Source: Dale Edwin Murray

When you step off the plane in Australia, after you adjust your eyes to the bright golden orb in the sky, you can¡¯t help but notice that most people have a spring in their step and a smile on their face.

Maybe it is just the sunshine, but it might also have something to do with the mining boom that has protected the Australian economy from the impact of global recession. Everything seems new and shiny in a flourishing economy. Jobs are plentiful, wages are high, quality of life is on an upward trajectory, the number of students in higher education is growing ¨C and no matter how hard you press anyone in the government or the Treasury, you cannot get them to worry about the number of student loans flying out the door.

Here in the UK in deepest, darkest January, when our universities minister has just had to mount yet another defence of the ever-growing resource accounting and budgeting (RAB) charge (the proportion of student loans that will never be repaid) to a select committee of MPs, I am keenly aware of the contrasts as well as the similarities that we share with our cousins Down Under.

Last week, commentators writing in Times Higher Education considered the impact of Australia¡¯s decision to lift the cap on undergraduate numbers in 2012. Their observations are astute and balanced, and given the UK coalition government¡¯s historic announcement that it will remove student number controls from 2015, we would do well to listen closely to their experiences. The Australian system is sufficiently like the UK¡¯s to allow valid comparison, with similar participation rates, diversity of higher education institutions, funding structures and quality assurance frameworks, all underpinned by an income-contingent loan system. As always, however, context is king.

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In crude terms, Australia¡¯s ¡°demand-led¡± policy has resulted in a massive explosion in university entrants ¨C and the participation rate was by no means low before the cap came off. Although everyone remains remarkably relaxed about tuition fee loans, expansion has come at significant cost to the federal government in terms of ¡°base funding¡± (equivalent to the teaching grant from the Higher Education Funding Council for England), and this might test the pre-election promises of Australia¡¯s coalition government to keep the ¡°demand-led¡± policy. A superficial comparison based on cost alone might suggest that we in the UK should take heed of this and keep the cap. But this would be to ignore the notable successes. One of the key aims of the policy was to open up access to higher education for those from non-traditional backgrounds, and it has done just that.

The big questions in Australia are around quality, retention and outcomes, but in these areas there are a number of important contrasts with the UK that may make the policy play out differently in this part of the world.

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First, some commentators in last week¡¯s THE article said there needed to be a sharper focus on students completing their courses, noting that university funding in Australia did?not incentivise this. In England, in contrast, universities are funded according to whether or not students complete a course: institutions receive three instalments, via the Student Loans Company, during the year; if a student drops out, the funding stops. Our system should be better able to constrain the ambition of less scrupulous higher education providers than one in which 100 per cent of funding is distributed up front.

Second, we have very well-established systems for co-regulation of standards through the Quality Assurance Agency, monitoring of student retention through ¡°performance indicators¡± and better (if by no means perfect) student data thanks to the National Student Survey and now the Key Information Set. This gives the UK government more tools with which to protect students and standards in an expanding system.

Third, Australian fees are capped at a lower level. As a result, they are not that different from further education fees. Some observers have suggested that part of the rise in undergraduate numbers has come from students who would have taken a further education programme under the old system. Given the UK¡¯s higher cap of ?9,000 on university tuition fees, such a situation is unlikely to occur in the UK.

But there are certainly potential lessons for the UK from Australia¡¯s experience. Did you know that in one part of their funding system, Australians have managed to design a tuition fee loan with virtually zero RAB charge (called FEE HELP)? These loans are available to postgraduate and part-time students, and any undergraduates who cannot access the subsidised (HECS HELP) loans. This outstanding achievement has gone largely unnoticed ¨C and it may go some way towards explaining Australia¡¯s relaxed attitude to the cost of tuition fee loans during a time of rising student numbers.

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