When the entire Optus network went down last week – knocking out mobiles, landlines and internet connections – my new paper Job-ready Graduates 2.0: The Universities Accord and centralised control of universities and courses was in the late stages of production. If the Optus incident had happened earlier I might have included more on the risks of the Accord interim report’s proposed Tertiary Education Commission as a single point of failure.

A Tertiary Education Commission’s role in allocating student places

My new report builds on my earlier explainer of the Accord interim report’s proposals for distributing student places, focusing on how this would affect the relationship between higher education and skills needs.

Under current and recent policies, Australia’s higher education system largely relies on decentralised decision-making in matching students with courses. Under block grant or demand driven systems universities decide what courses to teach and how many places to offer in each.

As my earlier post said, the Accord interim report deems demand driven funding ‘no longer reflective of current requirements’ due to its focus ‘only on the willingness of a student to learn, and the willingness of a provider to enrol’ (p.131).

The Accord interim reports wants more centralised decision-making ‘within a system that takes account of…the overall supply of a… well-located workforce that meets the changing requirements of the economy’, including ‘better planning than demand driven funding’ (p. 131).

The TEC’s roles would include ‘determining funding allocations’ for universities and negotiating agreements with them ‘to deliver against local, regional and national priorities and needs’ (pp.112-113).

The TEC’s ‘relationship with Jobs and Skills Australia could be an important part of this’ (p.131), ‘with the system needing to supply graduates who meet the societal and economic needs of their region and the nation’ (p. 132).

The report does not resolve the tension between this bureaucratic approach to allocating student places and its support for a universal learning entitlement or demand driven funding for equity groups. I suggest a voucher system, with vouchers tied to specific or a limited range of courses, could resolve this tension (not that I support such a system).

The problems of centralised sytems – even if working well

My report focuses on three problems that a TEC would experience even if functioning well.

The first – which all systems of distributing student places face – is that the labour market is hard to predict.

The second problem is the constraints of student demand. The abilities and interests of prospective students limit the pool of potential applicants. For demand driven and block grant systems this can be a problem for universities and/or employers, but student choices are an integral part of these systems – including for courses that do not reliably lead to good labour market outcomes (universities are about more than jobs). The Accord TEC model is more about meeting employer than student demand, making student constraints a significant issue.

The unpredictability of labour markets and student demand constraints both contribute to the stranded resources problem – money allocated to specific purposes that cannot be used because insufficient students matching all the funding criteria can be found.

A well-functioning TEC would regularly redistribute places in response to new labour market information, but this process would take time. The TEC would need to identify relevant trends, decide on the scale of response needed, check on capacity constraints at universities, perhaps investigate potential student demand, and then allocate places. Universities would then try to recruit students.

Under more decentralised models of allocating student places, such as block grants or demand driven funding, universities can respond quickly to changes in student demand, whether expressed through student applications or internal subject choices.

Single point of failure

But what if the TEC is not functioning well?

Like any other government agency, the TEC would not be guaranteed a sufficient budget and may have trouble finding suitable staff. The Tertiary Education Quality and Standards Agency, the quality regulator in higher education, has suffered from difficulty recruiting suitably qualified employees and high staff attrition. Universities can also face staffing issues, but in a decentralised decision-making system these are local rather than national problems.

Department of Education IT problems mean that the latest published applications and enrolment data is from 2021. Material in the Department’s annual report suggest that they have ‘preliminary’ 2022 enrolment data, but 2022 data is still inadequate for detailed planning of 2024 and beyond student place allocations. Universities have IT problems as well, but not all experience computer dysfunction at the same time. Using their own applications and enrolments data, universities can adjust their course and student place decisions in light of student demand.

The TEC as a single point of failure could freeze the system in time. Just how bad this would be depends on what autonomy universities are left with to manage their own affairs. I hope that the final Accord report preserves significant local decision making. But government policies to date – the 20,000 extra places, the nuclear submarine places, and the start-up year places – are all at the worst-case scenario end of the range of possibilities.

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