Gavin Marshall (Victoria, Australian Labor Party) Share this | Hansard source

I rise today to speak on the Higher Education Endowment Fund Bill 2007 and the Higher Education Endowment Fund (Consequential Amendments) Bill 2007. Both of these bills were referred to the Senate Standing Committee on Employment, Workplace Relations and Education for inquiry and report. The Higher Education Endowment Fund Bill 2007 establishes the Higher Education Endowment Fund, a perpetual endowment fund to generate earnings for capital expenditure and research facilities in higher education institutions. The Higher Education Endowment Fund (Consequential Amendments) Bill 2007 amends the Future Fund Act 2006 and the Income Tax Assessment Act 1997 to support the implementation of the Higher Education Endowment Fund.

The Higher Education Endowment Fund (Consequential Amendments) Bill 2007 provides that investments made by the Future Fund Board of Guardians will be determined by the Future Fund Board of Guardians, not by ministerial direction, and also specifies that responsible ministers cannot direct the Future Fund Board of Guardians to use the assets of the Future Fund to invest in particular assets.

By the government’s own analysis, Australian universities have a significant backlog of deferred infrastructure maintenance. The Department of Education, Science and Training estimated this backlog at $1.5 billion for the university sector as late as last year. When the EWRE committee looked at the HEEF legislation, this exact point was made by several submissions, including by the Federation of Australian Scientific and Technological Societies, the Group of Eight universities and the National Tertiary Education Union. The Group of Eight universities went even further than the department, estimating that the total of the deferred maintenance liabilities was $1.53 billion across the Group of Eight universities alone.

The main reason behind this backlog is that, since it came to power more than 11 years ago, the Howard government has undermined the higher education sector. It is not just Labor that makes this point. Numerous submissions to the committee of inquiry hearing into these two pieces of legislation pointed out that the Commonwealth government’s underfunding of the university sector since it came to power is a significant contributor to the current situation.

The submission by the Group of Eight noted that:

While $6 billion is a large amount of money it needs to be viewed in the context of recent funding trends for Australia’s public universities, the recurrent expenses and infrastructure challenges they now face ...

It is worth looking at the Howard government’s record on higher education investments since it was elected in 1996. As the Group of Eight have openly acknowledged, the Howard government’s first budget in 1996 slashed university operating grants by a cumulative six per cent over the forward estimates from 1997 to 2000, resulting in an $850 million cut to the sector. Not surprisingly, this has had significant flow-on effects in subsequent years as universities have dealt with the impact of those cuts. Universities Australia have confirmed that the government’s funding cuts to university operating grants since 1996 have put greater financial pressure on university finances and, following on from this, the services and quality of education they then provide.

Recent work undertaken by Universities Australia has demonstrated that funding shortfalls by the Commonwealth and the inadequate indexation formula have had a direct impact on teaching quality. That work shows that, since 1995, student to staff ratios have increased, with the result that students today receive less time one-on-one with their lecturers and tutors than their counterparts 12 years ago. According to this study, the student to staff ratio today is 20.4 compared to 14.6 in 1995. This assessment was reinforced by the Group of Eight’s submission, which stated that the implications of funding pressures faced by universities today include: even larger increases in student to staff ratios, with implications for quality of teaching and learning; reductions in academic salaries relative to average wages, with implications for the sector’s ability to attract talented candidates; and the deferment of essential expenditure on the maintenance of buildings and facilities, with long-term consequences for the quality of essential infrastructure.

Australia’s education system now relies on private financing more than all other OECD countries bar the US, Japan and South Korea. More than half of the cost of tertiary education today is met from private sources, with dependence on private sources having increased to 52 per cent from 35 per cent in 1995. As a proportion of total revenue, Commonwealth grants to universities have decreased from 57 per cent of their revenue in 1996 to 41 per cent in 2004. At the same time, university revenue derived from fees and charges has increased from 13 per cent in 1996 to 24 per cent in 2004.

The government is often heard justifying this situation by stating that tertiary spending has increased by 25 per cent since 1996. Whilst that may be true, enrolments have increased by more than double that since 1996. As a consequence, the average amount of Commonwealth funding per student in real terms has declined by nearly $1,500, while student HECS contributions have increased by nearly $2,000 and fees and charges have increased by over $3,000. It is a sign of what a clever politician Mr Howard is when he has Senator Barnett stand up in this place to talk about the real increase in funding, but one only has to step slightly behind those figures to see an absolute demonstration of how much money has actually been cut from this sector by this government.

The provisions of the Higher Education Endowment Fund Bill have been modelled on the provisions of the Future Fund Act 2006. The bill provides the Future Fund Board of Guardians with statutory powers to manage the investments of the Higher Education Endowment Fund. The bill also provides that, as per the Future Fund Act, the Treasurer and the Minister for Finance and Administration are the responsible ministers. In this capacity they will issue directions to the board about the performance of its investment functions. The board is therefore accountable to the Treasurer and the finance minister for meeting its obligations to manage the HEEF. The responsible ministers will set rules to determine the maximum amount available for payments from the HEEF and make the determinations to credit government contributions—initially $6 billion—to the fund and any subsequent government contributions.

A HEEF advisory board will be established to provide advice to the education minister on grants. Because of the different nature and intent of the HEEF compared to the Future Fund, the education minister, not the responsible ministers, is responsible for authorising grants of financial assistance to eligible higher education institutions and for appointments to the HEEF advisory board. It is unsurprising that the Higher Education Endowment Fund has been so well supported and welcomed in the higher education sector, given the continued underfunding of the sector by the Commonwealth government.

Putting the favourable reception by a neglected higher education sector to one side, this HEEF proposal is not without some concerns. This is confirmed in the detail of the bills. A central concern is the transparency of ministerial determinations. Under these bills, the education minister determines who sits on the fund’s advisory board and authorises grants of financial assistance to eligible higher education institutions in relation to capital expenditure. There is no direction in the legislation as to the make-up of the advisory board. There are no requirements for sufficient expertise or merit, and many groups have questioned why the responsibilities of the board are not set out in the bills themselves. This provision rings alarm bells, given the history of this government in administering funds on a political rather than a practical basis.

Just recently we saw the Regional Partnerships program used as a pork-barrelling slush fund yet again, although this time it was the Minister for Foreign Affairs, Alexander Downer, wanting a slice of the action after watching so many of his National Party colleagues trash due process to reward their own electorate projects. In this latest Regional Partnerships program fiasco, the foreign minister bypassed the standard application process, asked the Prime Minister to intervene and then ignored the relevant department’s advice after an application for funding in his electorate was rejected.

As this government has shown, it falls prey to temptation when it comes to subverting proper process for its own political advantage. These bills must be evaluated on the basis that they will be used for political advantage rather than on the merits of individual proposals. Senator Stott Despoja raised some of those concerns on behalf of the Democrats. I suspect that in future the strategic consideration of Liberal Party and National Party electoral prospects will have more influence than any strategic consideration of the sector’s infrastructure needs. I thought that the FASTS submission put it best when they stated that, in its current form, the fund is in effect ‘a significant slush fund for ministerial pork-barrelling’.

On top of this, there is no requirement that the advisory board’s recommendations or any variations to those recommendations be made public. It is not surprising that the Howard government prefer no public scrutiny when it comes to public money, as they seem to treat it as their own. Such is their arrogance after 11 years in government. The legislation does not even set out in any detail the rules by which funding will be distributed under the HEEF program.

In the event of a negative return for the fund, when there is little or no income, the fund will not release money. This would have the effect that the fund would not discharge any of the $300 million forecast by the Howard government. This has implications for eligible higher education providers that may be relying on being awarded approval for HEEF funds for infrastructure projects. There is little detail provided as to the investment strategy being considered by the board of guardians, including the time frame and scope of investments being made on behalf of the Commonwealth. Are the board of guardians considering an investment approach in the first few years that will not allow for returns to be released to eligible higher education providers? Nobody, at this point, seems to know. If this were the case, it would be at odds with the budget papers, which forecast an estimated average six per cent return per year.

This $300 million forecast is one that deserves to be looked at in detail. While the government is happy to trumpet this announcement, in reality there will be no sizeable return until late 2008, given the transfers to the HEEF will be made at the end of October 2007 and then at the end of January 2008. Based on the evidence presented by the government’s own Department of Education, Science and Training, and by Mercer Investment Consulting, the fund will struggle to deliver $300 million per year in the first years of its operation.

I found it interesting that the provision in the Higher Education Endowment Fund (Consequential Amendments) Bill 2007 specifying that the responsible ministers cannot direct the Future Fund Board of Guardians to use the assets of the Future Fund to invest in a particular asset was commented upon by the Minister for Finance and Administration, Senator Nick Minchin. He claimed that this amendment was to ‘stop the Labor Party robbing future generations by raiding the Future Fund, taking its annual earnings and dictating to the board that it should invest its money in advancing Labor’s political interests’.

I know that the senator is worried that we may seek to copy their impressive efforts in subverting due process when administering funding. Whether it be aged-care bed licences, Senator Boswell’s mysterious entitlements, the Regional Partnerships program or the shemozzle that is the broadband network tender process, I can assure the good senator that he should not be worried. We will not be emulating such amazing feats of political favour, ignoring process whenever and wherever. We are guided by the concepts of good governance, transparency and accountability—concepts which some government members think belong to another language. When these concepts are talked about by Kevin Rudd, most government members think that he is lapsing into Mandarin, such is their understanding of the principles of good governance.

Should we be entrusted by the Australian people to govern, Labor has given the commitment to restore transparency and accountability to government programs. Labor supports the Future Fund and is committed to the Future Fund objective of meeting public sector superannuation liabilities. The current coalition government has no plans for long-term investment in infrastructure. In contrast, Labor will invest future surpluses in the Building Australia Fund and make earnings available for infrastructure investment, with investment priorities recommended by Infrastructure Australia. Labor is committed to investing up to $2.7 billion in a national broadband network, with earnings reinvested in the Future Fund. Along with contributions from the private sector, the $2 billion Communications Fund will be used to help build the national broadband network which this country so desperately requires.

Labor supports the establishment of the Higher Education Endowment Fund. This is in line with the submissions received by the EWRE committee on the bills and in light of the evidence presented by the higher education sector to the committee. The measure to establish a Higher Education Endowment Fund is a welcome one. Indeed, the measure to increase Commonwealth funding for infrastructure purposes is long overdue and comes after years of neglect by the Howard government of our higher education sector.

We could do with some positive policies in this sector after such a long line of spectacular policy failures. Here are just a few to jog the memory. There are now more than 100 degrees offered by public universities that cost in excess of $100,000, and this has occurred despite the Prime Minister’s promise that ‘there will be no $100,000 university degrees under this government’. There are now degrees at public universities that cost more than $200,000. You can get into a full-fee degree with a mark 20 per cent worse than your HECS counterparts if you have the money to pay the full fee. VSU legislation has destroyed student services and campus amenities. Work Choices is being forced onto universities through funding arrangements, with further restrictions to come as university workers have voted with their feet by rejecting AWAs in favour of collective agreements.

Having brought down the quality of education, services and access across the higher education sector, the government has now firmly set its sights on trade skills and training. Given the current skills shortages, we must take action now. However, for this government action means a poor-quality quick fix, a dumbing down of trades qualifications and a lack of concerted effort to work with the three largest stakeholders in Australia—industry, the states and the Australian people.

The choice is now very clear. Australians can vote for a tired, arrogant and out-of-touch government who believe public money is their own and whose answer to problems with productivity and skills shortages is to slash wages and working conditions of ordinary Australian workers. Or they can vote for a party which believes education is the engine room of the economy, that education is about fairness—a party that believes helping Australians foster and create new skills through education and training is the pathway to prosperity.

Labor sees education and training as being about the economy and about opportunity. We see education as a means not only to learn and earn, but also to inspire creativity and innovation. Education, skills and training are the pathway out of poverty. They are the pathway to a career, security and a decent standard of living. We want education and training to be about lifelong learning. From the cradle to the classroom, from the living room to the workplace, we need to keep investing in ourselves, in our skills and therefore in our future. No matter where you are from, or how much money you have, you should still get a great education. That is our goal. We want education to be for the many and not just the few.