Greg Craven Lessons from the Australian Regulatory Journey

Transcription

1 HECQN - National Compliance & Quality Forum 2013 in Melbourne Greg Craven Lessons from the Australian Regulatory Journey I have been asked to talk about the lessons of the journey of higher education regulation and intend to concentrate on TEQSA because we re at a critical stage. But I signal at the outset that much of what I say is going to be more generally applicable to the wider question of regulation of higher education. To call it a journey so far is probably right, it s been an interesting journey, and it s had more episodes than Neighbours. There was the exciting start when we tried to create a national regulator, and then we came to the point where we had to sort of rescue the attempt, and then the bit where the legislation started to go very well, then TEQSA was established and was immediately characterised as a threat at least to western civilisation if not an intergalactic army. It was primed to do its job, made a few mistakes, now is being reviewed in a general kind of deregulation, so trying to draw lessons at this point is a bit like trying to deduce the nature of physics five minutes into the first lesson, but what I will try and do is try and catalogue the journey and try and draw a few fundamental things that I think apply both in the context of TEQSA and regulation more generally. In terms of the starting point here, the starting point is always going to be whether or not we need a national regulator of higher education. Now, I have never wavered in my belief that we need a national regulator. I ve always been of the view that the reason this was explicit in the Bradley Report was because of the view that there would be a significant extension of funding to private providers, something of an expansion of higher education, that there was a need for a regulator in these circumstances. Didn t quite happen like that, but whichever way you look at it, you ve got three unassailable reasons why you need a TEQSA. One is the size, complexity and range of the higher education sector, it does need regulatory assurance. One is the Bradley demand-driven system, the very significant number of student consumers that have come into the system, but the other interestingly enough is our overseas market reputation. Now the reason I say that s interesting is because it pre-dates Bradley, it s not the case that TEQSA is simply a response to Bradley, it s a natural outcome, I think, of directions that have been going on in Australian higher education for many years. I keep going to think the question is whether there will be a TEQSA but I will resist going into my famous hit There ll always be a TESQA to the Vera Lynn tune, but the question is what type of TEQSA. In this context I ll adopt the view of my father who was a sports journalist who used to say one should never be frank when there s an opportunity to be brutally frank. I think there has been extravagant criticism of TEQSA at times which I will modestly label as irresponsible, outrageous and damaging. Damaging because it has distracted TEQSA and hindered its establishment, because it promoted a sense of threat in an atmosphere that is not conducive to good decision-making by anyone including TEQSA. There s that old joke about trying to drain the swamp when you re up to your neck in alligators. And that in fact we ve gone into a position of a debate around trying to resist an aggressive regulator which has not necessarily been helpful for the development of policy.

2 I reject that extravagant view of the national regulator and of TEQSA. I am not saying, note, that I think TEQSA is perfect and I can illustrate that. I think it is certainly true that sometimes TEQSA has made bad decisions. I think in actual fact there is a direct correlation between the type of atmosphere I ve talked about and some of the less good decisions of a besieged regulator which is always going to find it harder to regulate. And sometimes it even means that criticism from critical friends is interpreted as a direct attack of the regulator. So my basic thesis is we need a regulator and we need a TEQSA; the real question is what type of regulator do we need and how is it to discharge its functions. I think we can get an awful lot of lessons, not only about the type of regulator, but about the type of regulation, or indeed deregulation more widely from the period before the establishment of TEQSA, in other words the period when we were formulating TEQSA moving towards a regulator. I think we can look back and see some interesting problems at that point for which you could hardly blame TEQSA because TEQSA didn t exist. I think in that period when we were creating TEQSA there were some mistakes made which did help to create an atmosphere of misapprehension which, in a way, as I said before, continues a lot. I think that at some of the initial stages there was a distinct lack of consultation which is a bad thing in regulation. There was a preference, I think, for death by powerpoint. There was a total lack of an idea of a regulatory partnership, in some quarters there was the idea, we re the people designing the regulator, you are the regulatees, we will do the regulation, don t call us, we ll call you. I think, there was a distinct lack, and this is going to be a theme, of a legislative philosophy. There are two aspects of that; one is what you re regulating and how. Every regulator needs to have a regulatory psychology which goes way beyond the narrow stipulations of its legislation. I think in the early stages of formulation, TEQSA lacked that, indeed there wasn t a really clear idea of how we wanted to implement what we wanted. We knew we wanted a risk regulator but it was very difficult because this is quite a complex concept of what a risk regulator is and how you articulate that. Now, they re the negative lessons if you like from the pre-teqsa period. What I think is much, much more important is that there are some enormously positive lessons from the way in which TEQSA was established from which we need to drew at both government and sectoral level. At this stage, both when we re thinking about how TEQSA should continue, but also as we re continuing wider questions about the context of regulatory design and what are the sorts of things that emerged in that period that were positive. One of things is the heroic efforts of a handful of bureaucrats who really took a difficult situation and fundamentally got it back on track. I m thinking of people like Leesa Schofield, David Hazelhurst and also Jessie Borthwick. This was a really, really good save. I want to talk about some of things that I think were important. One is that we began real consultation not we re doing this and we re telling you, but we re thinking of this, what do you think about that? Secondly, we went into a legislative partnership. It wasn t the case that universities would get distant communiques from Canberra, the universities were in the room as part of the drafting process with government. I don t think there s anybody who d think that that legislative partnership did not improve the legislation.

3 The third thing was that the legislation was shaped around a philosophy of regulation, wasn t just a label, wasn t just a slogan that we wanted a risk regulation, there was a philosophy of regulation embedded in the legislation. And, I have to tell you and I know that this is not a universally popular term for that philosophy, but it was light-touch regulation. Let me put that again in a calmer, more nuanced way, light-touch regulation. That was the philosophy. The philosophy that higher education is a given good, a regulatory system related to a given good is there to promote it, not supress it, and so in reacting to risk under such a philosophy you will make the smallest possible interference in relation only to real and demonstrable risk. And as a result of that, that philosophy was in turn, actually defined and expressed in the legislation, and in turn, defined what risk regulation meant and that was done with regard to the three basic principles of the Act. Regulatory necessity, reflection of risk and proportionality to risk. The final point was that by having defined that philosophy, you had effectively defined the regulatory psychology of TEQSA. It had the psychology of a light-touch regulator, regulating a good thing towards its promotion. Now, I want to talk about that regulatory psychology because I think that s absolutely vital. It s applicable not only to TEQSA, but its applicable more widely to the whole higher education regulatory system. And it s applicable particularly at a time when the government and the Minister is interested in the concept of deregulation. I for my sins have designed a lot of regulators in my life. I ve designed regulators for lawyers, for real estate agents and even famously designed regulators for brothels. I have set up tribunals, I ve been there, I understand this stuff. Legislation is vital but you can draft the best legislation in the world and it will not work unless the implementation works and the most important thing implementation for a regulator is its regulatory psychology. In other words what the regulator thinks it s doing and why and what its objectives are. And that fundamentally has to depend on the subject that you are regulating. For example, if you were to set up a cane toad authority, it would come as no surprise to you that the correct supposition for the regulator was that cane toads were bad things that should be suppressed and the regulatory psychology should therefore be tough and (inaudible) that s the way it should work. In the case of higher education, and I speak particularly from the position of universities, the regulatory philosophy is that these things are good to be promoted and therefore the regulatory approach should be within reason and the bounds of assurance, light and permissive. That regulatory philosophy is applicable well beyond the particular case of TEQSA to all elements of higher education regulation. That is vital because even when you get a regulator with the right regulation enshrining the right philosophy it will not work unless the regulatory psychology, the regulatory atmosphere, is correct and so from my point of view it is reasonable to draw certain lessons from that process at the establishment of TEQSA that I went through. It seems to me absolutely indispensable in the assurance of the type of psychology that I ve been talking about, that consultation is vital, that legislative and reform formulation should be in partnership between the sector and the regulator (when I say the sector, I don t just mean universities); that legislation must have a clear regulatory philosophy and that philosophy is, and we can argue about the terminology forever, but light touch, but that philosophy itself must be reflected in the regulatory psychology as embedded and as practised day-today.

4 My real criticism of TEQSA, and this is not the sort of extravagant criticism that I ve been myself criticising, comes as a critical friend. That s what I am towards TEQSA. I don t think TEQSA has got its regulatory psychology entirely right. And I think that s been reflected in some of its biggest difficulties. The occasional intrusive informational sally, for example the third-party arrangements more often, and I think this is quite sad, in a certain steely rhetoric about the erotic joys of being a regulator which are not actually reflected in steely regulatory decisions that are unreasonable and unfair. In fact the rhetoric that often creates the trouble is not reflected in negative action that actually happens but is a field day for critics who resent TEQSA as a sort of Stalinist tractor factory. Now, the reality I believe is, as I said, that TEQSA s intended regulatory psychology was light touch regulation. I say that not without fear of contradiction because I know I will be contradicted, but I say this to you, again in an uncompromising way, I was there. I was in the room and I know what was meant to happen and we have to move back to that position because it is clearly reflected in the three basic principles of that Act and it could not be clearer. And I hate to admit this but I committed the last refuge of an academic scoundrel preparing this, I actually did some research and I went to the TEQSA website (there s nice little things there that if you re competent you can pull down which excludes me but I tried). It s interesting that under Regulatory Approach I could find no reference to the three basic principles. I m sure they re there somewhere on the TEQSA website, the TEQSA Act is there so they ll be there but is it not remarkable that in a regulator bound by three basic principles that they are not front and centre in a simple statement of the regulatory approach. And that is one of the reasons why I m delighted to see the terms of the Minister s instructions very clearly on regulation continually referring to TEQSA not as a body of regulation but as a body of deregulation, a body of permission rather than prohibition and I believe the job is not to hurt TEQSA, not to dissolve TEQSA, not to criticise TEQSA but to simply recalibrate TEQSA on the right track. Track the right regulatory psychology. It s not about recasting TEQSA it s simply about adjusting it. If you look at the discussion papers that TEQSA s put out, all the proposals are going in the right direction. All the proposals call for less information, cutting red tape, better regulatory processes, more streamlining. I would prefer, and I m publicly on record as saying that what I prefer, is that universities had an earned autonomy model but that s a matter for a later day. But I m saying all of these things are in the right direction, but none of them will work unless the regulatory psychology is correct. If you have a restrictive regulatory psychology no amount of regulatory steps will make any difference. So I believe the fundamental job for TEQSA, well within its capacity, well within its significant talents, is to get its regulatory mind in the right zone. If that happens I think there will be less miscarriages of rhetoric and it will starve critics of TEQSA of the ammunition they have been using. But TEQSA has to admit that it has been created by a regulator, by legislation, it is a creature a creation of the three basic principles. The three basic principles of light touch regulation. I have one other fundamental step for TEQSA which is drawn from the lessons that I ve already tried to outline. That is it has to re-engage with the sector in making changes. I don t mean by that powerpoint consultation. I mean ongoing engagement in the room. The type of partnership and design we had two years ago that worked so well and can inject industry knowledge, mutual implication into complicated problems and trust. And that is going to have to be ongoing far beyond

5 the six week or any other week consultation period. That has to be part of the life of the national regulator of something as important as higher education. I would say to you quite clearly, this is all being said by me personally, not in any one of the many miserable hats I wear, that it is perfectly clear to me that Universities Australia (other groups that must be included in this) are not simply one industry group for this purpose. UA not as a board member, but as an observer, is the foundation of higher education in this country of bodies with unique governance of a constitutional character. Doesn t mean that other bodies shouldn t be engaged fully, but this is fundamental. So my operative conclusion with TEQSA is there must be a TEQSA, there must be a national regulator, and the two vital ingredients for success is the reinstatement of its regulatory psychology and its ongoing partnership with the sector in this current change process. Without those two things I see no point in a consultative engagement between the sector and TEQSA. There must be those two critical commitments to make it work and the consequence of failure are huge. The unfair criticism will continue, the regulator will be undermined and as the regulator is undermined so is the regulation and so is the sector. Having said that, can I say one final thing and a little link about something I think should be really happening in wider higher education regulation. We re in a very interesting space at the moment. We ve got a government Minister clearly committed to deregulation of higher education. I confine this to universities at the moment because I m a university person. It seems to me that there are always three very good reasons why deregulation and universities go together. One is because from deregulation comes diversity and freedom and from them come innovation and productivity. Secondly, by and large universities have a strong history of responsible behaviour and governance, we are not, I hope, cane toads. But the third one, at the most fundamental comes from classical liberal theory that government is not only about power as it s expressed in regulation, but also about the guarantee of liberty and freedom as expressed in deregulation. That s all very high falutin but let s put this quite clearly because I don t think we put it very clearly or well at all at the time TEQSA was being formulated. Universities are indispensable elements of the Australian and the British and the Western concept of freedom. Independent constitutional entities with unique governance, very irritating I admit, but guaranteeing a standing critique of society as a whole and not just any particular government but government generally. They are vital to balanced government. Now given that reality there is a huge opportunity at this time of philosophical reflection on higher education regulation to supply a missing piece of what I would call the meta-governance of higher education and universities. We have seen the dangers when the regulatory psychology in relation to universities is to some degree deficient, even where that degree of deficiency is exaggerated. The truth is, not withstanding everything that I ve said about the position of universities, that the closest attempt that we have ever come in law to define what is special about universities in our system,ironically, is the three basic principles in the TEQSA Act. And the charter of importance of universities should not be placed in the Act creating their regulator. This is a fundamental proposition that belongs in a far more prominent place. It s clear to me as a constitutional lawyer, and as you know constitutional lawyers are infallible, that the Commonwealth has legislative authority, both under the Corporations powers and probably under the implied power for nationhood, to pass a short universities Act recognising and celebrating the fundamental character

6 of universities in an appropriate place. Acknowledging their autonomy subject to law, within the regulatory envelope that the Commonwealth imposes and within absolute government control of funding as self-accrediting institutions, free in what they teach, in what they research, in who they enrol and in who they hire. And if we had an Act like that standing alongside or perhaps above the TEQSA legislation then indeed we would permanently establish a regulatory psychology of higher education without in any way compromising the power of the Commonwealth to set directions for the sector. It seems to me that moving beyond TEQSA, moving beyond the particular issues we have, that would be a keystone of higher education deregulatory innovation. That certainly would be a fit project for a government that sees itself as the heirs of Menzies and the establishment of the Australian higher education system in its modern form. I would strongly recommend it.