Australia: Graduate employment central to 2020 university funding scheme

Universities in Australia are expected to place even greater emphasis on ensuring their graduates land jobs after graduation from next year, after the government said their performance on this score would be a key consideration for additional funding.

Education Minister Dan Tehan confirmed the matter Wednesday when finalising the Morrison leadership’s new performance-based funding scheme to be rolled out in 2020. 

Under the scheme, the government will pump an extra AU$80 million into Bachelor-level courses to boost student outcomes, effectively lifting a freeze on university funding instituted in 2018.

Funding will be tied to four different performance metrics, on which the country’s 37 public universities will be measured against to gain their share of the funding increases.

“Graduate employment outcomes” will account for 40 percent of the money for new students, twice the weightage given to the other three metrics: student success, student experience and increased participation by remote, Indigenous and low socio-economic students.

‘‘The performance-based funding model that has been finalised makes an explicit link between funding and one of the key goals of every university: to produce job-ready graduates with the skills to succeed in the modern economy,’’ he said.

The minister’s remarks follow a report released by professional services firm EY that said improving university outcomes in Australia could lift national productivity and add AU$3.1 billion a year to the GDP by 2030.

The report produced for Tehan noted that the completion rates for domestic graduates have fallen dramatically in recent years, going from 75 percent in 2009 to 66 percent in 2017. Improving the rate would uplift productivity levels, in addition to saving AU$408 million in economic resources by 2030.

Performance-based funding provides an added incentive for universities to pay greater focus to graduate job-readiness, ensuring they are able to gain employment after leaving school. Tehan also gave his assurance that the new formula would not be punitive in nature.

For example, universities unable to reach their graduate employment targets would be “supported to improve” their performance.

“This uniquely Australian funding model will allow for adjustments to shifting national priorities and changes to the higher education landscape over time,” he said.

“We will continue to ensure the model is fit-for-purpose with reviews scheduled in 2020 and 2023.”

The additional AU$80 million for 2020 will come on top of the current AU$7 billion the government pays for student subsidies every year and will increase annually from next year.

The increase will take into account the annual growth rate of the country’s population of 18 to 64-year-olds. This cumulative approach will be tied to a limit, however, with funding to grow only until it reaches 7.5 percent of each university’s basic grant amount.

Beyond this point, the performance-based funding at stake for a university will remain at 7.5 percent.

Professor Paul Wellings CBE, the Vice-Chancellor of the University of Wollongong who led consultation for the new scheme said the funding structure places a spotlight on institutional performance.

He also called it “distinctive”, with every university receiving support to “encourage performance improvement and the sharing of best practice across the whole sector.”

Universities Australia Chief Executive Catriona Jackson thanked Tehan for reaffirming that the intent of the scheme was not to penalise under-performing universities but to ensure excellence across every institution.

“We know prevailing economic conditions are the strongest determinant of jobs across the economy, and job prospects for graduates follow the curve of that trajectory very closely,” she said.

“We appreciate the government’s understanding of that relationship and the need for a strong economy as the single most powerful factor that shapes whether our graduates can find work.”