Minter Ellison Alert | University place allocations to be deregulated and demand-driven

22 July 2011

In what is a major policy shift, the House of Representatives has passed a Bill to deregulate the allocation of undergraduate student places at universities. The Higher Education Support Amendment (Demand Driven Funding System & Other Measures) Bill 2011 (the Bill) was introduced into the Senate and read for a second time on 4 July 2011.

The Bill implements Recommendation 29 of the Bradley Review: 'that the Australian Government introduce a demand-driven entitlement system for domestic higher education students, in which recognised providers are free to enrol as many eligible students as they wish in eligible higher education courses and receive corresponding government subsidies for those students.'

Amendments to the Higher Education Support Act 2003 (Cth)

The Bill amends the Higher Education Support Act 2003 (Cth) (HESA) to, among other things:

  • remove the annual caps on Commonwealth Grant Scheme funding (Funding) and change the way in which higher education providers will be eligible for funding under Part 2-2 of HESA;
  • abolish the Student Learning Entitlement (the Entitlement);
  • require higher education providers to enter into 'mission based compacts' with the Commonwealth; and
  • introduce requirements for higher education providers to have policies in place to protect academic freedom in learning, teaching and research.

Implementation of a demand driven funding system

The provisions of Schedule 1 of the Bill amend HESA to give effect to a demand driven system for undergraduate student places at Table A providers (those higher education providers listed at section 16-15 of HESA, being mainly public universities). The new system allows Table A providers to determine the number of students that they choose to admit to most undergraduate courses and to receive corresponding Commonwealth subsidies for those students. This is a major policy shift from the current system where student places at Table A providers have been funded through agreements between the Commonwealth and those providers on the basis of a set or capped number of places within broad disciplines of study. 

For Table A providers there will be a distinction between 'designated courses of study' and courses which are not 'designated courses of study'. Table A providers will be able to determine the number of students they admit to courses of study which are not 'designated courses of study' but the Minister will be able to allocate Commonwealth supported places to Table A providers in respect of 'designated courses of study'.  'Designated courses of study' will be non-research postgraduate courses of study, courses of study in medicine and courses of study specified by the Minister by legislative instrument. This power of the Minister to specify a course as a 'designated course of study' will allow the Minister to allocate student places in a discipline where there is a need for more persons qualified in that discipline. For example, where there is a skills shortage. 

Further, consequential to the move to a demand driven system, Schedule 1 also:

  • amends the eligibility criteria for Funding. Table A providers will be eligible if they have entered into a section 30-25 funding agreement with the Commonwealth (Funding Agreement) with respect to that year. Non-Table A providers will be eligible if they are specified in the Commonwealth Grant Scheme Guidelines, the Minister has allocated a number of Commonwealth supported places to the provider for that year and the provider also enters into a Funding Agreement with respect to that year;
  • makes various amendments to ensure that Funding is no longer tied to the allocation of Commonwealth supported places to higher education providers;
  • inserts an option for Funding Agreements to specify a 'maximum basic grant amount' (to be calculated in accordance with a formula inserted by the Bill) payable to a provider for a grant year for both 'designated courses of study' and courses which are not 'designated courses of study'. This option will allow the Commonwealth the flexibility to operate on an institutional basis;
  • amends how the 'basic grant amount' for a higher education provider will be calculated each year; and
  • amends the adjustment formula specified in section 33-37(2) which is used to calculate the amount by which a higher education provider's basic grant amount is reduced if the provider breaches a condition of section 19-37 (requiring membership of certain organisations, or requiring the payment of certain amounts).

Abolishment of the SLE

Schedule 2 of the Bill amends HESA by removing the Entitlement. Under the Entitlement mechanism, a person's eligibility to undertake higher education as a Commonwealth supported student was generally limited to seven years full-time study. The effect of the amendments introduced by Schedule 2 is that students will no longer have a limit placed on how much study they can undertake as a Commonwealth supported student.

Mission based compacts and policy upholding free intellectual inquiry

Schedule 3 of the Bill amends HESA by requiring each Table A provider and each Table B provider (those higher education providers listed at section 16-20 of HESA) to enter into a 'mission based compact' with the Commonwealth. Each compact must include a statement of the provider's mission, a statement of the provider's strategies for teaching and learning, and a statement of the provider's strategies for undertaking research, research training and innovation. 

Each compact entered into by a provider and the Commonwealth will be published on the Department of Education, Employment and Workplace Relation's website.

Schedule 3 of the Bill also amends HESA by requiring Table A and Table B providers to have a policy that upholds free intellectual inquiry in relation to learning, teaching and research. Schedule 3 also amends the objects of HESA to make it clear that the objects of HESA include promoting and protecting free intellectual inquiry in learning, teaching and research. 

The compact and academic freedom requirements described above are added to the 'quality and accountability requirements' set out in section 19-1 such that compliance with these requirements will be a condition of funding under Part 2-2 of HESA.

Commencement

The Bill will commence operation in stages. Schedule 1 will commence on the day the Act receives Royal Assent and will apply in relation to the year commencing on 1 January 2012. Schedule 2 will commence on, and apply in relation to units of study whose consensus dates are on or after, 1 January 2012.  Schedule 3 will commence on the day the Act receives Royal Assent and will apply to the year commencing 1 January 2012.