I thank the Chairman and the committee for the opportunity to talk about the report. As members will know, reports end up being named after the chair of the group. Like the Chairman, I acknowledge the enormous work that the other members of the expert group put in as a public service. They did so without payment and put in a lot of very hard work. As the Chairman did, I also acknowledge the secretariat for the group. A lot of the heavy lifting was done by the secretariat from the National Economic and Social Council and Dr. Aedín Doris.
The committee has received the report. On 10 November the committee heard from the presidents of the universities and the institutes of technology and, therefore, I do not intend to go through the report in detail. Instead, I will concentrate on the thinking behind the group's conclusions and recommendations. That is probably a better way of assisting the committee. When members get down to discussing the specifics they will know why the group reached a certain conclusion or talked about an option in a particular way. The report is not technical but has dealt with political and societal issues. That is why we had extensive consultation with students, parents and employers around the country, and with institutes of technology and universities. We also had two sessions with the Joint Committee on Education and Social Protection which preceded this committee.
The group approached the work by concentrating on three areas. First, why as a country do we need to invest more in higher education and, in that context, put students first rather than just institutions? Second, what level of investment is needed? Third, if that is the level of investment required, then how does one fund the investment?
The committee will be aware of the report's conclusion that higher education has been at the heart of this country's transformation since the 1960s. Members do not need me to tell them that. Education has been at the heart of our transformation individually, which is crucial for an individual and his or her social and economic development. When I left school in 1968 only one person in my class went on to higher education but today half of the workforce have a third level qualification. Nobody in my family went directly from the leaving certificate into higher education, although later on they did so in various ways. Now all of my family, including nieces and nephews, are all expected to go into higher education. We must recognise this significant transformation.
The second main conclusion we reached was that we once again need to restore education, in particular higher education, as a key enabler of future development. Members will know better than anybody else, as politicians and people who are close to the ground, that the country is once again at a turning point where we are trying to transition from a very deep crisis and revive development and future prosperity while trying to address a number of key societal challenges in housing, the health services or other areas at a time of uncertainty with Brexit and what is happening in other countries. The report has concluded that as a people we need to rebuild and enhance our capabilities at a personal level, in terms of an individual being crucial, at an interpersonal level and at an institutional level. We often have the habit of concentrating on the institutions instead of working the other way around. We need to build those capacities in order to address the challenges and opportunities generated by moving again into a future phase of development. That is why we reached the conclusion that we need to restore education as a key enabler of our future development. Some people would conclude that it is not all about attracting students, foreign direct investment and multinationals. If one considers the key societal challenges we are trying to address one will realise that it cannot happen without higher education as an enabler. For example, members on the Joint Committee on Health when considering the health services would look at whether more nurses, carers, psychotherapists and doctors are needed. We will recruit people only if there is a significant investment in higher education. The same applies to issues such as housing and homelessness, regional development and local enterprises. We deemed higher education to be the key enabler of all that and not just a means to feed into foreign direct investment. We concluded that this requires significant investment in higher education, further education, apprenticeships and post-leaving certificate level opportunities. It is that role that determined the level of investment that we have recommended.
We acknowledge in the report that the requirement for the significant level of further investment that we recommended comes at a time when, despite a stabilisation of the national finances, public resources and household incomes remain stretched. We need to take account of that context. We must be aware that we face multiple competing choices, not conflicting ones, with understandable demands for increased resources for housing, health services and other areas of education the Chairman has mentioned before, in particular child care. The committee must acknowledge that there are no easy options and it is a difficult area because a political and societal response is required as opposed to a technical one.
At the same time, if we say that higher education is the key enabler for Ireland's future development, dealing with societal challenges, as I mentioned, and prosperity, then that role comes at a time when the current system of funding higher education is no longer sustainable. I know the committee had a meeting with the presidents of the universities and institutes of technology. They may not have put it as bluntly as I do when I say that the system is broken. There is no other way to describe the situation. Whatever solution the committee comes up with, the one conclusion that the report reached was that keeping the status quo is not an option. In fact, the status quo will worsen the situation significantly. I have said all this in terms of how we approached the matter. First, we said the current system fails to recognise the pressures facing higher education institutions. I will not go into the figures as the committee rehearsed them all on the last day. The committee had the report so members know how much the number of students has grown. They know about the reduction in staff numbers and the fact that the student-staff ratio has deteriorated significantly. In the report, we said that the average was 20:1, which is way above the OECD average. In fact, in any of the institutions the ratio is probably 40:1 or 50:1 in many cases.
The report does not take account of the scale of the coming demographic changes. Members will all know that these people have already been born. That is how we know that 45,000 people will want to access the system between now and 2030. They are already in primary education or wherever.
The current system has been highlighted a lot in the responses to the report.
The system fails to recognise the pressure on families and students. If we state students and families are at the centre of this and it is about building individual capabilities, we need to look at their experience of trying to access the system.
The €3,000 is a fee, and it is felt particularly by families with more than one person attending third level. We had extensive consultation with credit unions and families in various parts of the country who borrow money to pay for it. The State has had to step in to pay this for almost 50% of students because of the drop in household income in recent years. There is also the cost of going to third level and the high living costs and maintenance costs associated with studying. As a result, to progress through successfully, a very high percentage of students undertake additional work outside of their studies, and many students travel long distances because of the costs of trying to rent or stay close to the university. It is important the committee concentrates not only on the funding required for student numbers and the demographics but also on the actual cost of going to third level.
The group decided we would not look at patching up the existing system but that we needed to recommend a reformed integrated funding system for higher education which would do a number of things. It would significantly increase investment in higher education to take account of the demographics. It would restore the staff-student ratio, given the quality issues. It would enhance financial supports for students, including increasing the value of payments and extending supports to part-time and postgraduate students.
In the 1960s, which I mentioned in the context of my family's experience, the social class gradient of those accessing third level was very clearly upper and middle class. Something that has crept up on us, which we may not have noticed, is this social class gradient is re-emerging in postgraduate study, because a very high percentage of people from middle- and low-income backgrounds and disadvantaged backgrounds, including very good students, cannot afford to go on because the funding systems for postgraduate study were withdrawn. We need to be aware of this.
There is a need to increase capital expenditure significantly, and not only because of the demographics. We do not want to speak badly about our institutions or the sector, but we certainly found many of the laboratory-based engineering and technical programmes would not be accredited if they were to apply for it today because a significant element of practical work is associated with these programmes. This is the scale of the difficulty we found.
The report states this increased investment must be underpinned by complementary reforms in the sector, and it would be quite in order for the committee to state this also. We need a more flexible and responsive higher education system. People speak about lifelong learning, but we have not embraced it as a concept involving all of society and the entire economy. Our figures for the numbers and costs involved do not take account of the growth that would happen if we opened up in a responsive way to lifelong learning. The funding numbers do not take account of pay increases. If a pay increase process opens up, given the public discussion at present, it must come out of another pot. It is not provided for in our figures.
This brought us to the level of funding required. Based on the role we mentioned earlier of higher education being a key enabler, the demographics, what has happened to the staff-student ratio and the quality of education, we stated it must be an ambitious rather than incremental increase in investment to take account of the numbers, small group learning and the next phase of our development being very much involved in high expectation teaching. We have provided the committee with numbers on this and I will not go through them except to say they are substantial. This year's budget provided €36 million for higher education. This is welcome and is significant in the context of the difficulties we have in other areas, but what the report discusses would require more than €100 million. This is the scale of the difference we are speaking about and where we are in trying to deal with it incrementally.
Funding is also required for an ambitious and major increase in access, participation and progression for various socioeconomic groups, and the committee can recommend this. It is almost like a social contract, where we state as taxpayers in society we are prepared to make a significant level of investment in order that anybody who has the capacity and wants to access it should be capable of doing so. Committee members already know the figures. Almost 100%, that is 99%, of youngsters in Dublin 6 go to third level but in Dublin 15 only approximately 15% do so. We cannot have a social contract between society and the taxpayers which has this level of disparity in accessing what people believe is crucial for future capability development, not only for employment but for the societal challenges we mentioned. This is why we recommended a significant increase in the value of student supports, the extension of supports to part-time and postgraduate students, whom I mentioned earlier, and a more effective system of student financial aid.
With regard to funding, regardless of which option is chosen what is important is that it is underpinned with a major reformed maintenance and student support system. This is where the problem is with regard to general access and students from particular backgrounds being able to access, continue and progress.
Having increased investment, and I will not go into the figures as they have been provided to committee members, we dealt with how this would be funded and the funding options available. We put forward three particular options. We were asked to provide options but we were happy to do so because these are political and societal decisions. This is not a technical report and we need to put out the various options and their consequences to let people decide what they want from a political perspective. We had a set of guiding principles, the main one being that fairness and balance need to guide the funding system. We need fairness and balance between the public benefits of higher education and the private benefits to the individual. We also need balance between investment in the sector and cost containment and, as I mentioned earlier, the committee is quite entitled to ask the sector to reform and be more flexible in this context. We also need fairness and balance between various levels of family income. This action is what brought into focus for us the key issue of how to share out the costs and funding given the collective benefits of higher education for society and the individual benefits. The three beneficiaries are society, the individual and employers.
That is why we went with an employer contribution.
On the collective benefit, the committee does not need me to rehearse the contribution higher education has made to our society, economy, culture, public life and the formation of citizens. We found that was well understood in the consultation process, and it is important to see higher education in its own right as something somebody would want to do for its own sake as well as preparation for employment and so on. It has been the key enabler of our economy and our social services. The OECD has estimated a return in excess of 20% on that investment by way of tax returns. However, there are also gains in personal terms for the graduates. Someone with a higher degree will earn 100% more than an adult whose educational attainment is the leaving certificate over their respective lifespans. That relates to the question of how the individual benefit is dealt with. Higher education contributes to individual success and to the collective good. That core idea underpins the country's long-standing drive to widen access to higher education. We have submissions stating too many people are going into the system but the reason it is an open system is we can see the individual success and growth and collective good. That is, therefore, an important consideration when we look at how we fund the system.
We gave three options to approach this. One is a predominantly State-funded system. It is important to remember that in all three options the State remains the biggest contributor. People have pointed to what happens in other systems such as in the United States. The state is not involved in the US and we reject that system in the report. The three beneficiaries all have to contribute but the State will remain the biggest contributor. In Britain, there has been a significant increase in the student contribution but that was because there was an ideological decision that the state would withdraw from higher education. None of that underpins our report. Currently, the State invests approximately 60% of funding. It varies by institution. That would increase to 80% under the State-funded option. The other 20% would come from philanthropy, fees from foreign students and so on. We said all three options are feasible and we outlined the pros and cons of each. In the case of a predominantly State-funded system with the State paying 80%, it would deliver higher education free at the point of access to everybody and if that is the goal, that could be key. It is also administratively simple. However, the question the committee has to ask itself is whether in the current climate or over the next number of years sufficient State resources will be available to underpin that. That is what members have to look out for. Another question posed in the report is whether, if higher education gives such great individual benefits, it can be considered to be solely a public good and, therefore, whether every taxpayer must pay for those who access it.
The second option is the continuation of the current system, which provides for a significant investment-----