Higher Education Funding Report
for the 1997-99 Triennium

Minister for Employment, Education, Training and Youth Affairs

Senator the Hon Amanda Vanstone

March 1997

Department of Employment, Education, Training and Youth Affairs©

Contents

Glossary of Abbreviations

  1. Introduction
  2. An Overview

3. Other Significant Issues in 1996

4. Operating and Related Grants

5. Capital Development Pool Funding

6. Research

High Performance Computing and Communications

Appendix 1 Higher Education Institutions

Appendix 2 Cost Levels

Appendix 3 Other Relevant Government ReportsTables and Figures

Glossary of Abbreviations

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ACTA Australian Credit Transfer Agency
ANAO Australian National Audit Office
APA Australian Postgraduate Award
APA(I) Australian Postgraduate Award (Industry)
APDRF Australian Postdoctoral Research Fellowship
ANU Australian National University
ARC Australian Research Council
AVCC Australian Vice-Chancellors' Committee
AWE Average Weekly Earnings
CAF Cost Adjustment Factor
CAUT Committee for the Advancement of University Teaching
CDP Capital Development Pool
CP Competition Principles
CI Composite Index
CIPS Commonwealth Industry Places Scheme
CMC Co-operative Multimedia Centres
CPI Consumer Price Index
CQAHE Committee for Quality Assurance in Higher Education
CRC Co-operative Research Centre
CUTSD Committee for University Teaching and Staff Development
DEETYA Department of Employment, Education, Training and Youth Affairs
EFTSU Equivalent Full-time Student Unit
HEC Higher Education Council
HECS Higher Education Contribution Scheme
HEEP Higher Education Equity Program
HEIP Higher Education Innovation Program
HPCC High Performance Computing and Communications
IAS Institute of Advanced Studies
LCI Labour Cost Index
OECD Organisation for Economic Co-operation and Development
OLA Open Learning Agency of Australia
OLDPS Open Learning Deferred Payment Scheme
OPRS Overseas Postgraduate Research Scholarship
OZJAC national courses and careers information system
RIBG Research Infrastructure Block Grants Program
RIEF Research Infrastructure (Equipment and Facilities) Program
RQ Research Quantum
SG Superannuation Guarantee
SNA Safety Net Adjustment
SRF Senior Research Fellowship
TAFE Technical and Further Education
TER Tertiary Entrance Ranking
TMUI Treasury Measure of Underlying Inflation
UNS Unified National System

1. Introduction

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Purpose of the Report

The purpose of the report is to:

Background

Following the change of Government in March 1996, a Higher Education Budget Statement was prepared and released on 9 August 1996 in the context of the Government's 1996-97 Budget. The package of measures announced in the Statement is designed to contribute fairly to the Government's savings task, while advancing key objectives for the higher education sector and setting the framework for the future development of the sector. There are six major, integrated elements of policy:

Structure of the Report

The structure of the report broadly follows the above six themes, as well as providing specific information on major issues in 1996, operating and related grants, and capital and research funding to individual institutions for the 1997-99 triennium. This report is designed as a stand alone document, although it may usefully be read in conjunction with the Higher Education Budget Statement of 9 August 1996.

A list of institutions for which funding information is contained in the Report is at Appendix 1. The list comprises institutions funded under the Higher Education Funding Act 1988.

Technical Note: Cost Levels

Amounts in the Overview Section are expressed in 1996 Budget prices except Table 2.1 and Table 2.5. All amounts for 1996 are expressed in 1996 outturn (that is, current) prices. All amounts for 1997 onwards are expressed in estimated 1997 outturn prices. The relative cost adjustment factors can be found in Appendix 2.

2. An Overview

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1996-97 Budget and Related Matters

Australian higher education has undergone rapid expansion of funding and student numbers in recent years. Consistent with pressures in all OECD countries to restrain expenditure, there is pressure in Australia both to restrain expenditure and to address the issues of quality arising from the rapid expansion of the sector. Furthermore, demand for higher education has fallen for the last three consecutive years and the relevant population group is declining. The 17-24 year old population from which 70 per cent of undergraduate students are drawn, will decline by 3 per cent over the period 1996 to 1999.

The Government's funding package for higher education for the years 1997 to 1999 is both fiscally responsible and sensitive to the educational objectives and the planning horizons of the higher education sector.

The Budget measures cover short, medium and long term issues. The short term issues address urgent policy matters and the deficit reduction task. However, the Government has not been driven solely by fiscal concerns and has timed the savings measures having regard to the planning timetable for higher education institutions and to minimise the impact on universities in the first year.

In the medium term the Government is keen to reform some policy and administrative arrangements to enable institutions to respond more flexibly to their dynamic environment. Such matters include the overly complex regulatory mechanisms of State and Commonwealth governments which have led to duplication, inefficiencies and inappropriate bureaucratic constraints and workplace practice and organisation which restrict the ability of individual institutions to respond optimally to their environment and special circumstances.

For the longer term, the Government has identified a range of fundamental issues which have the potential to re-shape the higher education system. These are issues which are relevant to the next two decades and therefore extend far beyond the period of the Budget forward estimates. Accordingly the Government has established a process of policy review with a focus set on the future of higher education over the next ten to twenty years.

Responsible Levels of Funding for Teaching and Research

Table 2.1 summarises the total funding available to the higher education system for the years 1996-99 through the Employment, Education, Training and Youth Affairs portfolio.

Commonwealth funding for higher education (both operating grants and research) will increase by $51.1 million in 1997. It will be $8.1 million below the 1996 level in 1998 and $22.5 million below that level in 1999. Figure 2.2 illustrates expenditure on higher education for the 1996 Budget estimate period against 1995-96 expenditure levels. These levels are below previously announced levels by the order of 1 per cent, 3 per cent (a cumulative total of 4 per cent) and a further 1 per cent (cumulative 4.9 per cent) for the years 1997, 1998 and 1999, respectively.

These phased efficiency dividends in operating grants are made in a period when demand for higher education has fallen for the last three consecutive years and when the relevant population group is declining. The 17-24 year old population, from which 70 per cent of undergraduate students are drawn, will decline by 3 per cent over the period 1996 to 1999.

The specific funding details for operating grants and research are:

1997

1998

1999

Operating Grants

  • an increase in operating funds of 28.7 million or 0.6 per cent over 1996 levels;1

  • operating funds will be $58.1 million or 1.2 per cent below 1996 levels;

  • operating funds will be $62.5 million or 1.3 per cent below 1996 levels;

Research Funding

  • funds for targeted research programs will rise by $22.4 million, an increase of 5.8 per cent over the 1996 level.

  • funds for targeted research programs will be $50 million or 13 per cent higher than the 1996 level.

  • funds for targeted research programs will be $40 million or 10.4 per cent higher than the 1996 level.

1 Calculation of variation based on operating grants net of advances, repayments of advances or one-off reductions in grants.

Operating Grants

The reductions to previously announced increases to operating grants will be realised by applying a fixed proportional reduction to the forward estimates of the operating grant of each institution. All components of the operating grant will be affected, including the Research Quantum (RQ) and the capital 'roll-in' components. Under this approach:

The operating grant details for each institution for the 1997-99 triennium are set out in Chapter 4.

Research Funds

As indicated above, total funding for research over the three years 1997-1999 will increase by $91.5 million for research infrastructure and $39.1 million for Australian Postgraduate Awards and Collaborative Research Grants.

In 1996 total Government support for targeted higher education research programs is $386 million. This will rise by $22.4 million in 1997 and a further $27.6 million in 1998. The previous forward estimates for 1999 incorporated a fall of $29.1 million for research funding. This will be more than offset by an increase of $69.1 million for research being funded by the Government in 1999, a net increase of $40 million over 1996 levels, but a reduction of $10 million on the newly increased level of resources available in 1998. Through these increased funds:

The research funding allocations for each institution for 1997 and 1998-99 (where applicable) are set out in Chapter 6.

Adjusting to Change

To assist institutions to adjust to the changed operating environment for the 1997-99 triennium, the government has established a more flexible policy approach. Specifically the Government will:

Advance Payments of Operating Grants

The 1996 Budget statement foreshadowed that the Government has amended the Higher Education Funding Act 1988 to provide a limited capacity for advances of operating grants to assist institutions with the cash-flow implications of structural adjustment aimed at enhancing efficiency in the higher education sector. This amendment to Section 20A of the Act widens the existing facility to provide for payments to be made in any year and allow such payments to be made for purposes other than redundancy expenses, provided the advances fall within the general definition of grants for operating purposes paid under sections 15 and 16 of the Act.

Ministerial guidelines, effective from 1 January 1997, will set out the purposes for which institutions may apply for the advances. In summary, advances may be provided to:

All applications will be subject to Ministerial approval and, unless otherwise agreed by the Minister, it is expected that repayments will commence within one calendar year following receipt of the advance. The maximum total amount of advances available sector-wide will be $25 million in any calendar year (in estimated outturn prices).

A Fair Balance between Public and Private Funding

Higher Education Contribution Scheme (HECS)

Since 1989 when the Higher Education Contribution Scheme was introduced, all Australian undergraduates have contributed an equal amount per year towards the cost of their courses, regardless of the actual costs of the course or its likely benefits in terms of the future earnings of the individual.

On average, in 1996 the HECS contribution represents about 23 per cent of the cost of the higher education course, although the proportion of the actual course cost varies between 36 per cent for arts to 13 per cent for medicine. While it is difficult to quantify the private benefits of being a university graduate, it is clear that they are substantially greater than the notional level implied by the current HECS charge, and are greater for some disciplines relative to others.

The Government therefore believes that a higher level of HECS is justified and that in setting the level of the charge, consideration should be given to both the actual cost of the course undertaken and the likely future benefits to the individual in terms of increased life-time earnings.

The major change is the introduction of three contribution levels which are based on the actual cost of the course undertaken, the likely future benefits to the individual and student demand. The new charges will only affect students commencing a course of study after l January 1997. Students who commenced their course of study prior to 1 January 1997 will contribute under the current, single HECS contribution. The new differential HECS charges are presented in Table 2.3.

The new differentiated contributions are to be applied on a 'unit of enrolment' basis. Therefore, the total HECS liability incurred by a student depends on the discipline of specific units of study undertaken and each unit's student load weighting. The Government decided not to differentiate on the more broad basis of course as it wished to avoid, as far as possible, the anomaly of students undertaking the same units of study but enrolled in different courses contributing at a different HECS contribution rate.

The Government has provided extra funding of $5.3 million in 1996-97 and $2.5 million in subsequent years to assist universities make the administrative changes necessary for the implementation of the new differentiated HECS contributions.

The Government also decided to lower the income thresholds at which payments commence and at which higher rates of payment are required. This change means that individuals who defer HECS will pay their contribution more quickly, but there will be no increase in the level of their contribution. The current discount for payment at the voluntary threshold will be discontinued. The existing discounts for upfront payment (25 per cent) and voluntary payments of $500 or more at any time (15 per cent) remain. The payment thresholds are to be reduced from 1997-98 as shown below. A significant amendment was made to this measure by the Senate, allowing exemptions from repaying HECS for people in receipt of the Medicare Levy exemption or reduction, due to low family income. See Table 2.4 for details of the new HECS payment thresholds.

In making changes to the HECS arrangements the Government will retain the essential features of HECS to ensure that no qualified student is prevented from entering higher education because of his or her inability to pay at the time of enrolment. Students will continue to be able to defer their HECS contribution until they have the capacity to pay and the loan they receive from the Government will remain interest-free in real terms. Nor will any existing student have an unanticipated increase in the cost of their current course. Repayment periods for graduates with typical earning patterns under the new HECS arrangements will range from 6 to 9 years.

Greater Diversity, Choice and Opportunity

In the 1996 Budget the Government announced measures to encourage greater diversity, choice and opportunities for domestic students. At present, higher education institutions may charge fees for postgraduate and overseas students but not for domestic undergraduate students. Under current funding arrangements, higher education institutions are provided with funding to enrol an agreed target number of domestic undergraduate students. If they enrol more than this number, they receive no additional funding, even though the Commonwealth receives HECS payments from the students. Measures announced in the Budget to commence 1998 will give higher education institutions the flexibility to enrol fee-paying domestic undergraduate students and will return HECS contributions to institutions which increase their enrolments of HECS liable undergraduate students above their agreed target levels.

Fee-paying Opportunities for Domestic Students in Undergraduate Award Courses

From 1 January 1998, higher education institutions may offer places to domestic undergraduate students for a fee payable directly to the institution. However, to ensure that opportunities for access and entry to courses on a HECS liable basis are maintained, the Higher Education Funding Act 1988 requires that, before fee-paying places are offered:

The Minister will issue guidelines under the Higher Education Funding Act 1988 which will set out these specific requirements and other conditions which institutions must comply with in offering fee-paying places. Those conditions are that:

Financial penalties will apply where a higher education institution enrols fee-paying students but fails to meet its undergraduate HECS liable target load. For each fee-paying EFTSU which could have been made HECS liable and counted towards target, a funding penalty will be applied at the rate of the average undergraduate teaching grant ($9 000 in 1998).

Under these arrangements, higher education institutions will not be able to substitute fee-paying places for HECS liable places, nor will they be able to move entire undergraduate courses onto a fee-paying basis. Institutions will be able to increase the number of their fee-paying students beyond the limit imposed by the 25 per cent cap only by increasing the number of their HECS liable students at the same time-such an increase would have to occur in a ratio of three HECS liable students to every additional one fee-paying student. The only exception to this new measure is Medicine where, for health policy reasons, the Government wishes to limit the number of medical graduates.

Provision for Over-enrolment where the Number of Commonwealth Funded Places Exceeds Target Levels

From 1998 higher education institutions will be paid the equivalent of the minimum up front differential HECS payment for each HECS liable undergraduate student enrolled above the target level. This will provide some recognition of the costs incurred by institutions which over-enrol. It will also present an opportunity for institutions with very low marginal costs to offer additional places to undergraduate students without charging fees.

Correspondingly, the Commonwealth will reduce higher education institutions' funding by the equivalent of the minimum up front differential HECS payment for each EFTSU that institutions fall short of their agreed HECS liable undergraduate target.

As part of the overall package of policy improvement, the Government will also provide greater flexibility to institutions to offer ancillary services to students on a fee-for-service basis. There will be no departure from the existing principle that all undergraduate students (other than fee-payers) should be able to complete the compulsory requirements of their courses without facing fees. However, the Government will issue guidelines to clarify circumstances in which institutions may charge for incidental or additional services.

A New Approach to Quality Assurance and Improvement

In May 1996, the Minister allocated $50 million to universities in accordance with the recommendations made by the Committee for Quality Assurance in Higher Education (CQAHE) in its report of the third round of reviews conducted in 1995. The focus of the final round was research and community service. Details of the institutional allocations are set out in Table 4.11.

The CQAHE, which had been established to conduct quality reviews of universities, ceased operation on 31 December 1995, on completion of three rounds of reviews covering university activities of teaching and learning, research and community service.

In the Higher Education Budget Statement August 1996, the Government announced a new approach to quality assurance and improvement. The defining features of the new approach will include the following:

While the new approach will emphasise the development and operation of quality improvement processes at the institutional level, the Commonwealth Government is concerned to ensure that both the Australian and international student community are confident in and fully informed about the quality of institutions.

For this reason, the Government announced its intention to give responsibility to an independent agency to guide the development of the new approach to quality assurance and improvement; to ensure appropriate levels of rigour and comparability in the application of the new approach; and to report publicly on institutional quality assurance outcomes.

Consultation between the Department and the Australian Vice-Chancellors' Committee has indicated support for the Higher Education Council being accorded responsibility for quality improvement in higher education.

Final decisions on the implementation of the new approach will be outlined early in 1997.

Teaching Enhancement and Staff Development

Committee for University Teaching and Staff Development

The Committee for University Teaching and Staff Development (CUTSD) was established in July 1996 to encourage practical improvements in teaching practice in higher education, to identify and promote good practice, and to encourage and provide staff development opportunities for academic and administrative staff.

This Committee will continue the work of the former Committee for the Advancement of University Teaching (CAUT), whose term expired at the end of 1995, and the Commonwealth Staff Development Fund. The principal tasks of the Committee are to make recommendations to the Minister for Employment, Education, Training and Youth Affairs under the provisions of the Higher Education Funding Act 1988, on the funding of:

The Committee has been provided with a budget of $20 million over three years. Professor Ingrid Moses has been appointed as Chair of the Committee and the remainder of the membership of the Committee is expected to be announced in early 1997.

During 1996, the Government established an Ad Hoc Selection Committee to progress the assessment of the 1997 National Teaching Development Grants. The Ad Hoc Selection Committee made its final selection of grants at the end of October. From the 480 applications received for the 1997 National Teaching Development Grants, 88 were funded to the value of $3.8 million. National Teaching Development Grants for 1997 are set out in Table 4.12.

A Commitment to Equity

The unique deferred payment, income contingent, interest-free characteristics of the Higher Education Contribution Scheme (HECS) are internationally recognised as an effective means of achieving equity of access to higher education while ensuring that students contribute fairly to the cost of their higher education. The Government is committed to preserving HECS as the principal means for ensuring access to publicly funded higher education places. However, other specific measures are needed to complement HECS to facilitate access by the widest range of students.

Higher Education Equity Program

The Higher Education Equity Program (HEEP) provides annual funding of $5.37 million to institutions to assist them in providing appropriate programs for the following six equity target groups: students with a disability; people from socio-economically disadvantaged backgrounds; women in non-traditional areas of study and postgraduate courses; people from rural and isolated areas; people from non-English speaking backgrounds; and Aboriginal and Torres Strait Islander students. The groups, which were identified in 1990 as being disadvantaged in their access to higher education, were confirmed in the Higher Education Council's report, Equality, Diversity and Excellence: Advancing the National Higher Education Framework, which was published in April 1996. Indigenous students are also supported by separate funding amounting to $21 million annually.

In 1995 a three-year trial commenced aimed at collecting data on the access, participation, success and retention of each equity target group using standard definitions and equity performance indicators described in the 1994 report, Equity and General Performance Indicators in Higher Education.

Institutional allocations are determined following an assessment of institutions' performance as well as their equity plans and Aboriginal and Torres Strait Islander education strategies. The extent to which equity planning and practice are integrated throughout institutions and the strategic and analytical basis by which equity targets are established are taken into account in such an assessment.

The Regional Disability Liaison Officer (RDLO) initiative, which was funded for three years from 1994 and through which the provision of services for students with disabilities across higher education and TAFE institutions is coordinated, will be extended by another year, at a cost of $750 000.

Co-operative Projects for Higher Education Students with Disabilities, for which funding has been earmarked under HEEP since 1991, is currently being evaluated by the Department. The report of the evaluation is expected to be available early in 1997.

As the allocation of the new merit-based equity scholarships (see below) needed to be taken into account in developing equity plans, the deadline for submission of the plans has been extended until mid-February 1997. As a result, HEEP allocations are not announced in this report. It is anticipated that an announcement will be made in April 1997. Payments under HEEP for 1997, however, will commence as part of the normal payments to institutions based on 1996 HEEP allocations. Any adjustments necessary after the final allocation of 1997 funds will be made in the latter part of the year. 1996 Higher Education Equity Program allocations are provided in Table 2.5.

Merit-based Equity Scholarships Scheme

From 1997, a new system of merit scholarships will be introduced to further encourage the participation of equity groups. At a cost of $36.38 million over the next four years, and an annual commitment of $16.13 million from 1999, 1 000 EFTSU each year will be fully exempted from the HECS charge. The average duration of the scholarship will be four years, so the total pool of scholarships will build to 4 000 EFTSU by the year 2000. This is in addition to the Higher Education Equity Program (HEEP), described above, which provides $5.28 million in incentive funding to institutions to achieve improved outcomes for students from equity target groups. The allocation of scholarships on an EFTSU basis means that the total number of people to benefit will be more than 1 000 commencers in any one year and more than 4 000 by the year 2000.

These scholarships will be awarded by universities to commencing students within their equity target groups, allocated on the basis of merit as determined by the university. Scholarship recipients must be non-overseas undergraduate commencing students belonging to one of the designated equity groups (indigenous Australians, women in non-traditional areas, people with a disability, people from non-English speaking backgrounds, people from rural and isolated areas, and people from low socio-economic backgrounds). Students awarded scholarships are exempted from liability under HECS for the duration of their scholarship, regardless of whether they study on a full-time or part-time basis.

Though the Department sets broad guidelines for the scheme, each institution is responsible for developing its own administrative guidelines and for awarding the scholarships, on the basis of merit, to suitable applicants. The definition of merit is to be determined by each institution, having regard to the academic potential and level of disadvantage of applicants.

Table 2.6 shows the allocation of equity scholarships to each higher education institution for 1997.

Indigenous Higher Education

The number of indigenous higher education students increased by 2.2 per cent from 6 805 in 1995 to 6 956 in 1996. This total represents 1.1 per cent of all higher education students. Aboriginal and Torres Strait Islander students continue to be under represented in many disciplines and in post-graduate study. Success and retention rates for indigenous students are also about 20 per cent lower than for other students.

The Minister for Employment, Education, Training and Youth Affairs, Senator Amanda Vanstone, on 9 August 1996 announced that the Government had committed $72 million over the next three years for Aboriginal and Torres Strait Islander higher education.

The components of the $72 million package are:

Aboriginal and Torres Strait Islander Support Funding

Separately identified support funds are provided to higher education institutions to meet the special needs of Aboriginal and Torres Strait Islander students and to advance the goals of the National Aboriginal and Torres Strait Islander Education Policy (NAEP). As part of the funding arrangements, institutions are required to establish targets for indigenous students participating in higher education and to develop Aboriginal and Torres Strait Islander education strategies.

Support funding of $21.5 million for indigenous higher education will be provided in 1997 as included in Table 4.13. This maintains the level of support funding which was announced as part of the Commonwealth's response to the National Review of Education for Aboriginal and Torres Strait Islander Peoples.

The allocation of support funds for 1997-99 is based on an assessment of institutions' Aboriginal and Torres Strait Islander Education Strategies, including load targets for indigenous students, and on institutional performance in relation to student outcomes, particularly in terms of success and retention. This method is consistent with the findings of an independent review of support funding which was commissioned by the Commonwealth in 1995.

The previous Government issued the Higher Education Council (HEC) with a formal reference in December 1995 asking it to examine the existing arrangements of Commonwealth funding to higher education institutions in respect of indigenous higher education students. The new Government has confirmed the reference and the Council is expected to report in early 1997.

A More Strategic Relationship between the Commonwealth and Institutions

Given the size of the public investment in higher education, the Government clearly has an important responsibility to set the broad policy goals it wishes to pursue through this investment. It expects to do so, however, through the development of a strategic relationship between the Commonwealth and the universities that recognises the autonomy and individual circumstances of each institution. This will primarily be achieved by a better integration of accountability requirements with institutions' own internal planning processes. The Commonwealth's objective is to secure high quality outcomes for the public investment in higher education while limiting its own direct role in the management and delivery of specific purpose programs and streamlining reporting and accountability requirements for institutions.

This objective is reflected in new approaches to the Government's advisory structures, its role in industrial relations issues, its direct interactions with universities through the profiles and accountability processes and is also the basis for the wide ranging and high level review which is to be conducted during 1997 and which will focus on the long term future of the sector.

Enhanced and Revised Advisory Structures

The Higher Education Council (HEC) and the Australian Research Council (ARC) will be established as independent bodies with an increased range of responsibilities. In July 1996 the Government introduced an Amendment Bill into Parliament to wind up the National Board of Employment, Education and Training, one of the effects of which is to increase the autonomy of the ARC and the HEC, allowing them to provide advice directly to the Government.

At about the same time, the Government released a discussion paper on the HEC and the ARC which examined how their functions and responsibilities could be enhanced. The results of the associated consultation process will be incorporated into the legislation to be introduced into the Parliament as soon as possible.

Industrial Relations

Industrial Relations is an area in which the respective roles of the institutions and the Commonwealth will be moved to a more sustainable basis. Institutions are encouraged to take responsibility for their own workplace practices and to make the best possible arrangements for their own individual circumstances. Institutions will be assisted in achieving this by the passage of the Government's Workplace Relations Bill.

The Government is not the employer of persons working in the higher education sector, nor is it the sole source of funding. The Government has therefore stressed it is not a direct party in industrial disputes within the higher education sector. It is primarily up to the institutions to resolve disputes on salaries and conditions. The Government believes that in all sectors of the economy, sustainable salary increases can only be achieved through genuine productivity improvements at the enterprise level.

The Government does not intend to provide any across-the-board supplementation for salary increases in the higher education sector. The Government does note, however, that there are some significant barriers to effective and genuine enterprise bargaining in the higher education sector relating to existing national agreements and the history of centralised wage determination. The Government has made it clear it will examine proposals for some limited assistance for individual institutions where that assistance is essential to secure major workplace practice breakthroughs at the enterprise level.

Profiles and Accountability Processes

The Government's objective with regard to accountability and reporting requirements for institutions is to simplify procedures, reduce needless reporting and data collection and move to a process whereby institutions are accountable for the goals articulated in their own strategic plans. Within the broad parameters set by the Government's policy goals, institutions will be provided with as much flexibility to pursue their own goals as is possible, while maintaining accountability for the use of public funds.

The Government has consulted with the sector on the best way to integrate the activities of:

From 1997, the 'new to higher education target' will be abolished. In practice this has proven to be an unnecessary duplication of the undergraduate target (which will be maintained) and poses an administrative burden on institutions. (See paragraph below for further detail).

In 1997 and 1998, the Government will also be prepared to allow institutions some flexibility in meeting student load targets where it can be demonstrated that any shortfall arises from genuine declines in student demand.

Review of Reporting Requirements

The Government has initiated a review of all reporting requirements to ensure that necessary accountability requirements are met without unwarranted complexity, frequency or duplication. The review will include, in consultation with the State government authorities, consideration of the reporting requirements placed on institutions by levels of government other than the Commonwealth. The review will encompass the inputs to the composite index used for the distribution of the research quantum to ensure that the level of detail and the frequency of collection are necessary for the purpose.

Review of Higher Education Financing and Policy

In addition to the set of measures outlined in this report for the 1997-99 triennium there is a range of medium and long term challenges confronting the sector on a global scale. The new forces shaping the future environment for higher education need to be examined in a considered and comprehensive way if the sector is to meet the challenges and opportunities over the next two decades. These fundamental issues include:

The Government, therefore, will establish a major, independent review of higher education policy with a focus set on the future of higher education over the next ten to twenty years.

3. Other Significant Issues in 1996

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Competition Policy

The national competition policy agreed between Commonwealth, State and Territory governments on the 11 April 1995 establishes a number of legislative reforms and processes and principles for future reforms. All industry sectors, including higher education, are included in the scope of the reforms.

The principles and processes (set out in the inter-governmental Competition Principles (CP) Agreement to which the Commonwealth, States and Territories are parties) establish a framework for future reforms focussing on competitive neutrality, the structural reform of public monopolies and existing legislation which is anti-competitive. These reforms are concerned with the significant business activities of government owned organisations. Benefits expected from the new regime include greater innovation, increased growth and more jobs.

Each jurisdiction published a policy statement on competitive neutrality in June 1996 as required by the CP Agreement. The policy statements include timetables for implementation. Each government is concerned with organisations within its jurisdiction. All jurisdictions have identified universities as such organisations while recognising their basic community service obligations.

The agreement requires Governments to:

(a)adopt a corporatisation model for Government business enterprises which are trading or financial enterprises;
(b)impose on those enterprises:

(i)

full Commonwealth, State and Territory taxes and tax equivalent systems;

(ii)

guarantee fees directed towards offsetting the competitive advantages provided by Government guarantees; and

(iii)

those regulations to which private sector business are normally subject; or
(c)where an agency is not a trading or financial enterprise but undertakes significant business activity to:

(i)

implement the above principles, where appropriate; or

(ii)

ensure that the prices charged for goods and services will take account, where appropriate, of the items referred to above, and reflect the cost of attribution.

Currently, the higher eduction sector is a restricted market and there is, essentially, a competitively neutral regime applying to the 36 publicly funded universities. This is because:

The method of regulation of entry into the market, and Commonwealth funding methods are current issues for competitive neutrality. Accordingly, the fundamental structure of the higher education sector will be addressed by the review of higher education financing and policy to be undertaken in 1997. The examination of structural issues will encompass Commonwealth funding methods and is also likely to cover the regulation of entry.

The Commonwealth and the States and Territories are currently negotiating to ensure that jurisdictions do not introduce the principles differentially resulting in institutions in one jurisdiction gaining competitive advantage over institutions in other jurisdictions. A concurrent timetable of implementation is also being sought. The Higher Education Division is also liaising with implementing bodies to ensure that implementation does not cut across the Commonwealth higher education program objectives.

Another requirement of the CP Agreement is that each jurisdiction review its legislation to ensure that it does not restrict competition unless it can be demonstrated that the benefits of the restriction to the community as a whole outweigh the costs and the objectives of the legislation can only be achieved by restricting competition. A review of the Higher Education Funding Act 1988 will form part of the review of higher education.

Amendments to the competitive conduct rules in the Trade Practices Act 1974 (TP Act) have extended their coverage to all business activity in the economy and some enhancements to the prices oversight regime set out in the Prices Surveillance Act 1983 have also been made. The amended provisions of the TP Act came into force in July 1996. There is provision for protection from prosecution for breach of the TP Act where it is in the public interest. The provisions require that parties involved or their peak bodies apply to the Australian Consumer and Competition Commission for protection.

Australian Credit Transfer Agency (ACTA)

The Australian Credit Transfer Agency (ACTA) was phased in from July 1995 with substantial funding from the Commonwealth. The Agency is a wholly-owned subsidiary of the Australian Vice-Chancellors' Committee (AVCC) and is managed by a Board appointed by the Committee. In 1996 the Commonwealth allocated $600 000 for both the establishment of ACTA and its recurrent costs to the end of 1996. In addition, approximately $67 000 was provided to assist with the assessment of uncredentialled prior learning of those who are economically disadvantaged.

ACTA was to have provided a service for enquirers who sought advice on the national recognition of prior credentialled learning or an assessment of prior learning either credentialled by other providers or uncredentialled.

In June 1996 the Board of ACTA concluded, in view of the inadequate conversion rate of initial enquiries to paid assessment and the low level of support from universities for the proposed agreement with ACTA on referral of applicants, that the recognition of prior learning (RPL) assessment function of the Agency be discontinued immediately in order to maximise the return of unexpended funds to the Commonwealth. The Board decided that ACTA should continue to carry out until 31 December 1996 the remaining functions of policy advice on credit transfer and recognition of prior learning and the development (in collaboration with OZJAC) of a national credit transfer database.

No allocation has been made for ACTA in the 1997-99 triennium.

Australian Tertiary Admissions System

In 1996 the Department, working through the Ministerial Council on Education, Employment, Training and Youth Affairs' Taskforce on an Australian Tertiary Admissions System, undertook further work on the development of the Australian Tertiary Admissions System.

Major developments were:

The Ministerial Council has agreed that the Interstate Transfer Index is to be used to convert the 'home State' TERs of applicants to the TERs applicable in any other State/Territory. The index is a comparison scale, and its operation is communicated through the publication of a table outlining the points at which the TERs of different States/Territories are deemed to be equivalent.

Ministerial Council has also accepted a framework for incorporating TAFE courses that are not handled by tertiary admission centres into the Australian Tertiary Admissions System. TAFE courses where admissions are handled by tertiary admissions centres are, of course, already included in arrangements for the Australian Tertiary Admissions System.

The Taskforce will be undertaking further research into interstate equivalences and will monitor the ongoing implementation of the Australian Tertiary Admissions System. It will report back to the Ministerial Council on these matters in 1997.

Higher Education Innovation Program

In December 1995, legislation was passed to merge the former National Priority (Reserve) Fund (NP(R)F) and Quality Assurance (QA) programs and create the Higher Education Innovation Program (HEIP). The level of funding available under HEIP was significantly reduced in the context of the 1996 Budget.

Forward commitments formally approved under the former NP(R)F and QA programs will be met and competitive rounds for grants in teaching development, Targeted Institutional Links and University Mobility in Asia and the Pacific will continue. An amount of $4.5 million has been allocated over the period 1997-1999 to promote international collaboration and research links with countries of strategic importance to Australia's interests.

The HEIP will also continue to support teaching development through the Committee for University Teaching and Staff Development (CUTSD). A total of $20 million will be provided to CUTSD over the next three years.

In addition to funding the above initiatives, approximately $12.5 million will be available for new initiatives over 1997-1998. With the total HEIP funds declining over the triennium, it is anticipated that from 1999 all remaining funds in the program will be directed to CUTSD.

Open Learning Initiative

The Commonwealth's Open Learning Initiative (OLI), which was funded by the Commonwealth with $52 million for the period 1993-96, provides more flexible access to tertiary education and highlights the capacity of modern communications technology to enhance the learning environment by providing interactivity between the learner and tutors/information resources. The two main elements of the OLI are the establishment and operation of an independent open learning organisation, the Open Learning Agency of Australia (OLA), and the development of an open learning electronic support service (OPEN NET).

Open Learning Agency of Australia

The OLA operates as a broker of educational services, linking students and universities and to a lesser extent TAFE course providers. There are no entry requirements for study through the OLA and students can commence study in any of four 13 week study periods throughout the year. In 1996, OLA had over 8000 students in some 244 undergraduate units and 160 TAFE modules. The OLA does not offer a degree, as does the Open University in the United Kingdom, but degree pathways are offered by participating universities. The shareholding of OLA has been broadened to include over six institutions in 1997 to better support the OLA's move to self sufficiency. The increase in shareholding and self reliance will be complemented by activity on the development of online educational content and services.

Open Net

The initial focus of the Open Net service was on providing equitable access to modern information network services for students. Open Net achieved this through the provision of national local call access and the establishment of a national network of local access points for those clients who did not have the necessary equipment.

Given the rise of a strong commercial market in Internet service provision, Open Net is no longer required by the Commonwealth to provide these connectivity services. It is the Commonwealth's intention that ownership of Open Net will be transferred to the Open Learning Agency (OLA) to best preserve the policy objectives of the Commonwealth's Open Learning Initiative (OLI) and to avoid unproductive duplication of functions between the two elements of the OLI. The Commonwealth expects that the transfer of all Open Net shares to the OLA will result in enhanced development of online educational content and services; a broadening of shareholding and the retention of Open Net's skills and expertise.

Open Learning Deferred Payment Scheme (OLDPS)

To make studying through Open Learning more accessible, in 1994 the Government established the Open Learning Deferred Payment Scheme (OLDPS), an income contingent loan scheme similar to the Higher Education Contribution Scheme (HECS).

A review of OLDPS was undertaken in 1994-95 to examine, among other matters, administrative difficulties experienced in implementing the scheme. The Government accepted the review's recommendations and the major changes are:

The Government has decided that Open Learning Australia (OLA) should be free to set its own fee levels rather than being tied to the HECS charge. At the same time, the Commonwealth will maintain its commitment to OLDPS. However, the maximum assistance available under the scheme is to be retained at the current level, indexed annually.

Payment arrangements for deferred liabilities under OLDPS are identical to payment arrangements under HECS, so the lowering of payment thresholds under HECS will apply also to OLDPS. This will apply from the 1997-98 income year.

Cooperative Multimedia Centres (CMC) Program

The Cooperative Multimedia Centres (CMC) Program aims to support the development of a competitive, internationally successful multimedia (especially interactive multimedia) industry, by supporting collaborative approaches to meeting its skill needs and acting as a resource for the industry at large.

CMCs are incorporated bodies formed from organisations drawn from the education sectors, industry and the arts/cultural communities. The role of CMCs is to promote the development of collaborative links between education and training, business and creative communities. The Centres support skill formation and bring other benefits to those involved in producing and distributing multimedia.

Each CMC will receive funding of $1.375 million in each of the first three years in the first instance, with an expectation that, subject to satisfactory performance, funding will be provided for a further four years. Within the first three years, CMCs are expected to acquire a capacity to function without needing CMC Program funding support to underwrite their operations. CMCs receive substantial cash and in-kind support from their consortium members and from other sources such as State Governments. Typically, CMCs receive about three times as much support from non-CMC Program sources as they receive from the CMC Program.

Two competitive assessment rounds were conducted in 1995 to identify the groups to be invited to establish CMCs. Submissions were assessed by an independent assessment panel chaired by Professor Ralph Slatyer. Acting on the panel's advice, the previous Minister offered funding to six groups. The Commonwealth has subsequently entered into three-year agreements, providing $1.375 million per annum over three years, with the following:

Access Australia (headquartered in Sydney);

IMAGO (headquartered in Perth);

Ngapartji (headquartered in Adelaide);

QANTM (headquartered in Queensland and the Northern Territory);

eMERGE (headquartered in Melbourne); and

Starlit (headquartered in Brisbane).

Research Infrastructure

In outlining the 1995-96 Budget measures, the previous Funding Report identified the net allocation for research infrastructure over the 1996-98 triennium as $92.7 million. As a result of the 1996-97 Budget, there will be an additional $91.5 million allocated for research infrastructure over three years, beginning in 1997, to address deficiencies and allow Commonwealth competitive grant schemes to be more adequately supported. This will be allocated in the following way: $10.2 million in 1997, $30.5 million in 1998 and $50.9 million in 1999. The total resources available for research infrastructure over the 1997-99 triennium will be $104.5 million in 1997, $124.8 million in 1998 and $111.4 million in 1999. The 1997 funds will be allocated through the Research Infrastructure Block Grants Program. An additional $4 million and $6 million will be allocated to the Research Infrastructure (Equipment and Facilities) Program (RIEF) in 1998 and 1999 respectively. The Government is still considering allocative mechanisms for remaining research infrastructure funds in 1998 and 1999.

Review of the Institute of Advanced Studies (IAS)

During 1995, the Australian Research Council (ARC) and the Australian National University (ANU) jointly directed a review of the Schools and Centres of the Institute of Advanced Studies (IAS) by independent teams of national and international experts in research and administration. The Institute Review Committee received the various School and Centre assessments and wrote a report on the IAS as a whole, which it provided to the ARC and the ANU in September 1995. The ARC provided advice on the performance of and funding for the IAS which was tabled in May 1996, together with the Institute Review Committee's report and the ANU's response.

In its advice to Government, the ARC found that the IAS is a national asset with a unique place in Australia's higher education system undertaking basic research of very high quality as judged by international standards and demonstrates intellectual leadership across many disciplines. The Report of the Institute Review Committee found that research groups of the Institute are at the forefront of international research and among the leading groups in their fields and that the IAS is a world wide player in every field in which it has well established scholarly and research activity. Five of the major research schools and centres were considered by the individual review committees and the Institute Review Committee to be among the leading few centres in the world in their respective disciplines.

Arising from the review the Government has agreed to allocate to the ANU, for the IAS, $0.5 million from the RIBG Program for 1997 and $2 million in both 1998 and 1999 from the Research Infrastructure (Equipment and Facilities) program. In addition, the Government has approved that the IAS may compete for funds under the RIEF program.

Taxation of Postgraduate Research Scholarships

The Government stated in its pre-election higher education policy statement that it desires to attract industry support for postgraduate research scholarships. However, the Government is concerned at suggestions that such scholarships might be taxable and is aware of the need to clarify the tax status of industry linked postgraduate research scholarships. Options for taxation treatment of these scholarships are currently being considered.

Legislation

The Higher Education Funding Act 1988 (the Act), as amended in 1996, implements budget decisions to increase funding flexibility to universities and to provide additional opportunities and choice for Australian students. It strikes a balance between the public and private funding of higher education through changes to the Higher Education Contribution Scheme (HECS). It introduces merit-equity scholarships to further enhance the participation of equity groups in higher education and offers more choice to Australian students through extending the availability of fee-paying places to undergraduate students.

These measures and others in the Act, confirm and strengthen the Government's commitment to diversity, flexibility and innovation in the higher education sector and its commitment to equity and access for all Australian students.

The Higher Education Funding Amendment Bill (No.1) 1996, passed by the Senate, is currently waiting Royal Assent. It provides for a range of adjustments to funding levels, chiefly resulting from indexation arrangements announced in the 1995-96 Budget, including adjustments to operating grants for the years 1996, 1997 and 1998 and other technical amendments to the Act. Policy decisions reflected in the Bill are to simplify the administration of the Open Learning Initiative and the Open Learning Deferred Payment Scheme, and to provide greater flexibility to make advances of operating grants to institutions.

The Government has introduced the Higher Education Funding Amendment Bill (No.2) 1996 to repeal sections 25A and 25B of the Act, so that no further payments can be made for any funding year after 1996 under the Student Organisation Support (SOS) Program. The Bill includes transitional provisions to enable the level of payments already made to be adjusted in accordance with the program guidelines for final student numbers and to enable the recovery of grants already paid to student organisations. The repeal of sections 25A and 25B of the Act gives effect to the Government's policy of not supporting compulsory unionism.

International Education

In the 1996 Budget the Government allocated $4.5 million over the period 1996-97 to 1998-99 to promote international collaboration and research links with countries of strategic importance to Australia's interests. These funds are sourced from the Higher Education Innovations Program (HEIP).

International activities funded include the Targeted Institutional Links Program, scholarship programs, study centres, University Mobility in Asia and the Pacific (UMAP) and activities involving the Australian International Education Foundation (AIEF).

Medical Student Intakes

In 1995, the previous Government expressed concern about the apparent oversupply of general practitioners in Australia. This view was supported by a subsequent study conducted by the Australian Medical Workforce Advisory Committee (AMWAC). As a consequence, the Government sought a reduction in the number of commencing students entering medicine. Following negotiations with universities, a number of medical schools agreed to reduce their intakes; however this will result in a permanent reduction of only 38 students per annum.

The present Government has also expressed concern about the oversupply of general practitioners and the impact of this on Medicare outlays. The Government has sought to address this problem through a number of strategies including restrictions on overseas trained medical practitioners and limiting access to Medicare provider numbers only to those medical practitioners who have completed approved postgraduate study. In addition to these measures, the Government has agreed that the Minister for Family Services and Health and the Minister for Employment, Education, Training and Youth Affairs should develop an agreed strategy for further reductions to medical school intakes. The details of this strategy have not been finalised and so reductions to intakes will not take place in 1997.

Teacher Supply and Demand

The report Teacher Demand Projections to 2001, which was commissioned by the Australian Council of Deans of Education (ACDE), forecasts that some 17 000 new teacher graduates will be required by 2001 but that new teacher graduates are unlikely to exceed 12 000, implying a shortfall of 5 000 teachers. The ACDE therefore sees a need to increase teacher education intakes. A different result was projected by the Department in its 1995 report Australia's Workforce in the Year 2005: Jobs for the Future which concluded that there was no likely future imbalance in the supply of teachers. One difference between the two reports was that the ACDE report assumed that education authorities would fill a fairly high proportion of vacancies with new teacher graduates whereas the Departmental report assumed an increased intake from the much larger pool of former teachers and the return of part-time or casual teachers to full-time work. The Department is currently collecting further data from State and non-government education authorities on their estimates of future teacher supply and demand. The issue will be the subject of further discussion between the Department, ACDE and State and Territory departments.

4. Operating and Related Grants

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This Chapter provides information on operating and other grants payable under sub-program 2.1 of the Employment, Education Training and Youth Affairs portfolio.

Operating Grants

The Commonwealth provides operating grant funding to higher education institutions in the Unified National System in the form of a single operating grant on the basis of an educational profile covering both teaching and research activities. Institutional operating grants contain a teaching related component, a capital component (the capital 'roll-in'), and a research-related component (the research quantum). The teaching component of approximately $4.4 billion constitutes the bulk of operating grants and is intended to support expenditure on items such as academic and general salaries, minor capital works and non-salary items associated with teaching, such as libraries (refer to Table 2.1, Table 4.4 and Table 4.6 ).

Student Load Targets

Higher education institutions are allocated a block operating grant for the delivery of an agreed student load; that is, an institution's total load target. In addition to the total load target, institutions are required to meet an undergraduate target.

An institution's undergraduate target defines the minimum undergraduate load it is expected to deliver in a given year with the operating grant funds it receives. The residual load (and associated funding), which is the difference between the undergraduate target and the total load target, represents the limit of the Commonwealth's core subsidy for postgraduate training.

Revised Targets 1997 to 1999

The 1996 Budget statement indicated that institutions will be expected, wherever feasible, to maintain undergraduate load at levels already agreed, and to make any necessary adjustments for announced reductions in student load at the postgraduate coursework level. Consistent with this position, institutions were invited during profiles discussions to submit revised data for the period 1997 to 1999.

In setting revised student load targets for institutions in the light of their revised plans and the 1996-97 Budget announcements, the Government was determined to ensure that adjustments were made on the basis of sound educational policy and in a way that was both manageable and fair. Therefore, final decisions on total load and undergraduate targets for the period 1997 to 1999 are based on a set of principles which:

Revised total load and undergraduate targets are set out at Table 4.8 and Table 4.9 respectively. As indicated below, the tables reflect minor additional adjustments to the targets of James Cook University (for 1998 and 1999) and the University of New England (for 1997, 1998 and 1999) as part of packages to adjust load and grant for under-performance in 1995 and 1996.

There is also a reduction of 75 EFTSU to the undergraduate target for the Northern Territory University in each year of 1997 to 1999, reflecting the University's request that the Associate Diploma in Child Care be transferred to its TAFE sector.

Revised Undergraduate Targets

Sector wide, undergraduate student load targets will continue to grow during the period 1997 to 1999 relative to 1996. In 1997, there will be around 6 000 more undergraduate student places than in 1996, 10 000 more in 1998, and around 13 000 more in 1999. This represents an increase of some 3.7 per cent in undergraduate places between 1996 and 1999.

On a State basis, between 1996 and 1998 Queensland's undergraduate places will increase by more than 13 per cent. This is followed by an increase of around 5 per cent in Western Australia, over 2 per cent in New South Wales and 0.3 per cent in Tasmania. There will be marginal declines in funded undergraduate places between 1996 and 1999 in the Northern Territory (-1.3 per cent), the ACT (-1.0 per cent), South Australia (-0.6 per cent) and Victoria (-0.05 per cent). This pattern reflects the flow-on effects of growth places provided to individual States in previous years.

Revised Total Load Targets

Total funded places will decline between 1996 and 1999 by about 4 000 places, a percentage variation of slightly more than -1.0 per cent. Reductions in total funded load will occur in Victoria and South Australia (about -4.4 per cent each); Tasmania (-3.8 per cent); the ACT (-3.9 per cent), the Northern Territory (-2.9 per cent) and New South Wales (-2.4 per cent). The flow-on effect of growth places which were announced in previous years mean that the number of total funded places for Queensland and Western Australia will increase over the period 1996 to 1999 (by about 8.3 per cent and 0.6 per cent respectively). See Figure 4.1 for details of the Commonwealth funded load 1994 to 1999.

Institutions' Revised Data

There are eleven instances where the Government has lowered undergraduate targets to below the levels of previously announced forward estimates. Although the Government believes this to be justified on the basis of the principles outlined above, it emphasises that there is no compulsion on the institutions to reduce their undergraduate load to the lower targets if they do not wish to do so.

The Government has decided not to reduce undergraduate targets to the levels requested by eight institutions. In assessing the merits of each of these requests, the Government concluded that the arguments put forward for a reduction to undergraduate target were not sufficiently compelling when considered in the context of the principles outlined above and its stated priority of safeguarding access to undergraduate courses.

Performance against Targets-1996

Most institutions met or exceeded all their targets in 1996 (see Table 4.7). At the system level the total load target was exceeded by 19 704 EFTSU or 4.7 per cent, and the undergraduate target was exceeded by 17 718 EFTSU or 5 per cent. In 1996, the new to higher education target was exceeded by 11 541 or 11 per cent.

Two institutions-James Cook University (JCU) and the University of New England (UNE)-failed to meet their total load and undergraduate targets by considerable margins for the second year in a row. The Government will, therefore, recover operating funding totalling $3.8 million from JCU, and UNE will surrender the funding and growth places including pipeline that were previously allocated for 1997 and 1998 (totalling $1million by 2001). The Government also expects each institution to return to target as quickly as possible and to balance out under-enrolment in 1995 and 1996 with corresponding increases to enrolments at the undergraduate level in 1997 and 1998. The revised total and undergraduate targets of both institutions reflect the load adjustments agreed between the Commonwealth and institutions as part of these packages.

New to Higher Education Target (NHE)

The previous Government introduced a new to higher education (NHE) target for 1996 which specified the minimum number of students with no prior experience in higher education which an institution was expected to enrol in a given year. These targets, expressed in enrolments, not EFTSU, were calculated by multiplying 1996 undergraduate load target by a factor representing the average of the ratio between NHE commencers and undergraduate load over the period 1992 to 1994. They reflected historical, rather than projected, patterns of provision and course structures and were an attempt to externally impose access levels for students new to higher education. The Government considers that this approach diminishes the importance of institutions' own judgements in admissions matters and is an unnecessary duplication of the undergraduate target. It has, therefore, decided to abolish the NHE target from 1997 as part of its announced intention to simplify procedures and reduce needless reporting and data collection.

Additional Places 1997-99

Consistent with its Budget statement, the Government has sought to preserve undergraduate growth provided in the 1995-96 Budget over the period 1996 to1998. It will also provide a modest number of growth places for 1999. These 660 additional places plus their pipeline will be provided at $10 178 per EFTSU, the sector average funding rate for undergraduate places which includes capital roll-in and research quantum (RQ) components. In including the RQ in the growth funding rate for 1999, the Government has begun to arrest the decline of the RQ as a proportion of operating grants which has taken place in recent years.

Growth Allocations for 1999

Undergraduate growth for 1999 has been targeted to institutions in regions of low participation and provision with evidence of demand and capacity for expansion. Details of institutional growth allocations are presented in Table 4.2. With the pipeline provided in following years, a total of 1 800 places will be created at a total value $18.3 million.

New South Wales

Consistent with this policy, growth in New South Wales is directed towards increasing provision at the State's North, Central and South Coasts and in Western Sydney.

In total 145 EFTSU has been provided to New South Wales in 1999. Southern Cross University will receive 30 places and the University of Newcastle will receive 20 places to support developments on the North Coast and at Ourimbah.

Forty-five new places will be provided to the University of Wollongong for the planned South Coast development. In providing these places, the Government notes the significant growth already provided to Wollongong in 1997 and 1998, primarily for the South Coast, and would expect the University to transfer load to the South Coast as demand increases.

The University of Western Sydney will receive an additional 40 places in 1999 and 10 places have been allocated to Macquarie University to support higher education provision in the western Sydney region.

Victoria

The Government has not provided growth places for Victoria for 1999. However, the restoration of the pipeline of previous years' growth which was unilaterally withdrawn by the previous Government, has offset the impact of reductions to total load allocations.

The Government considers that pockets of demand in Victoria such as in the south east corridor of Melbourne, can be met by existing provision at metropolitan universities.

Queensland

Allocations for Queensland focus mainly on increasing provision in the rapidly growing south eastern corridor of Queensland.

A total of 375 additional places will be provided to Queensland institutions. Twenty-five places have been provided to the Australian Catholic University for its Queensland operations, the Central Queensland University will receive 65 places primarily for its campuses at Mackay and Bundaberg, and Griffith University will receive 95 places for its Logan and Gold Coast campuses. The Queensland University of Technology will receive 140 places principally for the Sunshine Coast University College, and the University of Queensland will receive 50 additional places in 1999.

Western Australia

In providing new places in 1999 to Western Australia, the Government noted that there appears to be no marked institution catchment areas in Perth and that all Western Australian universities draw students from a wide range of areas. In view of this, the Government decided that all should share in available growth. A further consideration was the need to support the development of campuses funded through the Capital Development Pool.

A total of 130 places will be provided to Western Australia institutions in 1996. There will be an additional 10 such places each for Curtin University of Technology and the University of Western Australia. Murdoch University has been allocated 60 places in 1999, primarily for its Rockingham campus and Edith Cowan University will receive 50 places for its Joondalup campus.

The Government notes Curtin University's proposal to move 1 200 EFSU (around 10 per cent of its funded load) from its main campus to Joondalup where it is working with a private provider which has a campus for international students. While the Government recognises the advantage in mixing Australian and international students, it considers that, as a first step, priority should be given to the rational and co-ordinated development of higher education provision in the Perth region. This view is supported by the WA State Government.

South Australia

No bids for growth were received from South Australian institutions and, given the projected low population growth in the 17-34 age cohort in the State, the Government has not provided additional places in 1999 to South Australia.

Tasmania

The Government has provided an additional 5 places to the University of Tasmania in recognition of the extremely low participation in the north-west of the State.

Northern Territory

A total of 5 EFTSU has been provided to the Northern Territory for Batchelor College in recognition of the need in remote communities, particularly in the area of health.

Australian Capital Territory

No bids for growth were received from ACT institutions. The Government has not allocated growth places in 1999 to the ACT, given the high participation rate in the Territory.

Commonwealth Industry Places Scheme (CIPS)

The Commonwealth Industry Places Scheme will enable higher education institutions to provide around 4 700 additional undergraduate places in cooperation with industry partners in 1999. Under the Scheme, the Commonwealth and the student contribute 60 per cent of the cost of each new place and its associated pipeline with the student contribution being made through HECS. The balance is funded by industry.

CIPS allocations for 1997 and 1998 were announced in 1996. However, the Commonwealth has been advised by a number of institutions that they will be unable to fill the places allocated to them in 1997 and 1998. These places, together with associated funding, have been redistributed. Table 4.10 shows revised 1997 and 1998 allocations following the redistribution of places between institutions.

For 1999, a total of $21.97 million is available under the Scheme. Allocations for 1999 are detailed in Table 4.10. In allocating places in 1999, priority has been given to the pipeline of places allocated in previous years. Bids for places have been assessed against a number of criteria including:

Superannuation

Due to historical circumstances, prior to 1996 a small number of institutions had no provision in their operating grants for superannuation, and received annual supplementation for their superannuation expenditure. As well, provision in the operating grant in respect of staff in the NSW State Authorities Superannuation Scheme was only 11.5 per cent of salaries, as opposed to 14 per cent in respect of all other schemes.

In 1996, funding was transferred from section 20 to section 17 of the Higher Education Funding Act (1988) to standardise the superannuation funding base for all institutions. Funding is aligned with the costs of the Superannuation Scheme for Australian Universities and the Tertiary Education Superannuation Scheme; that is, 14 per cent of salaries of participating staff plus the 3 per cent productivity benefit where approved.

Changes to indexation arrangements applying to higher education funding from 1996 mean that specific supplementation is no longer provided in respect of increases in the contribution rate required under the Superannuation Guarantee (SG). Funding already provided in respect of movements in the SG to the end of 1995 has been transferred into the institutions' base operating grants, with amounts determined on the basis of the 1994 entitlement in respect of SG costs, adjusted for the half year effect of increases in the SG contribution rate from 5 to 6 per cent from 1 July 1995.

As in previous years, the Commonwealth will continue to support the provision of supplementary financial assistance for specified superannuation costs incurred by institutions, such as the costs of participation in State emerging cost schemes.

Nurse Education

Following negotiations with the States and Territories in 1994, the Commonwealth assumed full funding responsibility for a total of 18 980 nurse education places, funded at the rate provided by the State at the time of transfer.

Since 1994, there has been a decline of 10 per cent in basic nursing load. The reasons for the decline include a fall in demand from potential students and in the case of some institutions, the restructuring of programs. According to projections provided in institutional profiles, this trend is expected to continue.

The Government would wish to ensure that there are processes in place which will enable institutions to plan to adequately to meet labour supply requirements in nursing. There is also a need to ensure that programs which lead to a basic nursing qualification are sufficiently flexible to respond to changing patterns of demand from employers while, at the same time, offering students a program with a range of potential exit points. The Commonwealth will be raising both of these issues with the States and Territories in the Joint Planning Committee (JPC) process.

Teaching Hospital Grants

Over the period 1997 to 1999, the Government will maintain recurrent grants for teaching hospitals associated with medical schools at the same level in real terms as applied in 1996. The grants provide for maintenance and service charges for areas used by medical students and staff of universities and for the purchase of books and journals to assist in meeting the requirements of clinical students and academic staff. Details of teaching hospital grants for the years 1997, 1998 and 1999 are set out in Table 4.14.

Capital Roll-in

Since 1994, higher education capital grants have been rolled into institutional operating grants. The Commonwealth will continue, however, to set aside $37.556 million each year for the Capital Development Pool (CDP) to enable specific purpose grants to be made for new campus developments. These grants are to assist institutions that experienced extraordinary levels of Commonwealth-funded growth from 1994, and to expand, develop and upgrade electronic delivery infrastructure, particularly for new campus developments.

The incorporation of capital grants into operating grants has meant that the Commonwealth is no longer closely involved in administering higher education institutions' capital projects and that responsibility for capital management decisions lies primarily with the institutions themselves. To ensure accountability for the expenditure of Commonwealth grants, institutions are expected to prepare and make available capital management plans as part of their profiles documentations. Institutions will continue to be accountable to their State Parliaments through the financial statements included in their annual reports and through performance audits of their planning and maintenance administration. The capital component of operating grants is detailed in Table 4.6. See Table 4.3 for details of the 1999 growth places plus pipeline and Table 4.5 for details of Operating Grant Targets 1997-1999.

5. Capital Development Pool Funding

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The Commonwealth provides a small pool of funds-the Capital Development Pool (CDP)-to assist higher education institutions with special capital projects. Most CDP grants are directed primarily to new campus developments in suburban growth corridors and regional centres. Funds are also available to institutions experiencing the flow on effect of earlier growth places and to assist institutions meet establishment costs associated with the expansion, development or upgrading of electronic delivery infrastructure. Proposals relating to electronic infrastructure are required to focus on providing increased access to regions with low tertiary participation and on increasing the efficiency of educational delivery. Over the 1997-99 period, $37.556 million will be available annually from the CDP.

Commonwealth support for new campus developments is contingent on:

CDP funds are only available to assist in developing new campuses or new colleges of existing universities. The funds are not to be used for the establishment of new universities or independent institutions.

Access to the CDP is not by competitive bidding or application. To ensure a coordinated approach, the Commonwealth seeks advice, through the Joint Planning Committee arrangements, from State/Territory governments on priorities for new developments. Institutions' plans for new developments are considered at profiles discussions. These negotiations help to ensure that new developments address needs or opportunities identified in State/Territory and institutional long term strategic plans.

The Commonwealth expects State/Territory governments and institutional planners to consider the needs of regional development and industry as well as demographic projections and levels of tertiary education participation. The level of Commonwealth support for new campus developments depends primarily on the student load to be accommodated.

State/Territory governments and institutions are expected to contribute significantly to new campus developments with the States/Territories being expected to meet the costs of land and provide infrastructure up to site boundaries. The Commonwealth directs grants from the CDP principally to the early stages of new campus or electronic delivery developments when costs tend to be high. Institutions are expected to make a greater contribution to later stages of developments.

Table 5.1 sets out institutional allocations from the CDP for 1997-99.

Capital Development Pool Allocations for 1999

In allocating funds for 1999 the Government has given priority to supporting those projects currently under development to ensure an adequate standard of infrastructure provision and to bring those campuses to economic viability.

New South Wales

In 1999 almost $10 million will be allocated to New South Wales institutions from the CDP. Charles Sturt University will receive $1.0 million to assist with the establishment of a higher education centre in Dubbo. In allocating these funds the Government would expect the University to transfer student load to the centre and develop the project with potential for electronic delivery to the region.

The University of Newcastle will receive $4.0 million for the Ourimbah campus. This will complete the Commonwealth's commitment, made in 1994, to the development of Stage 2 of the campus.

The University of Wollongong will receive $4.9 million for development of Stage 1 of a higher education facility on the south coast. The Government will consider a further small contribution in 2000 to complete Stage 1. Commonwealth funding for Stage 2 of the project would only be considered following investigation of student demand and an assessment of competing priorities within New South Wales.

The decision to support a higher education facility on the New South Wales south coast follows the findings of a joint Commonwealth/State Working Party in 1995 and completion of an options study in 1996 on site options, opportunities for electronic linkages and cooperation with the TAFE and school sectors. Stage 1 will comprise a hub facility at West Nowra and access centres at Bateman's Bay and Bega. The sites will be linked electronically with the main campus at Wollongong.

Queensland

In 1999 the Commonwealth will fund seven Queensland projects from the CDP at a total cost of over $21.0 million. Six of these projects are continuing developments and reflect the continuing growth being experienced by Queensland institutions and the need to strengthen provision in regions with a history of low higher education participation.

Central Queensland University will receive $2.5 million to assist with developments, particularly at its regional campuses. Griffith University will receive $5.5 million to assist with the development of the new campus at Logan and expansion of the Gold Coast campus. James Cook University will receive $2.0 million towards development of Stage 3 of the Cairns campus with the possibility of further contributions in subsequent years.

Queensland University of Technology will receive $1.0 million for further development of the Sunshine Coast University College campus. Consideration will be given to further contributions in future years. The University will also receive a small contribution, $0.5 million in 1999 with some further support in future years, to assist with a new building at the Carseldine campus.

The University of Queensland will receive $8.5 million for the new campus being developed at Ipswich. The University of Southern Queensland will receive $1.0 million to assist with developments at Toowoomba and Hervey Bay.

The 1998 cashflows for three Queensland developments have been adjusted to reflect progress on particular projects. Total Commonwealth commitment to these projects remains unchanged. In 1998 Griffith University will now receive $9.669 million for the Logan and Gold Coast campuses, James Cook University will receive $1.018 million for the Cairns campus and the University of Queensland will receive $3.052 million for the Ipswich campus.

Western Australia

Western Australian institutions will receive $5.5 million in 1999. Curtin University of Technology will receive $3.0 million for the Kalgoorlie campus which will complete the Commonwealth's commitment to the project. Part of this allocation is provided for the development of the Esperance Tertiary Centre, a higher education/TAFE annexe of the Kalgoorlie campus. $2.5 million has been earmarked for Western Australian institutions to support infrastructure development in the Perth region, especially collaborative and electronic projects. Provision of the funds is dependent on the development by the State and relevant institutions of a strategic plan addressing the rational and effective placement and use of both existing and any new infrastructure, potentially including the development of the Midland site.

Tasmania

The University of Tasmania will receive a contribution of almost $0.7 million in 1999 to assist with the development of communication links between Burnie and Launceston and its ability to deliver courses on a State-wide basis.

Northern Territory

Batchelor College will receive a small contribution in the order of $0.5 million over more than one year to assist with the upgrading of its study centres in regional communities. The Commonwealth would expect the Northern Territory Government to provide some matching funding for the TAFE activities at the College.

6. Research

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Research Quantum

The research quantum (RQ) is a component of the operating grant, allocated on a performance basis, which is directed to support research activities other than those directly linked to teaching and research training. Since 1995 the research quantum has been allocated on the basis of a composite research index that measures institutions' research performance.

The composite index (CI) was developed by a working party with representation from the Australian Research Council (ARC), the Australian Vice-Chancellors' Committee (AVCC), the Higher Education Council (HEC) and the Department, using data collected initially by the AVCC but now collected by the Department. The index contains both research input and research output measures. These are as follows:

Input

Output

The relative weightings assigned to these CI components have been amended from those previously foreshadowed in the light of advice received from the working party. In 1997-99, the relative weightings to be used in the composite index will be as shown below. For comparison purposes, the 1995 and 1996 weightings are also shown.

YearInput
(Financial)
Data
%
Publications


%
Higher Degree
Research
Completions
%
199590.0 7.0 3
199682.5 12.5 5
199782.5 12.5 5
199882.5 12.5 5
199982.5 12.5 5

For 1997 allocations, the elements of the financial component of the index-national competitive grants, other public sector funding, and industry and other funding-are to be weighted 2, 1, and 1 respectively. (The respective weightings for 1996 were 2.5, 1 and 1).

Controlled entity funding (a controlled entity being an independent operation of a university which meets certain criteria) in respect of the other public sector and industry and other funding categories is being phased in with a 0.5 weighting in 1997 and a 1.0 weighting in 1998. Controlled Entity funding in respect of national competitive grants will continue to be counted in full.

Syndicated research and development funding will be phased in with a 0.5 weighting in 1997 and a 1.0 weighting in 1998.

Within the count of higher degree research completions for calculating the research quantum from 1996, PhDs will continue to be assigned a weighting of 3 and Masters degrees a weighting of 1.

There are mechanisms for audit of the data on which the research quantum allocations are based. Financial data must be covered by an audit certificate. There are also independent audits of the publications data, examining whether institutions have correctly categorised their publications and have provided an accurate count of publications substantiated by reference to raw data.

In undertaking an independent audit of 1994 publications data, KPMG found a very high rate of errors. As a result of these errors the Minister agreed, on the advice of the Composite Index Working Party, that:

The total amount of funding provided in the research quantum for 1997, 1998 and 1999 will be $222.0 million, $215.9 million and $213.8 million respectively. Reductions in RQ funding over the period are in proportion to reductions in overall operating grants relative to previously announced levels for this period, as stated in the Budget. Provisional institutional allocations of the 1997 research quantum are set out in Table 6.2.

Research Infrastructure Program

The central objective of the research infrastructure program is to support high quality research by ensuring that areas of recognised research potential have access to the support necessary for their development; enhancing support for areas of existing research strength; and remedying deficiencies in research infrastructure. The program comprises two categories of grant:

In 1997, the Government will provide $104.5 million through the Research Infrastructure Program.

Research Infrastructure Block Grants Program

In 1995, the former Mechanisms A and B (which provided some differentiation between pre-1987 universities and advanced education institutions) were replaced by the Research Infrastructure Block Grants Program. Program grants are allocated to members of the Unified National System to assist in the development and maintenance of research infrastructure. In 1997, $85.2 million will be allocated to institutions on the basis of the National Competitive Grants Index. The block grant allocations are in Table 6.1.

The Research Infrastructure Block Grants allocations for 1997 show substantial variation from 1996. There are significant increases in funding for some institutions arising from the additional funding announced for infrastructure in the 1996-97 Budget. On the other hand, some institutions which receive relatively few National Competitive Grants will receive less infrastructure funding. With the introduction of Research Infrastructure Block Grants, all institutions were guaranteed over 1995 and 1996 a minimum proportion of their combined Mechanism A and Mechanism B funding for 1994. This guarantee has now expired.

In late 1996, DEETYA undertook the annual review of the composition of the National Competitive Grants Register. The purpose of the review is to ensure that schemes listed on the Register which are given a higher weighting in the composite index, are those which meet the criteria agreed with the higher education sector.

Research Infrastructure (Equipment and Facilities) Program (RIEF)

Grants allocated under the Research Infrastructure (Equipment and Facilities) Program fund relatively large scale initiatives which develop research infrastructure on a cooperative basis across groups of institutions. Such initiatives may also involve organisations outside the higher education sector. Although the grants are intended primarily to support large scale cooperative projects involving two or more institutions, individual institutions for whom collaborative arrangements are impracticable or inappropriate have been eligible to apply for grants since 1994. Applications are considered on merit by a selection panel appointed by the Australian Research Council.

Additional 1996 Equipment and Facilities grants totalling $1.6 million were allocated in December 1996. In 1997, $19.3 million will be distributed through the Equipment and Facilities Program providing support for a broad range of infrastructure development, including projects with a national and international focus. These are set out in Table 6.3. In 1998 a total of $23.4 million and in 1999 a total of $25.4 million has been allocated to RIEF program. Arising from the review of the Institute of Advanced Studies at the Australian National University the Government has agreed to allocate $2 million in both 1998 and 1999 from the RIEF program. In addition, the Government has approved that the IAS may compete for funds under the RIEF program.

The Major National Research Facilities Program funds establishment costs of major research facilities required to keep Australia at the leading edge of key scientific and technological developments. Over eight years $62 million is being provided. The program will concentrate on facilities involving establishment costs which are beyond the capacity of any individual Australian institution. The facilities must be capable of offering shared use by the widest pool of users from various scientific disciplines and areas of application including industry. Such facilities will be specifically identified as being for the national use and will be made available to researchers according to the merit of their proposals.

The Employment, Education, Training and Youth Affairs portfolio is contributing $1 million in each of the years 1996 to 2002 from the Equipment and Facilities Program. A further contribution of $0.78 million in each of the years 1996 to 2002 will be funded from DEETYA's annual appropriations.

High Performance Computing and Communications

The previous funding report stated that the Research Infrastructure Program (RIP) will contribute $2.5 million in 1997 and $2.5 million in 1998 towards a national High Performance Computing and Communications (HPCC) strategy. Given that the new Government has endorsed the HPCC program, the contributions from the RIP will continue at the price adjusted levels of $2.54 million in each of the years 1997 and 1998.

Australian Postgraduate Awards

A new Australian Postgraduate Award (APA) scheme was introduced in 1994. APAs are provided to support students undertaking PhD and Masters degrees. There are two components within the APA scheme:

Scheme guidelines require that a student receiving an award with a stipend must also, with the exception of those enrolled in non-UNS institutions, receive a HECS exemption.

In 1997 there will be 21 500 APAs providing a HECS exemption only (expressed as EFTSU). In addition, more than 4 500 students will hold an award providing a stipend, 1 605 of these being new awards in 1997. Funding for stipends plus other allowances under the APA scheme will amount to $73.7 million in 1997 compared with $69.5 million in 1996.

The current allocation formula which was introduced in 1995, has been designed to ensure that awards are allocated to institutions according to the extent and quality of their research training environment. The awards are distributed on the basis of higher degree research student load weighted at 40 per cent, higher degree research student completions weighted at 20 per cent and the composite index as used for the allocation of the research quantum (with the small completions component removed to avoid double counting) weighted at 40 per cent.

Allocations of new awards for 1997 are set out in Table 6.5. The distribution of Australian Postgraduate Award funding by institution is at Table 6.1.

Australian Postgraduate Awards (Industry)

The Commonwealth provides funding for Australian Postgraduate Awards (Industry) to assist in preparing high calibre postgraduate students through industry-based research. A total of 205 new awards will be funded in 1997, an increase of 55 over the number of new awards funded in 1996. The funding allocation for APA(I)s for 1997, including 375 continuing awards, totals $9.3 million.

In relation to new awards for 1997, general engineering and agricultural sciences have been the most successful with 28 new awards each, followed by biological sciences (26), chemical sciences and applied sciences and technology (23 each), social sciences (22), information, computers and communication technology (20), earth sciences (15), medical and health sciences (11), humanities (4), physical sciences (3) and mathematical sciences (2).

Details of APA(I)s for 1997 by higher education institution and field of research can be found in Table 6.7 and Table 6.8 respectively.

Fellowships

The Commonwealth provides funding for Fellowships to increase opportunities for outstanding researchers to conduct research in Australian higher education institutions and other organisations.

There are four categories of Fellowship offered:

New Fellowships approved by the Minister to be taken up in 1997 comprise 67 APDRFs, 15 ARFs, 15 QEIIs and 15 SRFs.

The selection process for Fellowships is highly competitive. There were approximately 8.4 applications for each new Fellowship available in 1997.

The most prestigious awards, the Senior Research Fellowships, have been awarded to 15 outstanding researchers. Three will work at the University of Sydney, two each at the University of Queensland, the University of Adelaide, the University of Wollongong and the Australian National University while one researcher will work at the University of New South Wales and one at Monash University.

Biological sciences, with 25 Fellowships, has been the most successful field of research for the awarding of Fellowships, followed by physical and mathematical sciences (19) and humanities (16).

Details of the award of Fellowships by category and institution are in Table 6.6.

Overseas Postgraduate Research Scholarships

Funding for Overseas Postgraduate Research Scholarships (OPRS) is provided to assist higher education institutions attract top quality overseas postgraduate students to Australia in areas of research strength, and to support Australia's research effort. The scholarships meet tuition and health insurance premiums only. OPRS are awarded by higher education institutions on the basis of academic merit and research capacity.

In 1997, 300 scholarships will be made available for postgraduate study. Funding for OPRS will amount to an estimated $15.2 million in 1997 as indicated in Table 6.1. Details of Overseas Postgraduate Research Scholarships can be found at Table 6.5.

Research Grants

Large Grants

Under the Large Grants Scheme, the Commonwealth provides funding to support high quality research within Australia by individuals or research teams in all fields except clinical medicine and dentistry. Special funding is also provided to ensure specified priority areas are supported adequately. In 1997, the priority areas are biology of sustainability, citizenship, food science and technology, optics, exploration geophysics, technological change, and projects with international links.

Higher education institutions will receive approximately $98 million in Large Grants in 1997. Grants to researchers outside the higher education sector will amount to approximately $698 000. Funding allocations are shown in Table 6.1.

There were 3 012 applications for 1997 Large Grants totalling almost $609 million in funding requests over three years. Funding is being provided for 640 new grants (totalling $35 million) and for 1 210 continuing research projects. The average Large Grant has increased from $54 600 in 1996 to $55 600 in 1997.

Biological science, with 22 per cent of the research funds allocated, is the largest field of research to be supported by Large Grants in 1997, followed by social sciences (13.6 per cent) and general engineering and physical sciences (10 per cent). The distribution of new Large Grants by broad field of research is shown in Table 6.11.

Small Grants

Under the Small Grants program, the Commonwealth provides block grants to higher education institutions to enable them to offer research grants of less than the minimum value of Large Grants: $20 000 in the case of the humanities, social sciences, mathematics and theoretical physics; and $30 000 in the case of other disciplines. In total, $26.9 million will be provided for Small Grants in 1997. Institutions receive a base grant of $50 000, with the remaining funds being distributed according to a formula that takes account of institutions' success in obtaining Large Grants, and of the distribution of Small Grants in the previous year.

The distribution of Small Grants funding by institution is shown in Table 6.1.

Collaborative Research Grants Program

The Collaborative Research Grants Program is designed to encourage research collaboration between higher education institutions and industry by supporting high quality research which has potential for benefiting Australia socially and economically. Funding is allocated to projects on the advice of the Australian Research Council and is provided on condition that the industry partner match the Commonwealth grant on a dollar for dollar basis. There were 424 applications for 1997 grants, with a total value of $32.6 million. While this was more than double the number of applications for 1996, the quality of applications continues to improve from year to year.

In 1997, the Commonwealth will provide $14 million for 201 new grants (an increase of 53 per cent over 1996) and $12.3 million for 187 ongoing grants. The average value of the Collaborative Research Grants funded by the Government in 1997 is $69 500, with an equivalent amount being provided by industry partners. Three projects will each receive funding of $150 000 or more in 1997.

Twenty-seven per cent of the new Collaborative Research Grants in 1997 are in social sciences, 16 per cent in applied science and technology and 11 per cent in General Engineering.

Industry support for the 201 new Collaborative Research Grants being funded in 1997 is divided between medium to large companies, small companies, and some Government departments not otherwise funded for research.

Collaborative Research Grants by higher education institution in rank order and by field of research are set out in Table 6.9 and Table 6.10 respectively.

International Research Fellowships

The Commonwealth provides funding for International Research Fellowships in order to meet Australia's obligations under the reciprocal research award agreements between the Australian Research Council and the French Ministry of Higher Education and Research, the Alexander Von Humboldt Stiftung and the Korea Science and Engineering Foundation. Australia's half share of the cost of the joint Australian Research Council/United Kingdom Science and Engineering Research Council Research Fellowship at the Anglo-Australian Observatory is met from the International Research Fellowships Scheme.

A total of up to 15 initial International Research Fellowships are awarded each year to eminent French, German and Korean researchers to undertake projects of international standard collaboratively with their Australian hosts. For 1997 ten applications have been received from France, 20 from Germany and 11 from Korea. Final determination is subject to approval by the overseas bodies prior to forwarding recommendations to the Minister for support in 1997.

The Aboriginal and Torres Strait Islander Researchers' Development Program

The Aboriginal and Torres Strait Islander Researchers Development Program was introduced in 1996 to encourage participation in, and to improve the standard of, research conducted by Aboriginal and Torres Strait Islander persons.

In its early years, the program will provide support for research projects and through these projects, for training and development in research methodology and the preparation of research proposals by Aboriginal and Torres Strait Islander researchers.

In 1996 the funding available was $200 000. Of the twenty four applications received four were successful with a total amount of $28 600 awarded. A second application round commenced in October 1996 and 22 applications have been received. Assessments and recommendations for funding for 1997 will take place in December 1996.

Details of the 1996 awards under the Aboriginal and Torres Strait Islanders Researchers Development Program are listed below.

No of Grants University

Amount

1La Trobe University

$8 000

1Melbourne University

$5 100

2University of South Australia

$15 500

TOTAL

$28 600

Research Centres

Special Research Centres are established on the basis of research excellence and their potential to contribute to the economic, social and cultural development of Australia. Key Centres of Teaching and Research are based on existing departments in higher education institutions and are aimed at assisting the higher education sector to respond to demands for expertise in particular fields, especially through teaching and research activities in areas relevant to national economic, technological and social objectives. They also promote co-operation between higher education and industry.

In 1997, $18 million will be provided to fund existing Centres and eight new Special Research Centres which will commence operations in January 1997. The new Centres, many of which are multidisciplinary, are in diverse fields including basic engineering science, mineral geology, theoretical atomic physics, environmental and cross cultural studies. They will receive an annual grant ranging from $400 000 to over $800 000, depending on their field of research and proposed program of activities.

In March-April 1996, eleven Special Research Centres established in 1991, and the Key Centre for Teaching and Research on Addictions, were reviewed by specialist panels appointed by the Australian Research Council. The panels comprised senior academics and industry or other end user representatives. The reviews were undertaken to assess the Centres' achievements and to determine whether Commonwealth funding should continue for a further three years. The Minister has approved continuation of funding for all the Centres reviewed.

Details of 1997 funding allocations for the Centres are at Table 6.4.

Advanced Engineering Centres

The Advanced Engineering Centres were established as part of a wider agenda to enhance the contribution of engineering skills, research and development in the evolution of internationally competitive industries for Australia. The Centres are designed to promote collaboration between higher education and industry so as to:

There are three Advanced Engineering Centres located in Sydney, Melbourne and Adelaide. Each Centre received establishment funding of $2.1 million in 1992 and 1993 and receives recurrent funding amounting to $0.54 million annually.

A major review of the Advanced Engineering Centres was conducted during 1995. One outcome of the review was a decision to fund Centres for a maximum period of six years.

Appendix 1: Higher Education Institutions

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Higher Education Institutions within the Unified National System

New South Wales

Charles Sturt University

The Macquarie University

Southern Cross University

University of New England

University of New South Wales

University of Newcastle

University of Sydney

University of Technology, Sydney

University of Western Sydney

University of Wollongong

Victoria

Deakin University

La Trobe University

Monash University

Royal Melbourne Institute of Technology

Swinburne University of Technology

University of Ballarat

University of Melbourne

Victoria University of Technology

Queensland

Central Queensland University

Griffith University

James Cook University of North Queensland

Queensland University of Technology

The University of Queensland

University of Southern Queensland

Western Australia

Curtin University of Technology

Edith Cowan University

Murdoch University

The University of Western Australia

South Australia

The Flinders University of South Australia

The University of Adelaide

University of South Australia

Tasmania

The University of Tasmania

Northern Territory

The Northern Territory University

Australian Capital Territory

Australian National University

University of Canberra

Multi-State

Australian Catholic University

Higher Education Institutions outside the Unified National System

New South Wales

Avondale College

Victoria

Marcus Oldham Farm Management College

Tasmania

Australian Maritime College

Northern Territory

Batchelor College

Private Universities

Bond University

The University of Notre Dame Australia

Appendix 2: Cost Levels

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The 1996 allocations are expressed in outturn (that is, current) prices for 1996. The allocations for 1997 onwards are expressed in outturn prices for 1997. The actual allocations for 1998 onwards will be derived on the basis of cost adjustments factors. These factors incorporate the new indexation procedures commenced as at 1 January 1996. The changes in indexation arrangements are the result of a review conducted by the Department of Finance and apply across a range of Commonwealth outlays.

The new approach to indexation has been accepted by Cabinet on the grounds that it is a simpler, fairer and more rational policy for the indexation of wage and other costs involved in delivering Commonwealth programs. A particular objective has been to ensure that salary-related indexation fully excludes the impact of any productivity-based wage rises.

The notional salary component of operating grants (75 per cent) will be indexed on the basis of the Safety Net Adjustment (SNA) as determined by the Australian Industrial Relations Commission (AIRC). The SNA is judged to be more appropriate than existing indexes, such as Average Weekly Earnings (AWE) or the Award Rates of Pay Index (ARPI) which include productivity-related increases in salaries. The SNA is currently $8 per week or approximately 1.3 per cent of AWE for 1997.

Non-salary adjustments of operating grants (25%) will be based on the Treasury Measure of Underlying Inflation (TMUI). The TMUI is based on the Consumer Price Index (CPI) but removes elements affected by seasonal and policy factors. The TMUI applicable to 1997 will be 2.9 per cent. These adjustments will apply to the whole of each calendar year and indexation will start from the first payment for the year.

The indexation arrangements for the salary components of operating grants will be reviewed when a new Labour Cost Index (LCI), which will remove the effects of productivity-based wage increases, is developed by the Australian Bureau of Statistics. The LCI should be available for application in 1998.

The Cost Adjustment Factor (CAF) does not reflect the actual price movements, but shows what increases the Commonwealth has provided institutions each year toward the increases in salary and non-salary costs.

The relative cost adjustment factors are as follows:

Recurrent Capital
Dec 1995a Dec 1987b Dec 1995a Dec 1987b
1989-91 Funding Report 0.8129381.043 0.808709 1.040
1990-92 Funding Report 0.8433361.082 0.868584 1.117
1991-93 Funding Report 0.8807481.130 0.932348 1.199
1992-94 Funding Report 0.9431021.210 0.957232 1.231
1993-95 Funding Report 0.9571321.228 0.963453 1.239
1994-96 Funding Report 0.9664851.240 0.972006 1.250
1994-96 Supplementary Funding Report 0.989088 1.269 0.9891141.272
December 1995 Prices 1.0000001.283 1.000000 1.286
1996-98 Funding Report 1.0157501.303 1.015750 1.306
This Report
1996 year allocation 1.016500 1.304 1.016500 1.307
1997 onwards allocations 1.033823 1.326 1.033823 1.329

a December 1995 equals 1.000000

b December 1987 equals 1.000

Appendix 3: Other Relevant Government Reports

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Higher Education: A Policy Statement, July 1988, AGPS, Canberra.

Higher Education Funding for the 1989-91 Triennium, November 1988, AGPS, Canberra.

Supplementary Funding Decisions on Higher Education for the 1989-91 Triennium, June 1989, AGPS, Canberra.

Higher Education Funding for the 1990-92 Triennium, December 1989, AGPS, Canberra.

Assessment of the Relative Funding Position of Australia's Higher Education Institutions, August 1990, DEET, Canberra.

Higher Education Funding for the 1991-93 Triennium Supplementary Report for Victoria, June 1991, DEET, Canberra.

Higher Education: Quality and Diversity in the 1990s, October 1991, AGPS, Canberra.

Higher Education Funding for the 1991-94 Triennium, December 1991, AGPS, Canberra.

Higher Education Funding for the 1992-94 Triennium Supplementary Report, August 1992, AGPS, Canberra.

Higher Education Funding for the 1993-95 Triennium, December 1992, AGPS, Canberra.

National Report on Australia's Higher Education Sector, May 1993, AGPS, Canberra.

Higher Education Budget Statement 1993, August 1993, AGPS, Canberra.

Higher Education Funding for the 1994-96 Triennium, December 1993, AGPS, Canberra.

Supplementary Higher Education Funding for the 1994-96 Triennium, December 1994, AGPS, Canberra.

Higher Education Funding for the 1996-98 Triennium, December 1995, AGPS, Canberra.

Higher Education Budget Statement 1996, August 1996, AGPS, Canberra.