The rise and fall of the demand driven system

A message from the Vice-Chancellor, Professor Greg Craven:

Over the last 35 years, higher education has changed our lives dramatically.

Since its launch, the demand driven system has fundamentally altered the landscape of Australian higher education in ways that many nations around the globe could only dream of.

In 1982, just 7% of Australians between the ages of 15 to 64 had a degree level qualification. Now this figure is just under a third for women (31.5%) and a quarter for men (24.9%) (ABS, 2017). Universities such as ACU have been at the forefront of a radical transformation of the Australian workforce.

Participation has increased for Aboriginal and Torres Strait Islander peoples, those from low socioeconomic backgrounds, first in family students, regional, remote and students with a disability.

Australia is immeasurably better for having invested in its people, through access to higher education.

ACU has been at the top of this wave of change, as the demand driven system redistributed enrolments from the large and old to a more diverse and comprehensive sector. In doing so, increasing choice and opportunity for all.

In the last 27 years, ACU has improved remarkably in every conceivable measure.

Science, Nursing, Business, Allied Health and Psychology were the top five national growth areas under the demand driven system, with ACU having grown by 167% from 2008 to 2016 in domestic bachelor enrolments. A proactive and strategic approach was executed. This has been achieved while preserving a relentless focus on quality student experience, research and our core values.

During its launch, the demand driven system was introduced to address unacceptably low levels of participation by global standards. While the counterintuitive storyline against a demand driven system propels myth into popular fiction, the reality is that students are satisfied and graduate outcomes are good, and getting better.

In December 2017, the government capped the allocation of Commonwealth supported enrolments. While the move appeared to be primarily budget driven, it was a decision without a compelling vision and did nothing to advance human capital. Compounding the storyline have been a number of myths the sector has worked tirelessly to dispel, such as:

Attrition is getting worse and is out of control – FALSE.

Attrition rates are stable and relatively unchanged over the last decade. This is the advice of the Higher Education Standards Panel (HESP). ACU’s adjusted attrition rate (13.8%) is below the national average (15%), and is stable (DET, 2017).

Students can’t find jobs because their degrees are of less value – FALSE.

The single most significant reason graduates don’t fully use their skills and education is due to labour market factors (63.1%). Other reasons include: further study (8.4%), using the job as a stepping stone (5.1%) or being satisfied with one’s current role (4.3%) (QILT, 2018).

Graduate outcomes have been consistently declining – FALSE.

Student satisfaction is high at ACU (at 80.4%) and full time graduate outcomes are good (at 79.3%), seven points above the national average (71.8%) (QILT, 2018). Over the last 35 years, graduate outcomes have consistently remained at around 80%, despite constantly changing economic conditions. Graduate outcomes fell below this level on two occasions: the first immediately followed the early 1990s recession, and the second following the 2009 Global Financial Crisis (GFC). Since the GFC, graduate outcomes have been increasing, including during the implementation of the demand driven system. Skilled graduates contribute to long term economic prosperity, financial independence and quality of life.

Universities are overfunded – FALSE.

The median operating margin for (Table A) Australian universities is 5.2% (TEQSA, 2017), all of which are not-for-profit entities. This is less than the aggregate for charitable organisations at 8.9% (ACNC, 2016).

Unfortunately, in each case, the simple (yet false) message is the more salient one. The fact is, as a nation we are still coming to grips with our understanding of higher education and the real and intrinsic value of learning and the pursuit of truth.

Bold ideas hold great power. All the same, funding policy with a fictitious storyline and without a clear vision is equally potent.

Sector diversity cannot be achieved if the ‘non-elites’ are seen as inferior. A cap on enrolments is an attack on diversity and the unique competitive advantages offered by a wider range of institutions. Why should student futures be determined by government controlled supply of educational access?

Additionally, linking funding increases to growth in the national population of 15-64 year olds makes little sense to anyone. Regional areas with above average growth rates will be disadvantaged, universities with a more diverse enrolment profile will be disadvantaged, young people will be disadvantaged as we enter the looming baby boom due to occur over the next decade.

If you would like to read more about the demand driven system, please download the report prepared by the Office of Planning and Strategic Management.

As always, I welcome your views and encourage you to discuss this important matter in your teams.


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