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									               THE HON JULIA GILLARD MP
                  DEPUTY PRIME MINISTER
   Minister for Education; Minister for Employment and Workplace Relations;

                         Minister for Social Inclusion.

       Australian Financial Review Higher Education Conference

      A Higher Education Revolution: Creating a Productive,
                 Prosperous, Modern Australia

                           Amora Hotel Jamison

                              13 March 2008


Thank you Michael Gill for that introduction and to the conference
organisers for the invitation to speak today.

I would also like to acknowledge the Cadigal band of the Eora people,
the traditional custodians of this land.

Time for a system re-think

Just a few weeks into the new academic year is an opportune time for
us to take stock of our higher education system, to start creating a new
understanding about its importance to Australia’s future, and to start
building a consensus about how to improve it further.

Over the course of the last decade, the issue of human capital has risen
dramatically in public policy importance globally.
Policy makers now accept that investing wisely in knowledge, skills and
innovation is one of the best means available to ensure long-term
prosperity, leading to both overall economic growth and to better
education and work opportunities.

Around the world, governments have responded by increasing their
policy focus in all areas of education, particularly higher education.

Everywhere it seems, except here.

In Australia since the mid-1990s our higher education system has been
subjected to a seemingly random blend of neglect with occasional
bursts of ideologically-driven interference.

Public funding has been cut.

Too many facilities at our universities are in decline – with a huge
backlog in deferred maintenance.

Financing has become chaotic, compromised and unsustainable, based
on an ever higher fees burden and a dangerous over-reliance on cross
subsidisation from overseas student revenues.

A bewildering array of student financing arrangements has been put in
place; each change adding another layer on top of past mistakes; none
advancing the important goal of educational equity.

The academic workforce has been allowed to age.

And the quality of campus life has been undermined.

We’ve even seen the sad spectacle of higher education policy being
driven by a sometimes highly unsubtle anti-intellectualism, with the
central idea of higher education – the pursuit of knowledge as a crucial
public good – dismissed as the wasteful activity of a selfish elite.

Despite the mish-mash approach of the Howard Government which
ranged from neglect at one moment to ideologically driven interference
at the next, most of our universities struggled through remarkably well. It
is a great testament to the quality and commitment of our university
leaders and the academic community.
Thanks to their commitment:

         o   the numbers of those in higher education remains high
         o   graduate employment outcomes are strong
         o   graduate and employer satisfaction levels are generally
         o   provision of higher education to international students has
             grown to become one of our leading export sectors
         o   we have notable areas of world-class research.

Labor’s achievement in the 1980s and 1990s was to shift our higher
education system to a mass system, building on record levels of
secondary school attainment. Other nations adopted our approach.

But under John Howard, government slept at the wheel for more than a

The Rudd Labor Government now needs to take up the next reform
challenge – that is to inject diversity, choice and the highest quality into
our mass higher education system.

Unless we resource and respect higher education institutions, we simply
won’t maintain our standard of living.

The inescapable conclusion is that Australia needs a new direction in
national higher education policy.

One that aims to exploit fully our human capital potential in order to
spread opportunity, raise economic productivity and transform the
economic gains of the resources boom into sustainable prosperity for all
Australians in the future.

Cold hard reality dictates that our goal must be the creation of a globally
competitive higher education system for a modern Australia.

The Education Revolution policies Labor took to the Federal election
and which we are now implementing, have begun to address the
neglect of the last 11 years – by targeting resources to areas of skill
shortage, by restoring equity and by enabling university leaders get on
with the business of running their institutions without interference from
politicians and public servants.
But the reform process will need to go further.

Taking it further will require no less than a system-wide rethink.

To facilitate that, I am announcing today a major review of Australian
higher education, which will help us shape the next steps in the
Education Revolution for our universities.

And I am announcing a new long-term goal for our post-secondary
education system: guaranteed access to higher education or skills
training for every young Australian with the talent and willingness to give
it a go.

A fresh approach

The job of improving our higher education system is an exciting
opportunity for me personally.

Like many of my colleagues in the Government, I’m one of those whose
horizons and opportunities in life were expanded enormously by access
to quality public schools and affordable universities – first in Adelaide
then Melbourne.

This is something important that people should note about the new
Government – including the Prime Minister: education made us.

And, as a result, we care about it. Deeply.

Not just about its obvious contribution to the economy, but its intrinsic
values - the capacity education builds in all of us for critical thinking and
reflection and the capability to better understand our place in the world.

It’s why the first major commitment Kevin Rudd made when elected
Opposition Leader was to start an Education Revolution.

In my experience, this understanding of the importance of education –
including higher education – to society is widely shared by the
Australian people.

I believe Australians are proud of our high international academic
reputation. They understand that an Australian qualification has the
potential to open doors for themselves and their children in places like
London, New York and Beijing.

They reward intelligence and are proud of their intellectual high

And they know that the supposed dichotomy between academic and
technical education is ultimately a false one.

Australians know that high quality advanced technical skills, high quality
research and the best analytical thinking must go together to improve
the way our businesses operate. And that together this skill and
knowledge builds prosperity, more jobs and wealthier households.

The Rudd Government agrees.

Like them, we don’t see our universities as places for an elite, but as
places where every Australian can aspire to excellence in whatever field
they choose.

We see them as the engine rooms of innovation and economic and
social progress.

As places to be respected and nurtured – in return for their continuing
cooperation and hard work.

I believe that together the Rudd Government and the higher education
community can be like a breath of fresh air blowing through our lecture
theatres, laboratories, tutorial rooms and technical workshops.

The case for higher education investment

The Rudd Government’s rationale for improving the performance of our
higher education system is that higher education leads to higher
productivity which leads to higher economic growth.

This case is now well accepted by the world’s leading economists and
economic bodies.

Human capital economists like the University of Chicago’s James
Heckman (who won the Nobel Prize for Economics in 2000) have been
telling us for some two decades that public spending on education and
skills leads to high rates of return on investment for countries.

OECD analysis of human capital suggests significant positive
correlations between rising levels of educational attainment on the one
hand, and both economic growth and improved physical and mental
wellbeing on the other. The organisation has estimated that one year of
average additional educational attainment for a population adds
between 3 to 6 percent to long term GDP growth.

Our competitor nations are aware of this thinking and have been acting
on it. Australia, by contrast, has not. Consider this analysis.

Between 1995 and 2004 public funding of tertiary education increased
by an average of 49 percent across the OECD but declined by 4 percent
in Australia.

This makes Australia the only OECD country where the total level of
public funding of tertiary education decreased during that time.

While private investment in Australia went up by 98 percent, this
actually compares poorly with the average OECD increase of 176
percent. Most nations managed to increase both public and private
investment substantially. Rather than leverage more private investment
through a partnership for growth, Australia shifted responsibility from the
public sector to the private. Mostly this has meant a shift to individual
students and their families who have paid more through higher tuition

Between 1995 and 2004 total funding per tertiary student increased by
an average of 9 percent across the OECD but increased here by only 1

Australia is now starting to fall behind our competitors in graduations in
critical areas. We are now below the OECD average for the proportion
of graduates in science and agriculture, and way below them in
engineering, manufacturing and construction – 7.2 percent compared
with 12.2 percent. In Korea the figure is 27.1 percent – four times
Australia’s density.

Research is also being badly affected. In the last ten years, research
output has grown rapidly in countries like Singapore, Korea, Taiwan and
mainland China – which is now the second biggest investor in research
and development in the world. But it has only limped along here in

If you want to know why investing in research is important, ask the
University of Queensland’s Professor Ian Frazer who discovered the
vaccine for a cancer that kills 250,000 women every year.

Over the last decade, Australian higher education has barely stood still
in terms of numbers, quality and output, while our competitors have
surged ahead.

The picture is clear: we are under-investing in our human capital, and in
the long run this will stall our global competitiveness.

This policy failure has grave potential consequences for every single

We’ve been led to believe in recent years that what happens to our
universities doesn’t matter to ordinary Australians. This is a dangerous

Every Australian is now feeling the consequences of the Howard
Government neglect of higher education in things like:

      A shortage of Australian-trained doctors and nurses;
      A shortage of early childhood educators and school teachers,
       especially in the crucial areas like maths and science; and,
      A shortage of qualified engineers and logistical workers for our
       booming resources and construction sectors.

Skills shortages are driving up the cost of doing business so we all end
up paying through higher inflation and higher interest rates.

So, if you want to know why investing in higher education is important,
simply look at the waiting lists in your hospital or GP surgery, the lack of
subject choice in your child’s school, the rising cost of items in the
shops and at your monthly bank balance.

By boosting national productivity, increasing Australia’s investment in
higher education will ultimately allow us to sustain higher economic
growth at lower rates of inflation and interest rates.
The new President of the Business Council of Australia, Greg Gailey,
got it right recently when he said:

            “More than ever, governments need to focus on fiscal
            policies and broader reform agendas in areas such as
            infrastructure, education, skills and workforce participation
            that collectively enhance the nation’s capacity to grow.”

Australia simply can’t afford a short-sighted, ideologically-driven and
backward-looking approach to higher education policy any longer.

The moment is now for us to start seriously investing in human capital at
all levels, including higher education.

Re-setting the balance – the Higher Education Revolution

Our first task must be to re-set the balance in our higher education
system caused by the last decade of Federal government neglect and

While many of the tasks must be immediate and specific to the higher
education sector, we must remember that narrowness and short-
termism won’t solve our problems.

This is why we have to start by recognising that ultimately the quality
and number of the graduates we produce depends on the capacities of
the high school graduates who enroll. This is a process that starts early
– right at the beginning of education.

That’s why we will ensure that every child in the year before formal
schooling has access to fifteen hours a week and 40 weeks a year of
high quality preschool education delivered by a qualified early childhood

It’s why we will ensure that every upper secondary student has access
to a computer. That Australian schools are served with fibre-to-the-
premises connections that will deliver broadband speeds of up to 100
megabits per second.

We will also ensure that nine out of 10 children complete year 12 or the
equivalent vocational training by 2020.
We recognise that not only must education be improved at the early
years, it must be part of a broad and properly articulated national
system that connects with and enhances vocational education. To help
with this, we will deliver more than 450,000 new VET places over the
next four years to address the skills gap.

These issues cut across the responsibilities of the Commonwealth and
the States and addressing them requires genuine Commonwealth-State

To this end, the Council of Australian Governments agreed in December
2007 to pursue an ambitious agenda of reform in the areas of
education, skills and early childhood development. I am chairing the
working group responsible for developing plans to deliver significant
improvements in productivity outcomes for all Australians.

Of course getting our young people to university, TAFE and private
institutions is only the start. Once there, we have to ensure they get the
best higher education and training possible.

The Government has already begun the process of improvement by
starting to implement our major higher education commitments.

To improve equity, full fee-paying undergraduate places will be phased
out in public universities for domestic students from 2009. We will be
consulting soon with all universities to work through implementation of
this initiative, including a compensating increase in Commonwealth
funded places.

To address the shortfall in critical disciplines, fees for new students
studying maths and science will be reduced by approximately 50 per
cent. We will pay 50 per cent of the HECS-HELP repayments of maths
and science graduates for five years, where they choose to work in a
priority maths or science related occupation.

To address shortages in key occupations, we are allocating 9,250 extra
nursing places and 1,500 extra early childhood education places. The
number of undergraduate Commonwealth Scholarships will double from
44,000 to 88,000 to assist students from disadvantaged backgrounds.

To increase the number of candidates for higher degrees, we are
doubling the number of Australian Postgraduate Awards by 2012.
And to restore the quality of students’ experiences on campus, the
Minister for Youth, Kate Ellis, has been consulting with universities and
all stakeholders and working to re-build university services.

A Review of Higher Education
These changes are significant and go to the heart of
the immediate- to medium-term needs of our higher
education system.
But long-term improvements of the scale needed to
make a major contribution to economic productivity
and prosperity will require a new strategy based on a
thorough reassessment of the system as a whole.
Unfortunately, there has been no serious,
independent, evidence-driven look at the higher
education system for many years. Sure, the previous
Government had its own approach to reviews, such
as last year’s review of the system’s funding clusters
or the earlier Brendan Nelson driven Crossroads
review. And then there was the ill-fated West review
(which some of you will remember) the proposals of
which were killed off by the former Prime Minister
before it could even properly report.
For too long there has been no serious consideration
of the future of our higher education sector. As a
result, government policy has been ad-hoc and
To address this, the Rudd Government will
commission a major Review of Australian Higher
It will report on the future direction of the sector, its
capacity to meet the needs of the Australian
community and economy, and the options available
for ongoing reform.
In particular the Review panel will examine and
advise on how to progress a number of key objectives
for higher education.
The first is the creation of a diverse set of high
performing, globally-focused institutions, each with its
own clear, distinctive mission.
The second is improving the sector’s contribution to
increased economic productivity and labour market
participation. In making recommendations on this
point, the Review will take into account current
economic, workforce and demographic trends.
The third is the improvement of funding arrangements
for the sector, taking into account public and private
contributions and the development of funding
compacts between the Australian Government and
The fourth will be widening access to higher
education and improving student support programs so
as to promote social inclusion and individual
The fifth is to ensure the highest possible standards –
because ultimately the future of the system rests on
the quality and reputation of its teaching and
Next is the creation of a broad tertiary education
system with proper articulation between universities
and vocational education and training.
It will consult with State and Territory tertiary
education authorities and invite submissions from the
sector and community.
It will collaborate with and take account of the work of
the Review of the National Innovation System and the
Government’s new skills advisory body Skills
The Review will be a document of great importance
that will inform the preparation of the Government’s
policy agenda for higher education for the decade
We see it as relevant not just to the higher education
sector, but as a major contribution to Australia’s
economic and social wellbeing in the coming decade.
I’m delighted, given the importance of the task, to
have some one of the calibre of Denise Bradley to
chair it for us.
Many of you will know Denise well. Her leadership at
the University of South Australia, where she was Vice
Chancellor for over a decade, and her many years of
involvement in national education policy, where she is
still heavily involved, will ensure that she brings both
detailed expertise and policy rigour to the Review.
Other members of the Review Expert Panel will be:
       o   Peter Noonan, who is an expert consultant in
           vocational and higher education with a deep
           experience in vocational education
           leadership in the Commonwealth,
           Queensland and Victorian Governments;
       o   Helen Nugent, who has an extensive
           background in business, higher education,
           the arts and advice to governments, and who
           chaired the 1999 Ministerial Inquiry into the
           Major Performing Arts; and
       o   Bill Scales, who is currently Chancellor of
           Swinburne University of Technology and
           Chairman of the Port of Melbourne
           Corporation and who will bring to the Review
           his years of experience in the public and
           private sectors.
The Review will provide a report on priority action by
the end of October and a final report by the end of this
It is my intention that the recommendations of the
Review will build on the collaborative new approach to
Government-university relationships embodied in our
proposed mission-based compacts. These compacts
will provide public universities with greater operating
autonomy within a total funding envelope agreed on a
three-yearly basis. We want to encourage
universities to pursue distinctive missions within a
public reporting framework of mission-based goals
agreed outcomes and performance standards.
This year the Government will be consulting with
universities on the precise shape of the compacts. I
expect this consultation process to kick off soon. We
will then move to negotiate compacts with each
university in 2009 for implementation in 2010.
To get things started, we are legislating in the current
session of Parliament to remove the Higher Education
Workplace Relations Requirements and the National
Governance Protocols as conditions of funding.
Conclusion: new approach based on cooperation

So we have a huge and important task ahead – to put higher education
at the heart of our efforts to create a more productive and prosperous
economy and a more equitable society.

In my view, this will best be achieved by enhancing the qualities that
have made our universities such treasured and respected places of
learning for so long.

Not just generic qualities – like the disinterested pursuit of knowledge –
but the particular qualities and strengths that each institution possesses,
whether it is delivering large-scale undergraduate degree programs,
graduate programs, innovative research, or meeting the needs of
specific regional communities.

Managing diversity like this while meeting national goals cannot be done
successfully through either a command and control or laissez-faire
It will take a new era of cooperation. And while we’re unlikely to see
eye-to-eye on every particular issue, I believe significant progress will

For the first time in many years, Australian universities will have a
Federal government that trusts and respects them. A government,
which understands that the formation of knowledge and skills through
teaching and research is the indispensable – absolutely indispensable –
precondition for the creation of a stronger economy and a more
confident and equitable society.

Our universities are great civic institutions with a grand public purpose
that spans economic and non-economic spheres. Building and
constantly re-building the capacity of our universities is therefore an
essential task for us all.

Thank you.

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