Council of Australian University Librarians (CAUL)

Learning for life:
review of higher education financing and policy:
a policy discussion paper.

12 November 1997
(Written comments due by 4pm Friday 5 December 1997)

Updated 13 November, 1997

The complete discussion paper is available in pdf format on the DEETYA web site at - the following is an extract prepared for members of CAUL.


Outline of the discussion paper

The report proper is only 46 pages. Chapter 3 addresses some of the weaknesses of the current system pretty accurately and these are more fully addressed in Appendix 7.

Chapter 4 looks at issues and options and explicitly invites comment. The issues on which comment is sought are:

Chapter 5 of the paper is basically a summary. Appendices 1 to 10 have been prepared within the Secretariat - terms of reference, details of submissions, summaries of submissions, assessment of current states of play and options for funding of learning and teaching, and research and research training. Appendices 11 to 16 were commissioned by the committee.

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Main points addressed, or concerns noted, with respect to libraries and information infrastructure and their role in the support of teaching and research:

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Extracts from the discussion paper

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Chapter 1

A fresh vision for higher education: into the third millennium
Supporting more focussed university research

The Committee supports the role that universities play in undertaking research and research training, thereby contributing to the national innovation system. However, it considers that there needs to be:

 greater national priority setting in relation to university research and research training;

 greater emphasis on the transfer of knowledge, technology and skills between higher education and other sectors of the community;

 a more strategic view taken of investment in research infrastructure; and

 reform of research training arrangements so that the allocation of resources better reflects student demand and employers' needs.

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Chapter 2

The future operating environment
Forces for change
The digital revolution is happening

Over the next twenty years universities will be affected significantly by the revolutionary developments taking place in information and communications technologies. Many more people will have access to the means of location-independent communication. More information, entertainment and other services will be accessible on-line; and on-line communication will be far more interactive than it is today.

The new technologies are already making higher education more accessible to students who find it difficult to attend a campus, such as those in rural or remote areas and older students, who usually have competing demands or work responsibilities. On campus students are also benefiting in a variety of ways.

Over the next twenty years, however, the changes wrought by the digital revolution will be so pervasive that universities will be forced to fundamentally rethink every aspect of the way in which they provide their services. In the increasingly competitive environment that the new technologies will bring, questions for universities will include the following:

The need for flexibility

At the time of the 1988 White Paper, the Commonwealth's highest priority was to rapidly increase higher education student numbers. By 1991, concerns about quality, flexibility and diversity had assumed more prominence in the public policy agenda. Since then, the Commonwealth has funded a wide range of projects and initiatives aimed at addressing these new concerns, including the Quality Programme, the Open Learning Initiative, and numerous projects supported under the National Priority (Reserve) Fund and its successor, the Higher Education Innovation Programme, including the feasibility of a Credit Transfer Agency and a system wide Library Infrastructure project.

While these initiatives have produced beneficial outcomes in some cases, the reality is that they have operated very much at the margin of the Commonwealth funding framework.

Over 90 per cent of Commonwealth funds are delivered in the form of one-line operating grants, calculated on the basis of the notional costs of delivering courses in the conventional way. These arrangements have not provided institutions with strong incentives to provide services in ways that meet student expectations at the lowest possible cost, taking full advantage of the opportunities made available by the new technologies.

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Chapter 3

The current policy and financing framework: strengths and weaknesses
Access to capital

Australian universities will have difficulty maintaining competitiveness in world markets unless they have access to funds to finance investment in new technologies and other infrastructure. The paper prepared for the Committee by Global Alliance Ltd argues Australian universities do not have the capacity to finance substantial infrastructure investments. Compared with the prestigious private universities in the USA, Australian universities have limited resources in terms of reserves and endowments.

Getting better value from public investment in university research

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Chapter 4

The way forward: issues and options for the future.

[Public support for learning and teaching should:] maintain, and perhaps even increase, the level of public funding provided at present.

However, it is difficult to determine an appropriate level of public funding on a 'per student' basis because of broader issues associated with the actual costs of providing higher education. While in the short run public funding should not be reduced as costs are likely to be steady, in the longer term factors such as the impact of technology are likely to lead to declining costs. Whatever the future, the government should remain a dominant provider of funding for higher education into the future.

That said: - The Committee does not support the arguments made in some submissions that public expenditure on higher education should be pegged at a particular proportion of GDP. There is a strong relationship between public expenditure on higher education and population growth among those groups from which higher education students are predominantly drawn. The key predictor of education expenditure as a proportion of GDP in most countries is demographic pressure associated with the age structure of the population. Movements in GDP, therefore, with no direct relationship to demographic shifts, would not be an appropriate method of governing higher education expenditure. -

An expenditure target set on a 'per undergraduate student' basis would be more effective in ensuring adequate levels of funding for higher education. It would also enable the government to fund the level of activity required within a particular timeframe, in line with the objective of being more responsive to students;

[Public support for learning and teaching should:] incorporate a capacity to provide targeted support for high priority initiatives. ... There may also be a case over the coming decade for the government to support special initiatives to increase collaboration between institutions, and between institutions and industry to encourage electronic courseware development, investment in communications infrastructure, or the digitisation and linkage of library resources.

Research policy and funding models

The Committee believes that there are some fundamental principles that should underpin future university research policy and funding. These principles are fully articulated in the supporting paper at Appendix 10; however, the key issues are as follows:

While we have been persuaded to the view that the balance of incentives in the current policy framework is weighted too far in favour of research, the Committee nevertheless reaffirms the fundamental importance of research to the academic enterprise. There appears to be a strong case for the ARC to adopt a stronger policy role, particularly in the areas of system level priority setting, research infrastructure, and knowledge, skills and technology transfer, and for these policy themes to be explicitly reflected in the design and configuration of ARC/DEETYA research programmes. More specifically, the ARC should provide advice to the government concerning the appropriate balance between funding allocated on a competitive block grant basis relative to that provided on a targeted research programme basis.

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Chapter 5

Making the transition (edited version in The Australian, 12 November pp. 46-47)
The Committee considers that there would be merit in adopting a transparent priority setting process for university research, set in the context of the broader research and innovation system.

Changes explored for research infrastructure and research transfer mechanisms involve consideration of issues relating to programme design as well as links with other funding agencies. The questions we have asked about the balance between project and block funding are issues for which the Australian Research Council (ARC) has responsibility to advise the government.

The central role of the ARC in relation to the proposed changes to research policy is recognised. The Committee expects that, in order to implement the full extent of the changes, careful consideration and comprehensive consultation with the ARC, National Health and Medical Research Council, universities and the wider research community will be required.

Capitalising the industry

The discussion earlier in this paper contends that advances in information technology and telecommunications should enable the higher education industry to achieve declining costs in the longer term. However, in order to take advantage of this situation, institutions, either working individually or in collaboration, must be able to invest in infrastructure that will enable them to be globally competitive. The proposed relaxation of prudential and governance arrangements will go some way to assisting institutions to achieve these goals, but institutions will also need access to additional capital funding.

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Appendix 1.

Terms of Reference
Scope of the review

The Government does not wish to limit the scope of the Review Committee's work in any way, though it expects that the Review Committee will examine long term developments in the following areas, and the implications of these developments for higher education teaching and research:

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Appendix 3.

Summary of submissions to the Review Committee

This paper presents a summary of the submissions provided by the major stakeholders and interest groups. These have been grouped as follows:

Summary of submissions by:
Distance Education, Learning Networks, Libraries Etc

Number    Organisation                                                         

38        National Council of Open and Distance Education                      

42         Australian Council for Education through Technology                 

86        Australian Association of Adult and Community Education Inc.         

97        National Open and Distance Education Student Network                 

101       Queensland Open Learning Network                                     

102       Committee of Australian University Directors of Information          

109       Council of Australian University Librarians                          

121       Federation of Australian Scientific and Technological Societies      

142       Australian Society for Computers in Learning in Tertiary Education   

211       Australian Library and Information Association                       

224       Open and Distance Learning Association of Australia                  

232       Committee for University Teaching and Staff Development              

266       Australian International Education Foundation Council                

342       The National Library of Australia                                    

Theme 1 The Role of Higher Education in Australia's Society and Economy
Open and distance education is seen as having increasing significance in addressing growing demand for mass education and lifelong learning. Increased flexibility will help those who have difficulty in accessing traditional tertiary education for financial, geographic, personal, occupational, disability or other reasons. The end result could be the emergence of 'virtual universities', which will enable students to study whatever, whenever and wherever they wish.

Other implications flowing from the greater use of educational technologies include:

The National Library and the Committee of Australian University Directors of Information Technology recommend that the Commonwealth adopt a major role in the development of a national information infrastructure by establishing a National Information Steering Committee, similar to the UK Joint Information Steering Committee:

Theme 2 Factors Affecting the Demand for and Provision of Higher Education over the next 10 or 20 years.
The National Library summarises trends emerging in higher education as:

The Library suggests that these trends are already emerging on the Internet, both locally (e.g. Open Learning Australia, the University of Southern Queensland's alliances with software, hardware and media companies to network course delivery) and overseas (e.g. University of Phoenix on-line service).

The emerging involvement of global media networks in the provision of education services will result in both opportunities and threats. Opportunities include the potential for the delivery of Australian courses to larger student numbers offshore and for Australian students to easily access overseas courses. While threats include increasing competition from overseas educational service providers and loss of control over accreditation.

There is some divergence in views on the future role of government. Some submissions argue that because degrees are increasingly the minimum entry level qualification, governments should remain committed to supporting the provision of undergraduate training.

Other submissions see the role of government changing from service provision to sector regulation.

There is general support for extension of the academic year to a full year.

Theme 3 Regulatory and Administrative Framework for Higher Education
The Council of Australian University Librarians recommends that Australia's intellectual property laws should enshrine the principle of fair dealing for research or study in a technology independent fashion.

To improve the quality of tertiary teaching, the Committee for University Teaching and Staff Development (CUTSD) recommends:

 continued Commonwealth support for CUTSD programmes and incentive funding for staff development additional to operating grants; and

 Commonwealth support for universities to provide or encourage training in teaching including study leave.

Theme 4 Financing, Higher Education Teaching and Research Training
The Australian Association of Adult and Community Education Inc. expressed support for public funding, possibly through a voucher system, to:

The Association advocates use of the taxation system to increase private investment in higher education through:

The National Library reports on the substantial costs associated with the transition from printed information to the networked electronic environment. As well, university libraries are experiencing:

It is suggested public financing should take account of the increasing costs of the introduction of new educational technologies, given that:

The Commonwealth should establish a National Information Infrastructure Fund to support the collaborative development of a national information/library infrastructure for the higher education system.

The Australian Council for Education Through Technology proposes more flexible funding mechanisms be introduced, to encourage larger numbers of students to enrol in undergraduate technology courses. Open and distance education, though, may not be a low-cost alternative to traditional classroom-based higher education. Some submissions point out the costs involved (which include HECS, books, computer hardware and software, Internet charges, printing, postage and telephone charges) match those for traditional delivery mechanisms.

Theme 5 Funding of Higher Education Research
The National Library comments that neither the Research Infrastructure (Equipment and Facilities) programme nor the National Priority (Reserve) Fund, has developed any form of strategic framework for the development of higher education libraries. The Library argues that this has resulted in poor public sector investments.

The Council of Australian University Librarians requests that the 150 per cent R&D taxation incentive be re-instated and extended to include investment in research infrastructure.

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Appendix 6

Assessment of the current policy settings for the funding of teaching
Few incentives for differentiation
Incentives favouring research over teaching
Institutions do not appear to have good information on costs.

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Appendix 7

Assessment of current policy settings for the funding of research
The current framework: strengths and weaknesses
The key strengths of the current research policy framework are:

However, there are also several weaknesses in the current framework. These are:

A priority setting role for the ARC
The ARC has yet to implement significant priority setting procedures or to initiate collaboration in R&D priority setting with other advisory and research performing agencies. It currently allocates resources to the fields of research in proportion to historical shares, with a mechanism to allow a slow response to changes in demand from the different fields of research. The ARC should be explicitly empowered to conduct priority setting, not only in relation to specific programmes delivered through the DEETYA portfolio, but also in linking this to the broader national innovation system by actively participating in all relevant forums and coordinating mechanisms 59 . Despite past difficulties in priority setting, methodologies such as those of the CSIRO and the 1996 ASTEC study could assist the ARC in these tasks.

More specifically, an explicit priority setting role for the ARC could include:

Research infrastructure
The maintenance of an adequate infrastructure base consistent with national research and innovation priorities is of fundamental importance. Australia's support for academic research infrastructure is characterised by:

Strategic infrastructure
Under current funding arrangements, only a small proportion ($20-$25 million) of the $325 million 62 notionally allocated for research infrastructure and related purposes is available for system level, strategic infrastructure priorities, through the Research Infrastructure Equipment and Facilities (RIEF) programme. All of the remainder provides infrastructure support for project based research and for other discretionary purposes.

Project related research infrastructure
Another dimension to the difficulties associated with infrastructure investment is the means by which project related infrastructure is funded through the Research Infrastructure Block Grants (RIBG) programme.

These funds are meant to cover the infrastructure costs of projects undertaken by individuals and teams of researchers who have won project grants. However, RIBG are allocated by DEETYA to institutions in proportion to their share of National Competitive Grants. As a result, there is no direct link between project funding and support for project based research infrastructure.

There would appear to be little reason for allocating infrastructure funding on this basis rather than as a component of the project grant. This would entail the transfer of the relevant shares of RIBG funding to the portfolios providing Commonwealth competitive grants to allow infrastructure funds to be attached to project grants.

Unless additional [infrastructure]funding is provided in future budgets, the ratio of infrastructure support to project grant funding will decline to 12 cents to the dollar by 2000, compared with a ratio of 27 cents to the dollar at present. (A level of 40 cents in the dollar was recommended by the 1995 Interdepartmental Committee on the Higher Education Research Financing).

The Research Quantum
The RQ provides funds to institutions for computing, libraries and other forms of basic infrastructure. It may also support internally provided grants and scholarships. Since 1995, the RQ has been allocated on the basis of institutions' performance against a composite index comprising measures of research income, publications and research degree completions. There has now been three years' experience to assess the process by which the RQ is allocated. The evidence suggests that the value of the current arrangements for allocating the RQ is questionable and that it would be worth examining other mechanisms for allocating block research funding.

Balance and mix of funding provided by project grant research programmes and block grants
The costs of allocating funds under some of these programmes are very high compared with the size of the grants 68 and there is little variation over time in the proportion of research income received by institutions from Commonwealth sources.

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Appendix 9

Options for the funding of learning and teaching
There is also a case for ensuring that funding arrangements maintain a capacity to provide additional targeted support for high priority initiatives...

There may also be a case, over the coming decade, for the government to support special initiatives to increase collaboration between institutions and between institutions and industry to encourage electronic courseware development, investment in communications infrastructure, or the digitisation and linkage of library resources.

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Appendix 10

Options for the funding of research and research training
Key principles ... which should anchor future financing and policy arrangements. .

Research funding models
Model 1 - Student centred allocation of research training funds and ARC empowered to engage in improved priority setting

Model 2 - Fewer, larger, more flexible programmes

Model 3 - Large competitive block grants programme

(In all models, the notional target benchmark of 40 cents infrastructure funding to every dollar of project grant is maintained. Models 2 & 3 introduce a strategic higher education research programme)

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Appendix 11.

Australian Higher Education in the Era of Mass Customisation
by Global Alliance Ltd
4.6.6 Limitations of Internet based education - important but diminishing?

There are some major limitations with the current generation of WWW related technology. These include:

4.8.1 The current Australian higher education industry is vertically integrated in space

The dominant production units, the universities, are a mixture of two industrial models:

4.8.2 Why is it vertically integrated in space ?

Historically the system was vertically integrated in space given three major forces:

Factor 1 - Ability to create a virtuous circle located in space

Factor 2 - There were internal economies of scale in having everything on one or a few sites ("campus") including:

Factor 3 - Government policy biases towards such institutions - non spatially concentrated and out-sourced courses such as distance education have been in Australia regarded as an inferior product not supported by Government until recent years and then still regarded as a poor orphan. Governments support "bricks and mortar" institutions with Ministerial names on plaques

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Appendix 12

Assessing the Economic Contributions of Regional Universities
by the Centre for International Economics
p. iv

The higher education system is becoming increasingly competitive. There is no reason why regional universities should be at a competitive disadvantage to metropolitan universities provided they:

The main expenditure outside the region is on library items. Apart from the libraries and scientific supplies, universities' main purchases are office equipment - hard and soft - and transport. Generally, local suppliers are available to meet these requirements.

Social and cultural effects
Direct effects on the region
Universities provide a considerable amount of physical infrastructure - sporting facilities, theatres, class room space, and accommodation out of term time. These facilities benefit the community because:

[libraries not mentioned here]

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Appendix 15

The Provision and Finance of Teaching Services in Higher Education
by Mark Harrison
Many higher education inputs and outputs are not currently valued in markets and involve many intangible qualities which are inherently difficult to measure in an objective, quantifiable way. The intangible features are as important as the measurable ones. Inputs include student time and effort, faculty time and effort, buildings and equipment, the curriculum, location, library holdings and acquisitions. In each case the quality is difficult to measure, and it is difficult to control for the influence of outside factors (such as the changing standards of school leavers). The quality of outputs, such as research and the education of students, is difficult to measure, particularly value added. The technologies of instruction, research and public service are poorly understood.

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Appendix 16

Intellectual Property: preliminary submission on copyright issues
Bridget Godwin and Bruce Donald
Executive Summary

The Expanding Role of Higher Education Institutions
.... there are a number of possible directions directions for education planning and policy with major copyright implications flowing from the digital on-line environment. These include:

The Scope of the Submission

Compulsory licences (also referred to as statutory licences) are found where it is considered that there is a public interest in facilitating access to and use of copyright, such as by educational institutions. In such cases, the ability of the copyright owner to exercise their exclusive rights for a particular use is replaced with a right to receive equitable remuneration. Compulsory licences balance the property rights of the copyright owner against the public interest in encouraging certain other endeavours.

Economics of International Copyright Obligations
Australia is a net copyright importer. A report .... assessed the value of imports of copyright items into Australia in 1992-93 as $1.4 billion, four times the level of copyright exports..... This contributes to the level of Australia's trade deficit and foreign debt.

It makes economic sense for net exporters of copyright to promote higher levels of protection. .... While it may be admirable to be a world leader in levels of copyright protection, this must not be at the cost of facilitating the development of information based industries.

(Comments apply also to the digital reproduction and compilation of more "conventional" forms of teaching materials)

[Uncertainties on the meaning of "reproduction" of works stored electronically mean that legislation is difficult to navigate and complex in expression and construction.]

3 .2 . The Dissemination of and Access to Information
3.2.1 The Right to Authorise On - line Distribution
Universities must approach the issues arising from the gaps in current copyright principles as they apply to the on-line environment from two perspectives.

3.2.3 Browsing and Hyperlinks
Viewing material on the Internet is often referred to as "browsing". Browsing will often result in the creation of a temporary copy of the browsed material being made on the browser's computer. There has been considerable debate as to whether browsing should in some way be controllable by copyright owners as a reproduction of their work. Similar considerations to those discussed above arise in this context.

Universities and particularly libraries make considerable use of browsing in the course of conducting research. To facilitate these activities it would seem necessary to permit browsing without any further permissions being required.

Copyright owners argue that a free right of browsing would undermine their market. Rather that purchasing a book or film, these products could potentially be accessed on screen whenever required. Links are an essential ingredient of Internet presentation whereby a body of information is cross-referenced to related information with an implied inducement to the reader to access that information. The law has not yet resolved the extent to which links involve copyright infringement. Two issues present themselves for consideration in relation to hyperlinks. As with browsing, the first is whether any act of reproduction or transmission is or should be considered to take place in making the link. The second is whether a link to an infringing site constitutes authorisation of the infringement. This issue is considered in more detain at 3.2.6.

3.2.4 Fair Dealing
The Copyright Act provides that fair dealing for the purposes of research and study or for criticism and review is not an infringement of copyright. These fair dealing provisions have played an important role in academic endeavour. They permit the use of some copyright material without the need to obtain the permission of the copyright owner.

An important issue for educational institutions is whether these fair use provisions will be applied to the digital on-line environment.

Universities submit that the principal activity of many academics and students is the creation and use of copyright material in the course of developing and maintaining the store of knowledge and the free flow of information and ideas. Universities believe that if they are not able to take advantage of the fair use provisions for digitised material, they will be encumbered with complex regulatory requirements and clearance procedures and that this would stifle the educational and research objectives of higher educational institutions.

Copyright owners believe that digitisation will facilitate ease of copyright clearance and that fair dealing should be restricted or even abolished. They contend that the fair use provisions undermine the copyright owners' market for their materials.

The scope of the fair use provisions will play an important part in the ability of the university sector to maintain reputations as centres of excellence and to facilitate academic endeavour. Clearly where on-line delivery becomes the new method of distribution of the copyright owner's material, fair dealing has the potential to erode this primary market. Some adjustments to the fair dealing provisions may be required to strike an appropriate balance in this context.

3.2.5 Exceptions for Libraries and Archives

The Copyright Act contains numerous provisions applicable to non-profit libraries. The role of libraries is and will continue to be closely connected with the activities of higher education institutions.

Libraries have played and important role in balancing the monopoly interest of the copyright owner against the public interest in avoiding the development of an information rich/ information poor society. Libraries are vital to the conduct of research and study and the pursuit of excellence.

The valuable roles played by libraries will continue in the new communications environment. Distance education will make remote access to libraries and the demand for on-line access to library collections essential to students. At the same time, the ability to digitally store entire library collections and provide them on-line makes it possible for libraries to expand their role in ways which could have a significant effect on the primary markets for copyright materials.

Libraries have three important roles:

The provisions of the Copyright Act relating to libraries recognise these roles by granting them certain exceptions in relation to the use of copyright materials. These include:

Many of the provisions granting these rights to libraries are now severely out of date. For example, the ability to make copies for preservation appears to be limited to the making of physical copies and microform, and do not include standard modern preservation techniques such as digital reproductions. Similarly, the right to provide copies to a person for the purposes of research and study is limited to the provision of physical copies and does not permit the on-line request or delivery of precisely the same material.

Provisions in the Act relevant to libraries will need updating to permit digital preservation and storage of collections, on-line supply of material as well as on-screen and remote access by students. Many libraries maintain large collections of sound recordings, films and multimedia works as well as books. Most provisions permitting the copying of library collections do not extend to such items, but are limited to books. Consideration of extension of the library provisions to all copyright materials held in their collections is required.

The ability of libraries to function in the network and digital context will be extremely impotent to the ability of universities to exploit the potential of on-line distance education.

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Selection compiled by
Diane Costello
CAUL, 13 November, 1997

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