Fixing Australian higher education - problems with the horizontal slice

This post continues the discussion begun in Fixing Australian higher education - problems with the vertical slice.

If you accept the picture painted in my last post about Australia's current university sector as half way accurate, you have to ask how we got into this mess. How did we end up in a world where if Paul Frijters rough figures are correct, seventy per cent of each education dollar is actually consumed in running the total system?

Introducing the Dawkins Revolution

To understand this, we have to move right up the food chain to Canberra. Here our entry point is a well written piece by Dean Ashenden, Decline and fall?. The message in the piece is summarised in this way:

Twenty-five years ago, John Dawkins dramatically reshaped higher education. His critics still fail to distinguish the good from the bad in his reforms.

The piece is worth reading in full for its sets a context. I also happen to agree with a fair bit of what Dean says. But I would also argue that it suffers from a lack of context. It explains why many of the criticisms of Mr Dawkin's reforms are unfair, but doesn't help us a great deal in understanding the mess I described in my last post, nor does it help us in understanding what might be done to fix things.

Wikipedia describes the changes introduced by Mr Dawkins in higher education as the Dawkins Revolution.

That term is misleading, really coined by academics concerned with their own domain, by commenters interested in the sector. It was a revolution, but not in the way perceived by those focused on the higher education vertical slice. It was a revolution driven by the need for structural change in the Australian economy. It was revolution influenced by changes taking place in broader perceptions of public administration and public policy and by a multiplicity of competing policy objectives. It was a revolution twisted by previous official thought and by existing agendas. It was profoundly influential, but in the end it failed, giving us the complex vertical mess I described in my last post.

This post explores the horizontal mess, the reasons for failure. I accept that it is partial. Further, I just don't have time to document all this. I stand ready to be corrected. I accept that I am grossly simplifying.

Threads in Canberra Thought

In 1983 Australia faced a problem. Previous policies controlling imports through a mix of tariffs and import controls had created a dual economy, an inward looking manufacturing sector focused on a small domestic market place along with an export economy based on primary products including minerals. This was unsustainable, but how to change?

In the labour market, the award system that grew out of the original Deakenite social contract had, like the tariff system, proliferated into a crazy patchwork series of occupational activities defined in awards, each requiring its own trade tick. Again, this had to change.

The Dawkins revolution in education and training actually began with the economic need for change in the work place. Added to that was the growing perception that we must have more skilled people. Unions and workers trading off rights needed something in return. They needed greater opportunities, they needed more flexibility. They needed more training.

The form the revolution took was influenced by three further general streams in thought.

One was the desire for industrial development, for the development of new industries, At official level, there was general agreement about the need for structural change, including the need to do away with the crazy patchwork quilt of industry protection measures. There was disagreement about the approach that should be adopted, but all wanted to use the measures available to achieve their objectives.

A second stream was the emergence of new forms of management through centred on concepts such as measurement, standards, continuous improvement, quality improvement, input-output , performance measurement, efficiency and effectiveness  and, later, risk management. This stream centred on the simple concept that performance could be improved if activities were defined, grouped and measured against agreed standards or performance targets,

The third stream has been characterised as neo-classical economics. The role of the market was central to this stream.  However, it was more than that, for the ideas became overlaid with a set of very particular models whose genesis lay in the stagflation of the 1970s and which reached their full flowering in New Zealand with Roger Douglas.

While market focused, these models were actually independent of some of the neo-classical models. To illustrate, the question of the relative size of government is fundamentally different from the best way of delivering government services and of making them properly accountable. However, this stream gave us concepts such as purchaser-provider models and the use of market proxies.

These different streams came together in the development of policy towards Australia's higher education sector. Here they interacted with another variable, bureaucratic thought, the long trail of past decisions and processes that affect current decisions. These ensured that  the reforms would take a particular form.

To illustrate all this, I return to the history of higher education in Australia. 

Australian Higher Education on the Eve of Revolution

Constitutionally, education is a state responsibility. For the first half of the twentieth century, the education system was structured into:

• primary and secondary schools, with a large public school system along with a smaller non-government sector dominated in student numbers by the large Catholic school system. The states funded public schools, while the non-government sector was funded through fees or other forms of private fund raising.  
• technical education was provided by state funded technical colleges. There was a close nexus between the colleges, trade training and the industrial relations system.
• teacher training was provided through state controlled and funded teachers colleges.
• university education was provided by a relatively small number of public universities established under state acts. Their funding came in part from fees, in part from state grants, in part from benefactions. The universities did provide some vocational education in areas such as medicine, law, or teaching, but their core focus was discipline based.
• professional education in areas such as accountancy, law or medical specialities was controlled by and to a varying degree delivered through professional bodies. In medicine, for example, the universities provided entry level qualifications, but training beyond that point was controlled by specialist colleges. In accountancy, training was completely controlled by the professional bodies.
• Nurse education was on the job and provided via the public hospital system.
• Finally, there were a raft of private providers in areas such as business studies or secretarial  providing training that while not officially credentialed was recognised by employers.

I recognise that this must seem a bit eye-glazing, but I wanted to illustrate the complexity of the education and training environment.

During the 1950s, the system came under great strain. Industrialisation during the Second World War increased the demand on technical education. The post war baby boom in combination with mass migration placed huge demands on the school system. State teacher's colleges struggled to provide the required number of teachers. More students were demanding entry to universities.

The Commonwealth had resisted any form of on-going support for education. However, the Menzie's Government  did move to provide financial support for universities. By 1957, Commonwealth grants were providing 29.2 per cent of university income, state grants 50.3 per cent.

In 1964-1965, the Martin Committee recommended the creation of a new type of tertiary college that would award qualifications at diploma level. The aim was to meet the need for vocational education, to bridge the gap between the technical education and university systems. The end result was the creation of Colleges of Advanced Education based on the existing teachers colleges and some of the autonomous technical colleges. In 1969, the new system was allowed to award a hierarchy of qualifications, from diplomas through to Bachelor degrees. In 1971, the Colleges were allowed to award Masters degrees.

The two sectors were administered very differently.

The university sector was funded via block grants. Universities were self-accrediting, defining their own offerings, making their own decisions on expenditure. By contrast, college offerings had first to be individually approved at state level before submission to Canberra for funding approval.

In July 1987, John Dawkins became Minister for Employment, Education and Training, the first time these various functions had been combined in a single department. By then, the good folk in the previous education department faced a number of problems that they had been trying to address for the best part of a decade.

To begin with, the decision of the Whitlam Government to abolish university fees from 1 January 1974 had made the higher education sector totally dependent on Government grants while increasing the cost to the budget. That position was unsustainable. Then there were problems with the management of a dual system of universities and colleges of advanced education funded in different ways.

The colleges were meant to be a separate vocational focused stream. By 1987, they were behaving more and more like universities. Lower level courses were being dropped in favour of higher level offerings, they were undertaking research, while staff and students were agitating for comparable treatment.

There were major cultural differences between the two sectors. The collapse in demand for teachers that had formed the bedrock of many CAEs, the need to compete for the funding of specific course offerings, created a far more entrepreneurial culture as colleges sought new offerings and new students.

This was aided by  credentialism, the increasing demand for longer and more formal qualifications for specific occupations. In teaching, the two year primary qualification was replaced by a three year degree. In nursing, training moved from on-the-job in hospitals to more formal degree training. As part of this,  the costs of training shifted from the states to the commonwealth. The  colleges were best equipped to gain from these changes. As they responded, they shrank the space previously occupied by other parts of the education system.

Faced with rising costs, Commonwealth officials in 1981 and 1982 had tried to force the amalgamation of smaller colleges of advanced education to capture perceived economies of scale. There were some mergers, but others were successfully resisted.

I have to declare a bias here.

In 1982 I had taken leave from the Commonwealth Public Service to work on my PhD thesis at the University of New England. While in Armidale, I combined with the Peter Monley to organise protest against the proposed forced merger of the Armidale College of Advanced Education and the University of New England. Peter was then a councillor from Dumaresq Shire, the shire surrounding Armidale. Peter worked the local government side, while I handled the university, strongly supported by the then VC. The result was a major demonstration that helped block the merger, if only for a time.

John Dawkins arrival created an opportunity for officials to bring about changes that they had wanted. However, the exact form of those changes would be influenced by the other forces described earlier.

The Dawkins Higher Education Reforms

There were two key elements to the Dawkins revolution.

The first was the replacement of what was known as the binary system - universities plus colleges of advanced education - by what was called the Unified National System. The second was effective re-introduction of university fees via HECS, the Higher Education Contributions Scheme.

Under the Unified National System, the distinction between universities and colleges was abolished. Institutions had to apply to join the unified national system. Those who did not would be funded on a contract basis for teaching purposes only. The approach adopted was actually quite prescriptive at a number of levels.

To begin with, benchmarks were established based on perceived economies of scale. A three tier system was created:

• You needed to have a minimum of 2000 EFTSUs (Equivalent Full Time Student Units) to gain recognition. One third of colleges fell below this benchmark. They were advised to merge or form a working relationship with a larger institution.
• The prerequisite from a funding perspective to support a broad teaching profile with some specialised research was a minimum sustainable load of 5000 EFTSUs.
• For a relatively comprehensive in teaching and with the resources required to undertake research across a significant proportion of its educational profile, a minimum sustainable load of 8000 EFTSUs was required.

The problem with this approach lay in the lack of variety and flexibility. It was a one size fits all. A smaller institution may have higher measured administrative costs, but still offer a more flexible and successful student experience. We can see this in the later re-emergence of smaller providers offering university level qualifications. Again, I have to admit my biases, for it was my own university, the University of New England, that provided the most spectacular example of merger failure.  

Institutions were also required to enter into new funding arrangements centred on its educational profile. The profile had to identify roles and mission and set out what the institution intended to do. This would then be used as a base for a contract negotiated with the government that specified:

• the level of funding available from the Commonwealth to achieve its chosen academic goals
• the ability of the institution to meet the higher education needs of its community
• and the institution's contribution to national priorities identified by the Commonwealth.

Within the bounds of the contact, universities had freedom to allocate funds. Further, they were not precluded from doing other things, but only if they could find the resources from non-Commonwealth sources.

This approach was, in fact, an example of the emerging purchaser-provider model. It imposed a reporting load on universities since they had to report on performance. Importantly, it made Commonwealth priorities central to future funding.

The year before, John Button's information Industry Statement had for the first time included tied funding for specific places in IT. The Education Department officials had resisted this because they thought that universities should be able to respond to student demand. Now Pandora's Box was opened, for university funding was becoming tied to very specific Commonwealth objectives.

The re-introduction of university fees via HECS created another set of dynamics. This wasn't really a fee system at all. The Commonwealth set the nominal fee level: part of this was then recovered by students via HECS, the balance paid by the Government. It was, in fact, a cost recovery measure that bore no relationship to any market dynamics. With Government resources constrained, there was constant downward pressure on real university funding.

Universities responded by greatly increasing staff-student ratios and through expansion of activities in areas where they could make money. This included extension of commercial training activities and especially expansion of marketing activities targeting overseas students where full fees could be charged. There were some disastrous failures, but the end result was a huge expansion in overseas student numbers.  

Changes in Vocational Education

The changes taking place in the university sector were linked to changes taking place in technical education. These changes were very important, for the ideas involved and the form they took in implementation created many complexities that affected the entire education sector.

Despite all the history, this is not a history piece. My aim is to paint a picture of the forces in play that created today's complex mess.

Earlier, I spoke of the need for workplace reform. Australia needed a more flexible workforce, and that required the break-down of the complex workplace system of awards that, among other things, linked particular activities to particular tickets regardless of actual skills or workplace circumstances. There were also concerns about the availability of skilled workers, concerns that had been highlighted during the previous mining boom by the presence of skills shortages. By the time the system responded via increased numbers, the boom was over. Now Australia had unemployed skilled workers.

The core concepts in the system that now evolved were simple enough. It was their application that was complicated!

There were six key concepts:

• standards. A standard is simply a defined measure. 
• competence or competencies.  Competence is the capacity to do. Each activity requires particular knowledge and skills. However, whether you are an electrician or a doctor, you don't use all your knowledge and skills in carrying out individual task, just those relevant to the task in question. Breaking skills up into smaller blocks relevant to the task in question opened the possibility of breaking down rigid occupational barriers, allowing people to do specific things even though they didn't have the broader qualification.
• recognition. If people are going to carry out activities including those within broader professional or trades domains, you need a system for assessing and recognising their particular skill sets.
• recognition of prior learning. People learn by doing. In the workplace, probably 90% of skills acquisition actually comes from on-the-job. In credential or standard ticket based systems, there may be no way of recognising this. But if a person can do, why shouldn't that be recognised?
• articulation. If you group knowledge and skills by levels, if you create a qualifications standards based framework that people can access via any mechanism they choose and achieve recognition, then you break down divides and silos and open up multiple learning paths.         
• quality assurance. If you are going to do all this, you need a system for checking. It's not important how people learn to do. The critical thing is that they can do.

All this was very exciting. It opened up the possibility of a far more flexible and effective education and training system that individuals could access in multiple ways. The reality was a little different.

To work, the new approach required:

• governments to carefully distinguish between their roles as purchasers and regulators.
• a focus on the assessment of outputs, not on inputs.
• the lightest possible hand in regulating the system, recognising that the higher compliance costs were, the more difficult it would be to achieve real change.

None of this happened. Instead, we got the worst of all possible worlds. In crude terms, a system designed to increase flexibility became a new way of asserting control. Key weaknesses included:

• a regulatory system targeting inputs as well as outputs.
• an incredibly complex process for the assessment and recognition of competencies.
• a growing failure to recognise the difference between education and training, with training models applied regardless.
• maintenance of existing regulatory barriers, slowing structural adjustment.
• misapplication of quality management and measurement based approaches, creating growing layers of measurement and reporting.

Markets in Higher Education

From a higher education perspective, one of the biggest failures of all lay in the failure to understand the complex market dynamics now being created. I will discuss this in my next post.