18 June, 2020
The Education Legislation Amendment (2020 Measures No. 1) Bill 2020 will amend the Higher Education Support Act 2003 to implement various schedules across the higher-education sector. Schedule 1 will give effect to the Australian government's measures to require all students commencing studies next year to have a Unique Student Identifier number in order to be eligible for Commonwealth assistance under the act. Schedule 2 will allow the department to resolve debt collection problems arising from an administrative error. This bill will streamline administration in our education system, and I support that. I also support schedule 4 of this bill, which, as a result of COVID-19, provides undergraduate students seeking FEE-HELP with an exemption from the requirement to pay the 25 per cent loan fee for units of study with census dates from 1 April to 30 September 2020, thereby reducing the financial burden on these students during that period. I note that this will assist many local students in Warringah, including those studying at the International College of Management.
But this bill also raises important issues when it comes to education, skills and our economy in the post-COVID-19 world. Prior to COVID-19, I was concerned our economy was losing its competitive edge. GDP and wage growth were slowing. Labour productivity, an essential driver of both, had also stalled. Many people, especially the youth in Warringah, were rightly stressed about their future and finding good employment. COVID-19 has amplified these concerns and put our economy into recession for the first time in 27 years. The young generation of Australians finishing school this year face unprecedented headwinds and uncertainty, including a contracting labour market and high living and education costs, as well as unaffordable housing.
But COVID-19 has also provided opportunities by accelerating trends towards developing new knowledge and skills in areas like digitisation and automation, both high-wage areas. Provided we have the right policy settings in our tertiary education sector, we can harness these shifts and unleash a new wave of economic growth, higher living standards and full employment for our youth.
According to a recent report by Pricewaterhousecoopers, prior to COVID-19, 75 per cent of businesses reported they were concerned about the shortage of digital skills within their industry. This is consistent with my experience. In Warringah last year I talked with several start-up entrepreneurs who were struggling with the lack of skilled employees that they could access. COVID-19 has put further demand on digital skills as many organisations have been forced to shift to remote work and diversify their product and service offerings.
After restrictions set in, businesses quickly needed to upgrade their IT infrastructure and remote-working capability of employees; to shift their product offerings online; and to improve their service delivery. The experience with remote work environments through COVID-19 will likely generate increased demand to deliver an effective, remote experience for employees, which is likely a reality for the foreseeable future.
So we need digitally-savvy employees who can work in a digital space with the skills to collaborate online efficiently and effectively. We need to take advantage of emerging technologies such as artificial intelligence and machine learning to lead the way in digital business and developing technologies. But machines and technology cannot do everything and, according to the Business Council of Australia, the future of business will also require emotional and social capabilities, or soft skills. Travel restrictions have put a halt on our immigration intake, which has previously supplied high-skilled labour in these areas. Australia should turn and rely on our internally-sourced labour to fill these needs. This means we need an efficient and effective tertiary education system to supply these high-skilled workers.
What are the barriers in relation to tertiary education? The costs are high. Our tertiary education system, prior to COVID-19, faced significant obstacles which have only been compounded. High tertiary education costs existed. They have now made access to important post-COVID-19 courses prohibitive. A student entering a graduate course in artificial intelligence could be expected to pay up to $90,000 for a course. The government has recognised this and, in the short term, is offering a 25 per cent fee exemption, provided for in schedule 4 of this bill in relation to deferral. The government has also announced discounted six-month online courses in information technology, engineering and mathematics. I suggest that these measures should be extended past the six-month courses and be incorporated over the long term.
The Productivity Commission's 2017 report, Shifting the dial: 5 year productivity review, raised concerns about declining admission standards, increasing student attrition rates and declining graduate outcomes in higher education under the demand-driven system. The Productivity Commission also found in a series of surveys that employers were not satisfied with the quality of recent graduates and that university students were not satisfied with the teaching in their courses—many did not even complete their courses. So kids and parents are rightly questioning the value-add of these expensive courses.
The Productivity Commission found that to improve these outcomes the tertiary education sector must improve the relevance of the skills and knowledge that are taught during their degrees and better match students to universities and courses that suit students' long-term interests, thereby reducing wasted education investments. KPMG, in their Reimagining tertiary education report, recommended that the government improves information available to support the operation of the tertiary education marketplace and assist students to make good educational choices. To achieve this, consistent with the research of the National Centre for Vocational Education Research, the Mitchell Institute and the Vice-Chancellors of the dual sector universities stated that we need to consider tertiary education holistically, not just universities or vocational education and training independently but as a unified sector, to address issues of relative spaces, funding, policy and regulatory coherence. By improving these measures, this could also lead to lower amounts of HELP debts expected to be repaid by students and to lower dropout rates and switching between courses.
Prior to COVID, our tertiary sector had already been suffering from increased demand for services and decreased government funding, leading to poor outcomes. Government funding of the Australian tertiary education system has received successive reductions in funding through the Commonwealth Grants Scheme and research block subsidies. The Mid-Year Economic and Fiscal Outlook in 2017-18 announced that Commonwealth Grants Scheme funding would be frozen for the 2018-19 year—that was a change that did not require legislation—and that increases from 2020 would be contingent on providers meeting performance targets. In August 2018, the parliament passed legislation to reduce the repayment threshold for HELP and introduced a lifetime borrowing limit. And the MYEFO for 2018-19 announced reduced funding growth for research block grants, a key component of university research funding.
There is clearly a difficulty if we are going to equate tertiary education with a business model. As growth in Australian government funding has contracted, overseas student fees have accounted for an increasing proportion of university revenue growth. University finance data from the DET shows that from 2016 to 2017 overseas student fees accounted for 64.2 per cent of total university revenue increases.
The lack of policy coherence between VET and universities is problematic. The Australian Industry Group, citing the Business Council of Australia, stated that preparation for the jobs of the future requires all the education and training sectors to operate as one system, and that this continues to act as a barrier to the creation of the responsive, integrated education and training system required to sustain economic growth in a changing world. The Bradley review highlighted that the efforts to resolve this have had limited success. To resolve this, the first act of the new National Skills Commissioner must be to outline how the government can better coordinate government policy in this area.
We are facing an unprecedented challenge through this crisis. It has exacerbated many of the underlying systemic issues with the economy. Our youth are facing daunting headwinds for their future prosperity and opportunities. And yet the crisis also offers opportunities to accelerate trends towards digitisation and automation. If we reform our tertiary sector to reduce costs for education, to place students more efficiently, to rectify funding disparities and to create a uniform policy framework between VET and the university sector, we can fill skill shortages in the high-growth, high-wage areas that will be the foundation of Australia's future prosperity. So whilst I rise in support of this bill, I call on the government to do much more in this sector.