AUSTRALIA: Outcomes of the Bradley review

I found the Bradley report disappointing and short-sighted. Reading it in the context of the federal government's promised education revolution, and early suggestions that the review team was proposing to make some bold suggestions, one had to ask whether we were seeing the first Revolution to achieve the status quo.

This was largely prompted by the comment in the report that "...the recommendations in this report, if fully implemented, are likely to do no more than maintain the relative international performance and position of the Australian higher education sector".

I was struck by the fact that the report could on the one hand demonstrate the system had been falling behind its international peers while on the other consign it to that position indefinitely. The report seemed to be concentrating on what the government might be able to afford rather than what the system needed to achieve the high status it and government seemed to want.

While it was understandable for the review to ensure that its demands were not too outlandish, my fear was that not having made a starker case for additional funding might leave the government with the capacity to argue that it had done enough even while providing less than the little that was requested.

The title of the government's response, its tenor and the fact that it has not delivered the funding that had been proposed, suggest that my fears were not ill-founded. A set of stretch goals might have made it harder for the government to argue that it had now done its bit because there would have been a longer-term plan towards which it needed to work.

My preference would have been an outcome in which the government would reduce the number of reforms but fund each adequately. Instead the government seems to have adopted the rhetoric but failed to fund it adequately.

The compelling public benefit argument for increased higher education funding, even in these difficult times, was well made in the Cutler and Bradley reports, in OECD reports that underpinned Labor's policy in Opposition, and in the initial responses by the two Ministers at three separate conferences in March this year. They are even repeated in the formal responses but funding has not followed the rhetoric.

Bradley argued the system had suffered significant neglect over recent years, with public spending reducing to unacceptable levels. It argued that Australia had now fallen well behind its international competitors in the OECD and that it should be brought back to its rightful place towards the top of the OECD ladder.

The report confirmed the government's contention that the financial situation faced by universities had been worsening; it also confirmed that Australia is losing its earlier competitive edge. Government contributions had reduced by 10% between 1996 and 2008 so the report concluded that higher education funding should be rebalanced through an immediate increase in public funding and that funding should then be indexed.

It proposed an increase of 10% in total government grants relating to teaching and learning, totalling $1.8 billion over four years, with indexation totalling $1.14 billion over the same period. In broad terms, the new policy and funding framework proposed by Bradley would be built on the following principles:

* A student centred, demand-driven funding system, with no quotas on total or discipline places from 2012 - moving from a mass to a universal higher education system;
* Concentration of research activity and research teaching in those institutions that can demonstrate capacity;
* Improved completion rates;
* Improved performance indicators to justify funding;
* Higher participation rates to achieve a graduate (bachelor or higher) output of 40% of 25-34 year olds by 2025;
* Higher participation (20%) and completion rates for disadvantaged students;
* Year 12 achievement rate of 90% by 2020;
* Quality assurance that is focused on standards and outcomes through a National Regulatory and Quality Agency for Higher Education;
* Negotiated compacts between the Commonwealth and institutions to determine mission and funding;

To achieve a world-class system, return higher education to the top of the OECD rankings in teaching and research expenditure, and create a system that would support nation building, the government needed to address the neglect described in Table 29 from the Report on Higher Education). Australia's public contributions to higher education are well below world standards.

While these are tough economic times, education, as the country's third largest export earner should be protected against the risk of a perception that it is not maintaining its competitive position. This could lead to a reduction in international students and that could cause financial failure of several universities. Lesser industries have been supported to maintain their competitiveness as part of the stimulus packages, but higher education has not been mentioned in any of them.

One of the interesting features of the report and the government's response is the argument that worsening staff:student ratios have been the cause of several of the problems identified in the report: student access, student retention, student experience, staff workloads and staff attraction and retention at a time of major staff shortfalls. Bradley also suggested that high dropout rates among the low SES group are caused by worsening staff:student ratios.

Yet neither proposed a solution to the problem. Bradley just states the problem and moves on, while the government response suggests that the enhanced quality assurance and standards arrangements under the new Tertiary Education Quality and Standards Agency will fix the problem.

Staff:student ratios are the most eloquent indicator of the system's health. The Bradley Report shows they have worsened constantly from 12.9 in 1990, to 15.6 in 1996 and 20.5 in 2006.

In fact this decline has been evident since the early 1980s, so it is the result of bipartisan neglect. It is a sentinel indicator of the health of the system because it reflects the decline in per capita student funding. The effects of this decline are enormous and affect every aspect of a university's activities.

Fixing this problem remains urgent because it is the surest way of supporting teaching quality and enhancing the student experience. The change from a mass to a universal access system means that there will be an increasing number of students who will need support and nurturing, and that cannot be achieved without the more individualised teaching that lower ratios would allow.

So what is done about staff:student ratios is a good guide to measuring the success of the government's funding announcements. But fixing it is not cheap. The 1996 level has certain attractions because it would take the system back to the situation before the most recent years of neglect and coincidentally to about current UK ratios - we will not mention the better comparator of the US where the ratios are still at levels we have not seen since the late 1970s.

Using constant 2006 staff and student figures, the additional annual cost would be some $772 million (US$609 million); to return to 1990 levels would require an additional $1.45 billion per year. The report's proposed increase of $1.8 billion over the first four years, based on a 10% increase in teaching and learning programmes and subsequent indexation would therefore not have been enough. Fixing staff:student ratios should have been given priority over reaching the 40% attainment target, which might instead have been further deferred.

The early responses from the two responsible Ministers consisted of aspirational statements suggesting they wanted to create a new higher education framework and a coherent policy and funding regime. There was a reassuring continuing emphasis on the centrality of higher education to national development. At the same time, they both acknowledged that reform would come at considerable cost and that it was not the most propitious timing.

The formal response, Transforming Australia's Higher Education System, published as part of the budget continued this theme, appearing to accept the Bradley proposals and laying claim to a new era in higher education. The response does provide a new policy and funding architecture for the system, even if, as we shall see, it does not provide adequate funding for it. In summary:

* A student centred, demand-driven funding system, with no quotas on total or discipline places from 2012 - moving from a mass to a universal higher education system from which private providers are excluded;
* Negotiated compacts between the Commonwealth and institutions to determine mission and funding;
* Performance indicators to justify funding;
* Higher participation rates to achieve a graduate (bachelor or higher) output of 40% of 25-34 year olds by 2025;
* Support to achieve a 20% participation of low SES students by 2020 and 18.5% by 2014-15;
* Complete overhaul of student support arrangements.
* Quality assurance that is focused on standards and outcomes through a Tertiary Education Quality and Standards Agency that will also accredit and monitor institutional performance;
* Indexation to increase 1.8% by 2011;
* Increasing the amount to cover the indirect costs of research.

A closer look at the budget papers indicates that things are not quite so rosy. Several of the proposals in Bradley and Cutler have been declared to be in need of further analysis and there will be several further reviews and committees established to work through these during the coming year.

Many of the infrastructure and recurrent funding allocations will be phased in over some years, although none will reach a level consistent with Bradley or Cutler. And many of the major funding initiatives have been scaled back or not accepted.

The five major recurrent items in Bradley would have totalled $5.47 billion in additional funding over the next four years. The budget has allocated an additional $4.5 billion but identified savings of $3.04 billion so the effective additional funding comes to $1.46 billion, which is about 27% of the total sought.

Demand-driven funding, which is a major part of the government's new funding regime, has also been reduced to half the amount proposed in Bradley, while the student numbers have remained the same. Of considerable interest here is that there is no allocation for capital works to house the additional enrolments. The fact that per capita funding will not increase means the competition for additional students is likely to be among institutions with low cost structures, with little research emphasis.

The full indexation of research to meet indirect costs was never a likely winner, but Bradley had proposed a start by raising the level from 20 cents to 50 cents in the dollar. The government has allocated less than half the amount sought in Bradley, although there is a promise that $301 million will be provided in 2013‑14, and the government suggests that it will approach 50 cents over time.

While it is acknowledged that universities use funds from other sources to meet the full costs of research, the government believes that the precise amount of that cross-subsidisation is not sufficiently clear to enable it to provide the additional resources without further investigation.

The Bradley report showed that participation from disadvantaged groups had barely changed over the past 20 years despite concerted efforts to support it. The problem is further exacerbated when we look at completion rates, which are consistently below the system average. The Bradley proposals to increase disadvantaged participation to 20% and the proposed changes to financial support were commendable.

It is clear that adequate financial assistance while at university is a necessary but not a sufficient condition for participation and completion. The problem starts much earlier and involves changing perceptions in parents and teachers to create a culture in which children are inspired to aspire to higher education.

Parents need to understand the value of higher education and that their children can aspire to it, despite their presumed inadequate background and despite the fact that for them higher education is an alien place. In several disadvantaged regions, teachers and schools perpetuate the vision of victimhood, having given up any belief in the capacity of their students to succeed.

So there was a need to change our approach and reward mechanisms so that teachers and schools are recognised for having supported the higher education aspirations of their students, and higher education institutions are rewarded for having enrolled them. I therefore welcome the government's decision to provide specific funding to support low SES participation , including a loading for each student and funds to support partnerships between universities and low SES schools.

It seems that the additional funding will be based on enrolment targets rather than retention. I believe that measures are required that promote success as well as access, so I would suggest that institutions be rewarded for having attracted and retained students past the first year danger zone and then to completion.

Once in higher education, disadvantaged students must be adequately supported and receive qualifications that meet minimum threshold standards. The new quality assurance arrangements will now ensure that this is the case.

The government has accepted a new model from 2012 that will fund public universities for the number of students they enrol, with no limits on total or discipline enrolments. While this gives students the choice of where they want to enrol and what they wish to study, there are some significant implementation details to be worked out, not least whether there are sufficient funds to support the additional places and whether there are enough qualified students to take them up.

The entitlements appear to be unlimited and, it seems, unconditional, with no stated limits on students who drop out of courses for personal reasons or for failure. Such a blank cheque must have struggled to get through the Treasury and the Expenditure Review Committee, so I surmise that the basis of this decision is that the only institutions prepared to take them at the marginal rates suggested by the funding announcements will be those prepared to concentrate on teaching with little or no research - the VET sector has been excluded from the scheme.

A further element in this policy change is the government's acceptance that aiming for 40% attainment for all 25-34 year olds by 2025 is achievable in terms of student demand and funding. The Bradley report based its estimates of the additional cost of this measure on a staff:student ratio of 1:20 and an expectation that the Education Investment Fund would be adequate to cover the infrastructure costs associated with the additional 355,500 students that would ultimately be enrolled.

These additional students will need new facilities even if they are enrolled in many of the existing institutions, but it would seem unlikely that they can all be accommodated without creating some new ones. Building the additional space in which to teach the new students, much of which will be in new institutions, will cost in the order of $25 billion over the next 15 years, requiring an additional $1.7 billion per year in infrastructure alone.

Any improvement on staff:student ratios will increase the costs further. The prospects of attracting the necessary staff (at least 18,000) is another unexplored issue, yet it is likely that doing so will require measures to address the recruitment and retention of staff in a globally competitive market that will also add to costs.

Given that there is a significant backlog of building works across the sector, the calls on the EIF are many and urgent and several projects have been identified in the government's response. However, few if any of these are for teaching space to cater for the additional enrolments.

This change will have far-reaching impacts on the way the system operates because for the first time there will be real competition for places even if price will not be a major factor. Institutions will also be at risk of failure if they cannot attract the students they need to fund their institutions, so the need for real strategic planning and real decisions about playing to strengths will be paramount.

My over-riding concern is that in the great enthusiasm to make bold changes the government has lost sight of the fact that they must be adequately funded. For example, while there is little argument with the government's idea of a higher participation rate, this can only be achieved if the current system is adequately funded by international standards. Universal access cannot be achieved on the cheap and per capita funding needs to reflect the needs of a more diverse student population.

Reforms should therefore have been staged over a defined period and introduced as funding became available - the nation cannot compete internationally with current resources and should not be expanded on marginal funding.

The current set of decisions will simply increase staff:student ratios further and condemn research to the second rank. We would have done better to have delayed reforms until funding was available and in the meantime used what few resources are available to begin to fix the per capita funding crisis. A slightly deferred but excellent system would be better than an immediate but mediocre one.

The sum total of the new arrangements is that the system will need to increase its reliance on international students to make ends meet. Recent falls in investments have removed the slim buffer that some universities had to cover inadequate funding levels, so international income has become the only means of saving some institutions from financial collapse or a major reduction in quality.

While the new quality assurance system is fine the assumption is that it will always find that quality has been maintained. If it finds that it has fallen because per capita funding has not kept pace with demands there will be no recourse to a solution because the funding will not be available.

*Professor Vin Massaro is a professorial fellow in the LH Martin Institute for Higher Education Leadership and Management at the University of Melbourne. This is an edited version of a speech he gave at the annual conference of the Association of Tertiary Education Managers in Adelaide last Wednesday. The full text of the speech is available here: