House of Representatives

Second Reading Speech

Ms Julie Bishop (Minister for Education, Science and Training and Minister Assisting the Prime Minister for Women's Issues)

That this bill be now read a second time.

The bill amends the Higher Education Support Act 2003 to provide for the Australian government's 2007-08 budget commitments.

The initiatives in this bill will fundamentally reshape the higher education landscape. The era of universities being forced into a one-size-fits-all model is now over. These reforms will allow more world-class universities to emerge and encourage excellence, diversity and specialisation in the sector.

This bill will amend the act to simplify university funding structures and give universities greater scope to adjust their student numbers and course mixes to respond to student demand and address skills needs.

It also provides for the creation of the new Diversity and Structural Adjustment Fund for universities. The fund will give more support for structural reform, promoting greater specialisation and diversity.

Through the fund, the Australian government will allocate $209 million over four years to universities that can identify strategies to better meet student and employer demand. The fund will focus particularly on addressing the capacity of universities to meet local labour market needs.

Institutions could use the funding to diversify, specialise, build on existing dual-sector activities, create new dual-sector activities, respond to local labour market needs or improve learning and teaching. Priority will be given to universities in regional areas and smaller metropolitan universities which can demonstrate the greatest need for structural reform. Sixty-seven million dollars in new funding will be provided to universities through the Diversity and Structural Adjustment Fund.

This bill simplifies university funding structures and provides additional funding for key disciplines in areas of skills need. Funding for the Commonwealth Grant Scheme will be increased for particular disciplines and the number of discipline clusters will be reduced from 12 to seven.

The revised cluster funding model addresses key pressure points identified by the sector in the recent review of the Higher Education Support Act 2003.

This bill will deliver an additional $557 million for the disciplines of mathematics and statistics, allied health, engineering, science and surveying, clinical psychology, education, nursing, behavioural science and social studies and medicine, dentistry and veterinary science.

Reflecting the higher salaries that business graduates expect to receive over a lifetime, the maximum student contribution for accounting, administration, economics and commerce units and the Commonwealth Grant Scheme subsidy will be aligned with law. It will be a decision for each institution as to whether it raises the student contribution for these disciplines. The change will affect students who commence studying at higher education providers in 2008. Students studying prior to this date will be able to continue under the existing arrangements until the end of 2012. Universities will be compensated during the transition period.

This bill will also introduce three-year Commonwealth Grant Scheme funding agreements from 2009, instead of the annual agreements. Institutions that finalise a three-year agreement during 2007 will be able to take advantage of this arrangement from 2008. The new three-year terms replace the current one-year terms and give Australian universities better scope to plan for the future and also cuts down on administrative costs. The agreements will reflect improved requirements for governance, financial accountability, quality and data reporting.

This bill will also provide for the relaxation of caps on Commonwealth supported places and domestic full fee paying undergraduate student places.

For Commonwealth supported places, table A and table B providers will be provided with full additional funding for overenrolments of up to five per cent of funding, up from the current discretionary allowance of one per cent. There will be no penalties for overenrolments above five per cent and universities will receive the full amount of student contributions from all Commonwealth supported students they enrol. The current arrangements which guarantee that there will be no Commonwealth Grant Scheme funding penalties for universities which underenrol by up to one per cent of funding will be continued. Funding will automatically reduce for underenrolments beyond the first one per cent of funding. However, a new minimum funding guarantee will mean that there will be no Commonwealth Grant Scheme funding reductions for underenrolments beyond five per cent of funding.

This bill removes the caps on the proportion of domestic full fee paying undergraduate places in each course. Universities, however, will still be required to offer their Commonwealth supported places in a discipline cluster before offering full-fee places.

The number of eligible students unable to obtain a place at university is at historically low levels, down from a peak of over 100,000 in 1992. The Australian Vice Chancellors Committee has said that unmet demand is virtually negligible. The 2,300 additional Commonwealth supported places to be allocated for next year and the additional flexibility the budget measures provide for universities will mean that students who are able to complete a course will generally not be prevented from going to university by caps on places. Relaxing the caps on university places will allow universities greater flexibility to change their course mix and student numbers. The reforms will support greater diversity and specialisation in the sector and will encourage the emergence of more world-class institutions.

Through this bill, the Australian government is also increasing the number of Commonwealth scholarships available and extending their coverage. The number of existing Commonwealth scholarships will be increased from around 8,500 to 12,000 per year at a cost of $91.4 million over four years. Two thousand of the new scholarships will be available to students who may not otherwise qualify for a higher education place to study two-year associate degrees as a pathway to full degrees. This is over and above the additional Commonwealth scholarships being provided to Indigenous students.

Participation rates for students in rural and regional areas have been largely unchanged over the last decade. These additional scholarships will provide more help to students who really need it.

The current administrative arrangements will also be changed to ensure that scholarships are offered before or at the same time students are offered a place. This will help students make better informed decisions about which offer to accept. Scholarship funding will now be paid directly to the student by the Australian government.

The increased number of scholarships will help to build the nation's skills base for the benefit of our future prosperity. This measure is further evidence of the Australian government's commitment to making the Higher Education sector more responsive to student demand by making a university degree even more accessible for students.

To improve higher education access for Indigenous people, the Australian government has created a new access scholarship. $27.7 million will be provided annually for up to 1,000 Indigenous higher education students, particularly those who need to relocate from rural and remote areas, to receive a one-off payment of $4,000 to take up an undergraduate or enabling course. These students will also be eligible to receive Commonwealth scholarships to assist them with their accommodation and education costs.

This bill also provides an additional $77 million to universities over the next four years to improve teacher education programs so that all three- and four-year bachelor degree teacher education students receive a minimum of 120 days in-school teaching experience, and meet new entry level teaching standards.

Mr Deputy Speaker, the Australian government has made an unprecedented investment in higher education through the 2007-08 budget package. This package builds on the Our Universities: Backing Australia's Future package which provided an additional $11 billion to the sector over 10 years from 2004. The Australian government will provide $8.8 billion to the higher education sector next financial year-a 31 per cent real increase since 1995-96.

This bill will promote a more diverse and internationally competitive sector. Together with the landmark ongoing $5 billion Higher Education Endowment Fund, provided from the 2006-07 budget surplus, which will give universities access to a perpetual growth fund, and the further $1.9 billion provided for higher education in this budget, this bill will promote excellence and quality in Australian universities for years to come. It will provide a more flexible framework for universities to meet the needs of students and employers and additional funding to improve access to tertiary education even further. I commend the bill to the House.

Debate (on motion by Ms Plibersek) adjourned.