1. May 26 2014 Professor Peter Noonan Professorial Fellow, Mitchell Institute Victoria University Honorary Fellow LH Martin Institute Graduate School of Education The University of Melbourne Global and National Trends: Policy Decisions and Impacts on Vocational and Higher Education The need for a new tertiary education financing framework

2. Current issues in tertiary education financing Three major unresolved policy challenges: – Divergent approaches and implementation of entitlement concept – Growing gap in investment and enrolment growth between VET and higher education – Growing gaps in entitlement models between states in VET Broader policy context – Reconceptualising tertiary education – Federalism reform process – Review of VET entitlement

3. Mitchell Institute Tertiary Funding Project Phase one report http://www.mitchellinstitute.org.au/reports/financing- tertiary-education-in-australia-the-reform-imperative-and-rethinking-student-entitlements – Rationale – Principles – Key elements – Financing framework – Modeling scope and methodology – Next steps Phase two report – Modeling outcomes – Final design and implementation – Mid June release

4. Problems with current tertiary funding model Differential treatment of students; Inconsistency in eligibility, subsidies and fees Inconsistent access to income contingent loans Inconsistent access to student income support Widening investment gap between higher education and VET; Growing gap in per student funding levels; Potential distortion of student choice; and Diminished overall effectiveness of the tertiary education system.

5. Expenditure on education and training in Australia, 2003-4 to 2012-13

6. Compound change in VET Expenditure, 2003-4 to 2012-13

7. Projected participation rates (when enrolments kept constant at 2013 level)

8. The proposal Coherent approach to tertiary education policy – Tertiary education defined as Certificate III and above – Certificate I and II defined as pre-tertiary Commit to a coherent tertiary entitlement model through COAG Each level of government takes specific responsibility for a specific set of qualifications – Commonwealth degrees and sub degrees – States fund certificate III and IV Extend ICLs to all tertiary qualifications under a single scheme – Will require major rethinking of ICL design

9. Commonwealth and State funding responsibilities by AQF level

10. Key issues Eligibility for entitlement – 18-24 year olds or working age population – Funding still available outside of the entitlement Design and relationship between subsidies and fees Extension of ICLs and settings – outcomes of modeling – financial sustainability essential Need for proper modeling of future demand requirements