[Aqualist] What the 2003 Budget delivers (summary from David Denham, FASTS)

[Simon Haberle]

Dear all,

Below is a statement from David Denham of FASTS on the 2003 Budget and 
should be of considerable interest to everyone.

Cheers Simon
_____________________________________________________

2003 Budget delivers more for Science and Innovation, but new Higher 
Education package creates some controversy

Science and Innovation
The 2003/04 Budget will deliver a $437M increase in support for Australian 
science and innovation. This increase brings the total Commonwealth support 
to for this sector to $5.43 billion, equivalent to 0.68% of the GDP, which 
is the highest it has been since 1996/97.
The new funding for the Backing Australia’s Ability program has been 
delivered in full. As a result the Australian Research Council, and 
Cooperative Research Centres will received a total increase of $104M in 
2003/04. The main outcomes for the larger Commonwealth science and research 
agencies are given below and a summary is shown in Table 1.


CSIRO
CSIRO’s purpose is to ‘deliver great science and innovative solutions for 
industry, society and the environment, by igniting the creative spirit of 
our people’. It is the largest research agency in Australia.

In the 2003/04 Budget, although CSIRO received a $20M one off contribution 
to its new flagship programs, its future is not clear. The next triennium 
funding agreement has essentially been put on hold pending the findings of 
a review into funding models applied to Commonwealth research agencies. The 
government is looking for arrangements that will bring the universities and 
the government agencies closer together to enhance collaboration.

At the same time the external earnings targets appear to dominate the 
organisation. According to the budget papers, CSIRO is expected to increase 
its external earnings from 30 percent ($285M) in 2002/03 to 42 percent 
($435M) in 2006/07. This might not be too bad, but it is finding it more 
and more difficult to meet its targets. The 2002/03 budget papers gave a 
target of $303M for external earnings but in the 2003/04 budget papers the 
outcome for 2002/03 is given as $285M. The difference will not even be 
covered by the extra Flagship Program funding and will result in a cut to 
it’s work program.

Furthermore, the increased emphasis on short-term tactical research is 
likely to lead to a decline in the longer-term public good strategic 
research and a distortion of CSIRO’s program.
It is to be hoped that this situation will be rectified, and we will await 
the outcome of the funding reviews, announced in the Budget, with interest.


Australian Research Council
The ARC’s Mission is to Advance Australia’s research excellence to be 
globally competitive and deliver benefits to the community. Its role is to 
advise the Government on research funding and policy and, through its 
management of the National Competitive Grants Program (NCGP), to promote 
the conduct of research and research training that is of the highest 
quality for the benefit of the Australian community.

The total expected appropriation for the ARC in the 2003-04 Budget is 
$426M, comprising $414M from the NCGP and $12M from DEST to administer the 
program. The ARC is now the second largest research agency in Australia, 
thanks to the boost in funds as a result of the Backing Australia’s Ability 
program and funding is scheduled to rise to $573M in 2006/07.


The National Health and Medical Research Council
The NHMRC consolidates within a single organisation the functions of 
research funding and development of advice. One of its strengths is that it 
brings together and draws upon the resources of all components of the 
health system, including governments, medical practitioners, nurses and 
allied health professionals, researchers, teaching and research 
institutions, public and private program managers, service administrators, 
community health organisations, social health researchers and consumers. 
Its budget for 2003/04 is $378M, which represents an increase of $39M over 
the previous year.


Defence Science and Technology Organisation
DSTO is one of Australia’s largest research agencies, it has a budget of 
$355.3M in 2003/2004, but the increase over the previous year is only about 
2.5 percent, so it has not done well in the competition for operational 
funds within the Defence Department.


Bureau of Meteorology
The Bureau of Meteorology did well in the Budget with an additional $62M 
being committed (over four years) to upgrade its weather radar network and 
a $31M boost over four years to improve its weather forecasting facilities. 
It does not have to bear a large external earnings target. The budget 
papers indicate that this will be held at about $14M/year through 2006/07. 
The government appropriation for 2003/04 will be $192M.


Australian Nuclear Science and Technology Organisation
ANSTO has a total appropriation budget of $219M. In summary, it receives 
$79M as capital funding for the new reactor and an additional $18M to 
upgrade the security upgrade at Lucas Heights. However, according to the 
forward estimates it appears that the operating budget provided by the 
Commonwealth will decline to $111M in 2005/06 (see the Table 1 below).


Geoscience Australia
Geoscience Australia did very well, with an increase of $61M over four 
years. This funding will be used to undertake geoscience research programs 
aimed at identifying new frontier areas for petroleum exploration. The 
additional funding will also be used to preserve the deteriorating seismic 
archives that are held by GA.

Without new oil discoveries, Australia’s oil is likely to fall by 40% over 
the next 10 years (see Bruce Hobbs article in Preview, April 2002), and 
this will result in an additional import bill of around $5 billion per 
year. GA is also not being burdened by external earnings targets; these 
will remain at about $12M through 2006/07.


The Australian Greenhouse Office
The AGO is the lead Commonwealth agency on greenhouse issues. It is 
responsible for promoting a whole of government position on greenhouse 
issues to the broader domestic and international community. It aims to 
develop an integrated, balanced approach that will facilitate the 
realisation of both economic and environmental benefits for Australia from 
the opportunities arising from greenhouse response actions.

However, although it had an increased appropriation in 2003/04 Budget, to 
$108M, the future years do not look good with the forward estimates 
indicating a fall to $61M in 2006/07. It is not clear what this means in 
the context of outputs in its work program.


Antarctic Division
The Antarctic Division of the Department of the Environment and Heritage is 
responsible for Australia’s commitment to the protection of the Antarctic 
as well as conducting world-class Antarctic scientific research. The 
2003/04 Budget provides for an appropriation at similar levels to last year 
and a commitment to invest $17.4M into new shipping support to supply our 
permanent bases. The annual appropriation of $87M remains constant for the 
next three years.


Australian Institute of Marine Science
AIMS mission is to generate and transfer the knowledge to support the 
sustainable use and protection of the marine environment through 
innovative, world class scientific and technologies research. The basic 
operating budget has been reduced in 2003/04 by approximately but it will 
receive additional funds for the Major National Research Facility in Darwin 
($3.25M); for facilitation of affiliation with James Cook University 
($2.9million); and to finalise refurbishment of AIMS facilities ($2.1million).

The newly affiliated body will be called The Australian Institute of Marine 
Science at James Cook University. The goal is for this institute to become 
a world-class centre for research and teaching in marine science.


AgencyGovernment appropriation in $MComments
2002/032003/042004/052005/06
CSIRO532568561572See text above for comments on CSIRO’s budget.
ARC363414483561Increases due to implementation of Backing Australia’s 
Ability programs.
NH&MRC339378Forward Estimates not available.
DSTO346355A 2.5% increase, a cut in real terms from 2002/03 to 2003/4. 
Forward estimates not available.
CRCs149202205267Numbers from BAA for forward estimates.
BoM162192195201Increased funding in 2003/04 for upgrade in weather 
forecasting equipment and replacement radar stations.
ANSTO182121114111Government appropriation from portfolio statements.
GA8696100104Increased funding for petroleum promotion program in 2003/04.
AGO731089185Core appropriation will reduce to $61M in 2006/07.
Antarctic
Division84878788No new money, but $69M committed over four years to improve 
transport facilities.
AIMS24222323Will be amalgamated with the James Cook University in 2003/04.

Table 1, A summary of appropriations for the main Commonwealth-funded 
science agencies



Backing Australia’s Future: the Nelson reforms to higher education

The Minister for Education Science and Technology, Brendan Nelson, 
announced $1.5 billion worth of additional funding for higher education 
over the period 2004 to 2007. However, most of the new funding will be 
provided in the later half of the package, as can be seen below.

Expenditure by Commonwealth ($M)20042005200620072004-2007
Commonwealth Course Contributions0.061.6133.5209.2404.3
Transition Fund0.012.60.00.012.6
Regional Loading27.930.331.532.9122.6
Conversion of Marginal Places0.064.8118.7164.1347.6
Growth Places11.90.00.010.910.9
National Priorities11.247.549.851.8161.0
Commonwealth Scholarship Program0.030.049.870.8161.8
Learning and Teaching Initiatives0.00.079.3108.9188.2
Equity Initiatives0.35.47.19.121.9
Workplace Productivity Program0.00.027.327.955.2
Collaboration and Structural Reform Fund0.06.56.76.820.0
Quality Initiatives0.00.90.90.92.7
Higher Education Information Management System4.35.45.15.320.1
Implementation on costs10.20.00.00.010.2
Marcus Oldham2.10.00.00.02.1
HELP Programs0.0-15.7-23.4-37.2-76.3
Total67.9249.3486.2661.11464.5

Table 2, Major funding elements in new Higher Education package

In addition, the Government has announced a series of policy reforms, with 
much of the funding being conditional on universities compliance with 
workplace relations and governance reforms.

A brief overview of the changes is given below.

New Funding Mechanism
The Government is moving away from Block Operating Grants to a new funding 
system called Commonwealth Grants System (CGS). Under CGS the Commonwealth 
will provide each university with a fixed amount of funding per student 
(see Table 1 for estimated contributions for different clusters of 
students) on top of which each university will set its own fees (capped at 
30% above the 2005 equivalent HECS charge).

The level of Commonwealth contribution varies between discipline areas 
grouped into 12 clusters (this model is essentially that proposed by the 
Australian Geoscience Council, in its submissions to the review).

Table 3 shows the 12 clusters, the estimated level of the Commonwealth 
contribution in 2005, the maximum fees universities will be allowed to 
charge, and funding per student, assuming the university fee is the same as 
the HECS charge.

ClusterDescriptionCommonwealth2005MaximumFunding per Student
ContributionHECSFeewith 2005 HECS
1Law1509642783557936
2Account Admin, Econ, Commerce2481549071377971
3Humanities4180385450108034
4Maths, Statistics49375490713710427
5Behavioural Science, Social Science66363854501010490
6Computer, Built Environ, Health73923854501011246
7Languages, Vis & Perform Arts90913854501012945
8Engineering, Science, Surveying123035490713717793
9Dentistry, Medicine, Vet Science154226427835521849
10Agriculture163945490713721884
11Education (1)72783854385411132
12Nursing (1)97333854385413587
(1) Education and nursing are National Priority areas and student fees are 
capped at current equivalent HECS rate

Table 3, Commonwealth Course Contribution Schedule 2005

All of the data presented in Table 3 are 2005 estimates. For example, in 
2005, for every Science student enrolled at a university, the Commonwealth 
contribution will be $12,303. The university has the option of adding its 
own fee on top of Commonwealth subsidy. The fees for Science students 
(which is where geoscience will fit) will then range from $0 to $7,137. The 
$7,137 cap represents a 30% top-up over and above the 2005 equivalent HECS 
charge. Therefore the amount of revenue a university receives for each 
Science student will be in the range between $12,303 and $19,440 depending 
on the fee the university imposes.


CGS Loading for Industrial Relations and Governance Reform
The package includes loadings to CGS contributions of 2.5% in 2005 
(included in the estimates presented Table 2), 5% and 7.5% in 2006 and 2007 
respectively. The loadings are over 2004 notional contribution levels. The 
total value of this component of the funding package is estimated to be 
$404M over the three years from 2005 to 2007.

The loadings are however, conditional on universities achieving certain 
workplace relations and governance reforms, the exact details of which are 
yet to be determined.


Summary of major measures

Workplace Productivity Program
Funds totalling $55.2M over two years from 2006 will be for institutions 
committed to workplace reform, and contingent on implementation of flexible 
working arrangements, improved productivity and performance.

Higher Education Loan Program (HELP)
This program will incorporate the current HECS and two new loan schemes. 
 From 2005, universities will set their own student fees within the ranges 
set by the Commonwealth, and will be allowed to increase the maximum number 
of full fee payers to 50% of their students. Postgraduate and undergraduate 
full-fee payers will be able to access the new FEE-HELP loans scheme 
borrowing up to $50,000, and indexed to the CPI plus 3.5% each year for a 
maximum of ten years, before returning to the CPI indexation. The repayment 
threshold will increase insubstantially to $30,000 from 2005.

Fee Paying HELP and Overseas Study HELP
These HEPLs will provide loans for students who do not access to an income 
contingent loan scheme (up to $50,000); and for full time undergraduates to 
study abroad for one or two semesters (up to $5000).

Transition fund
A total $12.6M will be available in 2005 to assist institutions in 
adjusting to the new arrangements for full-fee paying students, described 
above.

Regional loading
A total of $122.6M from 2004 to 2007 will be provided to regional 
institutions that face particular disadvantages in changes to the funding 
model. The CGS, which replaces the current base operating grants, will 
contribute towards the cost of an agreed number of places in each 
discipline at undergraduate, postgraduate non-research and enabling course 
levels. Universities will be classified in one of the four loading bands: 
Northern Territory (30%), ‘distant and small’ (7.5%), ‘proximate and small 
or distant and large’ (5%), and ‘proximate and large’ (2.5%). 10,000 EFTSUs 
and 300 km are the criteria for the size and distance respectively.

Conversion of marginal places
Marginally funded places provided for ‘over-enrolled’ students will be 
replaced with about 25,000 new places distributed on the basis of labour 
market needs, and will cost $347.6M for the period 2004-2007.

Growth places
In 2007, the Commonwealth will provide additional 1400 supported places 
worth $10.9M to areas of labour market needs, and in negotiation with 
States and Territories. The details of consultative processes for this are 
unclear.

National Priorities
Teacher and nurse education are among national labour market priorities. 
There will be:
·       Additional nursing places from 2004 to 2007, worth $40.4M;
·       Additional teaching places from 2005, worth $81.4M over three 
years; and
·       No increase in the maximum HECS level for teaching and nursing 
students, that is institutions will set these fees between $0 and $3,854.

Commonwealth scholarship program
Four new scholarships programs will be means-tested, merit-based, and 
non-repayable, and costed over the period 2004-2007:
·       Commonwealth Education Costs Scholarships (CECS) for students from 
low socio-economic, rural, and indigenous backgrounds, number 17,630, at 
$2,000 per year for up to four years, worth $84.4M.
·       Commonwealth Accommodation Scholarships (CAS) of $4,000 per year 
for up to four years for students from rural and isolated areas, worth $75.8M.
·       International Scholarships for 30 international students to study 
in Australia, worth $7.9M.
·       Additional $1M a year for Australian language teachers to undertake 
professional development in the country whose language they teach.
·       Additional 31 Australian Postgraduate Awards for postgraduate 
research students by 2007 and a $1M funding program for young researchers, 
doctoral and post-doctoral, to participate in international specialist 
forums in their fields.

Learning and teaching initiatives
·       Learning and Teaching Performance Fund of $138.5M for 2006 and 2007 
for institutions that choose to focus on undergraduate teaching and 
learning, with eligibility based on a range of performance indicators.
·       National Institute for Learning and Teaching in Higher Education 
will be formed in 2004 to provide a national framework for improving 
institutional performance in teaching and learning and perform secretariat 
functions to the Australian Universities Teaching Committee. It will be 
funded from 2006 at $21.9M per year.
·       Additional Australian Awards for University Teaching will be 
provided at a cost of $2.7M per year from 2006.

Equity initiatives
·       Indigenous Support Fund will increase to a total of $10.4M for 
2004-2007, for institutions that can provide evidence of increased 
indigenous participation.
·       Indigenous Staff Scholarships program for indigenous academic and 
general staff who have actively encouraged indigenous students to 
participate in and complete their courses, enabling a one-year leave from 
work to take up full-time university study in their field. Five 
scholarships will be provided per year from 2004, each covering $10,400 in 
tuition fees and a non-taxable stipend of $20,900.
·       Indigenous Higher Education Advisory Council will be established to 
advise the Minister and DEST as a formal advisory mechanism with indigenous 
higher education staff, funded at $260,000 per year, starting in mid-2003.
·       Higher Education Equity Program will be reviewed to develop a new 
performance-based funding formula. Block grants will not be provided. New 
funds will total $2.3m per year from 2005.
·       Students with Disabilities Program will be increased by $1.1M per 
year from 2005 for additional institutional infrastructure and services for 
this equity group.

Collaboration and Structural Reform Fund
This fund will absorb the current Higher Education Innovation Program aimed 
at fostering collaboration between universities, business, industry, 
professional and community groups and other organisations. The total of 
existing and new funds for 2005-2007 is $36.6M.

Quality initiatives
·       From 2005, $590,000 per year will go to Australian Universities 
Quality Agency to conduct audits of offshore programs.
·       There will be an extended version of the Course Experience 
Questionnaire, more intensive use of its qualitative data and a shift 
towards electronic delivery and publication of results and outcomes.
·       Additional $270,000 per year from 2005 will go to promote the 
Graduate Skills Assessment Test to and expand its use by employers.

Implications of the package

The implementation of the Government’s ‘reforms’ will cost $10.2M in 2004. 
The centrepieces of the Crossroads package are the proposed workplace 
relations and governance reforms, the deregulation of student fees, and 
changes to the funding model for universities. The scope of the latter is 
still unclear, pending the results of the separate review of research 
funding schemes.

The positive aspects of the package include initiatives to improve 
participation in higher education by members of the targeted equity groups, 
such as students from low socio-economic backgrounds, rural and regional 
areas, and indigenous communities. Indigenous education in particular is a 
single area seeing the most significant improvements, especially the 
support for Indigenous Employment Strategy and additional assistance for 
Indigenous staff and students.

The most contested aspect of the reforms are changes to industrial 
relations and university governance, on which much of the funding is 
contingent. Coupled with the planned introduction of voluntary student 
unionism legislation, the changes can be seen to represent a move by the 
Commonwealth to restrict industrial rights of both staff and students.


David Denham
7 Landsborough Street
Griffith ACT 2603
Australia
Tel: 02 6295 3014

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