The Federal Government recently announced it will implement performance-based funding based on the recommendations of an independent report headed by Professor Paul Wellings, Vice-Chancellor of the University of Wollongong.
The performance-based funding scheme, starting from 2020, aims to incentivise universities to focus on producing job-ready graduates with the skills to succeed in the modern economy.
The report recommends four measures should be used to assess the performance of universities: graduate employment outcomes, student success, student experience and participation of Indigenous, low socio-economic status, and regional and remote students.
“This report shows that while we have a world-class higher education system, it needs to be stronger, more sustainable and fit for purpose,” Federal Education Minister, Dan Tehan, said.
“Performance-based funding amounts will grow in line with population growth of 18 to 64-year olds, an increase of around $80m next year.
In a recent press conference, Tehan said the government will be engaging with the university sector with regards to implementing performance-based funding.
“I want to work with the sector because I see them as playing a key role in helping set our nation up for the future,” Tehan said.
“If we have job-ready graduates that can fill the needs of industry going forward, then we can make sure that the sector is providing the economic future this nation needs.”
Tehan said the model put forth by Professor Wellings was “not a carrot and stick”.
“It says: ‘We want to reward you where you are performing well, but then we want to work with you and help you where you’re not performing well, and there will be a financial payment to help you improve your performance’,” Tehan explained.
“So, this is a uniquely Australian model. It understands the different nature that we have here in Australia with regards to our higher education sector. Obviously, we’ve got universities in our capital cities, but we’ve also got universities operating in the outer metro areas and in regional rural areas in thin markets.”
‘A model for all universities’
Responding to questions from journalists at the press conference, Tehan said Professor Wellings’ report recognises “the nature and the environment” that Australia’s sector works in.
“I think their model works for all universities in that regard,” Tehan said.
Tehan acknowledged there were several questions around the detail of the full performance measures and said the Federal Government will be providing more information to the sector around the finer details in due course.
“One of the good things about this model is that what it will enable us to do is, over time, is to adjust for unforeseen circumstances. With any model that you put forward, obviously, there can be some unintended consequences,” Tehan noted.
“But, the sector, the feedback that we got from them, is that they understand that. They’re very keen to work with government on that.”
‘Fine tuning needed’
Emmaline Bexley, senior manager of higher education policy at La Trobe University, said one challenge in implementing the scheme will be that allocations under the scheme will increase the national pool of undergraduate places in line with population growth of the total working-age population (about 1.1-1.4% in the decade to 2030).
“This growth is far below that of the youth cohort expected to be eligible to enter higher education in the coming decade, projected to peak at around 4.1%,” Bexley wrote in The Conversation recently.
“In practice, this will mean a decrease in university participation for young Australians. This is an abrupt change of policy direction – growing youth participation in higher education has been government policy, regardless of the party in power, for more than 40 years.”
Bexley said there is also scope for unintended negative outcomes, although it remains to be seen how these will be handled.
“For example, using graduate employment outcomes as a measure seems to put the cart before the horse. Universities can do little to influence the wider employment market,” she explained.
“Fine-tuning is needed here to ensure universities are not incentivised to decrease places available in some areas of science, and in particular mathematics, which have below-average employment outcomes.”
Bexley said testing of the model will also be needed to understand how the equity group and the attrition measures will interact.
“Students from socially and educationally disadvantaged backgrounds typically drop out at higher rates than more advantaged students,” she said.