Wednesday, 14 May 2008
Higher Education Support Amendment (Removal of the Higher Education Workplace Relations Requirements and National Governance Protocols Requirements and Other Matters) Bill 2008
The government’s Higher Education Support Amendment (Removal of the Higher Education Workplace Relations Requirements and National Governance Protocols Requirements and Other Matters) Bill 2008 proposes a number of changes in the operation of the parent act, the Higher Education Support Act. They include allowing a higher education provider to list a body as a quality auditing body, allowing for requirements to be set out on the conduct of audits and providing authority to the minister to revoke a higher education provider’s approval if they cease operation as a business and for other reasons. The bill also contains a principal major amendment, which is the removal of conditionality for increased funding of universities and higher education providers that they meet the requirements of the national governance protocols and the higher education workplace relations requirements. The opposition have said publicly and to the government that we have significant concerns about this particular amendment with respect to the removal of funding conditionality contained within the government’s bill, wholly and only with respect to the operation of the national governance protocols. Both the protocols and the HEWRRs, as they were known, were incorporated into the Higher Education Support Act in 2003, for operation in 2004 and 2005 respectively, following the increased investment made into higher education in the Our Universities: Backing Australia’s Future package that saw funding to the sector rise to levels of more than $8 billion.
It is the case that the workplace relations requirements and the protocols were introduced to assist universities to become competitive, both internationally and domestically, and to offer career opportunities and managerial integrity to staff of universities and universities themselves. Both the HEWRRS and the national governance protocols were a condition of universities and higher education providers receiving increased levels of funding of 2.5 per cent in 2005, five per cent in 2006 and 7.5 per cent in 2007. The higher education workplace relations requirements provided for a wider degree of choice in agreement making and covered direct relationships with employers as well as flexibility and a focus on workplace productivity. Of course, under the government’s new workplace relations system that the opposition has not opposed, the previous government’s measures under the HEWRRS will become inconsistent with the wider workplace relations law and therefore will become obsolete. For this reason the opposition is not seeking to stand in the way of the removal of conditionality of funding as it relates to the meeting of the HEWRRS contained within the bill.
We note that in her second reading speech the minister did not address the issue of assisting universities in overcoming the immense difficulty in attracting the best and brightest minds to teach and work in our universities. Maybe she is not aware of the problem. Nowhere is it more evident than in our universities that, in order to attract and keep the best staff, staff need to be rewarded in accordance with their skills. The problem of how to attract and retain world-class staff will remain an unanswered question on the part of the government. However, as I have indicated, the opposition’s concern is with the heart of this bill, which removes conditionality of funding for universities and higher education providers to meet the national governance protocols. In doing so it removes the accountability the minister currently has in place to ensure best practice. The protocols are working today as a mechanism to promote accountability and integrity in the process of university governance. In fact, as representatives from the Department of Education, Employment and Workplace Relations were able to confirm to senators in estimates committees earlier this year, the guidelines had been met by every university and higher education provider in the previous year—meaning every higher education provider is compliant.
In opposition, the Labor Party never felt the need to support the implementation of the protocols to cover all our Commonwealth funded universities. Now the minister seems to be saying that she accepts the protocols but intends to have a non-legislative focus on university governance arrangements, as she referred to in her second reading speech. To move away from legislative guidelines and requirements is in our view a recipe for failure in the future. The reason for Australia-wide compliance last year is that the protocols on good governance mechanisms are intended to work within the discipline of legislative conditionality. The removal of the requirement of meeting the national governance protocols as a condition of increased funding will, in our view, mean a slow return to the sort of issues that were troubling universities with respect to governance in the past prior to the introduction of those protocols.
Under the government’s amendment, if there were an issue in the future with a university not meeting best practice then it appears the government could do little or nothing. That is the simple fact of the government’s amendment. I would not like to see, in a worst-case scenario, the minister having to come back into this House and move amendments to her own amendments so that she could tackle a governance problem that had arisen at a higher education provider or university. The Commonwealth will, of course, provide significant fund-ing to higher education over the next four years. With this allocated money, it is expected that universities’ governing bodies will provide the necessary oversight to ensure that it is being spent properly. Australians expect and deserve to know that universities have the best governance that they possibly can.
The history behind establishing consistent, well-defined and responsible national protocols for good governance is relatively recent. The national governance protocols, as included in chapter 7 of the Commonwealth grants scheme guidelines No. 1, go back to 2002 when emerging concerns were raised through the Higher education at the crossroads review conducted by the then education minister and now Leader of the Opposition. However, reviews conducted into university governance, such as the Hoare review in 1995 and the Victorian government’s review of 2002, also raised similar sorts of issues—which, apparently, the minister is at best unaware of or trying to deny the existence of.
Twelve years ago the Hoare report identified a number of problems associated with the performance of governing bodies. It argued that they lacked focus on strategic issues, that members of governing bodies had inadequately articulated roles and responsibilities, and that there was a lack of commitment and interest shown by some members. What is clear from the reviews of the past is that changing the face of university governance required an end to the old detached, amateurish, academic leadership models and required an end to reliance on politically-selected lay boards for university governance.
The Victorian Review of university governance noted the need to strengthen not only the process but also the perception of university governance in the wider community. For example, the review found that because of the increasing responsibilities of and demands placed on university councils:
The review believes that university councils’ discharge of these increased responsibilities should be transparent and open to public scrutiny as well as being accountable to the Minister.
Not surprisingly, the review proposed:
... a system of corporate governance and accountability to Government that sheets home responsibility to universities to advance their public purposes, with transparent governance of and effective accountability for all their activities, including their commercial ventures. The intent of the recommended changes is to enhance public confidence that effective decisions are being made by those who are charged with responsibility for advancing the universities’ public purposes.
That is exactly the intent of the national governance protocols that the government here intends to remove funding conditionality on. The current chair of the Future Fund, and then Commonwealth Bank Chief Executive Officer, David Murray, recognised this in 2002 when he urged state and federal ministers—and, I might point out to the government, they represented both political parties—to get behind the national governance protocols. He said:
If the taxpayers’ funds are coming from the federal government, then the federal government is the one that has to answer for the outcome of the funding.
He went on to add that the business community would be willing to invest more in our universities if they could be assured of the outcomes. It would be interesting if the minister could comment on exactly what has changed in the need to support university councils in aiming for the highest standards in governance. Indeed, in the issues paper Meeting the challenges: the governance and management of universities commissioned by the department, it was found—and the Labor Party are not yet able to accept this point:
Like other major institutions in our society, we must demand new levels of accountability of the university for the integrity of its financial operations, the quality of its services, and the stewardship of its resources.
The opposition is of the firm view that the national governance protocols, as derived from chapter 7 of the Commonwealth Grants Scheme Guidelines No. 1, are essential to the continued good governance of universities. Without these protocols anchored on continued funding conditionality, university governance standards would in our view slip over time. It would be a return to the past. It might not happen overnight, but it would happen over time.
It is the opposition that continues to support the protocols for good governance. The protocols specifically deal with internationally recognised best practice methods. For example, protocol 5 deals with the size of the membership of governing bodies. There are some horror stories from the past of dysfunctional and inefficient university councils with too many members, all representing competing sectional interests. It is interesting to note that the average size of university councils in 1990 was 27 members. In one university some years ago, the council size was said to be as high as 35. Successive reviews have argued for governing bodies of between 10 and 15 members. The protocols make provision for no more than 22. As to the intent of the protocols, what happened to the membership of university councils after 2002? Their average size dropped to around 21 members.
The third protocol, for example, demands that members be required to be trustees of the institution and act solely in the interests of the university, rather than as a delegate or representative of a particular constituency. It states that ‘all members of the governing body must be responsible and accountable to the governing body’ and that a member ‘must always act in the best interests of the higher education provider as a whole, with this obligation to be observed in priority to any duty a member may owe to those electing or appointing him or her’.
These protocols also deal with perfectly reasonable tenets of corporate governance that encourage universities to endorse best practice in their governing bodies. These include requirements for an induction process for new council members and ongoing professional development, as well as for transparent nomination procedures for new members going on to council who are not subject to an election. They also require that there is proper experience and diversity on boards. Removing the funding condition of having these protocols would remove the incentive for universities to strive for and excel in best practice—not for all universities, of course, but it would provide the opportunity for some to slip back to the very problems that the protocols were introduced to try and overcome.
Moving to a non-legislative focus will not ensure continued high standards in university governance. It is a way backwards. Like the recommendations from the reviews of the past pointed out, so many difficulties needed leadership to overcome, leadership provided by both state and territory government ministers and the council. The minister needs to demonstrate some leadership in taking up the challenge of ensuring that best practice is maintained into the future in all of our universities and higher education providers.
I have outlined to the House why the government should accept—and I say this respectfully—that it has got it wrong with respect to its treatment of the governance protocols. We understand that the minister in the first week of parliament was keen to make her point on workplace relations, but the government’s bill here fails to realise that the governance protocols are necessary policy when you are talking about the huge amounts of investment governments, students and the community place in our universities. In the interests of the convenience of the House today, I will not be seeking for the opposition to oppose the second reading. However, I give notice that I will move an amendment on behalf of the opposition in the consideration in detail stage of the debate.
The amendment that will be circulated will have the effect of continuing to require universities and higher education providers to meet the national governance protocols as a condition of increased funding. It will put back what we think should not have been taken away. The amendment will require universities and higher education providers to keep meeting the governance protocols as a condition of the funding. It will retain the provision that the minister must be satisfied that the provider meets the protocols. In the event that the minister is not satisfied, it will provide the minister with the same penalty mechanism that existed previously.
Importantly—as I outlined at the start and a number of times since—the coalition’s amendment in no way affects the government’s aim of removing the higher education workplace relations requirements from force should it be accepted. Our amendment does not provide for conditions of funding with respect to the HEWRRs; it only provides for funding conditionality with respect to the governance protocols. That is our aim. That is our objective. That is what we are seeking to achieve.
If the coalition’s amendment is successful, it will ensure that those protocols are substituted back into the bill. If the amendments are not successful, we intend to oppose the government’s bill currently under debate in the House because we will not support legislation that removes that funding conditionality with respect to governance protocols. In that event, we would oppose the third reading of the bill and vote against the passage of the bill in the final vote. Of course, in the Senate, a similar amendment will be moved. We hope that the minister is prepared to consider this issue. Our concern is just the issue of the national governance protocols. It is up to the government to indicate their intentions towards our amendments, which we have provided to them.
The minister has also changed regulations with respect to the Commonwealth Grant Scheme guidelines. These had the effect of removing chapter 7 from the guidelines and replacing it with the term ‘Not used’, therefore removing altogether from the guidelines both the HEWRRs conditions and the protocol conditions for governance. The minister tabled these changes to the guidelines in the House and in the Senate on 11 March. They are currently on the Senate disallowable instruments list as they are disallowable instruments under the act.
Whilst chapter 7 of the guidelines ceased to exist on 28 February, the day after they were registered on the Federal Register of Legislative Instruments, our amendment to the government bill will refer to guidelines as they were on 27 February, when they were in force.
My colleague Senator Brett Mason, the shadow parliamentary secretary for education, apprenticeships and training, has given notice in the Senate that he will move today that the guidelines be disallowed. The opposition has moved to disallow this instrument so as to maintain those national governance protocols that work in conjunction with the current legislation. We are aware the chapter also contains conditions with respect to the HEWRRs, although, as members would be aware, it is simply not possible to selectively disallow part of a chapter that deals with the governance protocols without also disallowing everything else within the guidelines. I reiterate that, if the government accepts our amendment, the legislative framework for the operation of the HEWRRs, as prescribed in the guidelines, will be removed. In any event, the act will refer only to the national governance protocols.
In any event the important point is that the workplace relations laws have changed since the last election—so the substance of the law has changed—rendering obsolete a lot of the HEWRRs guidelines, particularly relating to AWAs. If the minister’s wish was to introduce a new instrument—a new set of guidelines that dealt with just the HEWRRs—I say here and now that the opposition would not seek to disallow that if it is a housekeeping measure to just clean up the guidelines. As I have said, our amendment specifically ensures that it relates only to the national governance protocols.
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