Lowering cost of higher education critical to meeting Australia’s skills shortage, report warns

A major report has said ‘Australians should not be deterred from higher education because of the increased burden of student loans’. Photograph: Paul Miller/AAP

Access to higher education among disadvantaged Australians must be dramatically scaled up and the financial burden of studying eased if the country is to meet acute skills shortages, a major report has found.

The highly anticipated universities accord final report, being released by the education minister, Jason Clare, on Sunday, was expected to lay out the blueprint for the tertiary sector over the coming decades.

The report contains 47 recommendations, including compensating students for hundreds of hours of mandatory placements and tweaking Help loans to reduce ballooning student debt.

“Help is an indispensable part of the higher education funding system, but it requires reform to retain its social licence,” the report said. “Australians should not be deterred from higher education because of the increased burden of student loans.

“It is time to listen to what students are saying and to respond genuinely to their calls for change.”

Under the proposed reforms, the indexation rate would be set to either the consumer price index or the wage price index – whichever is lower – as some MPs have urged. Student contributions would also be reduced for low-income earners and the timing of indexation would change to deduct compulsory repayments first.

With the number of students accessing income support payments trending downwards, the review recommended expanded access to Youth Allowance for students whose parents earn up to $68,857 and those studying part-time.

The changes were required to reach ambitious targets laid out in the report, anticipating at least 80% of the workforce would need a vocational (VET) or university qualification by 2050. It requires a 20% increase in attainments, particularly among Australians from underrepresented backgrounds.

For Australians aged between 25 and 34, it recommended university attainments grow by 10% to 55% by 2050, and for tertiary or technical qualifications to jump to 40%.

To meet the targets, the system will need to more than double the number of commonwealth-supported university students, from 860,000 to 1.8 million.

“Australia is not meeting our current skills needs and will not meet them in the future unless we produce far greater numbers of higher education and VET graduates,” the report said.

“Australia’s current higher education system has neither the capacity nor capability to deliver what the nation needs.”

The latest data shows Australians from low socioeconomic status (SES) backgrounds make up 25% of the population, but only 17% of undergraduate enrolments. Educational attainment also declines further away from capital cities.

Projections suggest that to achieve parity by the designated timeline, students from target cohorts would need to make up 62.9% of enrolment growth.

It recommended a needs-based funding model that acknowledges the cost of providing additional supports to ensure priority cohorts, including low SES students, with bonuses for high completion rates – described as a “gamechanger” for regional providers who disproportionately enrol equity groups.

It also calls for better integration between vocational and higher education in order to create a more “seamless” tertiary system, including flexible pathways between the two and the continued development of a National Skills Passport to recognise prior learning.

“VET and higher education remain largely separate and siloed systems. Various cross-sectoral barriers continue, and there is a lack of shared purpose and direction,” the report said.

“Increasing the numbers of students in tertiary education to the required levels … would require new institutions, more diverse operating models and more cross-provision between VET and higher education providers, including opportunities to expand the role of Tafes.”

The accord was commissioned by the commonwealth and led by an expert review panel chaired by Prof Mary O’Kane. The report was informed by more than 800 submissions and 180 meetings with stakeholders.

The reportalso proposed the establishment of an Australian tertiary education commission to help develop future policies.

Clare said the plan would be for the “next decade and beyond”.

“Under Bob Hawke and Paul Keating, the number of Australians finishing high school jumped from around 40% to almost 80%,” he said. “That was nation changing.

“The accord says that in the years ahead, we will need 80% of the workforce to not just finish high school, we will need them to finish Tafe or university as well.”