It’s not just what is under your feet... it’s also about what's above your shoulders

Extract from the opening address at the Higher Education Summit, Auckland, 15 March 2010 by Derek McCormack, Vice-Chancellor of Auckland University of Technology and Chair of the New Zealand Vice-Chancellors' Committee.

The full version of Derek's address is available for download - Opening Address Higher Education Summit.pdf (139KB)

There has been a lot of talk recently about Australia’s economic surge ahead of New Zealand over the past couple of decades.  How do we catch up?  Can we catch up?   Is it minerals or something else?

The government has taken up the challenge to close the gap with the Australians. 

I was in Australia recently at a meeting about changes in higher education there.  As most will know, the Australian government has adopted a goal of having 40% of 25 to 35 year-olds with a bachelor’s degree or better by 2025.   Currently they have about 30% of 25 to 35 year-olds at that level – around the same as New Zealand has.

It’s a huge challenge for the Australian higher education sector requiring buildings, staff and boosted student recruitment.  At the meeting I attended there were Vice-Chancellors and other university leaders with various officials scratching their heads wondering how they were going to get all these extra young people to go to university.

I came back to New Zealand to the regular meeting of the Vice-Chancellors at which we, with officials of the Tertiary Education Commission, were scratching our heads wondering how we were going to stop all the extra young people that were showing up from getting into university.

The main reason for the divergent discourse between the two countries is the same financial crisis.  Australia has come through the crisis so far in better shape than New Zealand.  They are spending up – including on higher education.  We are restraining public spending  - including on higher education.  

Although, we should note that the previous government, pre-crisis, had already set in motion the arrangements for higher education and wider tertiary education that restrict the number of places with funding caps.

The Australian 40% goal isn’t to be based on increases in efficiency at the higher education institutions.  It comes with some big government funding commitments.  On the other side it also comes with challenging performance expectations:

• Higher completion rates
• Open reporting by universities on performance
• Increases in enrolment from lower socioeconomic status backgrounds
• New quality assurance arrangements
• Assessment of research quality with a funding link

We could note in passing that several of these are a catch up with where New Zealand already is.

What does Australia’s higher education direction mean? Australian Minister for Education, Julia Gillard, stated a couple of weeks ago, “In an era when investment in knowledge and skills promises to be the ultimate determinant of national and individual prosperity, Australia is losing ground against its competitors.”

So the conviction over the Tasman is that it’s not just what is under your feet – like minerals or grass – that determines your national fortunes.  It’s also, or more so, what is above your shoulders.

There is some evidence to back that up.  It is estimated that on average an Australian graduate receives $1.5 million more taxable income over a career life-time than a non-graduate.  Independent estimates of the economic return to Australia from a government investment in university education and research are high and compelling.

But Gillard expressed concern that there was also evidence of the Australian higher education system starting to creak uncompetitively in the world.

• Australia was dropping down the OECD table from seventh to ninth in university participation rates.  (New Zealand is slightly lower)
• There were poor student completion rates. (Similar concerns have been expressed here)
• There were high student to staff ratios, which have gone from just thirteen to one to twenty to one over the past fifteen years. (New Zealand has had a similar rise – though ending up slightly better than the Australian figure)
• There were concerns about student satisfaction.  (the Co-presidents of the New Zealand students association expressed the same concerns to me last week)

Gillard also noted that other countries –UK, Germany, Ireland - had set higher goals for the production of graduates. Those goals made the 40% stretch in Australia seem almost modest.   New Zealand has no goal as such to improve its graduate numbers – although the government’s recently announced Tertiary Education Strategy mentions it in a general way as an area for improvement.

At the moment, New Zealand is experiencing a huge lift in the numbers of people interested in tertiary and higher education, particularly the young.  At the same time it is adhering to fixed funding and enrolment caps.  All universities are overenrolled to the maximum the government will allow.  The situation is the same right across the tertiary sector – for Institutes of Technology and Polytechnics, Waananga and also many Private Training Establishments.

Applications for enrolment at my university were up 27% this year, on top of a similar increase last year after a stable situation during the previous four years.  We can only take a minor portion of the increase without breaching the government’s cap.  We aren’t sure what happens to those turned away.  There is no coordinated admissions information.  No doubt some will go to other institutions.

What are the reactions to this situation?

The Chamber of Commerce in their response to the Draft Tertiary Education Strategy late last year, spoke for an opinion group that thinks that the tertiary education balance is all wrong with too many young people trying to go to university.  In fact, according to the Ministry of Education statistics the increase in domestic university enrolments (as Equivalent Full Time Students or EFTS) from the year 2000 to 2008 has been slight at 6% , compared with an increase of 21% in the polytechnic sector, and 28% across the tertiary sector as a whole.   Universities began the decade as 55% of the sector and in 2008 had dropped to 47% of the sector.

Participation analyses show the same trend.  While age adjusted participation rates reported by the Ministry indicate an increase in tertiary participation generally they show a downwards trend in university participation and in bachelors degree participation across the whole sector of tertiary provider categories.  While Australia plans to surge ahead, New Zealand could be going backwards.  Although hidden in the overall statistics there are some positive trends:  a slight increase in under-25 year old participation in university education and in Maori participation.

Another response to the present situation has been from government and some commentators who have suggested focussing the scarce places on those most likely to succeed in the universities.  This is seen in proposals for performance incentives both for the individual student and the provider, and in the possible tightening of university entry requirements.   But of course fewer going to university will mean still greater pressure on the other tertiary sub-sectors, which are already over-subscribed with no more funding available to them either.

Others have suggested focussing the government’s tertiary investment on young people.  This has an appeal.  The young are tomorrow‘s capability.  But what about our aging workforce and rapidly changing skills requirements?   As we all know, skills and qualifications age faster than a career does.  Can we afford to lock off the system to older people whom we will have to rely on increasingly in the workforce?

In a similar argument, others have suggested making tertiary and higher education a government-investment priority ahead of other spending in the restrained government budget.  This would allow us to take up the surge of interest and use the opportunity it represents to invest in the future skills capability of all our people but particularly the larger numbers of young people now fronting up.   The argument is that the economic fortune of the country rests most with the aspirations and capabilities of the young.

Nevertheless, we do have a money issue.   The government already spends a good proportion of GDP on tertiary education that compares well within the OECD and it has no more, it says.  However, that spend doesn’t leave the higher education sector in a competitive space.   And it doesn’t support the level of demand for tertiary education.

One of the problems is our GDP compared with competitor nations.   It’s lower per capita so we are going to have less to spend per student.   Or we can spend a bit more on fewer students than other countries.

But a second problem compounds the situation.   New Zealand spends a much higher proportion of the government’s investment than others on the student and consequently less on the provision of their education.   The OECD average is about 20% on the student and 80% on the institution providing the education.   The Australians and the Americans spend a high 31% on the student, but New Zealand spends 42% on the student leaving a much lower proportion to be spent on the education the student receives.    The student-spend in New Zealand goes on a generous allowances scheme and the support of student loans.   The cost of the loans scheme has increased tremendously with the interest-free regime introduced in 2006. 

Everyone wants students to be able to access good quality higher education with the minimum financial burden and impediment later in life.   New Zealand does pretty well by its tertiary students with its allowances, generally low tuition fees, and interest free loans.   However, we might be well down the path towards letting our students down over the quality of education and their educational experience.

Participation and quality are in tension in a constrained funding environment.  But the funding environment is always constrained – an oft-repeated reason for doing nothing just now, whenever “just now” happens to be.  We must grapple with this issue as an urgent priority.  Competitor nations are ahead in their thinking and implementation.   Our economic futures, our social cohesion, our prosperity whether individually, nationally, or culturally depend on a higher education system capable of responding:

• To the aspirations of our young people
• To the shifting capability and innovation needs of industry in a global business environment
• To the changing international standards and modes of operation in higher education
• To the needs of our nation’s financial recovery and subsequent economic development.

The need to review what we are doing in tertiary education is clearly apparent.   Such a review offers a huge opportunity to build our national intellectual capital and vibrancy.   To ignore that opportunity will mean that we wallow, or go backwards in a rapidly changing world.

I’m hopeful, however, that the combination of the pressures to go forward will prevail, pressures that come in many forms and from many quarters: from students, from employers, from industry and business, from government, from Maori and from the wider community.