E&OE

JULIE HARE: David, thank you so much for that. The first thing I want to say is more a comment than a question, and that is Ministerial Direction 107, which is the most maligned thing around at the moment. It was introduced for a reason, and that was because too many students were using their student visas to basically come into the country and then jump ship and access the economy. You disagree with that? Okay.

PROFESSOR LLOYD: I do.

JULIE HARE: Okay, my question is this – I was speaking to a political insider, who I have huge respect for, and she said to me that linking the ending of Ministerial Direction 107 with the caps was, quote, one of the most cynical political moves she’d ever seen because there’s only one thing unis hate more than caps and that is Ministerial Direction 107. So, is this a Faustian pact that unis have somehow created for themselves by pushing for the ending of Ministerial Direction 107?

PROFESSOR LLOYD: MD 107, Julie, has been in place since December of last year and it’s September now. So, we have had three full quarters of the imposition of a deliberate, I guess, stemming of international enrolments. The evidence levels for streamlined visa processing are supposed to do the job that you spoke of, which is to protect Australia against non-genuine students. MD 107 doesn’t enhance that one jot. It just means that people in one enterprise, in one evidence level, get processed before those in another level. And essentially, institutions which are not in the top level will never get their visas processed. That has impacted on universities in the regions, in our metropolitan areas and in the capital cities The way in which it’s been connected to the caps is really unnecessary. MD 107, which has been acknowledged by the government as being a blunt instrument and acknowledged as something which is stymieing the economy and of higher education, it’s something that could be taken away tomorrow. It doesn’t need the passage of the legislation. It’s not reliant on caps. What we don’t know, and as an experimental scientist, we’ve conducted this experiment where we have perturbed the entire system, a 23 per cent reduction by imposition of the MD 107 and a signalling that it’s more difficult to come to Australia than ever before. We are seeing now a 23 per cent reduction. Each of our institutions which are processing under that directive are seeing reduced numbers of applications. That intervention alone has probably corrected whatever course was dreamt up to be corrected. True, it’s dreaming up and the need for caps after that perturbation is another parameter of the experiment being changed. At the same time, I would be saying take MD 107 off the table now and look at the landscape, see the damage that’s been done through that one intervention before you intervene and do a second one at the same time.

JULIE HARE: Okay, our first question is from John Ross from Times Higher Education.

JOHN ROSS: Hi, Professor Lloyd. Look, picking up a bit on Julie’s question. I, too, think Ministerial Direction 107 has probably been over maligned, because I don’t think removing it will necessarily achieve what the universities want. It’s effectively a delaying mechanism for some universities. It determines the order in which visas are processed. But to me, the bigger problem is the extraordinary number of rejections. So, something like one in five visas from applicants who want to come to universities are being rejected now on the basis that the processing officials think they can earn more in Australia than anywhere, so they won’t go home on that basis. You could knock back pretty much people from just about any country apart from maybe Switzerland and Norway and half a dozen other countries. I saw a rejection letter where somebody from Argentina had been rejected on the basis that the processing official didn’t think he’d go home to Colombia after he’d finished the course. So, to me, this is the biggest single problem that the sector faces. And it’s a huge problem for students. I don’t think it’s necessarily going to be fixed. I mean, even if this Faustian pact is accepted and we get caps instead of 107, we’re still going to have these rejections.

PROFESSOR LLOYD: I think, John, there’s multiple things in play here. You have the practice of MD 107, and you have the purpose of evidence levels in the processing of visas. The two things have been conflated and mixed up on the way through. The net result is that if you’re not in the entry for processing, you’re not going to get processed. And if you do get looked at, it’s much easier to knock you out than to let you through regardless of what the evidence levels say. We can see evidence across all of our institutions that have been impacted, institutions which have not had shonky students have had great productive students who have gone on to achieve in their institutions, return to their countries and the 16 per cent who stay in Australia have become model citizens and contributing to our economy. So, MD 107 is a very heavy-handed intervention which does prevent the processing, never mind augment the rejection. That’s the hidden hand of rejection behind the clear instruction to not process. The combination of those two things makes a system which is already struggling to be viable more accepting of what happens next.

JULIE HARE: Our next question is from Natasha Bita from The Australian.

NATASHA BITA: Hello, Professor. You are saying that universities need to be financially sustainable. Universities do receive at least $20 billion of funding from taxpayers. That’s just through the education department. How much money do you make from international students? And have you quantified how much money you stand to lose through these caps? You have described what the government is doing as shutting the borders to international students. They are still letting in 270,000 new enrolments. I don’t really interpret that as shutting the borders. So, what level would you like to see? We have some universities where 40 and 50 per cent of the students are from overseas. Is that a good way to run a university? Is that fair to the domestic students? Is it sustainable?

PROFESSOR LLOYD: Lots of questions in there, Natasha. I think that one of the key considerations here is whether or not we value an export industry which has been nurtured over decades by successive governments to derive financial benefit not just for universities but for the wider economy in Australia. And it’s an economic decision for the parties who are in government as to whether they will or won’t intervene to limit the ambition of the nation in that economic regard. And they’re making choices in that regard. How institutions enrol – we are regulated, we have a regulator called TEQSA, and TEQSA will look at the financial sustainability and the financial risks of organisations on a case-by-case basis across the 39 institutions that they regulate in the higher education sector in universities. Individual institutions should have individual missions as to how they wish to present themselves to market, both to domestic students and to international students. And in fact, the trajectory towards the implementation of the Accord will see mission-based contracts where people will agree what kind of student profiles they want to have. In the absence of the appropriate level of funding, and I can’t quantify what the appropriate level of funding is here for the aggregate of the sector, but in the absence of funding which sustains the operations of our institutions, we are compensating for the lack of core funding through private revenue and the only source of private revenue that universities have in Australia is to access international students and the fees that they bring. Every dollar, as I said, gets reinvested back in the missions of the institutions. The infrastructure in which our students are learning is built off the back of that surplus, should it ever be generated. But as I pointed out, two-thirds of the sector are in deficit. So, either we need a structural intervention to right size universities and determine how big they should be into the future, or we need to put in place the means for them to get themselves out of the hole that they’re in, or we augment the funding that comes to them from the core. One of those paths will lead to a sustainable, viable sector. In the meantime, our productivity continues to slip.

NATASHA BITA: How much money are we talking about? Everyone is saying we don’t have enough money, but we don’t know how much?

PROFESSOR LLOYD: It varies on a case-by-case basis depending on the institution. I mean, there are institutions which are in significant structural deficit which are going to require many hundreds of millions of dollars to remedy what they do. But it goes back to the mission of universities. If we want to have education and research, we need to work on the base cost of funding delivery and not the import to what it costs to teach a student, but the actual cost of attainment to graduate a student, to have them come out with the skills that we want and we wish to imbue them with. So, it is going to be significant. The costs to remedy even the JRG piece, to replace the $800 million that was lost, to replace the $2.5 billion research deficit that’s not in place. There will be significant investments needed and someone needs to prioritise that. I can call out the impacts that it’s going to have on the sector, and we can draw the line between the health of the sector and the health of the nation.

JULIE HARE: Our next question is from Maani Truu from the ABC.

MAANI TRUU: Hello, thank you for your speech. As Natasha mentioned, we have universities, some of the largest in Australia, with 40 or upwards of 40 per cent international students in their cohort. Is there any limit that’s appropriate on the number of international students that universities can enrol? And I just wanted to ask a second question as well. Jason Clare said that these caps would make the system fairer. It would redistribute international students from some of those bigger universities with higher proportions to some of the smaller ones, so they can also benefit from those fees. Do we need a mechanism to ensure that the system is fair, and those students are spread around?

PROFESSOR LLOYD: I’ll take the second part first. I don’t think there’s any evidence that says that determining that you can go to a place you don’t want to go is going to make you go to the place that you don’t want to go to. And that student choice will determine where students go, right? I don’t think the allocation of caps or the potential to enrol will change that enrolment for that student. It might allow that other institution to enrol a different student, and that might be equitable for the system, but it’s not equitable for the student who didn’t become enrolled. So, I think that’s one piece. I think if you asked 39 universities what the number should be, you will get 39 different answers. I think there needs to be a balance between the experience of the student in the classroom and the way in which the institution wants to portray itself as an Australian university, as a specialist in international education, or as an institution which is deriving revenue to drive research. And let’s accept that there is differentiation in mission and allow institutions to say how they want to be and not punish them for being successful in reaching those goals.

JULIE HARE: Thank you. Our next question is from Simon Gross from Canberra IQ.

SIMON GROSS: I’ve got a couple of observations from your speech. You said that no other export industry has been hit as hard as you. We are in a very strange or rare year where the Australian universities and WA sheep farmers are both saying they are being badly screwed by the government There’s a bit of difference. Well, you both had big, lucrative export trades that the government’s screwing down. There’s they’re going to screw it totally but it’s four years. Yours is starting to be screwed now. The support for the ban on the sheep farmers is not bipartisan support, but for the ban on or the lowering of the overseas student quotas is partisan. So, I’d like you to reflect on that. And the second observation, I am very disappointed that Greens Senator Faruqi has left because you said in your speech that HECS democratised education. And I was going to invite you to explain to the now absent Faruqi how that is.

PROFESSOR LLOYD: Okay, I’ll take the second one first. HECS enables students to attain education and defers the cost of that education until they earn enough income to pay it back. It’s an income contingent deferred loan. It makes it easy for someone to access education if they don’t have the means to access the education, and they don’t have to repay it until they reach a threshold which has been agreed by the community in terms of the way in which it is legislated. HECS means that education is put in reach of everybody. And I would view that as democratising education. As for the farmers, I feel for the farmers. I think the farmers can see what’s before them and they have mobilised exceptionally well. We are talking about the issue that we can see which hasn’t landed for us yet, but we are actually highlighting that in all cases, if you’re going to take an axe to something which is an economically relevant thing, there will be consequences. You are not going to have funded research in universities if the universities that are paying for it themselves have no means to generate that income.

JULIE HARE: Our next question is from Melissa Coade from The Mandarin.

MELISSA COADE: Hello, Professor Lloyd. Melissa Coade from The Mandarin. I’d like to ask about this idea of trust in government, and a phenomenon that many are observing of expertise and institutions being demonised as part of the corrosion of that trust in government. Is it your view that a.) universities are a victim or captured by this phenomenon and b.) in the context of how we conduct political discourse about public policy. If it’s so easy to ignore, however sensible the advocacy of groups like Universities Australia or vice chancellors are, do we need to see more experts becoming politicians instead of the other way around, like in February when Bill Shorten becomes VC of the University of Canberra?

PROFESSOR LLOYD: All right. I would love to see evidence-based decision making at play in policy determination because that, to me, is how a vibrant democracy can make good decisions. When it’s to the core of what I talked about today, when you are playing politics over policy and you have knee jerk interventions and you haven’t factored in the reality of the intervention and the consequences of intervention, you end up with all of these wonderful unintended consequences. And so, the trust in government piece is governments are elected by the people on a cyclic basis to represent their views. And what gets to the fore is the capacity to get re-elected and to continue to maintain that level of activity. Universities are not political organisations. We want to contribute to good policy. We want to contribute to evidence and data and evidence-driven decision making. When we hold up the truth as a fact and it doesn’t align with the world view of others then it gets squashed, blown up, capped, whatever it’s going to be. It’s the role of universities in a free democracy to hold up that mirror to what’s being said to us about what is truth, what is fact, and where trust should sit. And if we don’t have universities that are able to operate in that free space of intellectual rigour and academic freedom and expression to be able to say what is the truth and determine that and provide it in a non-biased, non-partisan way, then our democracy will wobble around and we will see debates of the nature that we saw just before I started talking today in the US.

MELISSA COADE: If I can elicit a bit more of a response from you, part of the bigger context of this phenomenon of trust in government eroding is because politics often now speaks to fear, emotion, beliefs, ideas that sit next to but aren’t necessarily truth or facts or evidence as you describe. Is it incumbent on groups like the ones you represent to play more of a role in winning hearts?

PROFESSOR LLOYD: Yes, I think it is, but we are up against interventions which would take the knees out from underneath the humanities faculties in our institutions, which is where this core understanding of the human condition comes from. So, the levers that are available to us are to stand in front of people and make an evidence-based case for what is needed that should be received not only by the people on the hill, but by the people who vote for the people on the hill.

JULIE HARE: Jacob Shteyman, AAP.

JACOB SHTEYMAN: Hey, Jacob Shteyman, Australian Associated Press. Professor Lloyd, you mentioned the importance of university education in supplying the skills needed to deliver the pressing economic transformations of our time. But the Job-ready Graduate scheme sharply increased fees for many supposedly jobs unready courses, largely in the humanities. Is there still value in a university education that is not vocational in nature? And should fees for courses like arts, commerce and law be reduced in a new funding model?

PROFESSOR LLOYD: How can we understand the human condition if we don’t have scholarship in the humanities? The breadth of education is not always about the application of the education in the short term. It’s about enriching the intellectual capacity of the nation so that we can ask questions. I don’t believe that we should pivot from one end of the spectrum to the other. I believe that personally. I believe that anybody who wants to attend an institution to study whatever it is they want should be supported to do that on an equitable basis.

JACOB SHTEYMAN: And so, would you like to see fees for courses reduced the new funding model?

PROFESSOR LLOYD: I’d like to see the activities we have properly funded. If someone holds up the notion of free education, the taxpayer pays for it. What we have here is an equitable distribution between the individual and the taxpayer. I think that it comes at a cost. I’d like to understand that it could be funded appropriately so that it’s not a perpetual deficit situation which creates compensation and unintended consequences.

JULIE HARE: Sorry, David, while I’ve got you on that. The other big issue around universities, which is not getting much coverage at the moment, it’s been blown out of the water by migration of student caps, is the Universities Accord. You know, there was a lot in the Accord, but most of it has been, including Job-ready Graduates, has been kicked down the road until the creation of an Australian Tertiary Education Commission that might or might not get up. We don’t exactly know what it’s going to look like. I understand vice-chancellors aren’t exactly thrilled with what it looks like at the moment. So, what we don’t know with the Accord, despite its huge ambitions, especially in terms of the proportion of students going to university, is how it’s going to be funded, how it’s going to be shaped. Have you got any clarity at all since the report landed and where we’re heading in that because the ATEC will be in place by 2026?

PROFESSOR LLOYD: I have some insight, Julie. I don’t know that I know how things are going to play out, and I don’t know that I know that legislation will land at the time it’s needed in order to give effect to the ambition of the Accord. The thing that concerns me most of all is that we have a landscape of ambition, which everyone has got a view on, that if it’s attained it will be good for Australia. It does come, as I said, with a cost. The cost could partially be offset by not introducing international student caps, by releasing MD 107. It will be a partnership between institutions and government. The government is a contributor to the cost of higher education funding. It’s not the sole funder of higher education in Australia. The beneficiaries are the Australian people. The Accord has got so many good things in there all across the horizon which is going to survive successive governments and changes of governments if we get the bipartisan commitment to enact this plan. That level of foresight has been absent for over a decade that I have been here in Australia. And if we can cement that and the commitment to engaging with our institutions in a constructive way, not an interventionist, perpetually destructive way and stabilise the ship, I think we’ll get the dividends we need.

JULIE HARE: Thank you. Nick Stuart from Ability News.

NICK STUART: You made the point that students are only marginal in terms of the need for housing in Australia, a marginal addition to the pressure. I know the ANU has built a lot of student housing. Sydney University, on the other hand, in 2020 closed down International House for university students. It has only, despite the urgings of former members of International House, former residents, there’s only one meeting that the university has held to actually try and get that house rebuilt again to provide extra student accommodation. The university, on the other hand, is sitting on $1 billion of investible funds. It’s doing nothing. Can you understand how ordinary Australians feel? Absolutely fed up with these continued excuses about how we need more international students to come here, when the universities are not investing in housing and residences themselves?

PROFESSOR LLOYD: I think you have given a very single case of the performance of an institution, and the institution is not here to respond to the question. I think that what I’m trying to advocate here is not about the…

NICK STUART: So, if that was correct, would you condemn Sydney University? Because I am quite happy to state that those facts are correct.

PROFESSOR LLOYD: Why would I stand in front of the Press Club and you as my inquisitor and condemn a member institution of Universities Australia? I have no evidence and no basis of fact on which to do so and nor would I choose to do so at this time.

NICK STUART: So, we’re hoping that the universities will spend more money on building residences. As I said, ANU actually has.

PROFESSOR LLOYD: Nick, I can tell you that every building in Australia’s universities has got a component of international student revenue in the bricks that are holding it up. The Education Investment Fund, which was designed to provide things like residences and laboratories and concert halls for the humanities and arts, was taken away many years ago and the compensatory measures have been the investments made by universities. How universities prioritise that is a matter for the individual institutions.

NICK STUART: And sorry, just one last point. As you mentioned this, the Rotary Clubs of Sydney actually contributed to the building of International House at Sydney University. It wasn’t done by the university. At what point will the university actually invest in the regeneration of that housing?

PROFESSOR LLOYD: Nick, all I can do is refer to what I talked about today, the importance for bipartisan support and supporting universities to prosper for the success of the nation.

JULIE HARE: Thank you. Angelica Waite from SBS.

ANGELICA WAITE: Minister Jason Clare this morning said of the cap system the origins of this are universities coming to me earlier this year saying, can you put in place a better and fairer system? Firstly, are you aware of universities asking Jason Clare for caps or any changes more broadly? And secondly, what would a better and fairer system look like if not caps as Jason Clare suggests?

PROFESSOR LLOYD: I think the most important piece there is that the institutions approach the Minister looking for a better and fairer system. That was in the context of Ministerial Direction 107, which was please stop doing this to us because our institutions will fail. Whether caps are the best and fairest alternative to that imposition, I would say that they are probably not. I think that a managed growth implementation deferred to 2026 and not implemented straight away in 2025 will be another fair way to do this. And the creation of an ATEC which can have nuanced and balanced conversations about the composition of universities across the entire sector, from going forward from 2026, will be a way to arrive at that without the imposition of caps at this time, and cognisant of the fact that the damage has already been done for the last nine months.

ENDS