On 19 July 2023, the Hon Jason Clare MP, Minister for Education, released the much-anticipated Australian Universities Accord Interim Report (the Interim Report). The Interim Report offers, in accordance with the terms of reference of the Accord, five priority actions which seek to address the Panel’s identification of immediate problems in Australia’s higher education sector and set the stage for wider-ranging and larger-scale reform. The Interim Report proceeds to set out the initial views of the Accord on issues – including 82 policy areas - requiring further consideration by the Accord. Those issues are categorised into three themes: evolving the mission for higher education, creating the foundations for a high functioning national system and building an enduring Accord process.

The Panel of the Accord has now invited written submissions on the Interim Report by 1 September 2023, which will inform the Panel’s final report to the Minister for Education due in December 2023.

Australian Universities Accord

The Australian Universities Accord was born of an election promise of the current government to seek to create a bipartisan approach to the Australian higher education sector. In part, the Australian Universities Accord was proposed to address the fraught relationship that existed in recent years between the university sector and the government under the previous administration. The starting point was the principles of accessibility, affordability, quality, certainty, sustainability and prosperity. It is clear from the terms of reference of the Accord, and now the Interim Report, that the Accord has progressed beyond that, into the first broad-scale review of the higher education sector in Australia since the Bradley Review in 2008.

What are the Priority Actions?

The Interim Report offers five priority actions for the purpose of addressing immediate issues identified by the Panel in Australia’s higher education sector, concerning access, opportunity and participation for students from underrepresented backgrounds, funding certainty and university governance:

• Priority Action 1: Extend visible, local access to tertiary education by creating further Regional University Centres (RUCs) and establish a similar concept for suburban/metropolitan locations.
• Priority Action 2: Cease the 50% pass rule introduced as part of the ‘Job Ready Graduates’ (JRG) package, given its poor equity impacts, and require increased reporting on student progress.
• Priority Action 3: Ensure that all First Nations students are eligible for a funded place at University, by extending demand driven funding to metropolitan First Nations students.
• Priority Action 4: Provide funding certainty, through the extension of the Higher Education Continuity Guarantee into 2024 and 2025, to minimise the risk of unnecessary structural adjustment to the sector. Interim funding arrangements must prioritise the delivery of supports for equity students to accelerate reform towards a high equity, high participation system.
• Priority Action 5: Through National Cabinet, immediately engage with state and territory governments and universities, to improve university governance with particular focus on: universities being good employers, student and staff safety and membership of governing bodies, including ensuring additional involvement of people with expertise in the business of universities.

The Minister has confirmed, in his speech to the National Press Club announcing the Interim Report, that the government is committed to implementing each of the Priority Actions.

It will come as little surprise to the sector that Priority Actions 1 to 4 are directed towards boosting access, opportunity and participation for students from underrepresented backgrounds, including First Nations students, students from low socio-economic status backgrounds, students with disabilities and regional and rural students. The Minister and the Chair of the Accord Panel have openly indicated that access, opportunity and participation of such groups in tertiary education are central to the Accord and vital for meeting Australia’s future skills, knowledge and workforce needs, and the introduction to the Interim Report states ‘[t]he overall goal of reform must be growth for skills through greater equity’.

Priority Actions 1 to 4 are clear indicators for the direction that the Accord intends to take the Australian higher education sector in the future. Those actions – as well as commentary throughout the Interim Report – make clear that the Accord Panel intends to make recommendations directed towards correcting the outcomes of the demand-driven funding system to ensure that groups historically suffering education disadvantage take up opportunities for access to and participation in tertiary education. Such recommendations would build on the aspirations of the Bradley Review, whilst tailoring the recommendations towards meeting the projected skills, knowledge and workforce needs of Australia in the future.

However, Priority Action 5 may not have been so anticipated by the sector and is likely to have significant implications for the work and composition of peak corporate and academic governance bodies of universities. In light of the government’s commitment to implement the Priority Actions, universities should give urgent consideration to appropriate steps to be taken in the short term in respect of Priority Action 5. Such steps may include consideration of the work being undertaken by their governance bodies in relation to student and staff safety and mechanisms to avoid underpayment of staff. In that regard, the Interim Report does provide some additional commentary around Priority Action 5 in its discussion of policy areas for further consideration. We comment on the Accord Panel’s views on strengthening university governance further below.

What are the other areas for further consideration?

Beyond the Priority Actions, the Interim Report records the Panel’s initial views and potential proposals on wider-ranging issues in the sector which the Accord was tasked to consider under its terms of reference. The Interim Report altogether identifies 82 policy areas that will be given further consideration for the purpose of the Accord’s final report to the Minister due in December 2023. Those policy areas are arranged into three categories in the Interim Report.

Evolving the mission for higher education

The Interim Report identifies 57 policy areas to be given further consideration in this category. In line with commentary around the Accord, the primary theme underlying many of the policy issues in this category is the need to meet Australia’s skills, knowledge and workforce needs, including by way of increasing participation, access and opportunity for historically underrepresented groups in higher education. The Accord Panel makes clear in the Interim Report that its intention in this regard is to build upon the target of the Bradley Review in 2008 in relation to participation of students from low socio-economic status backgrounds (which has not been met) whilst catering to the forecasted needs of Australia’s economy.

In this category, the Interim Report communicates the intention for the Accord to consider policy areas pertaining to topics including:

• Putting First Nations at the heart of Australia’s higher education system, which includes giving consideration to the creation of a First Nations Higher Education Council, and supporting a First Nations-led review of access, participation and outcomes for First Nations students, staff, research, teaching;
• Achieving a fair system that ensures access and attainment, which includes setting ambitious targets for participation and completion for students from underrepresented backgrounds and equity groups and developing a universal learning entitlement – a combination of public subsidy, student contribution paid through an income contingent loan and, for some, an employer contribution - which ensures that all students from equity cohorts are eligible for a funded place at university;
• Meeting Australia’s future skills needs, which includes improving integration of and removing barriers between higher education and vocational education and training (VET) and supporting students to undertake placements and work-integrated learning;
• Equity in participation, access and opportunity, which includes consideration of a student-centred, needs-based funding model to recognise additional costs involved in delivering education to equity groups and underrepresented communities and addressing financial barriers to study;
• Excellence in learning, teaching and student experience, which includes consideration of steps required to improve learning and teaching practices in higher education;
• Fostering international engagement, which includes better embedding international education within the mission of the Australian tertiary education system and individual institutions, and ensuring the integrity and accessibility of visa pathways for international students;
• Serving our communities, which includes creation and fostering of links between education and industry/communities, particularly in regional areas and areas with low participation and attainment rates;
• Research, innovation and research training, which includes developing a funding mechanism which recognises the importance of research, innovation and scholarship and is sufficient to meet national research priorities, enhancing understanding of Australia’s university/industry or government collaboration and sharing and translating university research through push and pull mechanisms.

Creating the foundations of a high functioning national system

The Interim Report identifies 25 policy areas to be given further consideration in this category, which are directed towards ensuring that the higher education system in Australia is sufficiently agile to adapt to an ever-changing economy and society characterised by growing demand for new knowledge and capabilities. The policy areas in this category are set out under three topics: a coherent national tertiary system, strengthening institutional governance and sustainable funding and financing.

Coherent national tertiary system

The Interim Report communicates the intention for the Accord to consider issues of particular interest to the sector in this area including the following:

• Firstly, the Interim Report indicates that the Accord considers that the requirements of the PCS – particularly the research requirements arising from the Coaldrake Review in 2019 which came into effect in 2021 – may be preventing institutions from developing stronger identities and diversity. The Interim Report outlines the Accord Panel’s views that the PCS may not reflect the aspiration of some universities who intend to build an identity and advantage as teaching-intensive or education for the professions-focused, and a review of the PCS might be needed to accurately reflect a wider mix of institutions which are required to serve a growing number of students.
• Secondly, the Interim Report indicates that the Accord will give further consideration to the concept of a National Regional University as an approach to ensure the sustainable, effective delivery of higher education in regional, rural and remote areas, which would be the second national university for Australia and would provide regional universities with an opportunity to ‘opt in’ to become part of the National Regional University. This issue, if followed through by the Panel in their final report and embraced by the sector, would have significant implications for existing regional universities and the deep connections those universities have with their local regions and industries.
• Thirdly, the Interim Report indicates that the Accord will give further consideration to bringing together the tertiary education system as a coherent whole, rather than higher education and VET operating as separate and siloed area. The Accord acknowledges that such action can only be achieved through collaborative reform across governments, regulators, employer groups, unions, student groups and education institutions, and will likely require greater systemic investment and whole-of-system governance. It will indeed be interesting to see how cohesion between the higher education and VET sectors is proposed to be achieved in the Accord’s final report due in December 2023, particularly as that proposal pertains to the intersection between TEQSA and ASQA and their respective roles in relation to dual-sector providers.
• Lastly, the Interim Report contemplates the creation of a Tertiary Education Commission charged with oversight of the development of a fit-for-purpose tertiary system and serving a core function to promote long-term strategic thinking across the tertiary education sector, including by advising government on policy reform and implementation, coordinating and negotiating activities with institutions in line with national priorities and tracking domestic and international trends. Further to those roles, the Interim Report also indicates that the Accord would consider whether the proposed Tertiary Education Commission might function as a pricing authority for Commonwealth higher education funding. It is uncertain from the Interim Report how a body with such wide remit might function in practice.

Strengthening institutional governance

The topic of ‘strengthening institutional governance’ also raises significant matters of interest to the sector, particularly for universities, and extend from Priority Action 5. They include considerations around the work of universities’ peak governance bodies in relation to student and staff wellbeing and safety, governance frameworks to avoid underpayments, composition of peak corporate governance bodies of universities to recognise the importance of expertise and leadership in teaching and research (as opposed to business expertise) and whether current reporting arrangements for universities demonstrate effective and efficient use of government funds.

Aspects of Priority Action 5 and the Interim Report’s discussion around strengthening institutional governance are surprising. In our view, the sector has shown itself willing and capable of responding appropriately to these and other sector specific and enterprise wide risks without government intervention. Universities in this country are good corporate citizens, and generally rely on a broad and appropriate range of expertise and experience in the composition of their peak governance bodies to discharge their mission.

In particular, to the extent that the Accord Panel intends to make recommendations impacting the constitution of peak governance bodies of universities, it must be acknowledged that most universities in Australia are custodians of significant state assets and manage significant income and expenditure (in the billions of dollars). Whilst it is critical for university governance bodies to have deep higher education expertise including in teaching and research, it is also critical to the successful operation of universities that governance bodies have a mix of expertise and experience which reflects the reality of operating a university, including in business, public governance and law. We consider it would be dangerous for the Accord Panel to make any recommendations that might hinder universities’ ability to ensure that the composition of their peak governance bodies contain an appropriate mix of skill-sets and expertise required to successfully operate the university in that context.

Given the recommendation for Priority Action 5 to be progressed through National Cabinet in the near future, we think it is important that universities give urgent consideration to this priority action of the Accord and engage with their state / territory government on potential impacts of ahead of consideration by National Cabinet.

Sustainable funding and finance

The Interim Report highlights in the area of ‘sustainable funding and finance’ various and significant issues created by the JRG package, and emphasises the need to implement a more fit-for-purpose funding model. In that regard, the Interim Report outlines a comprehensive set of proposed ‘guiding principles’ for a new funding model and highlights the need to move towards a student-centred, needs-based funding model which supports attainment and participation (particularly for students from historically disadvantaged backgrounds), funds high-quality education and improves affordability for students.

Building an Accord

The final category for further consideration in the Interim Report is the consideration of how an ‘ambitious, enduring Accord’ involving all major stakeholders of the higher education system in Australia - including higher education providers, their students, staff and alumni, state, territory and Commonwealth governments, businesses, unions and community organisations - can be operationalised to facilitate long-term cooperation and collaboration for the purpose of delivering on the opportunities and ambition of the Australian Universities Accord.

The Interim Report calls for immediate consideration of governance issues and offers much food for thought for longer-term consideration by the sector. It offers valuable insight into the direction that the Accord Panel intends to take the sector. If you would like further information or advice on this matter, please reach out to your client relationship partner or a member of our national higher education team.