Private colleges the only way to get to O’Kane’s big target

In essence, private providers can be part of the solution, but how? The answer is in one of the interim report’s own recommendations – a student-centred funding model.

This presents Australia with a golden opportunity to implement a revolutionary change to the funding of higher education, and vocational education. It would boost our productivity and make us a world leader in reform.

One for the taking

This is not a new concept. It has been raised by numerous reviews into the education sector over the past 15 years.

In an era when governments are seeking out policies that will enhance Australia’s productivity via economic reform, here is one for the taking.

Over recent decades, Australia has successfully transitioned to more equitable funding models in key social welfare programs. These include Medicare, childcare funding, the National Disability Insurance Scheme, and school funding – all of which have shifted from provider-directed funding to a more equitable approach that focuses on the ultimate beneficiaries – students or patients. It is time we apply this logic to higher education funding as well.

To unlock the benefits of a student-centred funding model, the government should allow domestic students to determine where they study in a provider-neutral way, on the proviso that they are delivering relevant courses in national priority fields. If that is then extended to the Vocational Education and Training sector, that will be enormous reform.

Every major developed nation is wrestling with the problem of how to better integrate higher education and vocational sectors. The introduction of student-centred funding is the answer to that conundrum. It allows the student to decide what is in their own best interests. If you do that, the so-called parity of esteem problem, where VET is looked down on as a second-rate education option, is also solved, as the matter will be resolved by student choice.

Australia would become the world leader in resolving what has been described as a wicked problem. But to be a world leader we need to act fast as other countries, such as the UK, have stolen a march on us.

The O’Kane review proposes a student-centred funding model, via a universal learning entitlement (ULE), which champions diversity, inclusivity and would have productivity dividends. A ULE would provide “an appropriate combination of a public subsidy and a student contribution that would be paid through and an income-contingent loan, as in the current HELP scheme.”

And such a reform would not simply help address our productivity demands.

One of the key benefits of a student-centred funding model is the potential to improve access to higher education for students from lower socioeconomic backgrounds. By allocating funding based on student needs and preferences, rather than institutional priorities, this model can help to level the playing field and ensure that all students have the opportunity to pursue their educational and career goals.

Indeed, the O’Kane review has already acknowledged the logic behind this by arguing for a demand-driven model for Indigenous students, whether they live in the bush or in metropolitan areas.

This is a reform that speaks to Australia’s future.

Peter Hendy is chief executive of the Independent Higher Education Association.