The Australian Constitution of 1900 empowers the Federal Government to promote consistency and coherence in the provision of all levels of education right across the country. Yet, despite this authority, all higher education institutions are self-governing entities being established and administered under legislation enacted in each of the six States and under Federal law in the Australian Capital Territory and the Northern Territory.

With the exception of two private universities and a few non-government colleges offering professional and occupational training courses to foreign students, all higher education in Australia is publicly funded through grants provided by both the Federal and the various State Governments. The Federal Government's extensive fiscal power which, since 1942, has also given it a monopoly over income taxation, allows it to make and place conditions on what it returns to the States by packaging it in the form of specific purpose grants. Education falls into this category. In reality, the Federal Government, through the agency of the States, undertakes public expenditure programs (according to its own priorities) in areas which the Federal Constitution appears to regard as State responsibilities.

Prior to 1988, the Australian higher education system was something of a stew comprising colleges of technical and further education (TAFE), colleges of advanced education (CAE), universities and a few other eligible educational institutions. Manifest in the Higher Education Funding Act, in 1988 an ideological shift by the incumbent Labor Federal Government spawned new, radical policies for financing and structuring this system. This transformation can be traced to fashionable economic rationalist principles emanating from Treasury and to a worldwide reformist trend in higher education in general, but directed at universities in particular.

In 1992, higher education funding totaled $AUD 5.1 billion ($AUD 1.00 buys $US 0.74) with the lion's share of money allocated under this category going to underwrite tertiary or university education for which, in that year, the Federal Government provided $4.8 billion, while the States contributed $325 million. Using a complex formula for each institution, funds are provided on a rolling triennium basis and cover operating and recurrent costs, research and capital expenditure.

Since 1988, with much turmoil, the TAFE system has been restructured internally and expanded, but its mission basically remains the same; providing work and skill-related training and adult education. Now with 800 centres Australia-wide, it takes around 1,042, 000 enrollments, including both day and night classes. This figure excludes courses taken for recreation or personal enrichment which bring in another 500,000 students. Business, trades/engineering and personal services courses account for 60% of students in vocational training with over half of these enrolled in Business Studies. Each of the States funds its own institutions supplemented by Federal Government grants. In 1992 the States contributed $1.6 billion while grants totaled $664 million.

The most controversial aspect of the Federal Government's policy shift was the abolition of the binary system in which universities coexisted with CAEs, and that in 1988 had only recently been upgraded from Teacher Training Colleges. Justified on the grounds of financial efficiency and educational effectiveness, the two systems were forced to amalgamate under what was claimed to be a strategy of national unification with the new entities subject to quasi-market discipline which was not unlike (surprise! surprise!) an approach pioneered in Britain.

Institutions having less than 2000 full-time students would have their funding withdrawn, while institutions on common or adjacent sites were obliged to combine under a single management structure and a single educational profile. The interpretation of 'adjacent' was rather liberal. For example, in 1989 though the University of New England (UNE) in Armidale, amalgamated with the cross-town Armidale CAE it was then also merged with the Northern Rivers CAE at Lismore and, in 1990, absorbed Orange Agricultural College, Orange. These institutions are respectively 280km NE and 360km SW by road from Armidale which is a rural city located in the central northern part of the State of New South Wales (NSW). Apart from being logistical and administrative nightmares, such arrangements were rarely met with enthusiasm, especially by the universities which felt their status had been eroded by association with precocious, semi-vocational institutions.

In several instances these 'arranged' and often polygamous marriages have subsequently failed and divorces ensued with the terms of settlement hotly and, in some cases, bitterly and publicly contested. For example, in 1992 UNE separated from its Lismore partner, which has now become Southern Cross University while Orange Agricultural College has taken up with the University of Sydney. These shenanigans have done nothing to correct the average citizen's generally cynical view of the worth of "ivory towers." Through assembling and then dismantling joint administrative structures, the dollar cost has also been substantial. Other divorces are pending. The upshot is that Australia now has 36 universities, whereas 79 higher education institutions existed prior to the amalgamaion process.

Using creative accounting, which flipped savings from these strategies back to higher education, the Labor government insists it has actually increased funding by 63% since 1983. but, in support of a recent 5.3% wage claim, the National Tertiary Education Union (NTEU) argues that unfunded over-enrollments and direct funding changes just to universities have in fact saved the Federal Government $600 million since 1988!

In 1992, this new university system educated around 559,000 students which is about equal to the combined enrollments of the City and of the State Universities of New York, USA. Approximately 100,000 students graduate each year while 120,000 commence studies, most directly from high school. The majority of these students attend campus on a commuting basis, though many institutions have halls of residence for those from remote or country areas, or, similarly, if a university is sited in such a location for accommodating its out-of-town intake. Like Australia's population, the majority of its universities are clustered in the SE corner of the continent in the major State capitals of Sydney (New South Wales) and Melbourne (Victoria).

Depending on their total final grades, about 30% of high school graduates enter university courses. With minor variations between States, these grades are a complex mix of an individual's examination marks per subject averaged against the marks of her/his cohorts and continuous in-school assessment which produces an overall ranked score. In NSW this is known as a Tertiary Education Rank (TER). Apart from prerequisite subjects for some courses such as medicine, generally speaking, the higher the student's grade, the wider the selection of courses to choose amongst. Unfortunately, employers are using these scores as a defacto indicator of employability which disadvantages those 60% of high school graduates who do not go on to university.

In 1992, 61% of students were enrolled in full-time study, 28% part-time and 11% externally. The basic undergraduate course at most institutions is a bachelor degree of 3-4 years duration. The most popular fields of study were Arts (22.6%), Business and Administration (21.6%), Education (15.4%) and Science (14.4%). Bachelor courses attracted over 70% of students while 16% enrolled for postgraduate studies.

With a classic developed country age-sex pyramid, Australia has a child dependency ratio (population aged 0-14 per 100 population of working ages) of around 32.6. This reflects a declining birth rate and a subsequent population growth barely at replacement levels. Consequently, universities are now keenly competing against each other for a shrinking pool of prospective students while TAFE's increasingly career-relevant programs become more attractive through the recently introduced option of articulation into university courses. This year, across Australia, there has been a 6% drop on 1995 figures in students applying for undergraduate courses.

The recurrent portion of Federal funding for each university is tied to a pre-agreed enrollment quota. Under-enrollment means paying back Federal advances; over-enrollment is at the university's cost. It is a neat balancing act orchestrated through contract admission centres in each state which coordinate enrollment offers to students. There is a strong temptation to lower enrollment standards (i.e. TERs) to make quota but if these are too low then there is either a high dropout or failure rate in first year which then leaves a 2-3 year loss in income stream. One excuse offered for lowering TERs is that universities are now prepared to do a lot of remedial teaching! The TER for Arts at Sydney, Australia's oldest and supposedly pre-eminent university, has been lowered 16 points in two years. This year's enrollments have been a Dutch auction with TERs being adjusted downwards on second round offers to attract the undecided and allowing first round choosers to upgrade.

As part of the 1988 package of reforms, the Labor Government also re-introduced tuition fees which, ironically, had been abolished in 1972 during the Labor party's last term in Federal office. Students are now required to pay for their courses through the Higher Education Contribution Scheme (HECS) using three options; either 'up front' at a 25% discount or by voluntary intermittent payments of more than $500.00 which attract a 15% discount or through the taxation system via a percentage surcharge (min 3% - max 5%) once income exceeds $26,695.00. Surprisingly, the split on the uptake of the first and third options is roughly 50:50. Depending on a means-test, some students qualify for financial aid (AUSTUDY) from the Federal Government. In 1990 nearly 182,000 students (37% of total eligible) qualified for half a billion dollars worth of assistance. Unfortunately, the system is open to abuse by parents using sharp accountants to deflate asset valuations and minimise assessable income.

Each year the HECS formula is reviewed and the rate of recovery invariably increases while the income threshold drops. But the fees are still really only a token of the true cost of delivery. For instance under HECS, a three year undergraduate Arts degree at any Australian university costs only around $6000.00. Degrees with a high technical content requiring equipment, facilities and technical support are more expensive.

Now in 1996, all postgraduate qualifications are cash on the barrel. HECS for these used to be the same as the undergraduate mechanism. Teachers who had previously been exempted from HECS by scholarship must now also pay up front for higher degrees. Any student unable to afford this requirement, will be forced to take out a loan. This will focus postgraduate studies on areas where career prospects are best while favouring those most able to afford these degrees.

The third part of the Federal Government's strategy during its thirteen years in office, has been to prune the overall level of funding for higher education while at the same time supposedly shifting the bulk of such funds towards universities prepared to emphasise research, training and industry liaison, the expectation being that GDP would be raised allowing quick recovery of its investment and the raising of its electoral stocks.

This forced adjustment is occurring at a time when demographics are working against maintaining even current levels of enrollments for the next several years while salary creep and increasing maintenance expenses are fast widening the gap between this reduced Government funding and the true operational costs of universities. Interactive technologies are also eliminating the requirement for students to come 'within walls' making a lot of past capital investments obsolete. Nonetheless, shortfalls are expected to be corrected by a mix of austerity campaigns (redundancies, outsourcing waste-watch committees etc.), sponsorship drives, passing the hat round amongst alumni, commercialising intellectual property, joint ventures with industry, and expanding the intake of foreign students. Raffles and lotteries may be next!

This predicament is coincidental to but also indicative of the momentum in the paradigm shift in tertiary education which has now reached the antipodes. It also reflects the basic change in the essential nature of work in post-industrial societies. UNE has been forced to rapidly rethink its priorities especially because of its relatively unique situation. UNE is located in Armidale, a community of barely 21,000, some 500km NW of Sydney and 120km inland from the NSW north coast, Though servicing the diverse needs of the surrounding pastoral industry, it is very much a city of education. Apart from UNE, Armidale supports a TAFE College, two State high schools, one Catholic and two Anglican boarding high schools, and several State and church primary schools. Education and associated services are therefore the cornerstone of the economic and cultural life of this community.

Originally a College of Sydney University UNE became a University in its own right in 1956. It now has faculties of Arts, of Economics Business and Law, of Education, Health and Professional Studies and of The Sciences. Being rural based, it has special reputation for agronomy and soil science, agricultural economics and natural resources, resource engineering and water policy.

Drawing students mostly from local regions and from east coast State capitals its catchment is Australia wide. UNE produces 3000 graduates per annum, from an enrollment of 4500 internal and 10000 external students. A designated Distance Learning Centre, it has a great strength in distance learning methods and technology. Like most universities UNE is labour intensive. There are 536 Academic and 1023 general staff while wages and salaries (exclusive of on-costs i.e. superannuation, workers compensation etc.) account for 54% of the total 1995 budget of around $135 million. Inclusive of oncosts this figure reaches 67%.

Apart from token economy drives, because of its cost structure UNE's main austerity strategy has been to cut staff. On 31/1/1996, 47 academics and 141 general staff left having taken up Voluntary Separation Packages. Unfortunately, such measures, though improving finances, may also leave mostly chaff and little wheat. A similar measure has been to outsource services such as maintenance and cleaning. This has met with strong opposition from unionised general staff members and is yet to be resolved. The impact of such strategies on the Armidale community which already has an unemployment rate of around 12% will be enormous.

Increasing enrollments of self-funded as opposed to aid agency supported foreign students is the 'cash flow' option most widely pursued by Australian universities because of the potentially bigger and more lucrative market. The base fees for foreign students are set higher than for Australian citizens because the Federal Government taxes a percentage as a retrospective contribution to infrastructure. The upper limit on fees is determined by market forces. What has become a $1.5 billion dollar industry has generated intense competition between universities with those having strengths in business, health, civil engineering and computing best able to tap into the potentially enormous Asian market where an English language based tertiary qualification is very highly valued. Qualifications are seen as a quick way of advancement and students expect to be promoted soon after graduation.

The main targets are countries with a strong English language background consequently, former British colonies such as Malaysia, Singapore, Hong Kong, India, Pakistan have been heavily trawled. India in particular has a growing middle class anxious for their children to have the benefit of an English language degree.

Joint ventures and twinning arrangement between Australian and Asian universities are being vigorously pursued, the theory being that through staff exchanges local capacity is improved while students (and the coffers of participating universities) benefit from completing part of their degrees in Australia. Asian based fee-paying short courses are also part of these arrangements.

In a new report Australia's Workforce 2005: Jobs in the Future (November 1995), the Minister for Education, Employment and Training has foreshadowed a further change in higher education policy. The Federal Government has signaled an even greater shift in priorities for growth towards the vocational education and training sector and intends to provide funding for an additional 40,000 TAFE places per year up to 1997.

With a budget deficit currently at $9.1 billion, funds for this expansion must come from cuts in budget allocations for university education. This strategy is in response to projections of employment growth in areas traditionally serviced by TAFE; the finance, health, personal services, retail, accommodation and restaurant industries. The last three being the shining lights but are notorious for their low paying jobs which are invariably part-time with little chance of advancement. Today, in a working population of 8.3 million, one in four Australians is employed part-time . These strategies make the figures look better but of the 700,000 jobs created over the past three years, over fifty percent are part-time.

A major problem is that a science led recovery is unlikely, it being regarded as an unattractive career with low pay prospects. It has such a poor public image through scientists being invariably portrayed as uncool nerd/geeks or egotistical defilers of the environment. Consequently, science courses are dropping TERs faster and further than so called 'soft' liberal arts degrees, for example a BSc (Environmental Management) at La Trobe (Albury Campus) has a TER of 30!

The real tragedy is that funding cuts and image problems are also impacting on those areas of potentially high value-adding in spinoffs from research and development in the new science intensive core technologies (microelectronics, telecommunications, biotechnology and new materials). If a flow of graduates with training in these areas is not fostered then Australia has little hope of competing .

Employment is expected to grow more slowly or fall in many of the manufacturing industries either through increased productivity or moving work offshore. The underlying strategy is to reduce unemployment (currently running at over 10%) however, any gains will be offset by demographics because a greater proportion of the Australian population (presently around 18 million) will be of working age over the next ten years.

In terms of its export base, Australia is still a developing country despite having the trappings of an industrialised economy. Coal, gold, wheat, meat and wool still keep the wolf from the door. These are labor extensive. Tourism and hospitality being labor intensive are expected to mop up unemployed youth. The Olympic games is here in 2000 and great expectations are held for the multiplier effect but previous hosts have a history of heavy debt.

These decisions and policies are creating path dependencies by closing out options in other areas. The interlocking internal life support cycles of the Australian economy are basically personal services provided to industrial service providers who feed off the wages and salaries of federal and state public servants who in turn are essentially service providers

The Labor Government has just called a Federal election to be held on March 3, 1996. Neither it or its tweedledum, the Liberal/National Party Coalition (L/NLP), has acknowledged higher education funding as a significant issue. Concern is too dilute within the wider community except in a few electorates like that covering Armidale where education at all levels contributes significantly to the local economy. But Armidale being in a traditionally safe NLP electorate and with education a non-issue then little will change. However, given the fine balance in voter loyalty in some electorates, the major focus of the Government's and the Opposition's interest will be on those where even independents stand a chance of election and may hold the balance of power in both houses of Federal Parliament. At the moment these marginal seats tend to be electorates where environmental issues and jobs are paramount. Porkbarrelling is rife. Who knows what may be stirred up between now and polling day!

February 14, 1996

Addendum

Subsequent to the Australian Federal elections held on March 2nd, after a thirteen year exile, the Liberal party/National Party Coalition has won power with an historic majority well exceeding the pollsters' predictions. Not a bad result from a campaign that was remarkable for its lack of both promises and policies. The electorate's almost biological need for change itself was as much a factor as any of the others touted by the professional commentators.

The leader of the Liberals, the re-badged, recovering economic rationalist, John Howard, is Prime Minister elect and will be sworn in soon. He will then appoint Ministers to existing portfolios and may create new ones in the post-election reshuffle. The Liberals won sufficient seats in the Lower House of Federal Parliament, the House of Representatives, to govern in their own right, but their agreement with their coalition partners prevents this. The Nationals will demand their share of power and representation in Howard's Ministry; the leader of the Nationals is assured of the Deputy Prime Ministership.

An alternating half of the seats in the Upper House or Senate (a house of review for Bills originating in the House of Representatives) was also voted for at this election. The situation there is not as clear cut with independents and the Australian Democrats capable of holding the balance of power through the ability to veto Bills opposed to their particular platform. Talk has been that the Democrats would act to block Howard's proposal to sell one third of the Government owned communications utility, Telstra, to fund environmental policies. If this happens, then Howard, depending on his degree of confidence in his mandate, may be tempted to pull a double dissolution which would mean another full election but for both houses this time, yet this move might assure Liberal supremacy in Federal Parliament. It's his call.

On the higher education front, the Australian Vice-Chancellor's Committee, in support of the National Tertiary Education Union (NTEU), has been quick to warn Howard that the issue of a long-standing 5.6% pay rise for academics is their top priority. The inference is that hundreds of demoralised academics will quit the system unless this demand is met.

Before the election, Labor's Minister for Education was taken to task over his plan to fund this pay claim under a special loan scheme whereby the Government offered to provide universities with supplementary funds of around $AUD200 million in 1996-97 to offset this cost. But these funds were really an advance to be repaid in installments plus interest @4%. This was not well received. The policy of the Liberal party prior to the campaign was roughly similar, or, at the least, not opposed to Labor's, judging by the rhetoric of their spokesperson on education. The new and as yet unnamed Minister for Education faces a real test from the outset.

Meanwhile, Sydney University has persuaded another twenty senior academics in its Faculty of Arts to take redundancy packages. This is in addition to seventy already bundled off over the past three years.

At the State level, the New South Wales Labor Government faces the prospect of intense and, judging by the rhetoric, militant industrial action from the unions representing both State School Teachers and TAFE teachers over demands for a 12% increase in salaries. Teachers have begun a series of rolling strikes which they insist will continue until their claims are met. The Government has countered with an explanation that the only way such a pay rise can be met is to cut 2000 teaching jobs and increase class sizes, a two pronged strategy to spilt the union and garner support from parents and students.

These disturbances in the higher education sector are symptomatic of a deep seated malaise caused by changing demographics in the high school and university age groups, as well as open learning technologies and major shifts in the type and structure of jobs. Australia is undergoing its own jobs quake and the shock waves are finally reaching the foundations of the education system.

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