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Lachlan Smirl delivered the presentation at the Higher Education Reform Summit. Presented by Informa and the Financial Review. The Higher Education Reform Summit examined issues, challenges and opportunities posed by the deregulation of Higher Education. For more information on the event please visit: http://bit.ly/1v7HwNm
Citation preview
Future ready?Positioning for growth in a
changing economic and policy
environment
Lachlan Smirl
Deloitte Access Economics
A 40 year revolution??
Source: Higher Education Statistics and UCube, Department of Industry
Note: There is a break in the data series between 2000 and 2001
0.0M
0.5M
1.0M
1.5M
2.0M
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018
Number of
enrolments
Abolition of student fees
Dawkins reforms: HECS &
institutional changes
Bradley Review & Base
Funding Review
An uncertain
future?
Kemp-Norton review & HE Reform Bill
Number of
accredited
universities15 4129
A trebling in the rate of participation
19701990
2014
A 40 year revolution??
> The number of people from low SES backgrounds studying for a degree has increased from only a few thousand
in 1970 to almost 140,000 today
> However, as a proportion of the total student population, participation is below parity and not significantly
improving
> In recent years, the rate of participation by indigenous students has grown. However these students are still
underrepresented when compared to the population as a whole.
60,000
70,000
80,000
90,000
100,000
110,000
120,000
130,000
140,000
Stu
de
nts
en
roll
ed
Low SES domestic students in higher educationIndigenous students in higher education
1.0%
1.1%
1.2%
1.3%
1.4%
1.5%
2000 2002 2004 2006 2008 2010 2012 2014
Pro
po
rtio
n o
f al
l en
rolm
ents
More disadvantaged students are participating, but they are still underrepresented
Source: Universities Australia, 2013
A 40 year revolution??
> Real spending on
tuition subsidies has
grown by 64% over
the past 25 years,
with an 85%
increase in
supported places
over that time
Enrolment growth has fuelled growth in public expenditure
A 40 year revolution??
> The share of the workforce with a higher
education qualification has risen from around
20% in year 2000 to almost 30% in 2012.
> COAG target to halve the proportion of
persons aged 20 to 64 who do not hold a
post-school qualification at Certificate III level
or above by 2020.
Source: ABS cat No. 6227.0, 2012
0%
10%
20%
30%
40%
50%
60%
70%
1997 2000 2003 2006 2009 2012
Share of workforce with Certificate I qualification or more.
Share of workforce with Higher Education qualification.
> Structural change taking place in the
economy means that employment in
Australia has been increasingly shifting
toward faster-growth knowledge
industries.
> This means that individuals with university
qualifications have been in strong
demand.
Source: ABS Cat No. 5204
Responding to – and driving – a changing Australian economy
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1960 1970 1980 1990 2000 2010
Shar
e o
f to
tal e
mp
loym
ne
t
Services
Construction
Manufacturing
Mining
Agriculture
+10 PP
0
10
20
30
40
50
60
Ch
ina
Ind
on
esia
Ital
y
Au
stri
a
Gre
ece
Ger
man
y
Fran
ce
Spai
n
OEC
D a
vera
ge
Net
her
lan
ds
Den
mar
k
Swit
zerl
and
Fin
lan
d
Irel
and
New
Ze
alan
d
Un
ited
Kin
gdo
m
Au
stra
lia
Ko
rea
Un
ited
Sta
tes
Isra
el
Jap
an
Can
ada
Russian…
Port
ion
of
adu
lts
wh
o h
ave
atta
ined
a t
erti
ary
leve
l ed
uca
tio
n
OECD Nation
2000 2012
A 40 year revolution??
Source: OECD, Education at a glance, 2014
Australia has 8 Universities
ranked in the top 200 in the
world, across all three major
international rankings.
Australia has the 7th highest level of tertiary educational attainment in the OECD
Profound forces of change
Digital disruption
The rise of Asia’s middle class
Intergenerational challenges
Drivers of the next phase of the University revolution
Digital Disruption
Long fuse, big bang?
Long fuse big bang?
> Implications for access, recruitment and delivery
o New consumers and/or existing consumers
> Implications for costs and competition.
> Internationalisation of universities to realise areas of further growth
1. University of Phoenix 11. University of Mumbai
2. Massachusetts Institute of Technology 12. University College London
3. Open University 13. University of Oxford
4. University of Calicut 14. Florida State University
5. University of California, Los Angeles
6. Anna University 16. University of Cambridge
17. Liberty University
8. London School of Economics 18. University of Rajasthan
19. University of Michigan
10. New York University 20. Annamalai University
Source: Google education industry analysis, 2014
> The most Googled European
university in the world in
2014 was the Open University
> 5 of the top 20 Googled
universities in the world were
located in India.
> In 2013, searches for online
universities overtook
traditional universities.
15. Harvard University
7. Stanford University
9. Columbia University
Top 20 most searched universities by Google users worldwide, 2014
Digital disruption may be yet to truly explode
The rise of Asia’s middle class
10
> A key force on the
disciplines that
universities teach
and research in the
future will be where
the next waves of
economic growth
are being
generated.
> Part of this will be
driven by student
demand for courses
where there are
strong employment
outcomes.
> A further part will
be driven by
industry and the
government to
meet the skills,
research and
innovation needs of
an economy in
transition.
Meeting the skills needs of the future
0
5
10
15
20
25
30
500
1500
2500
3500
4500
5500
1998 2000 2002 2004 2006 2008 2010 2012
GDP per capita, current $US(LHS)
Outbound Students (annualflow, '0,000s) (RHS)
Local enrolment, tertiary(millions) (RHS)
The rise of Asia’s middle class
> China’s GDP per capita more than quadrupled over the
decade to 2010
> The number of Chinese undertaking tertiary education grew
similarly – by around 400% - while the rate of domestic
participation in tertiary education grew three fold.
> Outbound mobility ratio 1.7 but growing – huge upside
potential
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Ch
ina
Ind
ia
Vie
tnam
Bra
zil
Thai
lan
d
USA
Nep
al
Mal
aysi
a
Ind
on
esi
a
South…
Ph
ilip
pin
es
Pak
ista
n
Saudi…
Co
lom
bia
Jap
an
Nu
mb
er
of
stu
de
nt
app
lican
ts
Country of citizenship
2012-13
2013-14
The last year has seen
strong growth from
markets like India,
Brazil, Thailand and
Nepal
> And growth will not only come from China.
> Australian universities are well-placed to capture increased
student demand from a number of important countries in our
region, including India, Indonesia, Vietnam and Malaysia.
> While demand for Australian University degrees from Asia is
strong and growing, ensuring that Australian universities
continue to rank highly in terms of teaching and research will
be key to the long-term sustainability of the industry.
Number of student visa applications granted to
offshore applicants by country of citizenship
Higher Education enrolments,
population and growth trends in China
Source: UNESCO, 2012
Source: DIBP, 2014
International student exports
Intergenerational challenges
12
Projections of Australian government education spending
> Higher education a modest contributor
> Projections policy-dependent
Projections of the ‘fiscal gap’
Source: Inter-generational report, 2010
Forces driving greater efficiency and sustainability
> From 2018-19 onwards, when revenue exceeds
spending by around 1.6 per cent of GDP, ageing and
health pressures are projected to lead to a gradual
deterioration in government finances
The policy imperative
13
• Nevertheless, looming fiscal challenges will place increasing levels of pressure on
government expenditures
o Competition for public funds will increase
• But the policy imperative is broader than merely a fiscal one
The world is changing irrespective of policy
It is an imperative to support the evolution of a policy environment conducive
to Australian tertiary education providers embracing the changes confronting
us, and seizing the opportunities that accompany them, in a manner that
maximises the sector’s socio-economic contribution
It’s an imperative of future readiness …
14
1. Maximisation of the value-addMeeting skills needs and delivering valuable qualifications
3. Efficient resource deploymentGetting more out of less
2. Access and inclusionSupporting equity of access and opportunity
4. Fiscal sustainabilityEnsuring public investment matches the relative social return
Features of a future-ready HE sector
Maximising the value add
The opportunity
• It is essential that universities are ready to meet the skills needs of the future.
• Our economy continues to undergo profound structural change as demands from
Asia continue to grow and evolve.
Meeting skills needs and delivering valuable qualifications
The imperative
• Reflecting on presentations on the conference, universities can:
• play a role in understanding the changing skills needs of society
• gain better connection with industry to understand the role that higher education plays
in providing skilled graduates
• enhance the student experience and provide greater transparency around quality of
teaching and learning to students
Access and inclusion
The opportunity
• Both the sector and society stands to benefit from continuing to foster access to
tertiary education for disadvantaged Australians.
• Students from disadvantaged background remain a source of potential
participation growth
Supporting equity of access and opportunity
The imperative
• Experience from the last two decades suggests that HECS alone is not sufficient
• Alternative delivery and funding models are required (e.g. digital, loadings,
pathways)
• Universities need to play an active and creative role in redressing barriers to
participation – irrespective of policy change
Efficient resource deployment
Getting more out of less
The opportunity
• Playing to strengths
• Identifying and leveraging comparative advantage
• Increased pursuit of cost-side efficiencies
• Delivery models, including workforce deployment and digital delivery
The imperative
• High performing global higher education institutions operate at the nexus of
effective educational practices and good management
• Universities need to be prepared to deploy existing resources in increasing
targeted ways to ensure maximum efficiency
• The corollary of this is increased diversification at the sector level
• Responding nimbly to digital disruption and global – and local (?) – competition
Fiscal sustainability
19
Ensuring public investment matches the relative social return
The opportunity
• Fiscal pressure will increase competition for public funds
• Public investment in higher education will increasingly focus on where the socio-
economic return is greatest
• Pressure for greater levels of private contribution likely to continue irrespective of
where the current Legislation lands
The imperative
• Continued revenue diversification
• Realisation of the international education opportunity
• And … , potentially … , fee setting and contestability
The next 40 year revolution??
A new frontier for growth – new markets; different preferences
Distinct and diverse offerings – comparative advantage fuelling
diversification
Stronger industry links; greater vocational focus
More commercial incentives for research
Digital delivery and recruitment – new markets; new methods
General information only
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