is second to that of the US, and the UK has managed to expand domestic student participation more rapidly than Australia; though in the UK a long legacy of public under-funding is also placing increasing strains on the system.

Australia could achieve a more balanced model of tertiary education, in which it took greater advantage of the internationalisation that has occurred, by:

* Raising public funding so as to fully cover the costs of domestic teaching and research projects; relaxing the present system of government incentives and accountability controls to permit a greater range of mission variation among institutions - whether by negotiating and funding nuanced missions on a one-by-one basis through an independent commission, or by deregulating domestic fee charging in association with income contingent tuition loan arrangements and a broad-based equity scholarships programme.

* Allowing part of the international revenues to be allocated to improving English language preparation and intercultural pedagogy for international students, or providing a richer set of international linkages, especially in personnel exchange, foreign doctoral programmes and post-doctoral researchers.

In its terms of reference, the Bradley committee was asked to address most of the symptoms, including funding levels, domestic participation, socio-economic equity in entry and completion, the need for greater institutional diversity in mission and provision, and the long-term global competitiveness of the Australian system.

It was also asked to consider how relations between higher education and sub-degree training could be better configured. Its terms of reference stopped short of a clear-cut focus on the extent to which the political economy of the system is driven by the export industry; and most of the research issues were outside its mandate, being addressed in a separate review of the Australian innovation system.

How successfully has the Bradley Report tackled these considerable challenges and will its recommendations survive the political process in which a neo-liberal Treasury remains a powerful player? Will the global economic recession give the neo-liberal fiscal management another burst of life or will it tip over into renewed government spending on research and innovation?

The short answer is that the Bradley package is politically moderate and astute, and has an even chance of implementation in a difficult fiscal climate. But it does not provide an adequate basis for long-term system redesign and renewal.

This is not simply a question of the level of enhanced funding it proposes, though that is a problem. Bradley goes only part of the way to tackling the weaknesses in the Australian model. It wants to (nearly) restore full indexation, to install a small increase in the funding rate of domestic students, and to toughen up standards.

But it leaves all institutions locked into volume building as the only way to raise more resources, leaves intact present direct governmental controls and drivers of system homogenisation, and ducks the issues of research concentrations and global competitiveness in the knowledge-economy. It recognises that Australian higher education is over-dependent on international revenues and a quantity-not-quality approach but is unlikely to change that.

The fundamental policy focus is on the domestic system and on making the policy settings established by a previous Labor government, the Dawkins reforms of 1987-1992, work better, with the intention of beginning the process of correcting what are seen as distortions and imbalances introduced in the Howard years.

Arguably, the Bradley committee fails to get to grips with the vast changes in worldwide higher education and knowledge cities in the last 20 years, including the mobile phone and the internet and their implications for youth cultures, pedagogies and open source knowledge flows; not to mention university rankings, Bologna and Europeanisation, and the rise of China and other Asian science powers.

The report places local socio-economic access, indigenous participation and completion, rural and remote disadvantage, and student financial support on the front-burner. It wants to raise the level of school leaver participation in higher education from 28% to 40%, to lift the participation of lowest socio-economic strata to one fifth of total enrolments, and make a renewed effort to lift the participation and completion of indigenous students.

It has also proposed the partial integration of vocational education and training into a national tertiary system alongside the universities and the federal provision of government support for VET programmes at diploma (two-year programme) level and above.

These are all welcome proposals and are likely to receive public and government support. We can note here that the inclusion of VET in a common tertiary education system may make it easier to achieve the social equity targets.

Bradley proposes US$4.5-$5.5 billion in additional annual funding overall, with about one third of this generated by growth in numbers including $600 million in additional borrowings from government under the income contingent tuition loans system, HECS.

It wants a 10 % increase in the base rate of government grants, which would bring these up to current cost levels though there would be little scope for improved staffing ratios unless subsidised from foreign earnings.

Student tuition contributions will not increase and the report makes a strong case for increasing student living support. Altogether, there would be a $1.8 billion increase in funding for teaching and learning, part of it subject to performance allocation on the basis of participation, equity and quality targets. In many disciplines at institutional level there will be no more than a 1-2% increase in the base funding rate which is insufficient to make a real difference.

This means that even if Bradley's recommendations are fully implemented - in the present fiscal climate that seems unlikely though it is not impossible - most institutions, even the leading research players, will still need to maintain and expand their very large international student populations.

In what is an often thoughtful in-principle statement on international linkages, the report has recognised the need to pluralise the international strategy and support more international doctoral students. But it proposes only that the government provide about $80 million in tuition scholarships, leaving it to institutions to provide living allowances for foreign doctoral students and their dependants.

This is a start but is not enough on its own to pluralise Australia's global orientation. The key policy step is to break from scarcity-induced export volume maximisation which continually badly affects not only global priorities but the material quality of the domestic system. That is precisely the step Bradley found too hard to take because it runs up against Treasury's desire to increase education export revenues.

This desire is enhanced in a trading context in which the commodity-dependent Australian economy is experiencing sharp declines in the price of its two largest exports, coal and iron ore. This is the central contradiction of Australia's global strategy in the knowledge economy; unless the government has the strength to grasp the problem it will stay in the 'too hard' basket

The Bradley committee surprised many observers by setting aside the preliminary government discussion of a system of 'compacts' negotiated with each individual institution which was designed to provide a framework for enhanced diversity. Perhaps the manner in which the report was put together, nested in the federal government's own education department, precluded the fundamental changes to governance entailed in negotiated diversity.

If the department or the minister's office were to negotiate compacts the process would become highly politicised; suggesting the need for a semi-independent commission as a 'buffer' between government and institutions.

This would also permit a greater degree of long-term planning and might enable a reduction in micro-management that would take pressure off the government-institution relationship. Although many had urged it, the Bradley report did not propose such a commission although it does want a new federal authority to manage the higher education-VET relationship, private sector accreditation and, importantly, standards.

There seems to be recognition that the Australian Quality Assurance Agency has been too dependent on self-regulation of quality (which leaves it open to capture by institutional marketing) and a stronger external watchdog is needed. This will regulate the emerging private sector more closely - recent problems of standards in international education have been mostly located in that sector- and may have more general implications for shoring up the quality Australian international education, though the report did not explore standards in relation to transnational programmes.

Longer term, the new federal authority also might have potential to develop a role in planning, policy advice and the administration of funding. In sum, the Bradley committee may have broken the patterns of the Howard years. On the other hand it has not established a newly modernised more globally savvy Australian higher education system with stable long-term life.

Its recommendations are a political patch-up and are likely to have the same used-by duration as the 2003 Nelson reforms by the Howard government, which marginally lifted funding rates by the same extent as proposed by Bradley. It will be necessary for government to again revisit system reform in a few years time.

Given these limitations, the most crucial proposed policy changes to achieve at this stage are the Bradley report's restoration of indexation of government grants, to start to transform the public-private dynamics; and implementation of the full funding of research costs as recommended by a separate review on innovation to establish research infrastructure parity with the UK and Canada, which would start to correct the erosion of Australia's comparative long-term research capacity.

The Bradley committee wants to increase research infrastructure by $200 million. But there is a danger the government will see this as a cheap substitute for implementing the innovation review's proposal which cost upwards of $1.2 billion

The ball is now in the government's court. It is budget preparation time and the Deputy Prime Minister and federal Education Minister Julia Gillard is expected to announce the government's response to the Bradley report next month.

* Simon Marginson is a professor of higher education in the centre for the study of higher education at the University of Melbourne. Creativity and the Global Knowledge Economy, by Michael Peters, Simon Marginson and Peter Murphy, will be published by Peter Lang (New York) early this year.