Higher Education Funding: Discussion (Resumed)

I warmly welcome our distinguished guests. We have in attendance our youngest stakeholder yet, Ms Jane Hayes-Nally, who is very welcome. We are delighted to have the input of second level students. I welcome Mrs. Justice Catherine McGuinness, chairman of the governing authority at NUI Galway, Professor John Hegarty from the Royal Irish Academy, Dr. Catherine Day, chairman of the governing authority of University College Cork, and Ms Annie Hoey, president of the Union of Students in Ireland, some of whose members I had the opportunity to meet the day before yesterday in Buswells Hotel when they were making a presentation. I also welcome Mr. Kieran McNulty, president of Trinity College Dublin Students Union. We had the pleasure of meeting and discussing this subject briefly during the summer. Ms Jane Hayes-Nally is president of the Irish Second-Level Students Union. The witnesses are here to discuss the findings of the Cassells report, Investing in National Ambition: A Strategy for Funding Higher Education. I acknowledge again the excellent work of Mr. Peter Cassells, his secretariat and all the members in bringing this piece of work before us. This is the third day on which we have had the opportunity to have witnesses in to discuss the various options and the potential impact on those they represent.

I wish to draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the Chairman to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. I advise witnesses that any submissions or opening statements they make to the committee today will be published on the committee's website following this meeting.

Members are reminded of the long-standing parliamentary practice to the effect that they should comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

I call Mrs. Justice Catherine McGuinness to make her opening statement. We will take three witnesses at a time and then revert to the members for comments and questions. We shall then take the second three.

Mrs. Justice Catherine McGuinness

I thank the Chairman. I am, of course, very grateful to the committee for this opportunity to join in the current discussion on the funding of higher education and of the report of the Expert Group on Future Funding for Higher Education, normally known as the Peter Cassells group. I am speaking here in my capacity as cathaoirleach of Údarás na hOllscoile, the governing body of NUI Galway, NUIG. In that capacity, I work closely with the president of NUIG, Professor James Browne, and with the other leaders of the university. The údarás works with many of the academics and county councillors from the area, and also the student union leadership. It is to some extent also relevant that, for some years previously, I was chair of the Irish Universities Quality Board. That body has now been subsumed into Quality and Qualifications Ireland, QQI, which is all about the quality of our higher education.

The committee will already have received the relevant submission made to it by the Irish Universities Association, IUA, together with the opening statement by Professor Don Barry of University of Limerick. I am in general agreement with the points made by Professor Barry, and with the detailed arguments made in the IUA submission. There is obviously no need for me to go into all the various tables and figures as I am in agreement with them. I welcome the report of the expert group, so ably led by Mr. Peter Cassells. The report clearly sets out the national benefits of investment in the higher education area.

The difficulties caused by ten years of cutbacks in higher education funding have been extreme. A crucial part of the work of the governing body, or Údarás na hOllscoile, concerns financial and budgeting issues. The údarás members and I are acutely conscious of the constant effort by those in the university to stretch available resources to cover essential needs and to source funding from internal sources and external sources, through research grants, help from alumni and every other possible source. It is a constant struggle. In his opening statement, Professor Barry, as chair of the IUA, refers to the purpose of investment in higher education, which is the priority of the committee, as follows:

Firstly, the more complex and changing world for which we are educating students, requires more sophisticated educational approaches. The [Cassells] group captures this well in identifying the need to invest in improved student staff ratios, smaller tutorial groups, more one-to-one contact with students, more project work, enhanced feedback and more time to engage in diverse learning styles and to support at-risk students.

These are precisely the affected areas in NUIG. That NUIG has succeeded, I am very proud to say, in moving up the ranking table of universities, by contrast with others, perhaps, does not mean we have found more money for ourselves, that we are better off or that we are not struggling all the time to make whatever investment is required to meet our needs. At the coalface, in the oversight of the realities of university life, we in NUIG are only too aware of the difficulty, and sometimes impossibility, of meeting the needs of students. If we fail to meet them, we also weaken the international standing of our universities. More importantly, we fail this country and we fail our students.

The Cassells report identifies three groups that benefit from higher education – the State, students and employers. The point of view of employers has been clearly set out in a recent article in The Irish Times by Mr. Danny McCoy, chief executive of IBEC, in which he states accepting the status quo is incompatible with our national ambitions and will condemn Ireland to become an education and research backwater. Mr. McCoy adds: "Ireland's reputation for having one of the best educated work forces in the world becomes increasingly threatened". He concludes: "Failure to invest now in third level will place an entire generation of students and the future of this country at a serious disadvantage".

Both the Cassells report and the IUA submission recommend that investment in higher education come from three sources. It should involve a funding system involving the State, students and employers. I agree with this conclusion and with the need to investigate the setting up of a loan system whereby graduates would contribute when their earnings reach a certain level. This is an urgent matter and not one to be put off for another distant commission.

In considering the specific position of NUIG, the committee should not forget the importance of the university's statutory and strategic obligation to an Gaeilge, the Irish language. In Vision 2020, NUIG's strategic plan for the period 2015 to 2020, under the heading "Pobal na Gaeilge agus an Gaeltachta", reference is made to the university's statutory obligations regarding the provision of education through Irish and its commitment to respond to the living needs of the Irish-speaking community regionally and nationally.

NUIG is the primary national provider of post-primary initial teacher education through the medium of Irish. Acadamh na hOllscolaíochta Gaeilge, established in 2004, operates fully through Irish and is responsible for the development and delivery of academic programmes, research and other services through the medium of Irish. The university operates Gaeltacht centres in An Ceathrú Rua and Carna in County Galway and in Gaoth Dobhair in County Donegal. All that requires investment both by the HEA and the university itself.

NUI Galway is the major higher education institution in the west, and serves the student population of the west and north west. It is designated by the Higher Education Authority as the leader of a group of higher education centres in this entire area. In considering the funding of higher education the committee must look at the population of students which is served. There is a degree of prosperity in the city of Galway area but it cannot be doubted that in the rural areas of Galway, Mayo and Donegal students and their parents are unlikely to have the means to meet large upfront fees. As my own son and his family live in An Spidéal and his children have been educated there I am well aware that the average family in the Gaeltacht and in Connemara generally will find university costs as fixed at present extremely difficult to meet.

"A Reminder of Inequality in Society" was the lead headline on The Irish Times list of feeder schools for third level institutions. This committee, in its present discussion, must deal with the needs of society, of the economy and of higher education providers. It must do so with justice. Above all, it must deal with the needs of young people. It must find the courage to move on this issue now.

I thank Mrs. McGuinness. I should have acknowledged that she is a former Member of the House also, having been a Member of the Seanad for many years. She gave great and distinguished service to the Seanad. I call Professor John Hegarty from the Royal Irish Academy, RIA, to make his opening statement. I understand the statement has been circulated to all members.

Professor John Hegarty

On behalf of the Royal Irish Academy I welcome the opportunity to speak to the committee today on the findings of the expert group on the future funding of higher education. The Royal Irish Academy is an independent body representative of academics across the entire country, North and South, who are elected on the basis of their achievements.

Regarding the background to the problem at hand, since 2008 the higher education system in Ireland has seen a very severe divestment of its funding base. There has been a 38% decline in State grants from 2007 to 2014 while student numbers have increased by 25%. There has been a 22% decrease in funding per student from €11,000 to €9,000 despite the student contribution charge trebling. Academic and support staff numbers have fallen by 2,000 from 19,000 in that period. The higher education capital budget has been reduced by 85%. Despite the best efforts of committed staff to be more efficient and entrepreneurial and the patience of students, the net effect of the cuts is a significant decline in quality and the system is now, sadly, firmly on a downward slope. That is evidenced by recent falls in the international university rankings and a deterioration in the student-staff ratio from 16:1 to 20:1. The OECD average is 14:1. The ratio is an important measure of the degree of personal interaction and mentoring between staff and students.

Investment in infrastructure across the system has also fallen from more than €200 million in 2008 to €35 million in 2014 with a resulting negative impact on the quality of the system's capital stock and infrastructure. Added to that are the increased demands of the projected demographic increase in student numbers over the next 15 years. It is clear that the system really is in crisis. A strong, vibrant and internationally competitive higher education system is critical to Ireland's social, cultural and economic life. Action is urgently needed to redress the crisis by increasing the scale of investment in higher education. Recent external international shocks such as the Brexit referendum in the UK and threats to continued foreign direct investment make the case ever more compelling. The future is about talent not tax.

The publication of the Cassells report is an important step in the development of a clear pathway for a sustainable future for the system. The RIA welcomes the report and endorses its findings. In its submission to the expert group the RIA suggested a new approach from the status quo, acknowledging that while further resources are needed the reality is that the State is unlikely and unwilling to carry the burden of the entire cost. The RIA's proposals were similar to the final proposals of the expert group, showing a significant degree of consensus. The RIA proposed a multifaceted approach to meet the required annual additional investment in the system, which we calculated at approximately €1 billion. That includes a 25% to 30% increase in staff to improve the student-staff ratio to 16:1, which is still below the OECD average. Further growth in student numbers should only be considered following that adjustment in the interests of quality.

The cost of further investment in higher education should be borne equitably by its key stakeholders – the State, students and the institutions themselves. An emergency capital investment fund of €580 million per annum over ten years should be established to fund major repairs and replacements for existing capital stock. Institutions should also be allowed to operate an annual surplus which could be used for infrastructural maintenance. The student contribution charge should be replaced by a new student fee and support mechanism which would offer students the option of deferred payment through an income-contingent student loan and the opportunity to borrow living and maintenance costs.

I will say a final word about access. The average annual cost of attending college away from home is up to €11,000, while the maximum grant available is under €6,000. Those costs, coupled with the requirement for the upfront payment of fees, has had a detrimental effect on access. A total of 40% of families borrow to finance participation in higher education and that has had a particularly negative effect on lower income groups which tend to be more debt averse. Any new higher education funding model should therefore include provision for a well-developed student support system. Income contingent student loans would have a positive effect by removing the need for upfront payment. Part-time education, which provides an alternative higher education pathway for many, could also be incentivised by allowing part-time students to avail of the student supports available to their full-time classmates. That could be supplemented by the introduction of a new tax relief for part-time postgraduate students. The RIA commends the committee on its important work and looks forward to working with it as it builds consensus on how best to address this most critical issue at this most critical time for this country.

I thank Professor Hegarty. I now call Dr. Catherine Day who is representing UCC. We are privileged to have her with us following her long career in Brussels and elsewhere in Europe. I am sure she has seen many examples of very good practice throughout the education system across Europe.

Dr. Catherine Day

Thank you, Chair, for inviting me to make a presentation here today. You referred to my previous role and I wish to make that my starting point. When I was Secretary General of the European Commission I was deeply involved in the Europe 2020 strategy, which is the EU's strategy for growth and jobs. I was also very involved in ensuring that third level education was one of the quantified targets of the strategy for the EU. The point of making it a quantified target was to put the right emphasis on the hugely important role of higher education in ensuring Europe's future well-being and prosperity. To ensure the European social model can continue to deliver on the high aspirations we have for citizens, it is necessary to invest more in the higher education system.

Coming from my previous background I naturally think it is very important that we set future Irish higher education policy in a broader European context. That context has been given greater relevance by the recent Brexit development.

I am here today as chair of the governing body of UCC. It has been interesting for me to have the opportunity to see how a key European policy is implemented on the ground. I have also seen the real difficulties of trying to deliver an internationally high standard of university education with restrained resources.

In the past ten years UCC has seen its undergraduate numbers grow from just over 11,500 to 13,000 and postgraduate students have increased to just over 4,000. At the same time the increases have happened State funding has fallen by 38%. On the one hand, the number of students has grown but, on the other hand, there is less money. Faced with such a difficult situation, UCC supported by its governing body has practiced prudent budget management and not built up a significant deficit in difficult years. This has been achieved at a cost, as previous speakers have said. There has been limited investment in new facilities and increased staff-student ratios. It is true that we can manage cutbacks and a lack of investment from one year to the next but we all know that postponing much needed investment just pushes the problem down the road and makes it bigger in the medium-term. It is critically important to remember that such a measure affects the quality of education delivered.

In common with other universities, UCC has seen its staff-student ratio increase dramatically from 1:21 in 2006 to 1:26 plus today. As we have just heard, the OECD average is 1:14 so UCC is far out of line with the average OECD ratio. An increased staff-student ratio has had a dramatic impact on the quality of education because it means less individual attention for students, reduced practical experience in laboratories and a reduced amount of tutorials or abolishing them completely. An increased ratio has lots of impacts on vital aspects of a university education. This is one of the reasons why Irish universities have fallen down the international ranking tables. Reduced funding also means increased stress for staff, which has tempted some of them to move abroad. Reduced funding has also reduced the capacity of UCC to attract the best academics in their fields of expertise.

Ireland rightly prides itself on traditionally putting a high value on education. According to a recent report from the European University Association’s public funding observatory, Ireland together with a few other countries like Croatia, Greece, Spain, Serbia and the UK have been classified as "systems in danger" because our funding to universities has decreased while student numbers have grown.

In common with the other speakers this morning, UCC views the Cassells report as setting out a compelling case for investing in national ambition through better funding for higher education. UCC thinks that the report rightly puts an emphasis on investment, quality and verification. The recent submission by the Irish Universities Association to this committee endorsed the Cassells report and its findings. In my view, the IUA made a very reasoned case for increased investment in this sector. Investment is at the heart of this issue. We can go on as we are, failing to invest enough in our universities and for some time we will still have a somewhat functioning university sector. However, it will not be a university sector that can deliver on individual or collective expectations as a society. All of this matters. It matters to our competitiveness, our influence in the world and our ability to satisfy the aspirations of our citizens.

It has sometimes been said that funding for higher education is an elite issue but I disagree. Just over half of our younger population have third level education. Most parents work very hard to give their children the best possible education and today that means third level for the majority. Therefore, such education has become the norm and a necessity if we are to maintain our standard of living into the future. Investing in human capital is even more important than investing in physical infrastructure, particularly for a small open economy like ours that relies on trade and inward investment for its well-being.

There have been many calls for public funding and almost everyone can make a special case for increased funding. I am not arguing that universities should be put ahead of other deserving priorities. Instead, I wish to argue strongly that higher education is among the top priorities.

In my view three things must be done at the same time. First, Ireland needs unequivocally to go for high standards in third level education. We should not be satisfied to be in the lower half of EU members states in this sector. Going for excellence in our university sector should be a public goal and the means to deliver same should follow.

Second, public investment in the university sector needs to be put on a sound footing. Therefore, current and capital expenditure must grow to improve quality and meet demographic demand. I will not go into all of the figures and data because they are available in excellent reports that have been published recently. The argument has been extremely well made. In my view, the Brexit context adds urgency to the need for funding and investment decisions now because they take time to come through in terms of results.

Third, universities need to diversify their sources of funding and they are all doing so. There has been a tendency during the financial crisis to micromanage the sector using the threat of reduced funding to obtain compliance. This approach has had a stifling effect and reduced the autonomy of universities. I argue that as long as universities do not create new liabilities for the public purse then they should be given the flexibility and agility to generate funding and deploy resources to best effect, subject to supervision by their governing authorities. Governance in the universities sectors has greatly improved in recent years. A climate of greater trust between officialdom and the universities is needed to ensure that the universities deliver a top quality outcome in terms of well qualified students and high quality research.

Like the previous speakers, I support the conclusions of the Cassells report and the submission made by the Irish Universities Association. Like them, I stress the urgency of taking clear decisions on future funding that provides adequately for sufficient investment to deliver high quality. The universities have the capacity to deliver the kind of higher education system that this country needs going into the future and they are eager to do so. Unfortunately, they cannot do so without a significantly increased and sustainable future funding model.

I thank Dr. Day for her presentation. Members can ask questions and indicate whether they want clarifications on anything that has been said by the first three contributors but first I will address a few questions to Mrs. Justice McGuinness. I noted from her submission that she agreed with the idea that the funding system should involve the State's students and employers. She called for an investigation into how a loan system could work for students. Can she expand on her preferred design for such a system? How does she envisage people with limited means can be encouraged to avail of these loans? Access to education is hugely important and is an aspiration for all of us. Would a loan system impact on inequality?

I liked the language that Professor Hegarty used in his submission when he suggested that the student contribution charge be replaced by what he called a "new student fee and support mechanism". He did not simply call it a loan. He also talked about the option of deferred payments using the income contingent loan and the opportunity to borrow living and maintenance costs. He made a good case for the costs incurred by students who must live away from home. He shared the concern about people needing access to higher education as a means to enhance their potential.

I thank Dr. Day for her interesting comments on the European context. She painted the picture of increased student numbers and reduced Exchequer financing and how both have led to a failure to invest. She also said that universities need to diversify their sources of funding. I would be interested to hear more about the topic and also more about the impact of Brexit.

I now call members to ask questions and call Deputy Thomas Byrne to commence.

Bhí áthas orm éisteacht leis an mBreitheamh Mac Aonghusa agus í ag taispeáint dúinn tábhacht na Gaeilge i nGaillimh. Bhí scéalta difriúla sna meáin an tseachtain seo caite. Tá áthas orm é sin a chloisteáil. Much of what has been said speaks for itself. I wanted to ask Dr. Day something. I thank her for being here and for all her service in the organisations in which she is involved. It is a labour of love for many of the witnesses. Dr. Day has considerable experience at European level. I know the European Union does not specifically have education competence like we have. Anyway, there are different systems of funding university education. Other witnesses present will tell us about Germany and other countries where student contributions are not significant, where no student loan schemes exist or where funding is provided by the State. Dr. Day has considerable experience of the European Commission. Has she any insight into whether we should go for a loan scheme or why other countries do not have one?

I thank the deputations for their presentations. We are all in agreement that we cannot continue with things as they are. Until something changes, the quality of education in Ireland - something we have always been proud of - will plummet.

I have concerns similar to those raised by other members in respect of access. I taught in a DEIS school for 16 years and I have seen the joy when the first child in a family declares intent to go to third level. I have concerns that this move would diminish that incentive and that the loan would frighten the child, especially when they turn to parents who do not fit the typical support model to which the rest of us may be accustomed. They may not get the necessary support at home. Those are my thoughts on that point.

I am keen to hear from all the deputations on the potential impact of loans on emigration. The statistics show that 20% of graduates emigrate and 10% emigrate on a permanent basis. If it is the case that a person who stays abroad would not have to pay back the loans - it appears that it might be - will this lead to a complete brain drain? Will our most wonderful and brilliant graduates stay abroad rather than repay? One impact is that the loans would not be paid back and we would suffer the loss of wonderful graduates. That needs to be explored.

How does Dr. Day see Brexit impacting on our universities and institutes of technology?

My final question is a general question for all three deputations. I am curious about the drop-out rates, including the drop-out rates from universities to institutes of technology and from institutes of technology to post leaving certificate courses. When students discover a lack of suitability and change around there is a loss of fees. Is there a broader issue? Do we need to explore something like the dual system in Germany? Would that help to address it? Is that something this country should explore?

Gabhaim buíochas le na finnéithe as ucht teacht isteach. Tá sé fíor-thabhachtach go bhfuilimid ag plé an ábhair seo. Tá sé in am agus tá géarchéim, mar is eol dúinn, sna hollscoileanna ar fud na tíre. I have serious concerns. My party has been advocating for students from lower socio-economic backgrounds. We have major concerns. We have examined the research in England, where loans were introduced some time ago. We have seen a fall of 14% in mature students and a fall of 40% in part-time students. Let us consider lone parents. One child in five comes from a lone-parent family. This will have a catastrophic effect. I realise one of the presentations this morning suggested that part-time education supports would be available for students in the same way as those available for full-time students. I am keen for clarity on that point. Reference was also made to the introduction of new tax reliefs for part-time post-graduate students. I am not keen for any of our students to be disadvantaged in any way.

Deputy Martin referred to how we have lost a vast number of graduates - tens of thousands - through emigration already. Why make the problem worse? Research has also shown that post-graduates who have taken out loans emigrate. That is a reality and a fact of life.

There are some benefits. Like most Deputies, I have met representatives from the Union of Students in Ireland. They outlined how graduates are of great benefit to us. If we invest in our education system, we gain more through income tax when those graduates secure employment.

We need to consider the apprenticeship area. This area is seriously under-valued. We have a chronic shortage of apprenticeships. I was at the education and training board conference some years ago. The speakers flagged the serious shortage at the time. The gaps in our system should be filled and need to be prioritised. More apprenticeships will benefit the economy. We need to be careful that we do not marginalise people. Certainly, my party is in favour of a State-funded system because we have no wish to see students disadvantaged.

I welcome the witnesses and thank them for their time, consideration and sharing their insights with us.

Two things come to mind. The first arises from listening to the three deputations. There is broad and general consensus along the lines of the recommendations of the report. This is my reading of the three contributions. I welcome that the three groups seem to be on a similar page in that regard.

It is easy to say that we should put more money into everything. It is the answer to everything. It is easy to say that we have a bottomless pit of money in these times and that it is great.

I have a question on governance for the two lady witnesses who have direct and first-hand experience. Dr. Day referred to significant improvements in governance in recent times. What did she mean by that? Could the witnesses give us some assurances on how far governance has evolved? Can they provide us with some insight into why they would make such a statement?

I carried out some work recently on the amount of legal fees expended by universities in defending legal actions involving staff. There have been several high-profile cases. The increase in the amount of legal fees being spent by third level institutions and universities has rocketed. By any standards the figures are extraordinary. Can the witnesses offer a comment on that matter?

I thank all the witnesses for their contributions and for sharing their knowledge and wisdom on an issue of immense importance to all of us.

Dr. Day referred to autonomy. I agree wholly with her on the point about the autonomy afforded to our universities and how they can use the resources available to them. This has been a recurring theme in our discussions in this room. I agree that additional autonomy should be afforded to our universities in terms of staff remuneration, how they spend the available resources and how they maximise the impact of those resources to the greatest possible extent to ensure better outcomes for their students. This is something we need to discuss in the overall context of what we are doing now, in the context of the Cassells report and how we move forward from here. Will the witnesses expand on their comments on how they see the process materialising? This is an exceptionally important move and we need to include our consideration in whatever conclusion we arrive at.

Many people have raised my next question. How do we effect a cultural change among the parents of Ireland to ensure they place a greater value on the apprenticeship and further education and training sector? How do we ensure they see it as a legitimate route to a successful and sustainable career? I am sorry to target Dr. Day with all these questions, but she will be especially familiar with the systems in Austria, Germany and other locations. In these countries people chose at a young age whether to go down the fully academic route or to go the FET route. Both lead to long, sustainable and happy careers.

I recall visiting the Dublin Aerospace facility three years ago. The chief executive of that successful entity started off as an apprentice aircraft mechanic. He rose up through the ranks. From speaking to him it was apparent to me that he had an extensive knowledge of how the company worked from the ground up. Such a career path is something that does not seem to have any value for many parents at this point in Ireland. The conclusion drawn is that the needs of their children are best served by going to university or an institute of technology. How do we effect that cultural change? It is the opposite in certain countries in Europe not far from here. I am keen to hear the thoughts of Dr. Day on that question.

Apologies for my late attendance but I had a prior appointment. In the delegates' opinion, what is the reason for the lack of concerted effort on the part of the education sector to pursue the national training levy, particularly given it is in surplus, and why is this not being seen as a viable option? While many people are speaking about this, there is nobody getting up in arms about it.

I understand the presentations focused on the issue of income contingent loans and to public funding also being required. It was also acknowledged that the introduction of income contingent loans is a withdrawal of public funding. How in the delegates' opinion can this withdrawal of public funding be balanced against the likely increase in fees for students? It would be helpful if when making presentations people could provide us with alternatives to the two suggestions set out in the Cassells report.

Dr. Catherine Day

I thank members for their questions. On how to diversify funding, which is the topic most debated at every governing body meeting and across the universities, as in all other cases there is no silver bullet or no one way of doing it. For example, UCC has just signed up for a €100 million from the EIB, which is one way of doing it. While a loan has to be repaid the EIB rates are very favourable. The money will be used to make capital investments in student accommodation, laboratory facilities and so on. This is not the answer to future funding but it is part of it. I understand that the EIB finances part of student loan systems in other member states so that this is an avenue that could also be explored.

The other area on which everybody is keen is philanthropy. Not only is the university sector targeting the philanthropists, but so also is the charity sector and cultural bodies. It is a source of funding and a means of staying in touch with one's alumni that is underdeveloped in Ireland as compared with other countries. It could be helped by the introduction of a tax credit in return for a contribution to one's former university. This is a way in which the State could help universities to get more funding without it necessarily having to pay for it. All universities are competing strongly for funding under Horizon 2020, the European research programme. I know that UCC has been very successful in that regard. The question that arises is how one deals with the patents and the rights coming from the research that is developed in the universities. These are also areas that could be developed. These are all small contributions but we are living in an era when even small breaks in financing can help a lot.

On the question of loans in other member states, there is no perfect model. In any event, every country has to develop its own model. We can learn a lot from what has worked well and not worked well in the case of other countries. We must be practical. It is difficult to argue that there is not a need for increased funding for third level education. If one starts from there one then has to be very pragmatic in terms of where one seeks to find that funding. Given all the other calls on public funding in Ireland today and conceivably into the future it is hard to impossible to see how a fully State funded system would materialise. This leads us to a need to identify other sources of funding. I believe that a loan system, well designed, has its place. Some of the objections to it, such as whether it would encourage people to emigrate, can be taken into account in the design of the system. People are pursued across international boundaries for offences such as non-payment of speeding fines and so it is possible to ensure that people repay loans and so on.

The design of the system will be important. As I said, it may be possible for organisations such as the EIB to at least contribute to the financing of a loan system. It would be fundamental that any such system would promote access from communities that otherwise would not have it. This can also be provided for as part of the design of the system. The reality is that if we are going to meet the funding needs of the future in this sector then contributions will have to come from everywhere. That is why Cassells talks about State funding, funding from students and from the employers, which picks on the point made earlier about the training levy. All sources have to be pursued. There are several beneficiaries from education, including society at large, the individuals concerned and employers. We have to find a way of ensuring that everyone contributes. The impact afterwards on the individual can be dealt with by the design of the system.

Drop-out rates were mentioned. I would like to pick up on one aspect of the drop-out rates because it is an issue that has been discussed a lot in the governing body of UCC. To reduce the number of drop-outs, we need a higher number of staff. An 18 year old on signing up for a subject at university does not always know whether he or she will be suited to it. Often, he or she will not realise that until after a couple of months into the first year. When professors and teaching staff identify that a student is struggling and is not in the right discipline they should be able to offer him or her guidance and counselling in regard to a transfer to another course so that he or she does not have to drop out. UCC is currently trying to do this but it does not have sufficient means to do so. If a student does not get that type of individual attention and the system does not pick up on it he or she can be lost to the system, which is devastating for the student but is also a loss for society. That is one aspect of the drop-out rate that I wanted to mention.

On governance, there is a much stronger awareness now of the responsibility that comes with public funding, including the need for accountability. Having been in charge of the accountability of the EU system to the political level I can say that the UCC system - I am sure it is the same for the other universities - is very much state-of-the-art in terms of identifying risks, mitigating and dealing with them and not running a deficit such that the State will have to pick up the tab. That is no longer the philosophy. Therefore, if the universities can raise money in different ways they should not have to be as controlled as they are when in receipt of direct State grant funding. There should be more trust in the system. That is what I mean by the governance having improved. There is a need to trust the universities to know best what their students need, what their systems need to deliver a quality product and to be accountable for delivery of the quality.

Brexit is a cause of great concern. The competitive environment for Ireland is going to be much more challenging once the UK leaves the European Union, and for all kinds of reasons, including the fact that the pressure on the UK to be more competitive is going to be much greater when it is outside the European Union. This will make the UK more aggressive in terms of competitiveness. Our capacity to retain, attract and maintain the sort of service and industrial economy that we have will be important. I would also like to reference agriculture in this context because UCC has a very strong research capacity in the food sector. In all of these industries there is going to increased pressure once the UK leaves the EU. We have an opportunity to market ourselves as the English speaking member state of the European Union. We could be very attractive for inward investment provided we can provide the talent in the form of graduates that inward investors will be looking for. Brexit is both an opportunity and a challenge for us. The answer to that challenge lies, in part, in the provision of high quality third level education.

On apprenticeships, I believe the most important thing about third level education is learning how to learn. A student who leaves school at 15 with no qualifications will find it hard to be adaptable in the future to learning new technologies because he or she will not by that age have learned how to learn.

What I see is a type of cross-over between what used to be called the academic and vocational education in that many people with a primary degree go on to do more vocational training. They have higher level education but they also realise they need more vocational training. The distinctions of old are fading but we must get people to understand that. Parents see that through the experience of their children. Perhaps that is a clue in part to how to change the culture. What is most important is that one learns how to learn, then one learns how to be adaptable and flexible and that something one did between the ages of 18 and 22 years does not give one an automatic right for the future. One must go on learning and be adaptable all the way through life. That is what higher level education gives a person.

I thank Dr. Day for her comprehensive response to the queries we raised. I call Professor Hegarty.

Professor John Hegarty

I will start with the questions on the reasons for the dropout rate and the reasons that more of our young people are not opting for the apprenticeship route.

There is a major issue at the transition from second to third level as to the suitability of everybody for higher education as distinct from further education or apprenticeships. Among parents, there is a snob value in a sense that universities and higher education are better and that is the place to go even if the student is totally unsuited and would be better off elsewhere. The league tables of the secondary schools which send pupils to universities copper-fastens this hierarchical view of education. That is most pernicious. There is a move in the higher education system, especially in the institutes of technology to offer courses from levels 6 and 7 to level 8, and that is indicative of the pathway from level 6 all the way to level 10. The respect for levels 6 and 7 qualifications are not as high as it was. This is a complicated matter which is a societal cultural issue. The solution will be when graduates realise they came through the wrong route and will become the ambassadors for alternatives. That is happening a little in the United States. Many graduates who have paid significant fees to highly respected institutions find that it has not offered them the significant rewards in terms of employment and so on. They are now expressing this. There are students who are highly qualified who opt to go for a different route. That speaks for itself. We need to have that message articulated in some way.

The other issue is about who pays for higher education, is it the State or a student loan system. We are advocating that it should be shared by all, partly on the basis that anything else is totally unrealistic. I was Provost of Trinity College for ten years from 2001 to 2011, when we went from boom to bust and at no time during the boom period could the State bring the Irish higher education system up to the OECD average. Why would we expect the State in the future to deliver that? It is a major political issue. If we want a high quality system, the investment must come in a different way, hence the diversity of sources.

We were careful not to mention the term "loan" because it has a psychological impact. The first impression is that the person will be saddled with major debt and he or she will have to pay it back no matter what, or otherwise his or her possessions will be repossessed. It is important to state that what is envisaged is not a mortgage and is not similar to how the system operates in the UK or US. We must ensure that people know that we are not thinking of that scale of student contribution. That would be abhorrent for Irish people. The State will be a major contributor to Irish higher education; it has to be because there is a significant public good associated with it.

There is an issue about whether a contribution will scare away certain elements of our society, the disadvantaged where perhaps there is no culture of going on to higher education and risk aversion to loans. Will there be a risk aversion to this type of mechanism, which is not a mortgage and that if one does not make much money one never pays back. That is also a culture and psychological issue. In designing any system like this all those factors have to be taken into account. There will still be a huge onus on the higher education institutions to be proactive in recruiting from all of those traditionally under-represented groups, whether it is economically disadvantaged students, students with disability, mature students or part-time students. As I understand it, the income contingent loans system has not turned off students from economic disadvantage from participating. In the UK, it has a detrimental effect on mature and part-time students. We must learn from that.

There must be checks and balances. There is a lot of work to be done. Let us focus on Brexit and the other major political upheavals across the world. I am convinced that our major attraction internationally will no longer be tax. While it will still be important, it will be the talent of our people and that means access by everybody to a good education, not to an average or poor education. If we do not have both of those we will not be able to compete as a country.

I thank Professor Hegarty. I now call Mrs. Justice McGuinness.

Mrs. Justice Catherine McGuinness

I thank the Chairman. I would like to second what Professor Hegarty and Dr. Day have said. They have dealt with the questions very well.

In response to the query on the reason for the dropout rate, I fully agree with Dr. Day's points. This has been the experience in NUIG as well. What is really lacking for students is the personal tutorial or personal pastoral resources that have had to be cut back because of the micro-management of the way in which the universities are allowed to employ a certain number of staff in a certain area and not in other areas. The dropout rate is affected - I echo something that has been said in the discussion - particularly because of the way in which our students are leaving school and going into the university at a young age, with the kind of examination they have done in the leaving certificate. Many university lecturers would worry and feel perhaps what may be needed in the university would be a first year where, as in the United States, students would be able to try out various different kinds of subjects and to learn how one learns for oneself in the university. I recall when I first went to Trinity College, one of the lecturers said to me that they would not look after me like my teachers did in school and that we would not be watched to see whether we did our homework. He said, "You're on your own here, folks."

While I am not saying people would be quite as harsh now as they were then, there is a certain feeling of being alone and coping with a big organisation all on one's own, and that is one of the reasons we need more investment in our students. Dropouts cost money to the student, the State and the university, and we all need to try to stop that.

Regarding the culture Deputy Cannon mentioned, what Dr. Day said is very true, but sometimes we look across the water at mainland Europe and think it is all wonderful. A few years ago, while Ireland held the chairmanship of the OSCE, I did a little work looking at human rights and various other educational matters in different European countries, among which was Austria and some parts of Germany, where this kind of system worked. The people there were not slow to criticise their system and say they were deciding to split students off into doing an apprenticeship or whatever else while they were still far too young. In this country we have downgraded what was the VEC system and have tried in a sort of snobbish way to say we will not call them VEC students and say they are different from the other children. We decided to turn them all into high-grade academic people. We have gone too far and we need to move to try to persuade people. We persuade them by producing a good apprenticeship system instead of muddling along producing a few apprenticeships here and there. We must provide a good system for people to go to before we start criticising the parents and saying they are all just taking the snob outlook.

Regarding governance and philanthropy, governance has improved greatly. In NUIG we have a system by which virtually every person who is a member of the Údarás also serves on one of its sub-committees and by which all these committees produce reports to the main meeting which are very carefully monitored. I am convinced that we have considered very hard risks and above all where we can possibly source funds in every way. We have developed our alumni trust extremely well and have had very good investment in buildings and the development of the campus in recent years. Anybody who has walked around the campus in Galway will see that there are outstanding new buildings, the funding for many of which has come from our alumni. We do not have in the west of Ireland all that many billionaires who can simply say they will give us funding for an enormous building out of their back pockets but we have our own alumni who have subscribed themselves and who have gathered together the money to do this. We have done reasonably well in philanthropy and we will continue to do so.

Regarding the question whether the State should finance everything, which is the position of a few speakers, my heart would say yes, and anybody who knows the history of my life would know that I would be inclined to feel that way, but it is just not going to happen. It will not be possible for the State, as things stand, to provide the entire funding for the higher education system. This was the idea behind the removal of the fees 20 years ago. However, because of this, fees have kind of crawled back again in the form of the student contribution and the system is as unequal as ever. The removal of fees has not made the system more equal. We are still faced with a system by which we want children from DEIS schools to be able to access third level education.

I can see there are downsides to a loan system, but it is the way in which it is designed that is important. I agree with both the other speakers that we must look very hard to see what has worked in other countries and above all what has not worked and what has been a mistake. Considering all the arguments made in the Cassells report, it looks to be probably the best solution. At least let us see if we can design a system that would work in this way. This does not let the State or the employers off the hook. I completely agree with Senator Ruane, who mentioned the employers' training fund. Mr. McCoy from IBEC in an article he wrote said there was a surplus in this fund and that it should be better used, and that is most certainly so. This fund should be drawn down. The employers will also gain from the better-educated graduates and they should therefore make more of a contribution. I am a little cautious about suggesting the loan should extend to cover maintenance.

I consider that maintenance grants should still be made by and large as they are made now and that people should get maintenance grants more directly than through such a loan system. This is again something that needs to be considered. Of course people need maintenance, and of course in the end there will always be some people who cannot afford to take on loans or to maintain themselves. There must be a way to encourage such people to go on to third level education.

That is more or less all I have to say.

I thank Mrs. Justice McGuinness for her comprehensive responses.

The witnesses have a wider perspective on Brexit than simply education, but we are the education committee. I have spoken to a number of academics privately since the referendum on Brexit and since the beginning of the current Dáil. Some of them seem to believe a land of milk and honey awaits with Brexit in that Irish universities could access research funding that otherwise would go to the UK and that Ireland might be a more attractive place for UK academics. They believe that if more funding goes into third level, we will be able to hire more people to come here who otherwise would continue in the UK. Do the witnesses have any views on this?

Dr. Catherine Day

My views would be less rosy. First, most of Horizon 2020 is designed in such a way that funding is allocated according to the criterion of excellence, so there will still be competitive bidding. It will not be the case that there is suddenly a big pot of money that will be reallocated to Ireland. Second, when the UK leaves, it takes its budget contribution with it, so the EU budget will be smaller as a result. Third, we do not know what kind of relationship will replace the current UK membership, but it is highly likely that part of that future relationship will give the UK access as a third country to European research. Non-EU countries have such access.

Our criterion is excellence and international collaboration is considered to be a vital ingredient in the research project. Fourth, the UK will be far-sighted enough, as part of a very focused competitiveness strategy, to continue out of UK Government funding to keep up a high level of funding for research because it understands it is key to its future prosperity. For all those reasons, I come back to what I said. It will be a tougher environment in which we will also have to make those investments. There can be some positives but I do not think they will be specifically in the area of research funding.

If we are to maintain excellence, we need a better funded system.

Dr. Catherine Day

You get what you pay for. If one buys cheap, one gets cheap. If one buys quality, it lasts.

I will tag on to that piece there. Is it not true to say that whatever the new arrangements will be with the UK and the European Union, the UK will no longer be able to lead out on research so they might have to lean on Ireland? We have a close relationship and both are English speaking countries. Will there be an arrangement whereby Ireland collaborates with England on its current and future research but it will actually be Ireland that leads the research projects? That means there would be an impact on rankings because the citations would be shared between the UK and Ireland. Is that not something that could possibly happen?

Dr. Catherine Day

We do not know the detail of the arrangements that will be negotiated but I am fairly confident in predicting that the UK will continue to participate in Horizon 2020. I do not know the exact terms. The UK will have to pay to participate in the future so all of this will go into the negotiating mix.

Professor John Hegarty

The only advantage I can see is academics in the UK relocating to Ireland because of access to the EU, not because they want to stay involved with the UK. Ireland has done that before. The SMI has succeeded in attracting whole groups of people to Ireland and to UCC in particular. It offers an attractive proposition which includes not just money but conditions. That is a definite possibility.

Mrs. Justice Catherine McGuinness

There have been a couple of moves like that in NUIG of people coming from Britain. In the legal profession, hundreds of solicitors are hastening to sign up to the Law Society in Ireland because they want to maintain practice rights in the EU. One may see that in the law school but it is a limited thing that will happen.

We are certainly all facing into a lot of uncertainty as a result of the impact. One thing is absolutely clear and that is the need for Ireland to invest in its third level strategy going forward for the benefit not only of students but society, business and families.

We will now go to our three remaining witnesses. The first is Ms Annie Hoey, the president of the USI. We have Ms Hoey's statement so she can read it or make the salient points from it.

Ms Annie Hoey

I sit before the committee as the voice of 354,000 students from throughout the island of Ireland who are calling on this committee to make the brave decision to introduce a publicly funded higher education system over the next 14 years. I am here as a spokesperson for students, staff and teachers who formed the coalition for publicly funded higher education. This coalition has the support of 1.9 million people and we are firmly united in our call for publicly funded higher education.

I have attended the past two presentations made to this committee on the future funding of higher education and I am aware that access is of great concern to everyone. The focus on access has become too narrow. Access to higher education should not just be about getting into college but getting on and beyond. As members will see in our supplementary paper, key targets of the national access plan - lone parents, part-time learners, those with a disability, adults outside the education system and those from lower income families - will all be adversely affected by increased fees and an income contingent loan scheme. There is also emerging evidence to indicate long-term effects of an income contingent loan scheme on future adult milestones such as accessing further credit, home ownership and mortgages. We must choose a funding option that sees fair access to a better standard of living, free from financial burden and free from debt. Far from being a radical idea, higher education systems mostly funded from public sources are actually the norm in Europe, while fully free public education exists in many strong and competitive economies, such as the Nordic economies and Scotland and Germany.

Universities are publicly funded in Germany, with 12 German universities in the 2014-2015 Times higher education world university rankings, up from ten the year before. Despite the fact that Ireland has the second highest fees in Europe and the eighth highest in the world, it has dropped down in the same rankings. In Germany, many vocational programmes are provided through a dual programme of training and education. This dual system allows for a developed, responsive and flexible system where people are not siloed into higher education but are provided with more pathways and access to a better standard of living that suits students and their needs. For young people from the EU, the chances of securing an apprenticeship in Germany have improved in recent years. For the first time, the number of people entering higher education matches that of people enrolling in programmes in vocational training. If we reimagine our higher education landscape by taking inspiration from the German vocational and apprenticeship models, we reduce the pressure on our universities and institutes of technology. By providing alternative pathways for post-secondary level education, participation is more fruitful and retention is improved for all. While considering how we will fund higher education, we should consider what ambitions we have for diversifying educational options. The current Minister for Education and Skills has often reiterated his ambitions for apprenticeships and training, so USI encourages the committee to delve deeper into funding models like Germany before making a final recommendation.

People should be educated based on their ability, needs and wants rather than on the wealth of their parents or their potential future earnings. Education is the most important investment any Government can make to ensure sustainable growth of the economy in the future. Higher education transforms society, enhances competitiveness and strengthens the economy. In most European countries, publicly funded or incredibly low fees are the norm, because education at every level is considered an intrinsic part of the social citizenship model. There is public support for publicly funded higher education. Out of 92,000 people who used our SmartVote web app last February, 57.3% agreed that third level education should be funded through general taxation. Despite what the Cassells report outlines as a reason a publicly funded model is too ambitious, public opinion agrees it is fair and balanced to fund higher education through public taxation.

The committee will see from our report that students are suffering and the status quo cannot continue. It is also clear that increased fees are not a fair, palatable or practicable option with or without an income contingent loan scheme. Others who argue against a publicly funded higher education model declare it is not feasible. If that is the case, we have to ask ourselves why, if it is not a viable option, did the expert group include it as an option to begin with? Not to choose a publicly funded higher education system is just that - it is a choice. A choice will be made by this committee. I and the students who stand behind us hope this committee will hear the thousands who are joining us in our call for a publicly funded higher education system.

I ask Mr. Kieran McNulty, who is the president of the students union at TCD, to make his contribution.

Mr. Kieran McNulty

I thank the committee for allowing me to speak to it today. I am speaking on behalf of the 17,000 students I represent in Trinity but also as a student who graduated last week having undergone a four-year course in law. I was lucky to have received the SUSI grant for each of the years and to have had two parents who supported me.

The committee has a defining decision ahead of it. Students spend between €11,000 a year on college according to a DIT cost of living survey, if they live away from home. I have had students come to my office every week asking for help, financial support and in some cases food to get by. Accommodation costs rise and finding suitable accommodation remains difficult. The cost of living also rises. These students who have to work two to three part-time jobs, who have to barely get by on the SUSI money, if they get it at all, are very dependent on the outcome of this committee’s review. Our students in our union stand for no fee increases and this is what I am asking the committee for today. Students, as a whole, are greatly concerned about the proposals of the July Cassells report. We saw this at the USI rally in October when close to 2,000 Trinity students, which is a record, marched on the streets of Dublin with every other institution in Ireland. The report rightly outlines that more investment is needed now in higher level education. As Peter Cassells stated to the committee, the system is broken and needs a revamp. Staff-student ratios are unacceptable and universities are now coming to the end of their reserves, not to mention the desperate state institutes of technology find themselves in.

Student fees increased in recessionary times from €1,500 to €3,000. This report outlines in part how they could increase again to €4,000 or €5,000, to say nothing of cuts to grants. In a time of recovery, this is most unfair and a retrograde step for our country to take. Make no mistake, an income contingent loan scheme of €4,000 to €5,000 is an increase in fees and will be seen as one.

While I know the system here is not the same as the one in the UK or in the USA, the countries where loans may be seen as having had a moderate success still have many pitfalls. Australia, for example, has tinkered with its system many times. It has charged more money for specific courses such as medicine or law, and the system may even be left behind by the current government. Youth Allowance - its version of SUSI - recipients are more likely to borrow from family and friends as well as others and go without educational books and materials than other university students. One in five loans there are not paid back and there is, similar to here, much emigration. Loans tend to rise. They tend to scare off students, particularly mature and part-time students, and they tend more and more not to be paid back.

The Institute of Technology presidents spoke passionately to this committee about maintaining access routes in their call for free education. A point made against the previous free fee scheme in the 1990s was that it did not improve access. A loan system will impede access for part-time and mature students. However, it is not only financial barriers that impede access. We have noted our recommendations for improving access in the report which was circulated to the committee.

If a proposed scheme will, at the worst, severely curtail access and, at best, keep access rates relatively the same as the loan system would do, why are we pursuing it? The report outlines that SUSI should be maintained and enhanced, and I agree. Living costs need to be covered more than they are currently, as previous speakers have outlined.

I do not want only to discuss the loan option, as much of the political and media attention is focused on it. There are, after all, two other options. Ms Annie Hoey outlined the arguments for a publicly funded education scheme and I ask that it would not be dismissed. Our report outlines how such schemes work in Europe, not just in the idyllic models in Scandinavia. The second option has not been discussed much either. It too should be examined and models should be created for all options, not just models for the loan option.

Our students have also brought answers and solutions to the committee. The Cassells report speaks of increasing the employer's contribution. It states, "This should be delivered by increasing the National Training Fund levy". It further states, "Each 0.1 per cent increase in the levy could raise at least an additional €50m per annum". If we raise this by 0.5% or even 1% this would go a long way. There needs to be a balance, on which I believe everyone is in agreement, but employers are categorically not playing their part. The word "talent" is used to describe Ireland's workforce to the world. There is a complete benefit for companies in contributing to higher and further education, and they need to do so more.

This committee has asked for advice several times on how to sell the option picked for higher education. This is a very easy way of selling it. Increase the employer's contribution only slightly and ring-fence it for higher education.

I thank the members for listening to me. I would be grateful if they read our report which was written and compiled by students. We are happy to come back and present or comment at any stage. This is a time to decide what we as a country stand for in looking towards the future. We need to decide if education truly is a public good and valued by this Government. This decision will affect us and the students who come after us most of all. I formally ask the members of this committee not to increase fees for students under any guise as part of their recommendation. We are their teachers, mechanics, engineers, researchers, doctors, therapists, nurses and even Senators and politicians. We are the future of this country and we deserve the best future that our country can give. We will play our part. We ask that our employers and politicians do the same.

I thank Mr. Kieran McNulty for his contribution. I ask Ms. Jane Hayes-Nally, president of the Irish Second-Level Students Union, to make her contribution. It is very important we hear the representative voice of the students who hopefully will be going on to third level in the next few years. Jane, you are very welcome.

Ms Jane Hayes-Nally

My name is Jane Hayes-Nally and I attend St. Mary’s High School in Midleton. I study eight leaving certificate subjects: three languages, three sciences and two mathematics subjects. I am in fifth year and I am the president of the Irish Second-Level Students Union. We represent the second-level students in Ireland and we believe in and strive for an education system without barriers. I represent hundreds of thousands of students who say that no matter who we are, where we come from or how much money our parents make, we should have the right to an education and the opportunity to continuing to third level if that is what we want.

There are five children in my family ranging in age from 17 to 10 years. My parents break their backs making sure we have everything we could want or need, despite the fact that my dad does not have a college degree. My mum is responsible for supporting our education at home, she has helped me with my mathematics homework and she also helped me to learn my spellings since I was four years old. My mother’s encouragement and support is at the core of my academic success and my love for learning. I owe a great deal to my parents, but once, maybe twice a week, one of the older children will say something about college and that leads to a huge argument. The problem is that my parents, like many parents in this country, do not know what is in store for us. They cannot afford to easily send all five of us to third level education. They cannot send us to the colleges that we dream of. My parents are reeling at the prospect of having to watch their children enter into an enormous level of debt from student loans. They are already looking into ways to help me pay my fees so that I will not have to do this. My parents do not want to see their children burdened with a huge debt that will impact the rest of their lives. They love us and they do not want this as a future for us.

If all five of us decided to enter into third level with student loans, we would have a collective debt of €100,000. That would be a debt of €100,000 hanging over one family. How would this make any parent feel? How would this make the parents in the members' constituencies feel? What kind of a choice is that for a parent to make? What kind of an issue is that for a teenager to have to consider? What are my options and what will my choice mean for my brothers and sisters? This poses the question: who gets to go to college from my family and who does not? We need to see debt for what it really is, a barrier to education.

I am only 17 years old and I am already worried about what student loans will mean for me. Debt is debt. Student loans will mean that I may not have access to credit later in life. How would that impact on my life? Would I be able to buy a house, own a car or raise a family in my own country? My parents passionately believe in education but they cannot support a decision that will cost us so much in the future. They will do anything to prevent their children getting into debt because they know how hard it would be and how much we would struggle.

There is no justification for a scheme which would limit the access of Irish people to education. There is no justification for burdening our students with debts when we are in a position to fund these opportunities, just like the Cassells report deems viable. How is it that we are even debating this? Why are my parents and I being put under this pressure when there is a report that states that there is a possible option which would allow every child the opportunity to progress to third level?

On many occasions my organisation has consulted second level students on what they want for their future and the students have said that education should be open to all, it should be equal and it should be accessible. Most recently we hosted councils in Connaught, Munster and Leinster for the students of those regions. We discussed and debated many issues during these events but most notably third level fees. We discussed the impact these fees would have on students my age who hope to progress to third level. Students as young as 13 years of age spoke of their fear that they will not get this opportunity. College as we know it is too expensive for many of us but college as we fear it will become will be inaccessible to even more. Free at the point of entry but extortionate at the point of exit is not what this nation stands for and the fear of debt will result in many families opting out of third level education, opting out of learning, opting out of a career and a future.

I know that student loans would mean an increase in fees and that this would deter students like me, from families like mine, from applying for third level courses. As things stand, even grant aided, I would struggle to cover the cost of living while in third level, let alone with an increase in fees. The idea that I will be saddled with debt before I have even begun my career is terrifying, but the added prospect that my siblings or I would not get the opportunity to progress to third level would be heartbreaking. I urge the members of the committee not to support any increase to student fees and not to support the introduction of a student loan scheme that will limit the options of students just like me, students who love to learn, enjoy their education and dream of the opportunity to create a future.

What other options do I have? My parents have taught me to always pay what I owe. The members may think that we do not understand what income contingent loans are but we know for a fact that they mean an increase in fees and a burden of debt for the rest of our lives.

Right now in Australia, one in five student loans remain unpaid as a result of emigration or graduates failing to earn sufficient income for long enough periods. Gender is a big problem in regard to paying back loans - women in the USA find it harder to pay back their loans than that of their male colleagues as women typically earn less than males. Thousands of those who are living abroad are too afraid to return to New Zealand due to their student loan debt. Is that what will happen to me, that I will be too afraid to come home, struggling to make repayments, saddled with debt before I am even 25?

I want a future. I want the chance to stay in Ireland and to study here. I, along with many of my fellow students, will contribute as a taxpayer to the generations that will come after us and we will help fund their education, but what happens if I cannot afford a future in Ireland? One of my options is to leave the home I love and the family I adore and pursue my education in Germany. Right now, no fees apply to international students in Germany, bar a small contribution charge of €50. Therefore, to the class of 2018, the message is "Willkommen in Deutschland". A record number of foreign students are currently enrolled in German universities and half of them stay in the country after graduating. Is this where my life will be then? Is this where my children will be educated?

I and many of my fellow students are begging to be heard.

We are telling this country that we need publicly funded education in order for us to have a future in our own country. We are not alone, however. We are not only students calling for this. We are among our parents, our teachers and our future lecturers. We are united with members of national unions, organisations and charities. Some 1.9 million people are represented. We are joined by people who believe in the same right to education as we do. My mother, who has supported my education, is sitting in the Gallery along with my sisters right now listening to me speak. My mother loves me and would do anything for me to have a future. Can the committee justify to her a system that would lock her daughter out and drive her eldest abroad, away from her home?

Le bhur dtoil, bíodh misneach agaibh. Go raibh maith agaibh.

I thank Ms Hayes-Nally. I am sure her mum and sisters are very proud of her today. Ms Hayes-Nally paints a good and clear picture of the stress that can impact on family life in terms of funding decisions. As the eldest of eleven, I totally understand where she is coming from.

What is clear from the last three presenters is that they feel an income contingent loan system would not be the best option that would be put before the people of this country. It is also clear from what the three speakers have said that there needs to be a publicly funded higher education system. I suppose we are in a situation where we are competing within the education budget for funding that is vitally needed for preschool education, primary and secondary, and special education as well, for investment in third level and further education, and we are also competing outside of education in terms of all our other priorities in health, justice, transport, etc. There is only a certain pot available. Are we saying that the taxpayers should pay a higher level of tax to fund third level? If so, it will go back again on many parents and will have further impact. We must look at ways by which it will not come straight back in another levy or fee, otherwise it would still have to be paid. I am interested in hearing the views of the witnesses later. If taxpayers are paying more tax, then there will be a situation where maybe their own children will not be able to go to third level. We need to consider the issues of fairness and equity.

If education was paid for through the tax system, their children would most definitely be able to access third level education because their education would be free, paid by the tax that they had paid to the State. I have a couple of questions.

I say, "Well done," to Ms Hayes-Nally. She highlights whether introducing income contingent loans to young people is even morally permissible and the fears that they feel. One area we have not looked at was raised only last week with me by a severely disabled young person who wanted to go on to third level education. That person told me of being faced with many cost-of-living needs. I am wondering have we taken into account those who already face a high cost merely to live, survive and be alive, and the thought of such students alone added onto that is not something that they are willing to risk. We need to look at those cohorts. I am guilty of always focusing only on the working class and the disadvantaged, but not taking into account the needs of other marginalised groups that are not spoken about as much, and maybe we need to look at that.

I have a couple of questions for Ms Hoey. How has the current system of fees affected students? Ms Hoey also mentioned the idea of access going beyond merely reaching the key target groups outlined by the national access plan. Could she elaborate on how each model affects them, based on her research? I never thought about it. I suppose the Trinity access programme looks at access right through to the end of one's degree and onwards. It was merely something that interested me.

Could Ms Hoey outline the long-term effects of an income contingent loan scheme on future adult milestones, such as a mortgage, being able to buy a car and going on a holiday? If one exceeds the threshold to pay an income contingent loan by, for example, €100, and one must pay that loan, what impact will that have on the milestones?

Mr. McNulty might go into the pitfalls of the Australian model. My fear around loans is that because there is not a technical report to go with this report to state how it all will work and be paid, at some stage are we leaving the door open for the State to step out, as it has done in other countries. Mrs. Justice Catherine McGuinness stated earlier that we are not letting the State off the hook. It might appear right now that we are not letting the State off the hook but we definitely might be leaving the door ajar for it to step out later on and for the area to become fully privatised. If anyone can speak to that, I would appreciate it.

It is great to hear all three of the presenters today. While there may not be consensus here on how education should be funded, everyone would be in agreement that the three presenters are wonderful ambassadors for the youth of the country. I say, "Well done," on fantastic presentations and how they care for the future generations.

The concerns I expressed earlier were particularly highlighted by Ms Hayes-Nally's presentation. When one thinks of a family of five ranging in age from 17 to ten, already Ms Hayes-Nally is worried about a burden of €100,000 being placed on her family. I note the love that her mother has given her for education and how obvious is the love that Ms Hayes-Nally has for her Mum, and that Ms Hayes-Nally is concerned that her mother may loose her daughter, as we expressed earlier the concern about emigration. How do all three presenters answer those who say this is not a loan as we know it? How do they answer the assertion that this is not a mortgage, it is not the typical debt and one will not be saddled with debt for life? How do they answer that?

Ms Hoey rightly pointed out that when we talk about access it is getting in, staying in and beyond. Often I have mentioned here the deficit in resources in college. Ms Hoey mentioned the path to resources in keeping students in college that is lacking because of that deficit. Ms Hoey referred to the USI having done research on publicly funded models in other countries. Would Ms Hoey, or indeed, Mr. McNulty, elaborate on what the USI found out from that and the impact it has had on the countries in question?

I thank everybody for coming here today on the case that they are making, not only today but on an ongoing basis. I agree with the comments of the other committee members that they are a credit to society, in fact, to the education system that we have at present, and of course to their families who have served them well.

If, for example, we were to take as a given what Mrs. Justice Catherine McGuinness stated that this publicly funded system is never going to happen, then one is left with a choice between the present fee structure and an income contingent loan model. I do not want to talk about a person's personal circumstances. In many cases the children of college-going age in a family who want to go to college and do not qualify for a grant are borrowing already and the debt is payable straight away at normal interest rates, and not contingent on one's employment. If those are the two options - I accept there is a third option - is an income contingent loan model not superior to the private bank loan model that must work for many today? I want to think about that because there is a heavy financial burden on parents.

If we are to reject Mrs. Justice Catherine McGuinness's argument, and if there is a higher court than the Supreme Court that says she is wrong - she is not normally wrong - and we go to the European courts on this one, how do we pay for it then? Maybe it is unfair to ask the witnesses that question. A lot of income tax would have to be generated. Are they, in particular regard to the USI, proposing specific tax increases to pay for this?

The third level students will know more about this than those at second level.

One of the recommendations of the Cassells report is to enhance the maintenance grant. Will the delegation give examples of where the maintenance system is failing, what are the problems with it and how are students suffering because of it? Whatever system we go forward with, that is one recommendation which is often widely ignored. We will have to deal with it.

I thank all the witnesses for their enlightening contributions. They are a credit to their institutions and, indeed, to their families and communities which have supported them. I was fortunate to have visited the Irish consulate in Boston three years ago. There I met two recently graduated law students who were working as interns and enjoying the experience immensely. One of them had just graduated from UCD and the other from a public college in Boston. The student from UCD was debt free but the student from Boston had a debt of $120,000 attached to her education. That night, I reflected on the argument and debate we were bound to have in this country on how we fund third level education. I made the decision that neither of the two outcomes I encountered at the consulate were sustainable or acceptable. It was not acceptable that a young person would be burdened with $120,000 of debt but neither could another young person, with probably a better law qualification, walk out of a third level institution with no debt. Three years on, the Cassells report has arrived at a similar conclusion.

Ms Jane Hayes-Nally’s contribution was excellent. I am an advocate of the student’s voice in education. It has been suppressed for too long and we need to hear more from Ms Jane Hayes-Nally and people like her who have legitimate views in how we support them in educating themselves.

I am primarily an idealist. Over my desk in Loughrea, I have a quote from Bill Moyers, a wonderful journalist in the US, "Ideas are great arrows, but there has to be a bow. And politics is the bow of idealism". After 13 years in politics, one has to temper one’s idealism somewhat as one gets older. There was a wonderful contrast between the witnesses’ perfectly idealistic view of how we should fund education, which I support, and that of Mrs. Justice Catherine McGuinness, who would claim she has an equally idealistic view. Life has taught us we have to be pragmatic about this as well. One of the main recommendations of the Cassells report is that there should be some kind of loan for third level education. Instead of having a blanket obstructionist view to this, young people’s time would be far better spent explaining how they feel a loan scheme should operate. They should point to what has gone wrong with such schemes in other countries and use that experience productively to ensure all contemplating going down the route of third level will not feel they do not have the option of pursuing it in Ireland. Ireland has one of the best education systems in the world. There is a whole cohort of families who are just above the income limit for the grant system but do not have the resources to put three young people through college. For me, that is the cohort I want to ensure does not contemplate not pursuing a third level course. Instead, I want us to create a system which supports them. We would all use our energies more productively if we were to go down that route.

I thank the speakers for their detailed and thorough contributions. They give a detailed insight into reality. I do not understand why we are so dismissive of state-funded education systems. Other countries like Germany have managed such a system. It is all about priorities. Over the past several years education has not been the top priority of previous Governments. That has led us into the case in which we are now. Why should our students and future students pay for those bad decisions made by these previous Governments?

The high drop-out rates in our universities and institutes of technology are partly due to the cuts in guidance counsellors. I have strongly advocated for the restoration of guidance counsellors. It is about priorities and decision-making but we have not always got our priorities right. We should not be dismissive of exploring the state-funded system. It is listed as an option and we should explore it. It is not for us to dismiss it because it will impact on students’ lives.

To be fair, I do not think any members are dismissing that option. We are discussing the different challenges and problems that each option can present. There is no straightforward solution. No matter what we produce collaboratively for the Minister, there will be no straightforward way. It is up to us to look at, to learn and to face up to the hard challenges and tasks when making recommendations on this issue.

I welcome the witnesses and congratulate them on their presentations. I have met many of them in the past and listened to their different views.

We all support keeping student fees at the lowest rate possible. I do not think any member believes they should go up by a significant amount. In saying that, we have to be practical to work within the resources available at the moment. We are after coming out of a recession and funding is getting back slowly. We have to work within those available resources.

I agree with Deputy Cannon on the grants available to families. I have also encountered families just over the qualifying limit. There are other options which we need to examine. Employers may need to contribute more. The University of Limerick and Limerick Institute of Technology co-operated with several companies in the area to have tailored courses around the needs of employers. This is another area we should examine across the country and to encourage some larger companies to come on board in tailoring courses with various third level institutions. Graduates can then find employment with those companies rather than being forced to emigrate.

Apart from the whole issue of funding the sector, reform of the system is badly needed too. There is no point in having no fees when the cost of sending a student to college is high. One has to go hand in hand with the other. Linking in with businesses is very important. Ring-fencing the levy and increasing it was mentioned earlier. We have to look at the whole apprenticeship and skills area.

Senator Byrne spoke about the large companies, but we must also be mindful of the SME sector which is struggling, so we should not put an extra levy on those.

Mr. Kieran McNulty

I thank the committee members for their questions. I will deal first with Senator Ruane's query about the Australian model. As I mentioned in my submission, they have tinkered with their system many times, including charging more money for specific courses. The Universities Australia report in 2013 stated that students receiving a youth allowance would not only have spent years in college struggling to survive on incomes below the poverty line, but will also have generated debts which could keep them impoverished for years. That is quite a stark review of the income contingent loan system there, which is commonly referred to as the best in the world.

The difficulty of chasing loans from people who emigrate was mentioned earlier. In 2012, there was a spate of headlines about people being arrested in New Zealand when coming home for holidays because they had not paid back their student loans. That is how the New Zealand system has tried to recoup loans that have not been repaid. I do not know if we want to go there.

There has been an overall decline in full-time undergraduates receiving youth allowance or AU study schemes from 42.4% in 2000 to 35.2% in 2006. University fees in New Zealand increased for ten years until the government introduced legislation that allowed for increases of only 5% per annum. If one contrasts this to the UK, although I know the system is not the same as in the UK, the loan system has only been in place since 2011. It was said in 2011 that the threshold would never go above £9,000 for student fees, yet universities pressured the British government into accepting £9,250 and that will increase further. This is what tends to happen with loans.

I will now turn to Deputy Thomas Byrne's questions. The question of students who are just above the threshold for SUSI grants has arisen a lot. Some 27% of students in my university receive the SUSI grant. I would argue that a huge percentage are just over that threshold, so much more account needs to be given to levelling and maybe even to zoning. That is because of adjacency rates, so if a student lived 21 km from university he or she got the full grant, but now if one lives within 45 km the grant is cut in half. That needs to be examined, particularly given that transport costs in rural areas are quite high. The system is not as competitive but if one is living in an urban area then accommodation costs need to be looked at also.

Senator Ruane asked whether a loan scheme would be preferable to the status quo. I would not think so because as she rightly said, people are getting loans already. I received a loan for my final year as well. If an income contingent loan system is introduced, that would mean in effect that people would get two loans. I was on SUSI but I still had to get a loan to cover my living expenses, although I do not live exorbitantly. Option 2 has been categorised as the status quo but it is the status quo with more funding. I would argue that option 2 is allowing for a general decrease in the student contribution, ring-fencing it as it is, or for using public funding more to enhance the grant system.

The student assistance fund needs to be reviewed. A separate union in our university has argued for the restoration of postgraduate grants, which could be looked at in our current system. A SUSI review group would be great.

As regards those who argue for an income contingent loan system, I have never heard an acceptable answer from people on the Cassells report as to why there is an automatic increase in the fee in the two models laid out. Since 2008 our fees have increased. From 2011 to 2015 they have risen from €1,500 to €3,000. In a time of recovery, why are we saying that it should go up to €4,000 or €5,000 while categorising this as a matter of fairness? Is it necessary to have an income contingent loan scheme that goes to €4,000 or €5,000? My worry is that it would rise, which is why I am firmly opposed to it. It is a slippery slope. I would like to hear whether members of this committee support an increase in fees. In choosing to examine the loan system that is, in effect, what the committee will be doing.

I thank Mr. McNulty. Would Ms Hoey like to respond?

Ms Annie Hoey

Yes. I have scribbled my notes so I will jump from one thing to the other. The feeling we are getting from our members on the ground, and this is from talking to the Irish Second-Level Students' Union as well, is that in recent years Ireland has become a very cold country for young people. We still do not see a lot of hope for the future. When we hear people talking about placing the burden of loans around our necks it is not filling my members within the Union of Students in Ireland, or members of the Irish Second-Level Students' Union, with a lot of hope about the value that is being placed on young people and their contribution to society. We have taken an awful kicking in recent years and young people still feel they are being targeted while this debate is raging on. Young people are astonished because on the one hand they are told they are the reason companies are coming here to invest and they are the future, but on the other hand people are talking about loans, debt and fees for higher education.

Ireland prides itself on its education system and we were promised we would have an option to continue to higher education. However, we do not understand how or why this debate is occurring. Young people feel left out in the cold about how their futures are being discussed, planned and funded. We want to stay in this country and want to learn whether that will be through higher education, further education or vocational learning. We want to contribute to society. Some of us might like to go to Australia for a year or two, but that is entirely different to being chased out of a country because there is no place for us. Young people feel Ireland is becoming a cold place to live in and that they are not overly welcome.

Adult milestones were mentioned. The Council of Australian Postgraduate Associations did research beyond the impact of income contingent loans. We talk a lot about how such loans will not incentivise or disincentivise people from various backgrounds getting in. That is something we contest in our research, but in Australia they are looking at what happens beyond that. In discussing people's futures we cannot look just at how they will be funded for the next four years, then cut funding and off they go into the wilderness and hope for the best. A large amount of research is being done in Australia and New Zealand on the impact of income contingent loans, particularly around students' ability to save and buy a first home. It will have a knock-on effect on the property market, although I do not want to go off on that tangent here. It is, however, no secret that there is a rental crisis. In Australia there is clear evidence to show that young people with income contingent loans are not able to get out of the rental property market. They are stuck in the rental market for a long time, which obviously has knock-on effects.

There is also evidence showing that the number of 20 to 24-year-olds living at home has increased from 42% to 47%. The increase for 25 to 29-year-olds living at home has risen from 12% to 17%. A recent UK study showed that 40% of graduates of 2012 have had to return home as they cannot afford to live where they want to. This has a knock-on effect on where they can work, the kind of jobs they can get, their career opportunities and options for promotion. Some 47% of graduates having to return home is an enormous number of people who feel they cannot progress in society and make their desired contribution. They have outrageous debts hanging over their heads, which is a real concern of ours.

There is also some evidence concerning family planning. In Australia, young people with income contingent loans are putting off starting a family by an average of 3.3 years. We are also worried about that trend. I cannot believe I am sitting here as a student representative talking about family planning, but here we are. That is the reality concerning such adult milestones, including starting families. A delay of over three years will have a long-term impact in a couple of years time.

Questions were asked about funding higher education. The Cassels report was remiss in not properly teasing out the three options.

I understand that the committee perhaps felt it needed to lean down on one option but I think it is a large gap in the report. While we are students, not economists - perhaps some of us will be economists in the future - we have done preliminary research in regard to mapping. The Nevin Economic Research Institute, NERI, has done mapping of how it could potentially be funded in the future, and I have circulated that paper to the committee. I would encourage members to talk to the experts from NERI who wrote that paper and ask them to come in and present to the committee how this could be funded in the future.

There are various taxation models which are based not just on income taxation but include other levies and taxation, particularly in regard to the national training fund. We hear employers say they could not possibly get involved in another 0.1% increase whereas student fees have gone up by 350% in the last six years. When people say no one else can possibly afford it, we have afforded it. We have taken the burden of 350% over the past couple of years while the State decreased its investment and employers did not increase their investment. We have weathered the burden of the increase in the cost of higher education. Therefore, when talking about other groups and people increasing their contribution, and given we have increased our contribution by hundreds of per cent, I do not think it unreasonable for us to say it is high time other sources were looked at seriously.

With regard to public funding, as ideological as I am, I wish we could say it will happen in the next 12 months but it is not going to happen in the next 12 months. We are talking about a 14-year to 15-year plan being put in place, far beyond the lifetime of this Government and it may even be beyond a time when I am talking about having children that this plan is fully implemented. It is a 14-year plan to phase in publicly funded education in order to start moving towards a model we can be proud of. While I wish it could be done overnight, it cannot be.

With regard to where the maintenance system is failing, we made a presentation to the previous education committee on the SUSI maintenance grant and what we would like to see in the grant reform, and I am more than happy to circulate that paper. We found a lot of gaps in the grant reform and some people were slipping through, such as parents and independent students. Estranged students were having huge difficulties in being able to prove estrangement. A member of the USI executive was the person who brought that through and that person really struggled in being able to prove estrangement from their family, and had to go through never-ending hoops, jumps and loops to try to prove that. If people want to prove estrangement, they need their parents to prove they are estranged from them, which is a little difficult when they are estranged from them. Some people are slipping through these gaps in the SUSI grant system and those are the ones targeted in the national access plan. We would see those as being the severe problems. There is then the issue of people who are just above the thresholds and also issues such as the distance from college. For example, to have people living on the Aran Islands considered as being adjacent is mad. These are small things but they have very negative long-term impacts on the students they affect and their families.

There was a question about how to convince people this is not a loan as we know it. I do not necessarily know this is something that can be done. We have been talking to students and they are recoiling in horror not because we have not explained to them what an income contingent loan is, but because they understand what it is and they understand what debt is. We are the generation which for the last eight years watched our parents be ravaged by the recession. Some of our parents lost their jobs and some of us had to move from our homes and schools. Some of us have watched our parents struggle to put food on the table. We know exactly what it is like to be faced with debt and with loans. I am not entirely sure, particularly with this generation, that there will be a way to convince us this loan is any different to any other kind of loan. Many of us are brought up, as Ms Hayes-Nally said, to pay back loans and to pay back what we borrow. Telling us we will not have to pay it back is a somewhat misguided financial approach.

Before student debt is considered as a policy solution for inadequate public investment in higher education, the wider social and economic impact of this debt should be considered and monitored. I would like to see some proper mapping of options 1 and 2 in regard to how they could be realised so the committee can make a fully informed decision about what the various options are, whether there needs to be a combination and how best we can move forward. As I said, it is over 14 years. We wish there was a magic wand but there is not. We are talking about a 14-year investment in higher education, although all of us will be gone from this debate at that time.

I thank Ms Hoey. The whole reason we are having this debate is the systematic under-funding in third level over the last number of years, particularly given the increase in the number of students. Having listened to the presidents of the universities and institutes of technology in regard to the huge pressures they are under at this time, the debate is very relevant. We need to have it and we need to put everything out there on the table.

In regard to the options the Cassells report has produced, we are certainly not limited to any one of those three, and we are open to looking at a hybrid or at other possibilities. In fact, we have asked Peter Cassells to come back to us in regard to teasing out all of the different options. We will certainly take on board the report the USI has produced for us and we may well come back on that. We are giving due consideration to everything.

Ms Jane Hayes-Nally

I thank my counterparts, who covered a lot of what was asked. I thank everyone for their nice comments. I would like to address Deputy Thomas Byrne's point that the ICL is preferable. I do not think it is preferable because it opens the door to increased fees and it reduces State funding, which is not a good thing.

To answer Deputy Ciarán Cannon, who advised my organisation to look at more practical ways of going about things, what we propose has been deemed a viable option and we would be in support of it being phased in. Perhaps it is ambitious but to reiterate Ms Hoey's point, young people are worth a lot to Ireland and I think we are worth that ambition and investment. With regard to maintenance grants, in the way this is explored in the Cassells report maintenance grants will be scrapped and students will take out loans, so perhaps I will be equal to other students because everybody is taking out a loan, but I will not receive €200 from my parents each week, as the student next to me might.

I thank all six witnesses for coming before the committee today. We have had a very productive and informative morning and we have certainly learned a lot from the engagement on both sides of the argument. The insights and observations of the witnesses are hugely valuable in terms of the deliberations we will have to make over the coming months. Thank you again.

Sitting suspended at 11.27 a.m. and resumed at 11.35 a.m.

On behalf of the committee, I welcome Mr. Tony Donohoe, director of education at the Irish Business and Employers Confederation, IBEC, Mr. Richard Kennedy, deputy president of the Irish Farmers Association, Ms Patricia King, general secretary of the Irish Congress of Trade Unions, Mr. James Doorley, deputy director of the National Youth Council of Ireland, Ms Michelle Murphy, research and policy analyst, Social Justice Ireland and Professor Diarmuid Hegarty, chairman of the Higher Education Colleges Association.

I wish to apologise to the witness for the delay, as we ran late with the earlier session. I thank them for bearing with us. The witnesses are here to discuss the findings of the Cassells report, Investing in National Ambition: A Strategy for Funding Higher Education.

I wish to draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the Chairman to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. I advise witnesses that any submissions or opening statements they make to the committee today will be published on the committee's website following this meeting.

I will divide the meeting into two brief sessions. We will hear from three witnesses and then the members can ask them questions. Then I will call the remaining three witnesses.

I call Mr. Donohoe to make his opening statement.

Mr. Tony Donohoe

I thank the joint committee for the opportunity to address members on a critical issue for the business sector. Ibec welcomes the report of the Expert Group on the Future Funding of Higher Education. We believe this is the most authoritative and balanced report on the economic and social benefits of investing in higher education and the serious challenges faced by the sector. We would also like to record our thanks to the chairman of the expert group, Mr. Peter Cassells, and the secretariat who met Ibec’s National Council and engaged extensively with the business community on this issue.

The report sets out the benefits of investment in higher education across the areas of economic growth, social development, culture and civic engagement. I propose to focus on the economic benefits, while fully aware that the system fulfils a vital role in society that extends well beyond that of satisfying enterprise’s needs for skills and research.

There is a significant inter-dependence between the economic and social benefits. Business and higher education have a shared objective of developing adaptable, well-rounded, creative, cultured and ethically minded citizens who have an appetite for learning.

We should also remember that 30 years after the abolition of college tuition fees, just one in seven young people in the country’s most disadvantaged areas progress to higher education. In our most affluent suburbs, in some cases just a few miles away, almost every young person, 99% has this opportunity. The report itself and evidence by the university and institute of technology presidents to this committee have highlighted the scale of the funding crisis in higher education. This will only get worse with growing numbers of students. I do not propose to restate the figures. Suffice to say that this is not special pleading. Poor education outcomes, overcrowded lecture halls and laboratories, deteriorating facilities and high student dropout rates will have severe economic and social consequences. While international rankings are a very imperfect measure, the continuing decline of Irish universities will also damage our reputation with international investors, and undermine our ability to attract international students and academic talent.

I wish to focus on possible solutions. The Cassells report sets out three funding options which could deliver the necessary investment to address this challenge: a predominantly State-funded system, retention of the current upfront fee of €3,000 or deferred payment of fees through an income contingent loan system. All three options envisage increased State investment ranging from an additional €1.3 billion for a State-funded system to €563 million for a deferred fee payment system.

The first two options are not economically sustainable or socially desirable. Our starting point should be that every student who has the ability and motivation to avail of a college education should be able to do so, whatever their personal circumstances. However, if we are serious about education disadvantage, we should target State investment in areas such as early childhood education which will increase the likelihood of young people in disadvantaged areas taking up this opportunity. Then we should provide the grants and support services to ensure that they can stay the course as students.

The second option of retaining the existing €3,000 upfront student charge is basically accepting the status quo. The Cassells report itself warns that this is completely incompatible with our national ambitions and will condemn Ireland to become an education and research backwater. This option also ignores the undoubted pressure on many student and families to come up with a large up-front payment. They will have gotten the worst of both worlds: fees without the support structure to pay them. Meanwhile, Ireland’s reputation for having one of the best educated workforces in the world becomes increasingly threatened.

The third option under which graduates would pay tuition fees when their earnings reach a certain level is the only equitable and sustainable option. There are many elements of this option that have to be worked out including the level of fees, how such fees will be regulated and how the scheme can be pre-financed in the period before repayments are made. Further, it would be economically foolish and socially unacceptable to saddle a generation of young people with the scale of debt that we see in the US and will probably see in the UK. Therefore we need a balanced, fair and sustainable system that combines adequate State investment with an affordable student contribution.

Business is also willing to play its part. Employers already pay over €360 million a year into the national training fund through a payroll levy and individual companies contribute directly to higher education institutions through a broad range of upskilling, research and sponsorship initiatives. A more structured approach to supporting programmes in areas of skills demand and more effective use of the national training fund should be explored.

Undoubtedly there are difficult political decisions to be made, but the time for debating the student fee issue has long passed. Twelve years ago, the OECD advised the Government that it was impossible to have quality higher education by predominantly relying on State funding. At that time, it suggested the introduction of an income contingent student loan system. The basis for this recommendation has not changed. Failure to invest now in third level will place an entire generation of students and the future of this country at a serious disadvantage.

Once again, I thank the committee for the opportunity to present the view of business on this critical issue. It is important that it is resolved. I wish the committee all the best with its endeavours. I am also happy to take questions on the issues raised.

Mr. Richard Kennedy

I wish to thank the committee for the opportunity to address it today as it considers the proposals contained in the report of the expert group on the future funding for higher education. I also apologise for the absence of our president today. He is in Brussels, which is why I have the job. As the committee will be aware, farm families have always placed a very high value on third level education. Farmers recognise the importance of higher education in delivering a strong future for the next generation, whether they return to work in agriculture or in other careers.

Higher education participation benefits the individual, society and the economy. On this basis, we believe that the proposal in the report for higher education to be funded by a combination of contributors - the State, employers and students themselves - has merit. However, we believe strongly that any contribution from a student must not be burdensome. Any change to the funding regime in the future must not prove a barrier to participation for students from lower income groups. We also believe that the committee should consider what impact high student fees could have on participation in certain courses or career areas. The imposition of student charges must not lead to a situation whereby students are incentivised to pursue a course that is deemed to lead to a high-earning career or, conversely, to not pursue a course where the lifetime career earnings may be modest, such as farming.

I wish to deal with the issue of potential changes to the means test for third level grants, as proposed in the report. It is worth noting that the report proposes the retention of maintenance grants for third level. This is very important. The report recommends:

Increases in funding for higher education institutions must be matched by improvements in the student support system. This should include an increase in the value of payments, particularly for the lowest income groups, the introduction of a capital assets test, and an extension of supports to part-time and postgraduate students.

The IFA is opposed to any attempt to include productive assets, such as farmland, in the means assessment for third level grants. Productive assets are required by farm and other small businesses to generate income and are not a measure of additional ability to pay. As the committee may be aware, the existing method of assessment of self-employed income for the maintenance grant disallows a number of expenses that are included in income tax computation. These disallowances, which impact on farm families in the means assessment, include capital allowances, lease payments, stock relief and interest on borrowing for capital purposes. Approximately 40% of students from farm families receive a maintenance grant, which can be compared with 33% of the general student population. This simply reflects the fact that average incomes in farming are low, at approximately €26,000. Like all other families, where the farm income exceeds the threshold for grant qualification, the student will not qualify for a grant. Any system that would impute additional income based on the value of productive assets would discriminate against a particular cohort of students, preventing this group from accessing a grant and potentially from attending college.

In its deliberations on the recommendations of the report, I ask that the committee take into account the concerns of farmers in this area. The inclusion of productive assets in the means test for third level grants could deny access to higher education to students from low-income farming and other self-employed families and must not be introduced.

Ms Patricia King

I thank the committee and note that we are pleased to accept the invitation to address it and to outline the views of congress on the report on the future funding of higher education. As the report rightly points out, higher education has made a significant contribution to the development of our country and it is essential that we reposition the sector so that it can continue to act as a driver of strong economic and social progress. However, as the report points out, this will require significant increased levels of investment in higher education, further education, apprenticeship and other post-second level opportunities.

The report recommends that the funding for the sector be increased as follows: an increase in the annual core funding of the sector by €600 million by 2021 and €1 billion by 2030; a €5.5 billion investment in capital expenditure over the next 15 years; and an additional €100 million to enhance the provision of student supports. Congress agrees that this level of increased funding is required and it is essential that the debate now moves to finding a sustainable and fair means of providing the required investment. The report points to three possible options for the future funding of the sector, namely a predominately State-funded system; an increased State funding with continuing student fees; or an increased State funding with deferred payment of fees through income contingent loans.

Congress believes that the first option, a predominately State-funded system, is the most equitable and sustainable option. Moving to a fully publicly funded system, in our view, will safeguard the contribution of the higher education sector to the economic and social development of the country. We agree that providing additional funding to the sector must be done on a phased basis and the timeframes envisaged in the report are realistic and achievable. A predominately State-funded system also avoids putting many thousands of future graduates into long-term debt. This is important not only in light of our recent economic history but also from the experience of student loan schemes in other jurisdictions. Ireland already has the third highest level of personal and household indebtedness in the EU. The introduction of a student loan scheme will add to this already high level of indebtedness. The experience of student loan schemes in the USA shows that 69% of graduates had to borrow money for their education and in the USA it takes a primary degree holder, on average, 21 years to pay off his or her student loan.

As the report points out, employers are major beneficiaries of the outcomes of higher education. Congress agrees with the recommendation in the report that employers should be required to make a structured contribution to the funding of higher education. We further agree that this contribution should be made by increasing the national training fund levy. The levy raised €350 million in 2015. Congress notes that every 0.1% increase in the levy will raise an additional €50 million and we propose that the rate of contribution be increased so that €700 million is raised through the levy annually.

If the required investment can be delivered, it places an onus and responsibility on our universities and institutes of technology to ensure that they maintain and improve the quality of teaching and learning and ensure there is an improved student experience arising from the increased investment; continue to adapt and respond to the changes taking place in our economy and society, with a particular focus on ensuring the employability of graduates through the provision of high quality career advice for students; provide significantly improved access to students from disadvantaged backgrounds; and immediately end the use of precarious forms of employment and offer conditions of employment so that the third level sector is seen as an employer of choice capable of attracting the most talented people.

I thank the Chairman.

Will members indicate if they have any questions? It is clear that IBEC is in favour of the student loan system. Does Mr. Tony Donohoe see any advantages to this? How could it be addressed? I note Mr. Richard Kennedy's concern about the inclusion of farming land in a means assessment. As a farmer's daughter, I totally agree with him. Does that mean he is in favour of a student loan system? Could he expand on that?

Clearly ICTU is in favour of the State-funded system but there are many demands on the public purse including pay restoration. I am interested in where Ms King feels that money should come from? Is it from higher taxes or levies or cutting spending in other areas?

I thank the witnesses for their time today. I will start with Mr. Donohoe. He said that business is also willing to play its part. Does that acknowledge it is not fully playing its part? Is IBEC open to an increase in the national training fund levy that will be ring fenced for higher education? Is the Irish Farmers' Association in favour of income contingent loans, which means the children of farmers would have to pay? To date, many of them have not. I am very open to looking at the fact that 40% of farmers' children are on maintenance grants and whether they should all be on maintenance grants. We have a strange situation where we have mature students who are being assessed on their parents' income when they do not even live with their parents yet capital and assets of farmers is not taken into account when their children seek to go to education. Somehow we have failed for a very long time to look at that. How many of the farmers' families are not in a position to pay? As we have so many politicians from outside of Dublin, we are sometimes afraid to look at the access of farmers and their children to education. It is a conversation we need to have.

There was one comment by Mr. Donohoe on free fees. Something we have not explored is that one in seven children from disadvantaged backgrounds went back into education. That figure does not take account of the number of mature students from those backgrounds who went back into education. When we say one in seven individuals, the research has failed to capture that it is actually one in seven families. It filters out over time. Among my peers and in my community, where a parent went back to education through the free fees system, their children are now just old enough to enter into the education system. They will enter it because their parents or elder sibling had that access. We have not even begun to account for the ripple effect on the children who are just now of age to go to college. There is a generational change from when it was first introduced. Sometimes it is not useful to look at how much free fees has or has not failed. It has had an impact but we have not given it long enough. We must consider the social and cultural capital and have a more three-pronged approach to access to education.

I thank Mr. Richard Kennedy for his presentation. As with my colleagues, I would like clarity on his position on income contingent loans. I have concerns, as I say every time we discuss the Cassells report, about equality of access to education and these income contingent loans. We could lose our most skilled graduates to emigration because if they emigrate they will probably not be chased to repay the loans.

How much more will employers be willing to pay into the national training fund? At the moment, it raises €350 million but ICTU want it to be raised to €700 million. What say does ICTU currently have over how that €350 million is spent? If it was increased, what say would it like to have?

I will make some observations. A decision will not be made by this committee. Some of the previous speakers wished us well in making our decision. We will not be making the decision. We will possibly be giving recommendations but it will be for the Oireachtas as a whole and the Government to make a decision.

On farmers, there is always a debate about capital assets but the truth is the average farm income was €24,000 last year. Many farmers are very badly off. That is often left out of the debate on capital assets. There may or may not be an argument for capital assets but farm incomes are extremely low and precarious and that is the bottom line as to why many farmers' children are on maintenance grants.

On the national training levy, there is no doubt it will play a role in whatever decision is made but the current levy is €380 million a year. If one doubles that, which would be a massive imposition, it is still only a tiny bit of the sum. I cannot see anyone proposing that. That is my observation. I do not know if IBEC has any observation on the impact of the training levy. The levy at the moment is 0.7% on employees. It is €382 million. If it was brought up to 1%, it would still only be €500 million. It would be way short of where we need to be. It will have to pay a role. Does IBEC see any role for an increase in that? How will it impact on its members?

I will hand back now to Ms Patricia King.

Ms Patricia King

The Chairman asked particularly about where the money would come from.

ICTU is very much of view that it should be a State-funded system. Regardless of what way we look at this and regardless of how many newspapers set out details of feeder schools and all that information, which highlights the inequality in the system, we will not resolve the inequities until we give everybody the same chance. That is the holy all of it. One gains experience of these matters over the course of one's life. I did not have the income to go to university and I know what that felt like.

On the matter of what farm household assets are taken into account in the awarding of grants, and some people know what is involved in filling out a means-tested grant application, there are no questions about what assets a certain part of the community has or do not have. If people have nothing it is very hard to get to third level and those people are denied access. Another group of people at least have a filter which means they do not have the same denial of access. There are farmers who are in low income categories and they should be treated no differently from others who are in low income categories. We would not argue otherwise.

If we reflect on secondary education which to some degree was fee paying for a considerable period in the sense that it was either done through fee or scholarship, when access to it was opened up, the vast majority of young people received a second level education. That was a major move. Some people with whom I went to national school had one place to go after it - I was not one of them - and that was into the local factory because they could not afford all the costs that were involved in going to secondary school. That is precisely where we are at in university terms. There are categories of young people whose parents, having regard to their household income, could not contemplate the notion of sending their children to university because of all the costs involved in that.

I have children who have been to university and I was lucky enough to earn a living to be able to provide that level of support. I know the costs involved in providing that. It is not a question of guessing any of this. I know what the denial of access to third level based on income means and I also know the cost levels involved. There are groups of students in secondary schools today who, as long as those barriers to access are in place, will never have access to third level, nor even the prospect of it, until we address those barriers.

The Chairman asked me where we would get the money to fund the system. I can think of €620 million that could be immediately got and put into the system, which would be a major injection of capital. We give our thriving, profitable big business accommodation and food sector a reduced VAT rate which denies this State €620 million a year. I am referring to global companies which pay the lowest of wages and which get this valuable reduced tax rate. What sort of transformation would we make to society and to the lives of young people sitting in classrooms in different parts of the country today if the State were able to say that it would not give that sector that tax reduction but would put that €620 million into the education system and thereby allow these young people equal access to university? We should not build our third level education system, which is extremely important to young people to give them a chance in life, on the basis that they should get a loan and sure they may not have to pay it back. That is a desperately bad foundation. I disagree entirely with IBEC.

The business sector here is well capable of paying much more than it pays. It gets a big benefit from having very well-educated people. There is an incentive for those in that sector to invest in third level. If they were to build up that resource as part of an investment in third level, the likelihood is that they would encourage people to stay here rather people having to leave the country. There is a big element in that. Many business people will say there are a few impediments very live in the economy. One of them is maintaining the skills, another is maintaining women, in particular, with their skills in the workforce because of the lack of child care, and another is the unavailability of housing. Education is a key element in that. We have to make a seismic decision. We view the Cassells report very positively. It sets out the options in a very good fashion. We have come down in favour of option one. I hope I have answered the Chairman's question about funding.

Yes. I ask Mr. Richard Kennedy to respond particularly on the IFA's position on whether it would support an income contingent loan scheme.

Mr. Richard Kennedy

I note on looking over my statement that I did not make it clear that we would be in favour of the contingent loan scheme for education, provided a limit would apply to the loan, as we would not want students to be burdened by exorbitant loans. Therefore, a limit should apply. We also believe that people who cannot afford to pay should be able to get grants in the normal way but people whose income is above the threshold should be able to apply for a loan under the contingent loan scheme. We are clear on that.

I do not know how much Ms Patricia King and I would have in common but, like her, I also understand the costs of education as a farmer. My income was above the threshold and that was not a problem and I had to play my part the same as everybody else. I would say to Senator Ruane and Deputy Catherine Martin that if land, which is the tool of our trade, was included in the calculation, the 40% of students from farm families who get the grant would be wiped out in terms of that percentage of students going to university. If they note the Teagasc income farm survey, which is an independent one, the factual position is that the average farm income is extremely low and it is accepted that it is low. Farmers who live in rural areas pay great attention to educating their families to the maximum of their ability and that would account for the differences between the two groups. That is our position on it. We understand there must be an increase in funding and we would favour the income contingent loan scheme, which should be capped to ensure it does not put too much of a burden on students.

I ask Mr. Tony Donohoe to respond.

Mr. Tony Donohoe

On the Chairman's initial question on the advantages of the income contingent loan scheme, I have been debating this issue for more than ten years and I have not come across any other credible alternative. The idea of State funding is very nice as a notion but the reality is that we will not have an additional €1 billion that is set out in option one of the Cassells Report. It is to be hoped we are entering a period of economic recovery and that we will see some of those more damaging cuts reversed, but if we are totally reliant on the State and the next economic downturn comes along, we can be guaranteed that it will be higher education funding that will be cut. It is much easier to cut. In education we do not have the headlines about people lying on hospital trolleys or about carer's allowance being cut. It is a slow-burning problem for which we will pay socially and economically, and we need to put in place a sustainable solution, which is to have co-financing.

I will come to the two questions around the national training fund and employers' propensity to pay and also some of the further issues Senator Ruane raised around access. I sound a word of caution when we talk about the national training fund. When we talk about companies in a skills context, we tend to envisage large multinationals which employ many graduates, but most people are employed by companies with fewer than 50 staff, many of which do not employ graduates. There is a danger that they will see this as an employment tax with all the knock-on effects.

In terms of IBEC's attitude to paying an increase in the national training fund, I would make two points.

First, any increase or adjustment to the national training fund must be part of a greater solution. As Deputy Byrne said, given the scale of the funding shortfall, the employer contribution is not going to make a significant difference. That is not to say that we should not increase the contribution. However, under the options that Cassells set out, the amount was an additional €150 million. That is 0.05% of the total funding requirement. We need to get real. I am surprised at the amount of time that has been taken up at the first session of this committee discussing this magic amount of money that is to come from the business sector. Incidentally, the same sector also creates the jobs that allow people to pay income tax which underpins our system.

Employers may not be prepared to engage on this if it is used for politically expedient reasons. The increase in student fees is perceived as being precisely that. If we use an increase in the national training fund as a sticking plaster to mend the deep cuts that have been imposed on this sector, it is a problem for us. Any change needs to be part of a greater solution.

I wish to pick up on the point make by Deputy Martin relating to how the current national training fund is used at the moment. The fund will be in surplus by €272 million. That goes from year to year. A surplus exists and it is not used for any other reason except to balance the books. My argument is that it should be used for educational purposes.

Employers already pay 0.7%. They have little influence on how this is spent. I have done a breakdown of the programmes the national training fund supports. There are 16 different programmes. Most of them are at further education level, the exceptions being Springboard and, it is hoped, more apprenticeships in future. A report going back to 2008 published by Forfás suggests few of these programmes have strong labour market outcomes. The national training framework, NTF, is not being used for the purposes for which it was set up. Until it is, employers will not be prepared to engage in this conversation. However, we would if we had some influence on how the money was spent. We might take a different view if we were confident that it was being used to meet skills requirements, but not if we believed it was being put into a black hole. It is important that we do not lose sight of the bigger issue when we are talking about increases in the NTF.

Senator Ruane made a point about access. Access is impacted primarily by culture. If particular areas have little or no history of people going on to third level, that should be addressed by interventions far earlier in the system. It is also impacted by the early education experience of those affected. Again, this arises earlier in the system.

The third priority is around living costs, especially for people living away from home. The living costs associated with going to college are far higher than any fees being discussed. Cassells found no evidence that this had impacted access. A more insidious class gradient is happening. A total of 32% of people in university now are studying masters and postdoctoral programmes. There is no support for students there or for part-time study. That is creating another class gradient and more discrimination. Unless we address that, as proposed by Cassells, we cannot really discuss an equitable system.

Thank you very much, Mr. Donohoe. Thank you all for your responses. Now we will go to the final three contributions of the day. The first is from James Doorley, deputy director of the National Youth Council of Ireland.

Mr. James Doorley

My thanks to Senators and Deputies for the invitation. The NYCI is the representative body of national youth organisations in Ireland. We have a wide membership, as the committee has heard already. Two of our members, the Union of Students in Ireland and the Irish Second-Level Students Union were before the committee this morning. My input is to try to seek to represent the interests of young people aspiring to access and already engaged in higher education studies in Ireland.

I will not go into detail on what the expert group has set out. Other contributors and the report have done that well enough. I am keen to focus on solutions to the problem as well as to highlight some of the challenges and potential consequences of pursuing some of the options proposed in the expert group report.

The expert group identified the scale of the funding required and proposed three funding options. Option two corresponds to the status quo. We accept this is not sustainable, not only from a funding perspective and in the sense of the financial pressures it is putting on the higher education sector but also because of the €3,000 registration fee and a lack of sufficient supports in tackling inequity in the system.

Others have alluded to the fact that in one area of Dublin 4 a total of 85% of students progressed to third level while in Dublin 17 only 22% did. It is clear that the current system is not working to address the inequity in the system.

As acknowledged by the expert group, option one is straightforward and supports the principles of access and participation. There are good reasons to support the argument to continue and enhance State investment in higher education. We take the view that higher education should be accessible to everyone. It should be a right rather than a privilege. Investment in higher education makes good social and economic returns. These returns are reflected in statistics showing that 41% of people in Ireland now have a higher education qualification. The proportion is even higher among the 25 to 34 years age cohort. All societies need a highly skilled and highly educated population to attract investment and to stimulate and sustain economic growth. The Government has published a skills strategy which is predicated on the idea that people have the skills they require. Therefore, our aim should be to work towards this option. We acknowledge that it cannot happen overnight and, therefore, we maintain the Government should bring forward a plan on how this can be achieved. The report referred to a timeframe of 15 years and how it can be achieved in that timeframe.

Any increase in funding for the higher education sector must include measures to increase the participation of students with fewer opportunities than is the case at present. We are rather concerned about the high level of non-progression of first year college students. The Higher Education Authority produced a report the year before last. It highlighted that 16% of students did not progress to second year. That corresponds to more than 6,500 young people. This represents a significant loss to those young people as well as the cost to their families and the loss of a year. It is also a cost from a financial point of view and we need to address that issue.

Another option includes income contingent loans. We are opposed to this idea. It would represent a profound change in how we invest and support third level education. First, we are concerned about the financial burden it would put on young people. If we have learned anything from the crisis, it is the fact that heaping high levels of debt on people, especially young people, is not a sustainable model to pursue. The report adverts to evidence from Australia and the UK. We need to acknowledge that Ireland is not Australia or the UK and we have different circumstances. Even in post-recession Ireland, young people are already facing an extremely challenging economic situation, including access to employment. Where young people do get access to employment, they face issues around career progression and low rates of pay.

The report refers to income thresholds. That is relevant for now, but young people have no guarantee that those income thresholds will not change at some stage in the future. This could also have a cooling effect on people or act as a deterrent. Young people have to make a choice. Should they take a low-paid job or get into debt? Many young people would be deterred from third level if they believed they would have to pay debt further down the line. It might be said that they do not have to pay it, but it is still there and they may have to pay it at some stage later on.

There is evidence in the report about Australia but Ireland has a much higher level of migration, particularly in the wake of the recent crisis, as we have seen. I believe the Cassells report refers to the basic idea in question, but there are many details that it does not address in terms of a income contingent loan system. I refer to the coverage, rates of payment, income thresholds and the question of who manages it. There is reference to the State managing it, but one must ask whether that could change ten, 15 or 20 years down the road. It would be a profound change. Once one starts with a system and agrees to it, one cannot go back. One cannot unscramble that egg. Any Government that would bring in a contingent loan system would be engaged in major change.

As I said, we are opposed to the deferred contingent loan system. We believe option 2 is the best in the longer term. We accept it would require increased State investment but we have believed in this country that the primary and secondary level education sectors should be funded by the taxpayer. I realise there are parent contributions; there is no doubt about that. Fundamentally, we believe investing in education is good social practice. Likewise, we believe this is the approach any Government should take in regard to the third level system.

I thank the committee for this opportunity. I am happy to answer any questions members may have.

I call Ms Michelle Murphy, the research and policy analyst in Social Justice Ireland.

Ms Michelle Murphy

I thank the Chairman and members. I apologise in advance because I have to leave at 12.50 p.m. I have a prior commitment at 1 p.m.

We have a vote at 12.50 p.m.

Ms Michelle Murphy

We welcome the invitation. I will not go through our entire introductory statement. It has been circulated.

The national risk assessment has identified a lack of investment in education as one of the seven social risks facing the country. Human capital has been singled out in that report as an area for investment. Education is recognised as crucial to the achievement of our national objectives. Competitiveness, social inclusion and active citizenship are also referred to.

The Central Statistics Office, CSO, population projections indicate considerable investment is required to ensure the higher education sector can continue to cope with the projected increase in demand. In recent years, however, funding has been out of step with this. Failure to invest in skills has been highlighted by the OECD as resulting in the danger of low levels of innovation, higher levels of underemployment, unemployment and vacant jobs. Educational success is now about critical approaches to problem solving and the capacity to live in a multifaceted world.

The report highlighted Ireland should be considering benchmarking its funding against funding in the countries with which we aspire to compete. This is an important point. The report outlines some options in funding. However, regardless of what options the Government takes, public investment will have to increase significantly over the next decade due to the shortfall in investment we have had and the demographic challenges of the future. In this regard, we propose that a framework to 2028, with a roadmap, should be set out for sustainable funding and revenue.

There are strong arguments, from an equity perspective, that those who benefit from higher education and who can afford to contribute to the cost should do so. People with higher education qualifications do reap a substantial earning premium in the labour market, which increases with age. There are arguments against it, however, especially in light of any complementary strategy to do with long-term future funding. An issue arises over fees in part-time education. With regard to the current fiscal rules, would the Government loan guarantee be recorded on the general Government balance sheet? That is a challenge we face. We have argued consistently that there should be flexibility within the Stability and Growth Pact concerning public investment in fields such as education, health care and child care.

Ultimately, the funding for higher education has to be considered within the overall future funding requirements of the State. I refer to the requirement to pay back our national debt and to the National Pensions Reserve Fund, which has been transferred to the State. Future pension payments, water infrastructure, broadband, child care and all these issues will require an increase in the overall national income, no matter what way one decides to fund higher education. In that regard, we welcome this discussion but we believe the future income needs of the State need to be considered in the broader discussion, and higher education should be considered in light of education as a whole along with early childhood education and primary and second level education. Life-long learning is crucial.

Professor Diarmuid Hegarty

I thank the Chairman for giving the Higher Education Colleges Association an opportunity to represent the views of the private colleges on the future of education funding. I attended the proceedings of the committee earlier this morning. It seems quite clear to me this committee and the Oireachtas as a whole face very difficult decisions. There is a real danger of a menagerie where the ostriches with their heads in the sand ignore the elephants in the room. I fear the pressing demands of the electorate may cause history to judge our generation as ostriches. We see our role as putting a spotlight on the elephants in the room. As private institutions, our key message is that we can help and we want to help.

What are the elephants in the room? There are two key ones. First, the committee faces a major challenge in recommending how to meet the coming explosion in student numbers. I really have not heard that stressed in earlier points made in respect of the Cassells committee.

The second major challenge concerns addressing the 20 years of relative failure to improve significantly access to higher education among the disadvantaged. If heads remain in the sand, these problems will reach crisis levels. Both problems have to be addressed with a huge number of additional places, many of which we can provide. We can do this at a much lower cost than the State sector and will not need any capital funding from the Exchequer.

The Cassells group projected a 29% increase in student numbers by the end of the next decade. The Department's latest projections put that between 22.5% at the low end and 34% at the high end. The actual percentage will depend on increases in the number of school leavers going to college and in the numbers of mature and overseas students. In other words, we could need up to 60,000 extra full-time places by the end of the next decade. That would increase higher education enrolment in Ireland up to a record 227,000 places. How can anyone address the question of funding higher education without factoring in an expansion of the scale we know is coming? The future students are already born and at school. How will we fund the extra 60,000 places? One should think for a moment about the consequence of not providing the places. We would be depriving tens of thousands of young people of the right to go to college. It would particularly affect the disadvantaged people in respect of whom much more has to be done to improve access. Free fees have not worked, as shown in the research paper by Dr. Kevin Denny from UCD, quoted in our submission.

Individual institutions are doing what they can to increase access. Let me give an example of a scholarship student on our lower degree programme. She is adapting well to the challenge of self-motivation. She describes college life as a fantastic experience and she is meeting many new people from different backgrounds. She is not entitled to a maintenance grant but is working four days per week and is coping well with this challenge. She is the eldest in a family of ten. She is the first to go to college among her family and close friends. She has been followed by her younger sister and is watched closely by others in her youth project. I am referring to her words, not mine.

We need an overall systemic approach to tackling the issue of disadvantage in higher education. I take issue with Ms Patricia King when she offers us €620 million. If we really want to increase access, that €620 million has to go into first and second levels, where the problem is. It is not a matter of funding. All the research shows it is not a question of funding, it is performance at second level that is determining access to third level.

Another consequence of not dramatically expanding higher education would be a likely skills shortage in an economy due to expand by 34% over the next ten years, according to the ESRI. That is even taking Brexit into account. If the places are not provided, it would act as a drag on multinational investment in Ireland at a time when the advantages of our current tax regime are under threat. Our detailed submission outlines how we can supply many additional places and how we can widen access. I will be happy to answer any questions.

We did not receive Professor Hegarty's written submission before the start of this meeting. We would appreciate it if he could forward it to us. We will ensure all the members get it.

Professor Diarmuid Hegarty

That went in a week ago.

In that case, there has been some communications challenge in regard to it. I thank Professor Hegarty. He has certainly stated the elephant in the room in a very straightforward way. That is the reality of the situation we are facing.

I thank Ms Michelle Murphy for her holistic approach to setting out the issues in regard to education and where education fits into society. Does she see the student loan option as a suitable method or does she feel that higher taxation is the answer?

It was clear Mr. Doorley was against the status quo and opposed to the student loans system. He feels the State-funded model is the way to go but I am interested in whether he believes the funding should come from increased taxation or cutting expenditure in other areas.

Do members have any questions?

I do not have any questions but some of the comments made have raised questions with me, which I have sent on to the committee, in regard to the other experts we need to hear from arising from this discussion. For example, we probably need to hear from someone who knows the German system, and we have heard about the Australian system but we probably need to hear from someone with direct experience of it. With regard to Professor Hegarty's contribution, the issue of demographics was discussed at other meetings but it is a huge issue that merits further discussion. I thank all of the witnesses for their contributions.

I too welcome the contributions. Professor Hegarty made an interesting point on private colleges and how we can use that facility to cater not alone for current demand but projected demand going forward. With regard to the current situation in this country and other jurisdictions that Professor Hegarty is aware of, how do the private colleges contribute?

I agree completely with Ms Murphy's point that education, health and child care are crucial in society. Nonetheless, they are areas that have been neglected, let us face it, which is where we have got the priorities wrong. As I stated earlier, there is a way around this and it simply means prioritising what is important. That has not happened in the past and it needs to happen now. It will affect future change and will affect our young people and society in general. We need to have our priorities right. We need to put pressure on the Government to ensure those areas are always prioritised.

Professor Diarmuid Hegarty

To answer Senator Gallagher's question, in our paper we talked about the immediate possibility of providing 7,000 additional places. As regards the funding and how other jurisdictions dealt with this, the British have approached it in a clever way in that they have extended the student loan funding to students of what they call "alternative providers". They have learned the lesson from the United States by limiting the amount of the loan and they will only lend up to Stg£6,000 a year in respect of a course in an alternative provider in the UK. This prevents astronomic student loans building up where students are studying with private providers, as has been the case in the United States. There is a way of learning lessons from elsewhere, and through the student loan system there is definitely a way of funding much greater access through the private colleges.

Ms Michelle Murphy

I thank the Deputies and Senators. To come back to the Chairman's first question, our organisation is on record that we foresee higher taxation, which means raising national income. This is not just for funding higher education but for the pressures I outlined, which were also noted by Deputy Nolan, in regard to waste infrastructure, broadband, public transport and demographic pressures, not just in education but in health services, child care, the fair deal scheme and housing - the list goes on. We have publicly supported this in the past and have written about it.

Within the context of increased PRSI and increased State funding, there is a strong argument from an equity perspective for an income-contingent loans scheme. The Department of Education and Skills in 2009 published a very detailed paper looking at a variety of options and looking at countries such as Australia and the United Kingdom. However, the detail has to be simple. For example, is it the State that guarantees it? Any form of income-contingent loan should not in any way prevent State resources being allocated to other areas where there is need, which is critical.

No matter what option is picked, more investment is needed. At the moment there is significant pressure on the national income from other areas so, as a society, we are going to have to reconcile ourselves to the fact the Government will have to raise the amount of national income collected on an annual basis in order to fund the services and infrastructure that people expect. I agree with Deputy Nolan that we need a framework for prioritisation and that framework has to be able to deliver a vibrant economy, decent services and infrastructure, good governance, sustainability and just taxation. We need to be able to explain to the people that, in order to get their social services, we need to prioritise and, therefore, some things will have to wait. However, they need to be convinced that, in the long run, the State will be able to deliver the services they expect.

Mr. James Doorley

The Chairman asked where the money should come from, which is the fundamental question the report is looking at. We would argue this is about broadening the tax base through progressive taxation. We know many people who do third level earn higher salaries but, as a result, they will contribute to the overall system through progressive taxation. The idea is that we should not treat third level differently, given we do not ask people to take out loans to go to second level or to primary school, and, in a sense, we should look at education as a social good to which we all contribute, and we do that through the taxation system.

There is a concern that we will solve one problem - the fact the State has a funding problem at third level - but create another. We know what happened in housing, in which the State was very involved. The State built many houses and provided support to people through county councils to build their houses. It then went out of that sector and decided the private sector will deal with it and people can take out loans. We see now that the State is trying to solve a crisis. What might happen is that the State could solve the problem so that we know where we will get the resources to deal with investment in third level, which is through the contingent loans system, but we are then loading that debt onto individuals throughout the country who will have that debt for perhaps ten or 20 years.

It is very important that we look at this issue from a youth perspective, in particular in regard to the post-secondary level and young people's options to progress their career, and that we do not just talk about third level. We seem to have a bit of an obsession with talking about third level. I believe we also need to look at the vocational education sector and further education, and how that is going to be funded. Mr. Donohoe mentioned that we can see from Australia and the UK that fees have a huge impact on part-time fees. I did not go to college when I left school because it was not an option for me at the time, but I went back afterwards. People who have decided not to go to third level when they leave school, but who want to go back afterwards to study part-time, could be disadvantaged by a loans system.

As Deputy Byrne said, the Government will make the decision on this. However, due to the lack of detail, I do not know how anyone could recommend the model of a contingent loans system presented in the report. While I accept the report acknowledges this, it does not address many of the necessary details. It is as if I went into a bank to get a loan and was told it would give me X amount but would not tell me the interest rate. There would have to be a lot more detail before anyone would agree to this. We believe we could end up just solving the State's problem. As Mr. Donohoe mentioned, if the State did go down the line of the contingent loans system, there is a real danger that, if the pressure does come on down the line, it would decide to decrease the income thresholds and put less money into third level, so the level of debt would increase and the number of people able to access it would decrease.

In terms of participation, particularly from low income groups and other under-represented groups, it is much more than just funding and is really around the supports at first and second level. However, it is also around the other supports that people need at local level to help them to aspire to go to third level and to feel that, if they do go, they can get a meaningful career and job out of it afterwards.

I thank Mr. James Doorley for his contribution. On behalf of all members, I thank each of our six witnesses for coming before us this morning. It was a very productive and informative session. The witnesses took a holistic approach to setting out the issues in respect of education and where education fits in terms of society. Their insights were very valuable. It was good to have a diversity of views and opinions expressed in this very robust debate. Let me assure Mr. Doorley that we will be having a session focused on the detail of the possibility of the loans, because that is very important as well.

I thank the members. As there is no further business we will adjourn.

The joint committee adjourned at 12.40 p.m. until 2.30 p.m. on Thursday, 15 December 2016.