Unfinished business

The new government must continue with the Coalition’s economy-boosting reforms in tertiary education, argues Alan Tudge as he delivers a speech to the higher education sector.

The Education portfolio in the Commonwealth is significant both in terms of investment – around $180 billion over the next four years – and the extraordinary impact that it has on the lives of individuals and the future prosperity of our nation.

There is no portfolio like it, and I took my role as Minister very seriously, as I am taking my Shadow responsibilities.  I specifically requested of the Opposition Leader to stay in education. It has been one of my main areas of focus for 20 years now.

Alongside the enormous tasks of government during the pandemic, we were proud of the reforms we delivered to drive better tertiary education and research outcomes in Australia.

We understood these reforms would pay dividends in increased productivity in our economy for the next generation and beyond.

I would like to use this opportunity today to touch on some of those reforms, but also outline what I think are areas of unfinished business which I would like to see Minister Clare take up, particularly reforms which will help drive our economy.

With strong economic headwinds and an absence of Labor policy to ameliorate this and drive productivity, I suggest that continuing our higher education reforms is vital.

A record of investment and reform

The Liberal Party and the Coalition have always acknowledged the central role that universities play, going back to our founder, Robert Menzies, who saw education as a mechanism to “equalise opportunity”.

Over the last 9 years, we increased the funding to universities by 34 percent to $19.5 billion and increased the number of government supported university places by 11 per cent to 640,000.

We supported the opening of new research facilities and medical schools. We provided additional scholarships for students, including Indigenous students and those in rural areas whose access was more limited.

We supported the opening of new campuses so more people could access tertiary institutions locally – knowing that if they study locally, they are more likely to remain local.

We updated the Provider Categories creating a new class of University College.

We started the process of enabling micro-credentialing so individuals can more rapidly upskill.

Let me expand briefly, however, on two of the more substantial reforms in our last term of government.

The Job Ready Graduate reforms in 2020 introduced substantial changes to the funding model to university courses. The aim was to create incentives for students to study in those areas where there were critical shortages or where job growth was expected.

With the abolition of government supported places allocated to each faculty (and instead given as a block and provided at the aggregate level) there was an absence of policy settings to ensure that national skills priorities were being addressed through course offerings.

The Job Ready Graduate program created this policy setting while still leaving flexibility to university administrations over which courses they offer.

Consequently, under the Job Ready Graduate reforms, national priority courses had their prices markedly dropped for students.  For example, mathematics and statistics are now 59 per cent cheaper for students to study; teaching and nursing are 42 per cent cheaper; science and environmental science is 18 per cent cheaper; and agricultural science is 59 per cent cheaper.

All up, in the first year of implementation, around 60 per cent of commencing students saw a reduction, or no change, in their contributions.

We know from enrolment data that students responded to these price signals.  Witness the increased enrolments in courses such as teaching, nursing, engineering, IT, sciences and agriculture.  It was not a perfect correlation because students choose courses for many reasons, not just price signals.  However, it is having an impact.

Job Ready Graduates also provided more support to regional students and universities including access to a $5,000 Tertiary Access Payment to help with relocation costs for regional students. A $900 million National Priorities and Industry Linkage Fund was also established to support universities to work more closely with local industry.

The second substantial reform of recent years that I mention today, and was my top priority when I was Minister, was the reforms to help make our brilliant research more impactful and more relevant to Australia’s economic needs; to translate it into commercial applications and in doing so, boost productivity, create jobs and new industries.

It was a deliberate effort to match what other countries have done, such as the United States, Germany, Japan, the United Kingdom and particularly Israel.

Australian universities produce world-leading research – something we are all very proud of – but we are not as competitive in terms of our research utility – translation and commercialisation.

Consider that over the last 20 years, the number of academic papers written and published has increased fourfold from 23,000 in the year 2000 to over 100,000 in 2020.  This has increased in line with annual expenditure on university research which has also grown fourfold to more than $12 billion.

But on nearly every measure of research commercialisation, we have barely moved over those same 20 years.

The Coalition Government took a measured approach to deeply understanding the impediments and put in place schemes and incentives to drive translation and commercialisation.

We appointed a 10-member expert panel of the most brilliant business minds, researchers and university leaders.  It included the CEOs of Siemens (who chaired it), Macquarie Bank and Cochlear; top researcher and former Australian of the Year, Prof Michelle Simmons, Chief Scientist Alan Finkel and then Cathy Foley, Andrew Stevens and University leaders Deb Terry and Paul Wellings.

This group did not just provide some high level input, but spent days going over intricate details to maximise the potential of getting seismic change.

The result – the Australian Government’s University Research Commercialisation Action Plan – lays out a comprehensive set of reforms to completely shift the dial in this area unlikely anything that has been done before.

The challenge for Minister Clare, which I will expand upon in a minute, is to fully embed these reforms – to make it a substantial economic reform for the nation.

The Plan included a $2.2 billion investment over the next decade and involved several parts working together, all focused on six areas where we already have some strategic advantage as identified in the Modern Manufacturing Strategy.

It was an alignment to create national priorities for the country, rather than separate industry priorities and separate university research priorities and separate CSIRO priorities etc.

The cornerstone of the plan was the new $1.6 billion Australia’s Economic Accelerator.  This is a 10-year investment in a competitive funding program. It is designed around three stage-gates to take research from proof of concept, across the so-called “valley of death” and through to commercial realisation.  At each stage, fewer projects will be funded, but with larger amounts of money and a greater industry co-contribution. Stage 3 of the Accelerator will be operated through CSIRO’s Main Sequence Ventures, which will be expanded by $150 million.

The second major element was the Trailblazer Universities initiative. This was largely modelled off the Canadian supercluster initiative and is a deliberate attempt to identify and scale-up existing centres of expertise and industry collaboration in the six modern manufacturing priority areas.

Our aim was to create “trailblazers” to be leaders in the world in research commercialisation in each of the priority areas and a model to other universities as to what is possible.

Universities and businesses that applied had to demonstrate commercialisation readiness including innovative IP arrangements, clear promotion pathways for academics involved in commercialisation activities, course offerings in the priority area endorsed by business, and industry alignment including funding and workforce mobility between industry and university.

Successful universities received at least $50 million in funding to put towards hiring world leading academics in this area, equipment or other areas to support the objectives.

In November 2021, we started with an initial commitment of $243 million for four Trailblazers. The applications were so impressive that we boosted the investment with $119 million, taking the Trailblazer University Program to $362 million for six Trailblazers.

Even at this early stage, the Trailblazer program demonstrated the capacity to overcome challenges that have previously stymied university research commercialisation.

They have massively scaled up the collaboration between universities and industry. Together, the six Trailblazers are establishing 170 industry partnerships.  More than 60 per cent of these partners are small and medium enterprises.  Trailblazer partners estimate that their projects will generate more than 7,400 new jobs.

And we see significant skin in the game from the universities and their industry partners – more than $1 billion in combined co-investment.

Thirdly, the Action Plan also provided Australian researchers and academics with new opportunities to build a career out of research commercialisation and incentives to collaborate with business.

There has always been very clear pathways for career advancement for academics based on publishing, but less so for translating and commercialising.  Thus, $295 million was provided to support 1,800 new industry PhDs and 800 new industry fellowships.

The industry PhD and research fellowship schemes will encourage mobility and collaboration between university researchers and industry, build capacity and understanding of research translation and provide recognised university career paths at all levels.

Finally, existing university research funding and arrangements were reformed in order to strengthen incentives for genuine collaboration with industry. This included adjusting the $2 billion in existing university research funding and creating a new IP framework.

These are not the only reforms of recent years, but the most substantial. Others include a new international education strategy, initiatives to ensure greater freedom of speech and academic inquiry, and a plan to radically shape up initial teacher education.

Of course, much of this was happening while trying to support the university sector during the pandemic with an extra billion in research funding, more domestic places, and significantly greater flexibility on visas and regulations so that international students could study abroad while borders were closed.

While some universities were barely impacted financially by the pandemic, others were significantly hit and the lack of enrolments in international students has a two or three year tail.  These other reforms that I have mentioned were also aimed in part at providing additional funding into the sector when it really needed it.

Maintaining reform momentum to drive economic growth

So where to from here for the new government and Minister Clare in particular?

The Labor Party outlined very little policy in higher education pre-election and Minister Clare has little experience in the education sector.

The key challenge for the government as a whole is how to maintain the strong economic growth that it inherited, and not let inflation, rising energy prices and increased interest rates get out of control.

They promised the Australian public that they would be able to manage these things and drive productivity (the key to sustainable wage growth), but they have outlined very little to do this. If anything, their actions to date, such as increased government expenditure, will exacerbate problems.

If the Albanese Government is serious about driving productivity, then there is a significant opportunity for Minister Clare to continue with and embed our reforms and make universities a greater engine for innovation, and new technologies and products.

My suggestion to Minister Clare is the following four priorities in the immediate term to support economic growth:

First, maintain and embed our Research Commercialisation Plan.  The funding is already allocated, the detailed designs are in place, but it will require ongoing attention from the Minister to ensure that the full benefit to our economy and society are realised.

Most pressingly, the staged-gate funding model (“Australia’s Economic Accelerator”) will require legislation to see it enacted.  I am sure that the Education Department has already briefed Minister Clare on this. He needs to approve it, introduce it into the parliament and he will have our full support.

However, he will also need to be vigilant in how the detailed structures are put together, in line with the comprehensive action plan.  There will always be resistance to things like IP reform or new employment pathways, and it is critical for Minister Clare to not buckle.

Second, to maintain and strengthen the Job Ready Graduates reforms to ensure that students are studying courses in areas where we need them to study. There are critical skills and labour shortages in Australia and we need graduates as soon as possible who are skilled in the areas of national need.

I am concerned that the Labor Party spent much of the last three years criticising our ambition in these reforms and we know that they will be under significant pressure from the Greens to now reverse them.

Related to this is to continue the path of embedding micro-credentialing, particularly industry-led ones, and enabling students to “stack” credentials from different institutions, including from vocational ones. Micro-credentialing allows individuals to rapidly upskill in labor shortage areas.

Fourth, to fully implement the International Education strategy as a further way of providing an additional revenue source for our universities and our economy. In particular, the enormous opportunity from providing high quality education through innovative offshore models to potentially millions of students in developing countries, who want the education but have few home-grown options.

Of course, there are other areas which require attention including continuing with the former government’s freedom of speech and freedom of academic inquiry agenda, ensuring greater diversification of international students on campuses, prioritising the quality and experience of Australian students, and continuing with the initial teacher education reforms.

Today, however, I have particularly focused on the areas to support productivity and the economy. Universities Australia Chair, John Dewar, is right that universities can be central to national economic strategy.

This was the Coalition Government’s view and the now Opposition’s view.  We put in place policies to support this. I encourage Minister Clare to continue down this path with the agenda I have outlined.

Finally, let me say something about the New Colombo Plan and Labor’s intentions. I am worried that Labor will gut this for the simple reason that it was a signature policy of the Coalition Government.

This program, before the pandemic hit, supported over 10,000 young people per year to study and work in our region, and in doing so, develop knowledge and relationships with our neighbours. All up, over 40,000 young Australians have been supported to go to over 40 locations across the Indo-Pacific. It is a known program to students; it is a known and valued brand in the region.

Geopolitically, this is a time for strengthening relationships in our region, which the New Colombo Plan does. So this is an immediate test for Minister Clare.

Alan Tudge is shadow minister for education. This is an edited extract of a speech delivered to the Universities Australia annual conference.