Government funding for non-uni providers

Opinion by Matt Brett

The release of the Review of the Demand Driven Funding System by David Kemp and Andrew Norton has triggered significant interest in non-university higher education providers.

The review recommended that all higher education providers, including public universities and non-university higher education providers, be eligible for Commonwealth-supported places subject to approval by the Tertiary Education Quality and Standards Agency (TEQSA).

Recommendations get mixed response

La Trobe University's submission to the review was one of the few university-based submissions to support the extension of Commonwealth support to non-university providers.

La Trobe's central proposition within this submission is that student entitlements to government support and subsidy should be made available to all elements of the higher education system, underpinned by appropriate levels of regulation and quality assurance, and in a fiscally sustainable manner.

This position was adopted because we believed competition would drive quality, innovation and efficiency. It would enable the higher education sector to service a greater diversity of need, including the needs of Australian universities.

However, not all representatives of public universities have embraced the prospect of greater competition for funding and students.

Universities Australia issued a statement calling for "a cautious approach to be exercised in considering its recommendation to extend public funding to for-profit non-university higher education providers". Providing for-profit providers with access to public funding could create a "substantial risk to the reputation of the entire sector", it argued.

The vice-chancellor of Australian Catholic University, Professor Greg Craven, questioned among other things:

… why should you be funded as a university if you're not a university?

The University of Adelaide's vice-chancellor, Professor Warren Bebbington, has written that Australia must ignore vested interests and seize the chance for change. He highlighted the positives for Australia if we were to emulate the diversity of the American system.

Universities Australia are right in recommending a cautious approach to government funding of non-university providers. Australia has little to fear from non-university providers, if we maintain clear standards and a focused regulator. There is more to fear from maintaining a path that does not cultivate institutional diversity.

What exactly are non-university providers?

One might assume from the way the debate is being framed that universities and non-university providers are clearly distinguished along public/private and for-profit/not-for-profit lines. As with many aspects of higher education, the reality is complex and riddled with anomalies.

The TEQSA Provider Register lists 173 higher education providers, of which 43 are universities. Everything else is a non-university higher-education provider. The enrolment share for non-university providers is very small, a little over 5%.

Some non-university providers aspire to be universities. They are committed to one day demonstrating teaching and research excellence that will meet the Higher Education Standards.

Some non-university providers are commercial entities of public universities, blurring the boundary between public and private. Many universities work in partnership with non-university providers as they deliver university programs through franchising arrangements.

Some non-university providers target specific occupational needs in areas such as health or business. Other non-university providers appeal to individual interests such as religion or jazz music. This type generally occupies niche areas where universities do not compete.

Analysing the performance of public universities is reasonably straightforward, with uCube enabling ready access to data. Analysis of non-university provider performance is more challenging. Higher education public data sets group "private providers" together, restricting data access where sample sizes are small, or ignoring this category altogether.

Implications of keeping the non-university sector small

Universities are left free to compete solely with each other in a system that Kaplan Australia's submission characterised as "public sector supply driven".

There is great diversity across our public universities. However, for almost all universities, the explicit strategy is to teach more students and undertake more research. Teaching income is often used to cross-subsidise research or other strategic priorities.

Australia undoubtedly needs more graduates, more research and more innovation. The review prompts some consideration of whether keeping the non-university provider sector small is an efficient and effective way to meet Australia's teaching and research needs.

What next for higher education providers?

If review recommendations are accepted, we might see a sector where a greater proportion of students choose non-university providers focused explicitly on high quality or more efficient teaching.

Changes in higher education funding policy may also allow institutions to pursue a research focus, without having to accommodate ever-increasing numbers of students. Some universities would continue on their current growth trajectory, but this could be by choice rather than necessity.

At the very least, the review has put a spotlight on an important aspect of Australian higher education. It provides impetus for more regulatory oversight by TEQSA of providers and their courses. Critical policy issues in extending public subsidies to non-university providers relate to funding, the refinement of Higher Education Standards and the role of TEQSA.

First published on The Conversation on 23 April 2014.

Matt Brett is the Manager of Higher Education Policy at La Trobe University.