I will begin by setting out the overall context. Since the start of the new millennium, the strategic development of the universities has been marked by three significant developments, the first of which is a continuing expansion of participation in university education. There are nearly 100,000 students in our universities, including 15,000 postgraduates. Participation of under-represented groups is advancing at a steady pace. The second development is that the universities have been transformed from being predominantly teaching institutions into something much more comparable with the best universities in the world, as we now have a stronger research component and linkages between research, teaching and knowledge transfer in all of its dimensions. The third development is that universities have undertaken significant structural and strategic reforms in order that they can more effectively manage what are large, multifunctional institutions. This is being done to deliver services to learners.
These developments have taken place in the context of a concerted Government push to raise skills and develop what is widely known as a knowledge society. Both the national development plan and the strategy for science, technology and innovation, SSTI, expand on this overall goal. The appropriateness of this approach is underscored by the difficulties facing the economy which testify to the need to base future growth on innovation rather than speculation. The developments I have outlined are positive but the key question is whether we are resourcing higher education at a level that will allow it to deliver on this knowledge society and knowledge economy goal that has been set out.
The most reliable way to assess this is in the international context using data provided by the OECD in its publication Education At A Glance. Those data show a spend per student in third level education is approximately $10,000. The best performers are spending $14,000-$24,000. The OECD produces its data in dollars, adjusted for purchasing power parity. In GDP terms, we spend less than our peer group and, contrary to most OECD countries, and worryingly, our proportional spend on higher education has been heading in a negative direction. These data may seem counter-intuitive because, in simple volume terms, spending has been growing quite strongly. The previous Minister for Education and Science made this point to this committee in a previous sitting. Any seeming contradiction can be resolved in the context of growing student numbers and the growing support for research. These have pushed gross funding up but growing student numbers mean that the actual funding per student is decreasing. Although there is inflating resource allocation, the same positive gloss is not reflected in terms of what is needed to serve the needs of students.
We see this particularly in the core grant, which is the basic resourcing base for overall third level education. Students are effectively the consumers of university services and reduction in funding per student has a meaningful impact on the quality of the student experience. This is why OECD uses funding per student as its yardstick.
The specific issues the committee has asked us to address are the possible re-introduction of university fees, the outcome of the recent meeting between the university heads and the Minister for Education and Science and the issues of financial accountability and systems for measuring outcome. Regarding fees, we set out our position in our policy paper entitled Individual Financial Contributions to Higher Education. The text is included in our submission.
I summarise our position as follows. The question of whether there should be increased individual contributions to funding of higher education cannot be divorced from the holistic consideration of how higher education is funded. I refer to the public and private balance, not simply the private element. The universities believe there are rational grounds for sharing the cost of investment in higher education between the Exchequer and those individuals who benefit from their participation in higher education. This should be achieved through an investment plan that sets out agreed multi-annual levels of funding for the Exchequer and individual funding components. Such a plan does not exist. One of the things that bedevils higher education is that there is very little strategic planning for how we fund and grow our higher education system. In addition to the fee component, the investment plan should take account of other possible sources of non-Exchequer investment such as philanthropic donations. A private component is not purely about the individual student.
The most equitable approach to the individual contributions is via income contingent deferred loans and top-up fees. We have not proposed an implementation model for this because any system should be in a form appropriate to the specific circumstances obtaining in Ireland. It should be done as part of an overall investment plan, not simply an approach that decides to generate a certain amount of revenue and seeks this from students. Our policy paper outlines a number of key implementation issues to be considered. The issue is complex and needs to be dealt with in a carefully planned way. However, we are not in favour of a replication of the fees and grants system that obtained in the pre-1996 period, particularly for the reasons of inequity that led to its abolition.
Regarding the meeting with the Minister, the chair of the IUA, Dr. Hugh Brady, president of UCD, who cannot be here today, articulated the position I have described to the Minister. We also highlighted the more proximate concerns about funding cutbacks we are now faced with and the reductions in funding discussed earlier. We apprised the Minister of the likely consequences for services if the kinds of cutbacks referred to in the press in recent months come to be realised. We highlighted areas where there will be a real impact such as teaching and learning, infrastructure and services to students. We also discussed a slightly technical issue, which is important, of the overhead rate for research funding. That is at best 30% and should be raised to 40% at a minimum to reflect the real cost of research. Where the overhead is unfunded it must be picked up by the universities and this has an impact on the third level side of university operations.
We raised the need for improved fiscal incentives to encourage philanthropic donations and for targeted infrastructural investment, for example in student residences where there is strong demand. These issues are addressed in more detail in a submission to the Commission on Taxation and we would be happy to provide that to the committee if it is of interest.
Regarding financial accountability and outcomes measurement, there is an extensive financial and governance accountability system in place in the universities. This has been progressively strengthened in recent years. In the financial area, universities are subject to rigorous financial audit on an annual basis. A university's financial statements are audited both by university appointed external auditors and by the Comptroller and Auditor General, a double audit.
In respect of research funding activities, we are subject to a range of external audits by funding agencies, the EU and other sponsors. In addition, an extensive range of governance and accountability systems and measures are in place. As these are detailed in our submission I will not go into detail — I am conscious of time.
The key outcome is the provision of quality education to students. The growth in student numbers, the fact that our graduates rate highly on employability and high completion rates are testament to positive outcomes from higher education. The second main area is research. The SSTI strategy sets out a target of doubling PhD numbers by 2013. We are well on the way to achieving that. In line with the SSTI, we are radically reforming doctoral education, moving to a standardised duration of four years for a PhD and focussing on supplementing the discovery based core of the PhD with training and a wider range of skills aimed at enhancing the employability of PhD graduates and ensuring that this new cohort of PhD graduates we produce go on to work in industry and services as well as academia and have the transformative effect on the economy we are looking for.
Research is also the subject of extensive peer review and auditing by research funders. The recent value-for-money review by Science Foundation Ireland, undertaken by Indecon consultants, is one example of this. There is a range of outcomes to which universities contribute in advancing the cultural life of the nation and supporting the democratic process through its provision of objective analysis and informed comment. These outcomes, of necessity, are difficult to quantify but remain important nonetheless.
