Changes designed to favour courses that show improved student performance are ‘not credible’, higher education analyst says

This article is more than 2 years old

This article is more than 2 years old

The government’s plan to tie university funding to student performance is unlikely to make a big difference to enrolments unless changes are made to the way different disciplines are funded, experts have warned.

This week the government used the release of the latest employer satisfaction survey for graduates to push its case for changes to higher education funding announced in its mid-year budget.

The survey found that about 84% of employers were satisfied with the qualifications students were getting at university, while 88% of students thought their degrees had prepared them “well” or “very well” for their jobs.

The education minister, Simon Birmingham, said the figures were “encouraging” but that they “reinforce the need to ensure our higher education institutions are focused on the work readiness of graduates”.

“Australia has excellent universities but they must place student outcomes at the forefront of their considerations to meet the needs of our economy, employers and ultimately boost the employment prospects of graduates,” he said.

“That’s precisely why the changes we announced in Myefo [the mid-year economic and fiscal outlook] will link additional funding for bachelor courses to performance outcomes.”

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In December, the government announced it would effectively end the demand-driven funding system introduced by the Gillard government in 2012 by freezing commonwealth grant scheme funding for bachelor degrees at 2017 levels in 2018 and 2019, with increases from 2020 subject to performance targets.

Universities Australia has argued the freeze amounts to a $2.2bn cut to the sector.

But some experts have questioned whether performance funding would really have an impact on university behaviour.

Andrew Norton, a higher education expert from the Grattan Institute, said the promise of performance funding was often “not credible”.

“One problem is that performance funding is pretty speculative because there’s no law that says the government has to pay this money in the end,” he said.

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“This has been one of its great flaws; the criteria constantly change and often the money is abolished in a future budget, so it doesn’t make sense for universities to make major changes because it’s not a credible promise.”

The employer satisfaction survey pointed to higher satisfaction levels for vocationally oriented courses, such as engineering and health. Satisfaction with those graduates was almost 10% higher than those from courses such as management and commerce.

Birmingham said universities should be responding to those signals “to ensure course offerings are aligned with the expectations of employers so as to ultimately improve the job prospects of graduates”.

But Norton said the funding mix between disciplines meant that freezing commonwealth funding would penalise health and engineering more than courses with lower employer satisfaction.

This year commerce and law degrees will receive the lowest per student payment from the commonwealth, while health degrees receive among the highest.

“If you’re enrolling students in commerce or law you still get most of the funding rate from the student contribution, indexed to inflation while the commonwealth’s share retracts,” Norton said.

“And if the labour market demands areas such as health and engineering it doesn’t make a lot of economic sense to respond because at the margins universities will only get the student contribution, which is a third or less of the funding rate.”

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The 2017 employer satisfaction survey questioned more than 3,000 companies on their views.

It found a 93% satisfaction rate with foundation skills such as general literacy, numeracy and communication skills and 90% satisfaction with adaptive skills such as teamwork.

Universities Australia’s acting chief executive Catriona Jackson said the results showed university graduates were meeting employers’ expectations.

“Employers have given university graduates the equivalent of a high distinction,” she said.

“These results tell an overwhelmingly positive story about graduates in the labour market and that universities are preparing their students well for their chosen careers.

“Employers are seeing, first-hand, the world-class quality of university graduates that we’re producing in Australia.”