‘Policy or politics? – Australia’s future and the role of universities’

**Check against delivery**

Thank you, Julie, for that warm welcome.

And thank you to the National Press Club for providing Australia’s higher education sector with this important platform today.

I’m delighted to be here in my capacity as Chair of Universities Australia, the peak body representing Australia’s 39 comprehensive universities, and to have the opportunity to speak on behalf of our great sector.

It is what could be euphemistically termed an ‘issues rich’ time for universities, as I’m sure my colleagues who have travelled to be here and close observers of higher education will attest.

But before I dive in, let me begin by acknowledging the Ngunnawal and Ngambri peoples on whose land we are gathered today here in Canberra and by paying my respects to elders past, present and emerging.

I’d also like to acknowledge some people in the room:

• The Shadow Minister for Education, Senator the Hon Sarah Henderson
• Secretary of the Department of Education, Mr Tony Cook
• Deputy Secretary in the Department of Education, Mr Ben Rimmer
• Jobs and Skills Australia Commissioner, Professor Barney Glover AO
• Parliamentarians
• Chancellors
• Vice-chancellors
• Senior public servants
• Industry leaders and heads

Standing here last year, I apologised for my accent, the speed of my delivery and the lack of subtitles.

My accent hasn’t changed, nor have my teeth, but I have made a concerted effort this year to come to this stage with fewer words on the pages in front of me than 12 months ago.

This is done in the hope that I can be disciplined in my delivery and, perhaps, dispense with the need for subtitles, although as I frequently observe to colleagues, hope is not really a strategy.

So, good luck with that.

The cynics among us might say I am applying the current thinking to funding higher education and research in this country to what I have prepared today, in taking the approach that less is somehow more.

While I have no doubt everyone in this room may benefit from my attempted slower speed of delivery, I can assure you that no one here – or anywhere in the country, for that matter – will be better off because of an underfunded, financially unstable university sector.

And so, with a federal election on the horizon, I’m here to make the case to both sides of politics that universities matter.

They matter to me and my colleagues, obviously.

They matter to the 250,000 people employed at our universities and in other sectors of the economy supported by the work we do.

They matter to the more than one million domestic and international students currently studying at our institutions, who have placed their faith in our sector to enable their personal advancement.

They matter to the roughly six million people who hold a bachelor degree or above in Australia.

They matter to the millions of students we have helped educate from around the world.

They matter to all Australians, university-educated or not, by way of the social and economic dividends they deliver.

And because our universities matter to all Australians, it stands that they should matter equally to those who go to work at the place on the hill behind me, receiving bipartisan support and encouragement to thrive and serve the nation.

Regrettably, this is not and has not always been the case.

Over the last few decades, Australia’s higher education system has been subjected to a unique blend of passive neglect punctuated with occasional bursts of occasionally well intended ideologically driven intervention.

Successive governments from both side of politics have under-funded university teaching and research and shut down programs designed to fund university infrastructure.

Elected officials have directly intervened in what were independent, peer reviewed research grant processes and now, just as we enact a research enabled recovery from a pandemic, they are using international students as scapegoats to blame the housing crisis on.

This poll-driven attack on a major component of our sector has once again put universities on the front pages of newspapers and at the top of news bulletins for all the wrong reasons.

I’ll return to this topic later.

Too often, our sector is at the centre of national debate for political rather than policy purposes.

And what gets lost in the sometimes-heated debate is the central tenet and purpose of higher education, which is the pursuit of knowledge – through education and research – and which is undertaken by our institutions and invested in by governments everywhere in the world as a crucial public good.

Losing sight of this purpose is a dangerous path to tread when universities are central to the task of creating a productive, prosperous modern Australia.

The Universities Accord final report lays bare this challenge, not just for universities but for this and successive governments.

The report says Australia is competing in a global race to produce more knowledge, skills, opportunities and research in response to the rapid technological, social, political and environmental change we are experiencing.

War and shifting alliances are reshaping the geopolitical order, posing a major threat to global economies.

Extreme weather events are challenging businesses and governments, drawing attention to the work still to do in meeting emissions targets.

And advanced technologies are offering a glimmer of hope and competitive advantage, even if they do carry significant risk.

The Accord report warns that if we fall behind in the race to prepare for and respond to challenges, changes and opportunities, our productivity, innovation and standard of living will decline.

The role of universities here is clear – we must educate more skilled graduates to fuel our economy and undertake more research and development to drive our progress.

And we must do it quickly.

After all, the answer to so many of the challenges the government is seeking to address lies in higher education.

The highly educated people modernising our energy grid.

The scientists working to cure disease and the health professionals caring for an ageing population.

The experts working to improve our agricultural capacity and protect our water supplies.

The specialists developing our sovereign capability.

The teachers shaping the future generations.

These are all skilled people and all of them are educated at and working in our universities.

And we require many, many more of them.

The needs of our economy and the imperative to transform demand it.

According to Jobs and Skills Australia, 90 per cent of jobs growth in the next 10 years will require post-secondary education.

Around half of these jobs will require a university degree, many in areas critical to the delivery of national priorities.

Realising a Future Made in Australia.

Becoming a clean energy superpower and decarbonising our economy.

Reshaping our defence industries and delivering AUKUS.

Easing cost-of-living pressures.

Re-energising our stagnating economy and kick-starting productivity growth.

These tasks are not easily achieved – if achievable at all – without our universities and university graduates.

On one hand, the government is seemingly attuned to this, using this year’s federal budget to set an overall tertiary education attainment target of 80 per cent of working aged people by 2050, up from 60 per cent in 2023.

That is a good thing, something which should be applauded and supported

Meeting this target could add around $240 billion to the economy, not to mention substantial social benefits.

Higher education improves lives.

We know that higher education attainment increases median incomes and reduces dependency on income support.

And it sets people up for a rewarding career in a profession of their choosing while opening up pathways to further study and advancement.

But the scale of this challenge should not be underestimated.

To put the target into perspective, the Australian tertiary education system will need to support a million extra students studying on a Commonwealth supported place, growing from 860,000 in 2022 to 1.8 million by 2050.

A million extra.

This is the equivalent of creating a new institution the size of Monash University every two years.

As someone with some unique insight into the machinery of standing up a new university, I can attest that this will be a significant challenge.

So, if we are not to deliver a huge number of new institutions, we now have no choice but to grow and improve the higher education system, to build our universities for the future to support the economic, technological and social needs of the nation.

Jobs and Skills Australia Commissioner Professor Barney Glover AO stood on this stage last month and said this need has never been greater, referring to the challenge as a critical national imperative, not simply an educational or sector-oriented priority.

I couldn’t agree more with Barney.

His remarks echo the policy platforms of past governments from both sides of the aisle over multiple decades, notably those led by Robert Menzies and Bob Hawke and, more recently, the Labor Party in 2007.

Menzies, of course, was responsible for taking the Commonwealth into higher education through the establishment of the Australian Universities Commission in the late 1950s – an intervention since characterised as having saved Australia’s universities from a funding crisis that threatened their very existence.

The Commission was charged with overseeing the development and funding of Australian universities.

Until then, Menzies had been committed to the rights of the states to continue being the major backers of tertiary education and to hold the reins of tertiary governance.

The post-World War II baby and immigration booms changed the landscape, with state education budgets eaten up by the need to build and staff new schools to accommodate an ever-increasing population.

To Menzies, a university education was, quote, “a sanity badly needed in an insane world”.

And, so, he went to work on opening the door to university for more Australians.

By 1972, nine universities had become 15, the number of academics had more than tripled with 274 professors growing to 853 and student numbers increased from nearly 38,000 to a staggering 128,700.

After his retirement as prime minister in 1966, Menzies cited his support for universities as one of his government’s greatest achievements.

Who could disagree?

In Bob Hawke, Australia had another great enabler of education opportunity.

As prime minister, Hawke and his then Education Minister, John Dawkins, introduced the Higher Education Contribution Scheme.

Where would we be today without it?

HECS has revolutionised our system, democratising higher education and making it accessible for everyday Australians in vastly larger numbers.

From its introduction in 1989 to 2017, the number of Australian undergraduate students rose from around 355,000 to over 800,000.

The Hawke Government, of course, also turned Australia’s Colleges of Advanced Education into universities.

Fast forward to 2007.

Labor, vying to return to government, identified education as its most important economic policy issue at the election.

Calling for a revolution in education – be careful what you wish for – Labor in 2007 warned that Australia’s prosperity would hit the wall unless the quality and funding of education – from childhood to adulthood – was raised substantially.

The supporting policy paper quoted statistics showing Australia’s productivity had declined in line with education funding – a graph we could likely replot again today.

Public investment in universities, specifically, had fallen seven per cent in the previous decade, compared with the OECD average of a 48 per cent increase.

Labor harnessed this evidence to argue that education needed to be viewed as an economic investment, and that investment in human capital was essential for creating an innovative, productive workforce that could adapt to a rapidly changing world.

The Labor Government, to its credit, delivered on this during its two terms in power, raising government investment in higher education as a percentage of GDP between 2008 and 2013.

For universities, Labor’s education revolution also saw the creation of the demand-driven system, opening the door to a university education for more Australians to meet future demand and drive prosperity.

It worked, particularly in widening university participation among under-represented groups.

Between 2008 until the demand-driven system was suspended by the Coalition in 2017:

• enrolments of undergraduate students from low socio-economic backgrounds rose by two-thirds
• Indigenous undergraduate enrolments more than doubled, growing 105 per cent
• enrolments of undergraduate students with a disability also doubled, and
• enrolments of students from regional and remote areas jumped by 50 per cent.

Undoubtedly, the human capital in a bigger and more highly skilled workforce helped drive Australia’s 28 consecutive years of economic growth prior to COVID-19.

Unfortunately, the funding gains made over a decade ago have not been sustained relative to GDP.

Government investment in higher education in 2020 was at 0.56 per cent of GDP, lower than 2008 levels and 60 per cent below the OECD average of 0.93 per cent.

This takes me back to my earlier point of universities not being the subject of bipartisan support and encouragement.

The last seven years, the majority under a Coalition Government, have been particularly difficult, starting with the re-capping of university places in 2017.

Since then, other changes to higher education policy have resulted in significant funding shortfalls for universities to the tune of billions of dollars.

Our institutions are grappling with:

• almost $4 billion lost through the closure of the Education Investment Fund
• a funding deficit of $2.5 billion per year in grant research and equity support, and
• around $800 million less per year in domestic funding under the Job-ready Graduates Package.

And then, as we all know, COVID-19 put more pressure on universities already dealing with such cuts.

The Morrison Government’s decision to exclude our institutions from the JobKeeper income support scheme made things worse, especially when international student revenue was significantly down.

It would be remiss of me not to acknowledge the $1 billion we received from the Coalition in 2020 for additional places and research funding.

Whichever way you look it, though, that top-up merely confirmed our reliance on international students to fund what the then Government was not.

And so, the effects of the pandemic are still being felt today – in an economic long covid which is threatening the sustainability of most Australian universities.

Despite what gets bandied about with impunity, the stark and frightening reality is that two-thirds of publicly funded universities were in deficit in 2022 and 2023.

As if that isn’t enough financial pain, the Albanese Government and the Peter Dutton-led Coalition are now out-doing one another in their rush to reduce the number of overseas students studying at Australia’s universities.

The government, under pressure from the opposition, is currently seeking to pass legislation that would give it powers to limit overseas enrolments in a bid to neutralise the perceived political damage it is suffering from high migration rates – despite ours being a migrant nation and I note myself that I am proud to stand here as a naturalised Australian citizen.

This is an extraordinary intervention in our sector to an extent not seen since the Morrison Government politicised Australian Research Council funding grants in 2021.

Back then, the Coalition used the cover of Christmas to block grants for research projects it arbitrarily judged to have failed to demonstrate value for money or contribute to the national interest.

Labor has since passed legislation to, in the words of Education Minister Jason Clare, end of the days of using the ARC as a political plaything.

But ironically, universities are squarely once again a political plaything as their work in support of the national economy is conflated with a national housing problem.

Australia does have a housing problem, but it is not the making of international students.

The Chair of the government’s own National Housing Supply and Affordability Council even says so, admitting last week that capping international student numbers would have little impact on Australia’s housing woes.

But let’s not take their word for it, let’s look at some of the other evidence.

According to the Student Accommodation Council, overseas students make up less than four per cent of the private rental market.

For the more mathematically inclined among us, that means that more than 96 per cent of housing in Australia and any associated problem therein has absolutely nothing to do with international students.

Further analysis undertaken by Universities Australia has found the suburbs where those students typically live have higher vacancy rates than the metropolitan averages of our major capital cities.

Let’s be honest here: supply-side issues, not international students, are the real cause of the housing crisis.

Using these talented individuals, who have hitched their hopes for personal advancement to an Australian wagon, as cannon fodder in a poll-driven battle over migration just damages our nation’s standing and reputation and our universities with it.

I remember what happened in April 2020 – don’t you?

We saw the harm done to this critical export industry when Scott Morrison told Australia’s international students to ‘go home’.

The combined fall in education and tourism exports wiped 1.5 per cent off our GDP in the first half of 2020.

The long-term damage in Anthony Albanese now telling Australia’s international students to ‘stay home’ remains to be seen.

Chances are, it won’t be pretty.

In case you think I am jumping at shadows here, the Canadian lived experience offers a cautionary case study on the danger of poorly formed and rushed changes to foreign student enrolments.

Just as in Australia, Canada specifically targeted international students as contributors to a housing crisis, ignoring the real problem of housing supply, and opted for caps.

With those caps now in place, international interest in Canada as a study destination has seen that nation drop from first to fourth in the world, and their projected enrolments, driven by market sentiment that students are no longer welcome, will likely come in well under the new caps, in some cases by more than 20 per cent.

It’s hardly surprising when applying to attend university is now akin to buying a lottery ticket.

Australia could suffer the same fate as Canada if prospective students don’t feel welcome and decide their future isn’t worth gambling with.

What is a sure bet is that our other international competitor nations – the United Kingdom, the United States and others – are standing by ready to capitalise on our poor policy decisions.

The other real danger of using students for political gain is what we stand to lose by turning them away when we are we are in a global race for talent.

We know that international students contributed more than half of Australia’s GDP growth last year.

Last week’s national accounts, which showed the economy barely growing in the June quarter, should be sounding alarm bells.

Irrespective of the dark arts of accountancy, international education is our second biggest export after mining, worth around $50 billion to the economy.

The industry supports 250,000 jobs across all sectors, similar to the number of jobs in the mining sector.

Students who come from overseas play a valuable role in our labour market, helping to fill skills gaps and supporting the operation of small and large businesses in regional and capital cities.

The Morrison Government recognised this when it offered visa rebates to accelerate the return of Australia’s international students in 2022.

Talk about an about-turn.

So many Australian businesses are directly benefitting from overseas students at a time when skills shortages are biting hard across the economy.

Polling commissioned by Universities Australia shows that this reality is not lost on everyday Australians, with 68 per cent of voters agreeing that international students are important to our workforce.

Sixty-eight per cent is an approval rating that many in government would love to see.

Meanwhile, 61 per cent of Australians consider Australia’s international students an important driver of our economic growth.

In wilfully weakening our economy by capping international student numbers, the government needs to consider how many businesses it is willing to put at risk and how much damage to the economy it is prepared to do at the very time when our economy is stalling.

The Business Council of Australia, the Australian Chamber of Commerce and Industry, the Council of Small Business Organisations Australia and Tourism & Transport Forum Australia have all issued clear and unambiguous warnings about this.

Of course, I recognise that international student fees also support the operation of our universities, making up a shortfall in government funding for research, teaching and campus infrastructure.

What seems to get lost here is the reality that our institutions reinvest every dollar they receive from overseas students back into their operations.

Australian universities are not for profit organisations – reinvestment is what we do to deliver on our purpose.

Wilfully having fewer students here will only worsen an already widening funding gap at a time universities need greater support, to conduct their operations and to support the nation’s ambition through the delivery of national priorities.

Remember what it is we are expected to do next?

Educate an additional one million students.

How exactly can we deliver for future learners and increased skills provision in the midst of a tail spinning downward spiral of core funding?

Today, in 2024, just as we’re celebrating Australian international competitiveness at the Games in Paris, Australian Government investment in R&D as a percentage of GDP remains at its lowest ever level on record.

This illustrates just how dependent our institutions are on international student fees to support researchers in Australian universities.

If universities don’t have the means to compensate for this lack of core funding, Australian research simply is not going to happen.

I absolutely acknowledge the government’s right to control migration numbers, but this should not be done at the expense of any one sector, particularly one as economically important as education.

We also need to consider the role of education as a key source of soft power for Australia in our region, and the impact of effectively shutting our borders to students at a time we need stronger regional relationships.

Students who study in Australia return home with deep personal connections to our country, many of whom go on to lead influential careers.

These connections, a hidden soft superpower for Australia, are now being placed at risk with the government’s abrupt changes to international education.

We will be watching closely to see if the legislation to give effect to these changes passes the parliament.

But even without legislated powers to limit international student numbers, the government has already taken a sledgehammer to the international education sector.

It may surprise you to learn that before the spectre of caps arose, visa grants in higher education had already dropped 23 per cent – the equivalent of almost 60,000 students – in the past year since the government brought in the destructive Ministerial Direction 107 last December.

This directive – MD107 – wilfully slowed visa processing to a trickle, drove up visa cancellations and inflicted incredibly serious financial harm on universities, particularly those in regional Australia and outer suburban areas.

And it is still in place today.

It need not be, but it is.

Our estimates put the economic hit of the government’s crackdown on overseas students, starting last December, at $4.3 billion and counting, while also putting 14,000 jobs in the university sector at risk.

No other major export industry is treated the way international education is right now.

Not mining, not agriculture, not tourism – none of them.

Imagine how economically self-destructive it would be for the government to ban shiploads of iron ore from leaving our ports, yet that is exactly what it is doing to our higher education sector.

Enough is enough.

Higher education belongs on the national policy agenda, not in the political playbook.

It beggars belief to think that this is acceptable.

There is simply too much at stake for Australia’s future to be treating universities as political playthings rather than the critical national assets they are.

Let’s consider where the world is heading and why we can’t afford to be left behind.

By 2030, McKinsey estimates generative AI could contribute up to $4.4 trillion to the global economy.

This is the next big productivity frontier.

By the early 2040s, the first nuclear-powered submarines built in Australia are expected to be delivered to the Navy.

This is crucial for the defence of our nation.

By 2050, it is hoped emissions will have reached net zero levels.

This is essential to keeping global warming below 1.5 degree Celsius.

Universities are central to these endeavours.

The shift from fossil fuels to renewables and, potentially, to nuclear.

From information technology to artificial intelligence.

From a younger to an older population.

And from globalisation to fragmentation.

The path Australia takes in navigating these challenges and opportunities will change over time, dictated by the priorities and preferences of the government of the day.

What won’t change is the role of Australian higher education in creating an innovative, productive workforce that can adapt to the rapidly changing world in which we live.

A workforce that can keep Australia in the race – or better still, ahead of the pack and winning the race.

A workforce to get us where we need to be and keep us there.

A workforce that can create a productive, prosperous modern Australia.

To achieve this, surely, we can see that we need our universities to be properly resourced.

We need politics to be taken out of higher education.

Australia needs this to happen.

And we need our institutions to be recognised and celebrated for all that they do to build our nation.

The next federal election is a fork in the road for our sector.

For both major parties, it looms as a choice between providing bipartisan support and encouragement for higher education or treating universities as political footballs in the electoral game.

With bipartisan support and encouragement, universities can deliver a better, brighter, more prosperous future for all Australians – informing, supporting and advancing the policy agenda of the government of the day.

Or, if our elected representatives choose the other path, wherein our higher education institutions are being kicked to and fro in the parliamentary arena, they can deliver possible short-term electoral gains but ultimately can only fall short of their mission in the winds of political change.

These are the two paths before the major parties.

One for the betterment of Australia and Australians, the other almost certain to damage the prosperity of our and future generations.

Today, I am calling on Anthony Albanese and Peter Dutton to put universities at the centre of the economic agendas they take to the next election.

To make universities a policy priority instead of a political pawn.

To follow the lead and examples of leaders like Menzies and Hawke in their support of, and investment in, universities for the greater good of the Australian nation.

Every investment has a cost.

It will cost money to grow and improve the higher education sector in line with the nation’s needs, but there is no greater investment than an investment in Australia’s future, particularly when every Australian benefits.

The Universities Accord offers a solid policy blueprint to build from.

The Labor Party has made a good start in bringing Professor Mary O’Kane’s vision for the future of the higher education sector to life, starting with much-needed financial support measures for students.

With those pro-student supporting measures before the parliament, I urge the Liberal-National Coalition to back them.

But this is only a start.

As a matter of priority, we need to address Australia’s research funding problem.

What good is a $22.7 billion investment to build a Future Made in Australia without the research and development work required to spur the growth of new industries?

It’s fine for the government to commit to a strategic examination of the R&D system, but this only puts off what is already urgently needed – increased and sustainable funding for university research and development.

The government will need to come to the table, now that their actions mean that universities have less international student revenue to fund this important work.

We can’t afford to kick the can down the road, not when our productivity, economic growth and a major component of the government’s own agenda depends on this work.

The Labor Party has committed to growing investment in R&D and the Coalition would be wise to do the same.

Australia doesn’t aspire to be average in any other global competition, yet our parties seem to be acceptant of performing far below average in this most crucial of domains.

You can’t have a strong economy without the ideas, products and solutions our brilliant researchers generate.

I do want to acknowledge the work happening in government to progress a new funding model for universities to underpin the growth of the higher education system, but there is still some way to go in this task.

Any model that seeks to limit growth in domestic student enrolments is counterintuitive to what the government is asking us to do, and that is to educate more students for the benefit of the nation.

We need a funding model that supports the significant uplift in tertiary participation required by 2050.

Scrapping the Job-ready Graduates Package for a system that is fairer for students and universities is key to this.

Like most of the changes recommended by the Accord, replacing JRG is a costly exercise.

The economic conditions under which I am making these asks are not lost on me.

We know that there are fiscal challenges and people are calling for a reduction in budget deficits.

But if our elected officials are serious about the nation’s future, universities are not just a worthy investment but a necessary one for their role in delivering a more sophisticated workforce to meet Australia’s future needs.

The government’s own projections put the potential return on investment in this vital national endeavour at $240 billion by 2050.

Without financially sustainable and viable universities we will not realise this return.

No increase in skilled workforce.

No additional income.

No improvements to our standard of living.

It’s a straightforward and incredibly beneficial relationship.

And one in which we get out far more than we put in.

Bipartisan support and encouragement of a sector that delivers for our nation is needed to produce the economic, social and technological gains Australia needs to remain safe, successful and prosperous in the coming decades.

As the adage goes, the cost of inaction is always greater than the cost of action.

We need to stop this practice of using Australia’s universities as a political pawn when the benefit of working productively with and supporting our sector yields such critical dividends.

Australia’s universities matter.

They matter to us all.

Thank you.