Barque Institute Pty Ltd and Tertiary Education Quality and Standards Agency
[2020] AATA 70
•24 January 2020
Barque Institute Pty Ltd and Tertiary Education Quality and Standards Agency [2020] AATA 70 (24 January 2020)
Division:General Division
File Number(s): 2017/7375
Re:Barque Institute Pty Ltd
APPLICANT
AndTertiary Education Quality and Standards Agency
RESPONDENT
DECISION
Tribunal:Deputy President Bernard J McCabe
Date:24 January 2020
Place:Sydney
The decision under review is affirmed.
....................................[sgd]....................................
Deputy President Bernard J McCabe
CATCHWORDS
TERTIARY EDUCATION REGISTRATION – whether the applicant can be registered as a higher education provider – deemed decision of the Agency – does the applicant satisfy the requirements for registration – compliance with the Threshold Standards – financial viability and sustainability – corporate and academic governance – can undertakings and conditions cure the issues – applicant does not satisfy the Threshold Standards – decision affirmed
LEGISLATION
Higher Education Standards Framework (Threshold Standards) 2011
Higher Education Support Act 2003 ss 16-25 and 16-27
Tertiary Education Quality and Standards Agency Act 2011 ss 4, 5, 13, 18, 19, 20, 21, 46, 49, 58
CASES
Barque Institute Pty Ltd and Tertiary Education Quality and Standards Agency [2018] AATA 314
SECONDARY MATERIALS
Provider Registration Standards ss 2, 3
REASONS FOR DECISION
Deputy President Bernard J McCabe
24 January 2020
Higher education is one of this country’s biggest exports, and higher education providers are an important part of our economic infrastructure. The sector serves students who are increasingly asked to invest significant resources in their own education. Given the significance of the sector and the consumer protection challenges it presents, the Commonwealth is understandably concerned to ensure participants in the industry are properly regulated according to consistent national standards. That regulatory framework is contained in the Tertiary Education Quality and Standards Agency Act 2011 (the TEQSA Act).
Section 4 of the TEQSA Act explains an entity must be registered as a higher education provider before it can confer a regulated higher education award. The requirement that higher education providers must also have individual courses of study approved by the regulator adds an additional layer of protection and quality assurance. The registration process in each case is administered by the regulator, the Tertiary Education Quality and Standards Agency (the Agency).
Barque Institute Pty Ltd is seeking registration as a higher education provider under s 21 of the TEQSA Act. It has also applied for accreditation of several higher education courses to be offered through the new institution. That application for registration was unsuccessful, and the courses were not approved.
The matter has now come before the Tribunal. The outcome of the Tribunal’s review depends on whether Barque is able to satisfy what are known as the Threshold Standards. Section 21(1) of the TEQSA Act says an applicant for registration must satisfy the decision-maker (the Agency at first instance, or the Tribunal on review) that the applicant can meet (a) the applicable Threshold Standards and (b) the fit and proper person requirement.
If the Tribunal is satisfied Barque should be registered as a higher education provider under s 21(1), two further questions potentially arise:
(a)Whether Barque has made a valid application for accreditation of the individual courses of study. That depends on whether the application complied with the requirements in s 46(2) of the TEQSA Act; and
(b)Assuming there was a valid application for accreditation of the courses - whether those courses of study should be accredited pursuant to s 49. That depends on whether the applicant has been registered as a higher education provider – the threshold issue – and whether the course or courses of study in question meet the Provider Course Accreditation Standards.
The Agency agreed at the hearing that it would not oppose the accreditation of the course if the Tribunal were satisfied Barque met the Threshold Standards and should be approved, either with or without conditions. As it happens, for reasons I will explain, I am not satisfied Barque is able to satisfy all of the relevant standards and conditions and the imposition of conditions is unlikely to assist. It is therefore unnecessary for me to express a definitive view on the question of course accreditation.
THE LEGISLATIVE FRAMEWORK
I will begin by describing the regulatory regime. That will help frame the discussion which follows.
The regulatory regime – and the role of the Agency within that set of arrangements – can only be fully understood if one appreciates the basic principles for regulation. Those basic principles are set out in Part 2 of the TEQSA Act. In particular, s 13 says the Agency must:
…comply with the following principles when exercising a power under this Act in relation to a regulated entity:
(a)the principle of regulatory necessity;
(b)the principle of reflecting risk;
(c)the principle of proportionate regulation.
The other provisions in Part 2 elaborate on what is meant by each of the enumerated principles. Suffice to say I acknowledge the Tribunal is also obliged to comply with the principles as it conducts its review.
Part 3 of the TEQSA Act contains the provisions governing the registration of an entity as a higher education provider. The provisions governing the accreditation of courses of study are found in Part 4.
Section 18(3) in Part 3 provides for the form and content of an application for registration. Once an application meeting those requirements is filed, the Agency undertakes a preliminary assessment of the application under s 19, and a substantive assessment of the application under s 20. The two-step process allows for the applicant and the Agency to better manage the application. The decision to register (or not) is made under s 21(1). I have already mentioned s 21(1) provides for the Agency to grant the application for registration if the applicant meets the Threshold Standards and satisfies the fit and proper person requirement. That decision must be made within nine months of receiving the application (ie, the date on which it receives the substantive assessment fee: s 21(2)(a)) although the Agency may allow itself an extension of up to nine months to finalise its deliberations under s 21(3) if there are reasons beyond its control which prevent it from making the decision in the ordinary course.
There is a parallel provision which governs the approval of applications for accreditation of courses of study. Section 49(1) in Part 4 allows the Agency to accredit a course of study provided the applicant is a registered higher education provider (ie, the entity has been registered under s 21) and the particular course of study meets the Provider Course Accreditation Standards. (I will have more to say about the Threshold Standards and the Provider Course Accreditation Standards below.) Similar time limits apply to the decision-making process under ss 21 and 49: applications for accreditation should ordinarily be made within nine months of the application being made although the Agency may give itself an extension of up to nine months if it cannot complete the decision-making process within the initial nine month period for reasons beyond its control.
I have mentioned the time limits and the potential for an extension of time because the Agency in this case failed to make the decision on the applications for registration and accreditation within the initial nine month period. The Tribunal has already ruled the Agency failed to effectively extend the time for it to consider either application so it was deemed to have refused each of the applications: see Barque Institute Pty Ltd and Tertiary Education Quality and Standards Agency [2018] AATA 314. It follows there is a reviewable decision to refuse registration which is currently before the Tribunal.
Section 58 contemplates the relevant Minister making a range of standards which form part of the Higher Education Standards Framework. In particular, s 58(1) (as it appeared at the time) contemplated the Minister using legislative instruments to make:
(a)the Provider Registration Standards;
(b)the Provider Category Standards;
(c)the Provider Course Accreditation Standards;
(d)the Qualification Standards;
(f)the Teaching and Learning Standards;
(g)the Information Standards;
(h)other standards against which the quality of higher education can be assessed.
The Minister also had the power to make research standards pursuant to s 58(2). The research standards are not relevant for present purposes and need not be further discussed.
For present purposes I must focus on the Threshold Standards, which are referred to in s 21. That expression is defined in s 5 to include the Provider Standards (ie the Provider Registration Standards, the Provider Category Standards, and the Provider Course Accreditation Standards) and the Qualification Standards – in other words, the standards referred to in s 58(1)(a)-(d).
The Threshold Standards are set out in the Higher Education Standards Framework (Threshold Standards) 2011. They were made by the Minister in 2011. The 2011 Threshold Standards were replaced by new standards in 2015 but the 2011 Threshold Standards continue to apply in this case because Barque lodged its application the day before the commencement of the 2015 iteration of the Threshold Standards.
The Agency says Barque is unable to satisfy the Threshold Standards (ie, the 2011 Standards) because it does not meet the Provider Registration Standards dealing with:
·financial viability and sustainability (addressed in Provider Registration Standards 2.1 and 2.2); and
·corporate and academic governance (addressed in Provider Registration Standards 3.2, 3.3, 3.4, 3.5, 3.7 and 3.8).
Barque argues that it does meet the relevant standards, but adds any shortcomings could properly be addressed through the imposition of conditions and an adjustment of the term of registration. It pointed to examples of that approach being used to address shortcomings in the applications lodged by other higher education providers.
I will deal with the two categories of standards in turn after briefly discussing the applicant’s business proposal. At the end of these reasons, I will discuss whether conditions are appropriate.
What the applicant has in mind
Barque is a proprietary company limited by shares. It was registered in 2016. At that time, all of the company’s shares were owned by Green Patch Charter Pty Ltd, the trustee of the Green Patch Charter Trust. Barque’s draft business plan dated 30 June 2016 was included in the s 37 documents at T3. There are several versions of that document in s 37 documents. That document was ultimately supplemented by a much more comprehensive suite of documents touching on every aspect of the business. The omnibus document was included in the s 37 documents as document T31. The draft business plan outlined how Barque would realise the ambition of establishing a new, privately-owned higher education provider in the Australian market for higher education. The documents in T31 provided some of the detail and data to that end.
The business plan had its genesis in discussions over an extended period between Barque’s promoters and politicians, the agency, university leaders from Australia and overseas, industry contacts and financiers. The exploratory talks preceding the establishment of Barque were outlined in a document dated 25 June 2018 titled “Statement from the original board of directors of Barque Institute about its inception…”.
The business plan proposes offering courses leading to undergraduate or post-graduate qualifications in several areas, including:
·Bachelor of Commerce
·Master of Business Administration
·Bachelor of Design
·Masters of Design and
·Bachelor of Law.
I should note Barque has not yet sought accreditation with respect to all of those courses. The existing application for approval only relates to the Master of Business Administration (MBA).
Barque proposes charging fees for each subject completed as part of a course. The business plan identified a fee per subject that was “in line with the more affordable universities”. The business plan also discussed features of the degree programs (eg teaching methods that focused on ‘real world’ experience, the pedigree of the academic staff, the flexibility of the courses, engagement with industry and the professions) that would make them attractive to students and employers alike and successfully position Barque in the market. The plan makes a number of observations about the higher education market and explains the assumptions underlying its business case in general terms. The business plan also includes more detailed projections of revenue and expenses. Barque provided additional data before the hearing which included more detail and which addressed different operational assumptions – including, for example, the effect if Barque was successful in obtaining approval for its students to access the FEE-Help system. In its outline of submissions, the importance of FEE-Help to Barque’s finances was discussed but Barque insisted the project was viable even if the Minister did not allow access to the FEE-Help scheme. Barque filed additional material following the hearing; some of that was provided with leave, but other material was unsolicited.
The business plan makes clear – and other evidence presented at the hearing confirmed – the new enterprise had modest plans for its physical estate. A temporary campus was identified in the central business district of Sydney. The plan anticipates Barque would initially sub-lease premises from another education provider before Barque leased a more permanent presence that met its requirements. Mr Botsman (who appeared for Barque) drew my attention to a range of planning documents that addressed the accommodation issues, including fit out and information technology needs: transcript at p 28; see also exhibit one at pp 1252, 1277, 4798 and 5374. In its outline of submissions, Barque emphasised it did not intend to be a “traditional ‘bricks and mortar’ [higher education provider]” – and urged it should not be evaluated as such.
The plan also includes an organisational chart. Barque said it wants “a flat leadership structure to maximise efficiency”. The founding senior executives are identified in the document. They include:
·Mr Michael Stacey, the Institute Director and Chairman of the Board, who is an engineer with a background in management and marketing; and
·Mr Jonathon Stacey, the company secretary and operations manager. Jonathon Stacey has a background in finance.
There is also provision for the appointment of a small number of teaching staff, many of whom, it appears, will be engaged on a sessional basis. The plan anticipated the structure would rapidly evolve as the enterprise grew and required more managers and teaching and administrative staff.
The plan referred to a distinction between the ‘Support’ and ‘Academia’ components of the organisation. The organisational charts in the plan identified some roles that were plainly ‘Support’ roles (such as the ‘Marketing and Sales Manager’ or the ‘IT Manager’) while others (like the ‘Dean of Studies’ and ‘Course Coordinators’) were presumably part of the ‘Academia’ stream. But the plan does not clearly explain how these two streams would mingle in practice. The plan also refers to an academic senate but its role is not clearly described in that document. The role of the academic senate and the relationship between the academic and management staff was the subject of other evidence, including material in the T documents.
The plan envisaged an enterprise that started small, but which would grow profitably if the student enrolment and expense projections were achieved. That enterprise had some of the hallmarks of a family business. In its outline of submissions, Barque emphasised the financial support and expertise that would be provided by members of the Stacey family.
ASSESSING THE PLAN AGAINST THE THRESHOLD STANDARDS
The Agency says aspects of the plan proposed by the applicant come up short when assessed against the Threshold Standards. I now turn to deal with the disputed standards in more detail.
The financial viability and sustainability standard
Section 2 of the Provider Registration Standards (found in Chapter one of the Threshold Standards 2011) sets out what is expected of a higher education provider in relation to its financial viability and sustainability. While the various sub-sections address different aspects of a higher education provider’s financial position, the focus in these proceedings is on ss 2.1 and 2.2. The relevant portions of s 2 provide:
2.1The higher education provider is financially viable and has the capacity to sustain quality in its current and planned higher education operations, using realistic projections of student demand and income from all sources.
2.2The higher education provider applies, and demonstrates the capacity to continue to apply, sufficient financial resources to ensure the achievement of its higher education objectives.
Assessing the adequacy of an entity’s financial viability is a tricky task. Any new business entails an element of risk, and nobody can guarantee success. Many new businesses will struggle; it is notorious that a significant percentage of new business ventures in the wider economy will fail – not necessarily because they are a bad idea, or even badly executed. A large proportion of new businesses fail simply because their promoters do not have the financial resources and expertise to sustain them through their infancy. Even established businesses can come unstuck if their finances and financial management are not sufficient when market conditions change or unexpected events occur.
In most businesses, the consequences of failure are visited most heavily on the promoters, investors, creditors and employees. When a business closes, the former customers typically have the option of dealing with somebody else. But it is not that simple for students enrolling in an institution which sells education and accreditation. It would be a disaster for those students if the institution were to collapse half way through an expensive degree program when each student has already committed substantial financial resources towards obtaining the qualification. Changing to another provider part way through a course may not be an easy option. That vulnerability does not cease upon graduation. Graduates might be disadvantaged in the employment market if the institution that accredited them were to subsequently fail. Both students and graduates would still have cause to complain if the institution survived a financial crisis by cutting corners that reduced the quality of its offerings and thereafter devalued the qualification in the eyes of employers.
The reference to quality underlines the point in s 2 that the goal is not merely to have the financial wherewithal to survive, but to have the financial resources and management capacity to consistently deliver higher education in a way that conforms to the regulatory framework. The ability to conform to the regulatory framework on an ongoing basis is in the interests of students and graduates, but also in Australia’s national interest as a country with a reputation for providing high quality higher education – an increasingly valuable export. That requires the provider to demonstrate it has the resources and expertise likely to be necessary to (a) meet the ongoing requirements imposed on it by government and (b) navigate the (sometimes peculiar) features of the market for higher education services.
There are relatively high barriers to entry into the Australian higher education market, to be sure. Those barriers confer some protection on providers who make it inside. But the domestic market is also populated with large, well-established and (at least in the cases of the universities) mainly state-owned providers that have historically benefitted from a range of direct and indirect subsidies that distort the market. Many of them are saddled with high fixed costs, including large academic and bureaucratic workforces and expensive campuses. But most of those entities also enjoy tax-exempt status. They can attract donations that confer a tax deduction on the donor, and they can access networks of alumni for assistance. A private enterprise without that status or history is unlikely to attract significant donations, at least in the short term. And those donations are important: a number of the existing players have large foundations which support their work. Some of the institutions can readily commercialise the output of their research. Many of them also enjoy established reputations which help them attract staff and students. Rightly or wrongly, the public might also assume state-owned providers also enjoy some sort of government guarantee of viability and quality. Even if that perception is not well-founded, it almost certainly confers some sort of competitive advantage on those institutions.
The market (or sub-market) for international students travelling to Australia is also attended by its own peculiarities. It is affected by movements in exchange rates, immigration rules and the vagaries of international relations. Higher education providers need to have the financial wherewithal to withstand the shock of an external event – for example, if the flow of students from an entire country were suddenly cut off or be substantially curtailed because of some crisis. The behaviour of industry and regulators in other countries also impact on the attraction of Australian providers.
In short, while there is a market for higher education services and the entities which operate within it are businesses, the market has a number of unique structural features. As a consequence, the providers within the market do not necessarily operate like other businesses. That makes it difficult to predict what a new entrant into the market will require in terms of financial resources to be viable but also to operate as a higher education provider that meets the regulatory framework.
I turn to the evidence and arguments that were presented in reference to Threshold Standard 2.1, which requires that I be satisfied as to financial viability and the capacity to sustain quality in light of realistic projections of income and demand.
The Agency said Barque had not provided ‘realistic projections’ of student income and demand that showed it was financially viable and had the capacity to sustain quality in current and planned higher education operations. The Agency’s statement of facts, issues and contentions gave two examples that were said to illustrate its central point.
The first example was contained in the budget submitted in support of the application for registration. The budget featured a statement of projected income and expenditure that would be achieved in connection with projected enrolments. The projected enrolments were said to include students in the Master of Design course – but Barque has not yet sought approval for that course. The Agency pointed out in its written submissions “21% of Barque’s projected enrolments in year 1 are attributable to a course which Barque cannot offer”: at [22]. That anomaly has substantial implications for its revenue projections.
There was an argument during oral submissions over whether those particular projections were representative of the information Barque had provided. Barque also addressed the apparent shortcoming in its outline of submissions. Mr Jonathon Stacey also stepped me through the reasoning in evidence he gave from the bar table: transcript at p 19. Barque says those projections were prepared in response to a request from the Agency that the business plan address the first five years of Barque’s operations, and Barque intended to offer the Master of Design course during that period even if it were not approved in the first year of operations. Barque also disputed the amount of revenue it anticipated from the Master of Design course – implicitly accepting the revenue figures were inflated, albeit by less than the Agency had estimated. Barque also pointed out the amount of expenditure reflected in the projections would be reduced if the Master of Design course were not offered. Lastly, Barque pointed out that projections reproduced in exhibit one at p 1488 confirmed Barque would still make a profit if it only offered the MBA in year one without offering the Master of Design course.
Interestingly, the Agency pointed out Barque’s outline of submissions dated 29 June 2018 – which purported to rebut the Agency’s criticism about the Master of Design course – included an annexure setting out projections that apparently included revenue generated in year one in connection with the Master of Design course.
Barque’s explanation for the apparent anomaly in relation to the Master of Design course was not particularly satisfying. But even if I assume in Barque’s favour that the anomaly is not especially telling because the projections referred to in exhibit one at p 1488 do proceed on more accurate assumptions about enrolments, the apparent error in what should have been a carefully thought out exchange with the Agency might take on more significance when one has regard to the second example cited by the Agency. The Agency says that example should raise doubts about the quality of the projections more generally.
The Agency points out Barque was asked to provide ‘base-case’ and ‘sensitised’ forecasts in connection with its application for registration. Those forecasts, which are included in exhibit one at pp 142 and 3402, appear to assume Barque will receive FEE-Help revenue from the Commonwealth. The FEE-Help system is established under the Higher Education Support Act 2003 (the HES Act). It enables students to obtain a loan to assist with payment of tuition fees to approved higher education providers. An approved higher education provider must be a registered higher education provider (s 16-27), but that is not the only criteria for approval under the HES Act. The criteria for approval are set out in s 16-25. They are wide-ranging. Amongst other things, the Minister must be “satisfied that the body has sufficient experience in the provision of higher education”: s 16-25(1)(fb). Barque cannot assume it will inevitably be approved under the HES Act in the event its application for registration as a higher education provider under the TEQSA Act was successful. Indeed, given experience in higher education is a criterion, Barque might not become eligible for approval for some time after it commenced operations.
Barque addressed those concerns in its written outline of submissions. It pointed out Barque cannot apply for approval to participate in the FEE-Help scheme until it was registered as a higher education provider. In those circumstances, while it cannot assume it will be approved, it should not be assumed that it would not be approved. I was provided with evidence of an email exchange between Barque and an officer of the relevant department [see BAE 4, p 10], which tends to confirm the Minister may be open to approving Barque. But that does not take us very far. Barque says its success in the short term does not depend on obtaining approval with respect to FEE-Help. It said it could still attract domestic students willing to pay fees who have the means to pay or the capacity to borrow the entire cost of their tuition without assistance from the Commonwealth. It supported that contention by referring to some market research about the diminishing number of course-work MBA programs in the face of increased demand from students for management and business studies [BAE-3 at pp 172, 175]. The Agency points out Barque’s analysis appears to rely in part on material generated by the Agency itself for a different purpose. Barque also makes a series of assertions about the affordability of a full-fee option which are not comprehensively explained or justified. Given the questions over the data and the way it is used, I am not satisfied that material clearly establishes a gap in the domestic market that would be filled by desirable students willing to pay full tuition up front. I am particularly concerned about the glibness of the assertions about the willingness of students to pay full fees to a new provider without an established reputation, a skeleton teaching staff and no established campus.
There are also problems with Barque’s other contingency plan. To the extent it was unable to fill places with domestic students, Barque insisted the places could be filled with overseas students who are required to pay fees up front. It included projections in its written outline of submissions that showed it would make a modest profit after two years if it pursued that course. Yet those assumptions might turn out to be heroic for some of the same reasons I have just mentioned: Barque assumes it can attract fee-paying overseas students to a new program without an established academic staff or its own premises and without an established brand. That last consideration is surely important for international students who can choose between courses offered by well-known universities from around the world.
I acknowledge there is evidence Barque has engaged in a good deal of number crunching in which it has sought to demonstrate the financial implications of various scenarios. Mr Botsman, who appeared for Barque, took me through reams of material at the hearing which demonstrate a lot of data has been gathered and processed in the course of preparing the projections. Yet the Agency has raised important questions over the reasonableness of some of those projections. The reasonableness of the projections depends at least partly on the reasonableness of the assumptions which underlie them. For reasons I have explained, I am not satisfied with some of the assumptions. In the absence of realistic projections, it is difficult to be confident about Barque’s viability and capacity to sustain quality in its operations.
Section 2.2 of the Provider Registration Standards draws attention to the sufficiency of the financial resources available to a higher education provider seeking registration. Barque explained in its written outline of submissions that it met this requirement by furnishing budgets that projected surpluses, and by demonstrating it had ongoing access to sufficient capital.
Barque’s projections suggest an early surplus, which would presumably add to the resources available to the business. I have already indicated I have my doubts over reasonableness of those projections. Those doubts must in turn call into question how much capital Barque will require from external sources. In that regard, Barque points to the starting capital provided in the form of a director’s loan from Mr Michael Stacey in the amount of $500,000 and undertakings of additional support out of his financial resources if certain conditions are met. Those resources were spelled out in a revised statement of financial capacity that detailed Mr Stacey’s liquid and non-liquid assets. I do not need to reproduce those figures here. Suffice to say Mr Stacey indicates his ability and intention to provide financial resources in excess of $1.3 million to Barque over the first two years of operation.
The Agency points out the director’s loan is properly regarded as part of the financial resources available to Barque but notes the further assistance from Mr Stacey is contingent upon certain conditions. The likelihood of Barque requiring access to those additional funds – from Mr Stacey, assuming he is willing to provide them, or from somebody else – depends on it performing as projected. If the marketing costs are higher than expected, or the enrolments are lower, or there is any other obstacle to meeting its financial goals, Mr Stacey might face a difficult choice. And not just as a creditor: as a director of Barque, he would also need to be satisfied the company was able to pay its debts when they fell due before it accepted further advances. If it was not meeting its targets, that might be an obstacle to accessing further advances provided by Mr Stacey even if he were minded to provide them.
I acknowledge Barque offered undertakings which were intended to emphasise Mr Stacey’s commitment. I do not doubt his bona fides in doing so. But even if Barque has easier access to Mr Stacey’s resources, that only takes Barque so far. Mr Stacey is proposing to loan money. He is not a wealthy philanthropist who proposes to gift the resources, or a large corporation with more flexible access to sources of capital.
The short point is that Barque has modest ambitions, particularly at the outset, but it also has relatively limited financial resources available to achieve those ambitions. Those resources are not so significant that they allow a significant margin for error in performance against the projections – but as I have already explained, there is reason to be sceptical about the reasonableness and reliability of those projections in the first place. Barque’s claim in the outline of submissions that “it is almost inconceivable that Barque will require funding beyond the $1.3m that Mr Michael Stacey is prepared to commit to the first two years of operations” is troubling because a more sanguine assessment of the risks may be required. The Agency points out Barque’s own figures suggest losses in the order of $2 million in the first two years if it is not approved for FEE-Help; even if Mr Stacey’s were to faithfully supply the resources he has outlined, it is unclear whether that would be enough, or whether alternative sources of funding would be necessary and available.
I should add that I do not doubt Barque has access to appropriate financial management capacity. Jonathon Stacey is clearly qualified and experienced. Mr MacMahon is also likely to be a valuable resource.
I am not satisfied Barque meets Provider Registration Standards 2.1 and 2.2. I agree each of standards 2.1 and 2.2 need to be considered separately. But if I adopted a different approach and considered whether I was satisfied Barque met s 2 of the Provider Registration Standards having regard to the entirety of sub-sections 2.1-2.5, Barque would still not succeed. I make that finding even though the Agency does not dispute Barque meets the requirements contemplated in ss 2.3-2.5 which focus on the competence and efficacy of its financial management and systems. The problem is not one of financial competence. The problem, rather, is the questionable assumptions Barque makes about the start-up phase. At a minimum, more market research is required to inform the projections, or more financial resources should be made available to cover the eventualities. I do not accept that expecting an applicant for registration to undertake that sort of preparatory work would offend any of the regulatory principles referred to in Part 2 of the TEQSA Act.
The corporate and academic governance standard
Section 3 of the Provider Registration Standards requires that the higher education provider show sound corporate and academic governance of its higher education operations. The section then sets out a number of sub-sections which expand on that standard. The Agency says Barque does not satisfy this standard because it does not meet the requirements in sub-sections 3.2-3.8. I will deal with each of the individual sub-sections and the evidence and submissions separately below.
This standard requires the higher education provider to grapple with the difficult balance between what are sometimes (unhelpfully) called the ‘business’ and ‘academic’ functions. This tension reflects the uncomfortable relationship that exists whenever professional persons who expect and require autonomy are expected to work in an organisation with managers who do not share the same professional background. Hospitals, universities law firms, engineering firms - even courts and tribunals - must find ways to take advantage of the expertise of managers in conducting operations without compromising professional values, including autonomy. Ideally, the managers and professionals work cooperatively to realise the benefits that come from specialisation. But that is no easy task. Even in well-functioning organisations, there may still be a measure of (hopefully creative) tension between what are euphemistically called ‘stakeholders’ as they go about the business of delivering what are still, in substance, professional services that are difficult to commoditise.
In many organisations, the relationship is much more strained. Each of the managers and professionals are given to fantasising about a life unburdened by the inconvenience or bother of having to deal with the other. The proper functioning of the organisation – and the essential work of the professionals for which it was established – can be disrupted as stakeholders struggle to answer whose interests and values are to prevail.
The academy is particularly vulnerable to this struggle. The struggle within Australian higher education organisations intensified after the 1990s when universities – most of which were statutory corporations – became much larger in pursuit of economies of scale. They were also swept by a wave of ‘commercialisation’ in which the public sector introduced business practices and arrangements adapted (not always successfully) from the private sector. This movement, which occurred throughout government, was intended to wring greater operational efficiencies from public assets and improve the quality of service delivered to consumers and the wider economy.
This phenomenon generated a decades-long debate over whether universities were properly regarded as ‘businesses’ at all. Most academics probably now accept universities are businesses, at least in a broad sense. That is not to suggest they are inevitably conducted for profit, or that they do not ultimately serve a public purpose. The challenge is to ensure they are not badly-run businesses, which begins with recognising how they are similar to and different from other organisations – since no two businesses are the same.
Professional services’ businesses are probably a useful model for the academy, but in any event one must recognise higher education providers are quite different (and must be managed and structured differently) to organisations in the business of supplying fungible commodities like manufactured goods or entertainment.
The challenge of developing organisational arrangements and a culture that strike a proper balance between academics and managers has become more urgent – and more complex – as a result of the fundamental changes occurring in the market for higher education. Barque’s argument that it is not a ‘bricks and mortar’ institution is evidence of those changes. Barque plainly does not regard physical plant and an extensive campus as essential to its conception of a higher education provider. It apparently anticipates its small scale will be a feature rather than a disadvantage. Barque is also offering its own answers to the organisational challenge I have described above. The unanswered question (for present purposes, at least) is whether those organisational arrangements are capable of meeting the standards set out in s 3 of the Provider Registration Standards and the sub-sections which follow.
3.2 The higher education provider’s corporate governing body has a majority of external members and uses a full range of expertise required for effective governance of the higher education provider, including higher education expertise and independent financial expertise, through its membership and/or through external advisers.
Barque’s board at the time of the hearing was comprised of five directors and the company secretary (who is not a director). Three of those individuals are external (in the sense they are not employees) and two are executives. The two executives discussed at the time of the hearing are Michael Stacey, the chairman, and Heico Wesselius. The three external directors are Dr Li Day, Anthony MacMahon and Melanie Roffey.
I have already explained Mr Michael Stacey has a background in engineering, management and marketing. He says he has lectured at university but does not otherwise claim to have higher education expertise. Mr MacMahon has lengthy experience as a company director and financial manager: he was the chief financial officer of a large company and has, more recently, been the finance manager at a religious charity overseeing a number of global education projects. Ms Roffey has lectured at TAFE and has worked more recently as a human resources director for a large travel services firm with several thousand employees. Dr Day is an adjunct professor at Charles Sturt University who has worked at the CSIRO and a university in China. She has experience supervising PhD and post-doctoral students with a particular interest in commercialising the results of research. She is an experienced researcher but she does not appear to have experience in university governance as such. Mr Wesselius has taught in the MBA programs offered at a number of well-known universities here and overseas; he was also a course coordinator and member of faculty and university-wide curriculum committees, and a member of the university faculty senate. The Agency raises questions over whether that experience is properly characterised as ‘higher education expertise’ – although the Agency has a narrow view of what that expression means. I was told Mr Wesselius had recently completed doctoral studies and expected to be formally recognised shortly after the hearing: transcript at p 34.
Barque has also established a ‘register of advisors’ which, it says, will supplement the experience of the board members. At the time of the hearing, the register included:
·Dr Leslie Kilmartin who has been the pro vice chancellor in charge of the regional operations of a large Australian university. Dr Kilmartin was described as having extensive experience advising senior managers of Australian universities;
·Mr Gareth Benbow, a chartered accountant with experience in providing advice to a range of organisations.
Barque has engaged additional consultants in an apparent attempt to meet the Agency’s concerns, including:
·Dr Hilary Winchester, a former acting vice chancellor of the Central Queensland University and a consultant proposed by the Agency to review Barque’s governance practices;
·Dr Ralph Wolff, the former president of the Senior College Commission of the Western Association of Schools and Colleges, an accreditation body in the United States. Barque points out Dr Wolff has been a speaker at an industry conference; and
·Dr Peter Wolnizer, the former dean of the University of Sydney Business School and the former dean of the Macquarie Graduate School of Management at Macquarie University.
Barque argues it has the right mix of talent and experience available to it, whether on the board or through its external advisers. The Agency disagrees. To begin with, the Agency says the reference in the sub-section to ‘higher education expertise’ means expertise and experience in higher education governance. While I accept the thrust of the sub-section is directed towards the selection of appropriate people capable of providing effective governance, I do not accept it inevitably follows each of those individuals (or even a number of them) must have prior experience on the governing bodies of other higher education providers. The point of the sub-section is to ensure the governing body is acquainted with the special features of a higher education business and the higher education market.
There are many examples of academics with extensive experience in the commercial world, or who have served on the boards of charities or other organisations. It would be odd if that experience were discounted just because they had not served on the board of a higher education body. That is particularly true in circumstances where the governing bodies of many higher education bodies have not themselves been models of good governance. But even academics who do not possess any high-level experience in governance and management might have a role: so long as that person has broad-ranging experience of the business of higher education, that may be enough depending on the make-up of the rest of the talent pool. Of course, that experience needs to be viewed critically, as many long-term academics or managers have limited insight into the business of higher education. Attending a university, or even working in one, does not inevitably mean you know how to participate usefully in the governance of a higher education provider.
The point of the standard set out in s 3.2 is to ensure the governing body is collectively able to understand the complex task of delivering higher education services in accordance with the standards. I doubt it is possible to be as prescriptive on that issue as the Agency suggests. One must make an assessment after considering the background and experience of all the individuals on the governing body as well as any advisers. In doing so, one should keep several things in mind.
One must consider the distribution of talent as between the executives and the external members of the governing body, and between the members of the governing body and the advisers. Mr Botsman made clear at the hearing that Barque’s board relied heavily on the input from its advisers to make up for any gaps in the knowledge base of the board members. I expressed my concerns over that approach in the following exchange (transcript at p 31):
Deputy President: …one of the concerns is that… unless you have a base level of expertise that enables you to evaluate what consultants are telling you…it’s not terribly meaningful.
Mr Botsman: Yes, but that would then – in my respectful submission, that would undercut what the threshold standards are proposing, because that then supposes that you have as a member of the board someone with sufficient experience to evaluate the credibility of the external advisor, which would practically fulfil the requirement for the expertise in the first place. What the standards by indicating that expertise can be provided by members or external advisers seems to assume is that - seems to assume is a scenario where the members do not have significant experience or expertise in governance, but they are able to call on the advice that they need through 30 external advisers, and surmising that that arrangement would only work in a situation where a board member has sufficient experience in the first place would undercut this disjunctive arrangement that the standards envisage, in my submission
I accept the standard assumes some of the necessary expertise can be sourced from consultants, but the governing body is ultimately responsible for its own deliberations. The members of that body must be sufficiently familiar with the business they are running to make sense of the advice they receive.
There are other difficulties with over-reliance on advisers. Advisers do not have the same responsibilities as members of the governing body, and they are not subject to the same duties. They are easier to ignore than members of the governing body and presumably do not participate in that body’s deliberations. A higher education provider would not satisfy the standard if its governing body did not include anybody - preferably one or more of the external members in the case of a small board - with appropriate higher education expertise. (Dr Di Lay has some higher education experience but it is unclear from the material provided whether her expertise is sufficient or appropriate when the only other person on the board with appreciable academic experience is an executive.) It certainly would not do to rely on a roster of advisers who could be kept safely at a distance by executives or other board members who want a free hand.
One must also be conscious of any implications flowing from the power to appoint individuals to the governing body. It stands to reason that a member of the governing body who also possesses the power to appoint others might have outsize influence over deliberations. That is certainly an issue in a case like this where the ownership structure of Barque makes Mr Michael Stacey pre-eminent. While I do not question his fitness to play a leading role in the institution, the fact Barque has some of the features of a small family business – at least at the outset – must be considered when settling the governance arrangements and personnel.
Barque has not satisfied me that its governance arrangements satisfy the standard referred to in s 3.2. While I accept there is evidence of the board, or board members, taking advice from consultants, it is unclear whether and how the board uses the full range of expertise required for effective governance of a higher education provider. It is also unclear whether the board has sufficient access to higher education expertise – most obviously on the board itself. More thought needs to be given to how the governing body should be structured in light of the observations I have made. Having said that, it may be comparatively easy to achieve compliance with s 3.2. Barque was wary in its submissions about appointing a large and unwieldy board. That is fair enough, but nobody suggests Barque should do that. The appointment of one or two additional external board members with higher education expertise might change the picture. I note Barque has offered an enforceable undertaking to do that, which is encouraging.
3.3 The higher education provider’s corporate governance arrangements demonstrate a clear distinction between governance and management responsibilities
I turn next to the standard in s 3.3. Barque provided an organisational chart (exhibit one at p 5925). The ‘key governance groups’ were said to include:
·The board of directors, whose terms of reference are found in exhibit one at p 4343;
·academic senate, whose constitution and terms of reference are reproduced in exhibit one at p 4947;
·The academic and quality integrity committee, whose terms of reference are found at p 5502;
·The industry council, whose terms of reference are found at p 5443;
·The finance committee, whose policy and procedure manual is reproduced at p 255;
·The risk and audit committee, whose terms of reference are found at pp 1222 and 5316; and
·The capital planning/investment committee, whose Capital Planning Policy are found at p 565.
I questioned Mr Botsman at the hearing about the status of the document purporting to determine the board’s terms of reference: transcript at pp 43-44. I noted the company’s constitution explains and delineates the role of the board of directors. Every board has constitutional responsibilities which cannot be displaced by adopting policy documents using modish terms like ‘governance’, ‘strategic direction’ and ‘mission’. I was told that was not the intention.
Barque also provided an updated list of the individuals filling key roles within the organisation, including:
·Institute director;
·Dean of studies;
·Course coordinator;
·Operations manager;
·Financial controller; and
·Student services manager.
Barque insists the distinction between governance and management is well-understood within the organisation, although Mr Botsman suggested at the hearing there was a danger in being “unduly pedantic”: transcript at p 41. There is wisdom in that more pragmatic approach.
The Agency argues there are too few people involved and that a small number of individuals are effectively performing too many roles, which might blur the distinction between those roles. For example: the Agency’s outline of submissions point out all members of the academic senate also hold management positions, and two members of the senate are also members of the capital planning committee. All but one of the members of the academic quality and integrity committee also hold positions in management. The Agency suggests that the overlap between management and governance roles “is almost complete”: outline of submissions at [44].
Barque argues the relevant foundational documents make the different roles clear, and there is no reason to doubt the distinction is understood. It relies on the report of Emeritus Professor Chris Pratt, an independent consultant approved by the Agency, whose report concludes as much: exhibit one at p 3543. Barque also says significant overlap is not surprising or objectionable in such a small organisation which has not enrolled any students or commenced operations. It argues that requiring a new entrant to appoint different staff to so many roles would be burdensome in a new operation with modest ambitions. I note Professor Pratt commented on the desirability of making further appointments (exhibit one at p 3544). I understood Barque to argue it would do so as the organisation grew following its launch. That line of argument appears to invoke the regulatory principles in the TEQSA Act, most obviously s 14 which says the Agency should not burden the regulated entity any more than is reasonably necessary.
Barque points out the Agency’s own guidance contemplates a measure of overlap between management and governance in any event. The Agency acknowledges the possibility of overlap, but says the overlap is too great.
I share the Agency’s concern about the extent of the overlap between the governance and management functions as a small number of people do double or even triple duty. I accept the documents explain the different functions but I also accept the distinction is difficult to maintain in practice if the same people are doing the job. I agree with Professor Pratt’s measured advice that the issue can and should be addressed through additional management appointments – but I also accept that could be done as the organisation grew. Particularly when I have regard to s 14 of the TEQSA Act, I do not think the current arrangements fail to meet the standard laid out in s 3.3.
3.4 The higher education provider’s corporate governing body regularly monitors potential risks to the higher education provider’s higher education operations and ensures the higher education provider has strategies to mitigate risks that may eventuate.
Barque tendered a number of documents it says help to demonstrate compliance with this standard. I was referred in particular to the risk management framework, reproduced in exhibit one at p 4346ff. The framework was adapted from the framework used by Griffith University. Mr Botsman pointed out the framework is extensive and elaborate, which is unsurprising if Griffith University was the model: transcript at pp 45-47. One would expect an organisation of that size and scope to have expended a great deal of resources on the issue. But adopting the framework of an organisation that is so different in size, scope and ambition raises a question over whether Barque has properly engaged with the risks it faces in the environment in which it operates, and whether the strategies which it adopts to mitigate those risks make sense for Barque. Mr Botsman explained Barque was (a) trying to avoid ‘re-inventing the wheel’ and (b) seeking out best practice in the industry: transcript at p 47. There is value in that for a small operation like Barque with limited resources. But there is also value in undertaking the analysis and preparing the framework from scratch – if only because undertaking the analysis and reflecting on the response is more likely to promote awareness of risk and improve the capacity to develop and execute risk-management strategies.
Mr Botsman also argued it made sense for Barque to use Griffith as a model because Barque would not always be so small: transcript at p 46. Barque wanted a program it could grow into, rather than something which would have to be replaced in the near future. I take the point, but there is no point having a plan with room to grow if it does not meet the needs of the moment.
Barque says its framework adopts a sophisticated risk management methodology which included concepts like ‘event impact triage’. Some of those concepts were borrowed from Griffith but Mr Botsman points out others – like ‘critical negative events’, referred to in exhibit one at pp 4439-4444 - were developed by Barque: transcript at p 49. In any event, the core concepts in the framework make their way into particular policies that regulate the operations of every aspect of the business: transcript at pp 48-49. The Agency criticises the quality of some of that work. It points out in its statement of facts, issues and contentions that the framework documents focus on spectacular events rather than more mundane risks, and often resort to bromides like “prevention is always better than cure”.
The Agency criticises Barque’s use of the Griffith model for reasons I have explored. The Agency also noted (in its statement of facts, issues and contentions) the terms of reference for the risk and audit committee appear to have been copied from the terms of reference used by the audit committee at the University of Wollongong. I was told that this suggested Barque had not made a genuine attempt to engage with the issue; it suggested Barque was creating documents to satisfy the Agency rather than embracing the concepts. Barque responded that it did not simply plagiarise the document: it selected the best example available and adapted it, I was told. The Agency sought to reinforce its point by referring to Barque’s ‘risk register’. The register was created to record anticipated risks. The Agency pointed out the register only contained one entry. Barque argued that was not unreasonable in circumstances where it had not commenced operation. The Agency was critical of that response when it was offered. It argued that a sound approach to risk management required the organisation to turn its mind to likely risks. Barque’s failure to identify more risks in the register was puzzling in those circumstances.
While I accept Barque has done a lot of work to establish policies and documentations and processes that purport to meet the standard created by s 3.4, it is less clear whether Barque has actually embraced and internalised a sound approach to risk management. Mr Botsman pointed out (transcript at p 50) Barque’s board had addressed itself to questions of risk at a number of meetings. But that did not stop the Agency’s criticism in its statement of facts, issues and contentions about the failure to discuss the framework or the risk register at board meetings. Barque argued it had addressed itself to those things but it offered undertakings that would commit the board to reviewing the organisation’s risk management infrastructure and regularly addressing risk at board meetings. The fact that undertakings would be necessary at this juncture despite all of the effort is troubling.
I am not satisfied Barque has sufficient risk management strategies in place and the standard has not been met. However, I also accept Barque might achieve compliance if it were to give more detailed undertakings.
3.5 The higher education provider’s corporate governing body ensures that all delegations (including financial, academic and management) are appropriate, documented, observed and regularly reviewed.
Barque referred to me to a schedule of delegations that was reproduced in exhibit one at pp 1622 and 5419. I was told the schedule had been reviewed by the board at a recent meeting. Barque pointed out in the outline of submissions there was not a pressing need for regular review of the delegations unless and until it commenced operations. Having said that, it insisted all of the delegations were:
·Appropriate, as evidenced by the fact they were similar to those used in other small higher education providers, and were made by experienced directors;
·Documented, in the schedule of delegations and elsewhere; and
·Reviewed, in the sense Barque’s board meets regularly and has the opportunity to consider the delegations at any meeting.
Barque said there was evidence of the delegations being observed in operation. That evidence came in the form of minutes of various meetings where delegated bodies performed the functions entrusted to them, and in the form of actions carried out by officers under the terms of delegations.
The Agency pressed two criticisms of Barque’s delegations. First, the Agency argued it was not acceptable for Barque to say it would review the delegation schedule ‘as required’. The standard explicitly requires that the schedule be regularly reviewed. That is true, although any doubts could be readily addressed through the imposition of a condition. I note Barque has offered an undertaking to do that.
Second, the Agency says the delegation schedule is high level and inappropriate because it does not include sufficient detail as to the financial, academic and managerial delegations. Barque replied that the information was accessible if one examined various documents in more detail. The Agency explained it was not acceptable that one should be forced to look beyond the schedule to understand who was responsible for what within the organisation. The whole point of such a schedule is that it should offer a clear explanation of what powers may be exercised by whom, and the nature and limits of those powers in each case.
The Agency is right, although this criticism could also be readily addressed through an undertaking. I note Barque has offered undertakings that would ensure it refined the schedule of delegations.
3.7 The higher education provider’s corporate governing body protects the academic integrity and quality of the higher education provider’s higher education operations through academic governance arrangements that provide a clear and discernible separation between corporate and academic governance, including a properly constituted academic board and course advisory committees.
Barque points to documents that establish separate arrangements for corporate and academic governance – most obviously the board resolution to establish an academic senate which includes delegation of all academic responsibilities: exhibit one at p 1198. The academic senate is governed by its own constitution (reproduced in exhibit one at p 4947) and reports to the board. The board also established the academic quality and integrity committee which reports to the academic senate (exhibit one at p 5507). That quality and integrity committee also acts as the course advisory committee: exhibit one at p 1184. The board also established the industry council (exhibit one at p 1180) which provides advice to the quality and integrity committee (exhibit one at p 5443).
The Agency points out in its statement of facts, issues and contentions that it had only been provided with minutes of one meeting of academic senate, and that meeting was attended by Mr Michael Stacey and Mr Wesselius. The constitution of academic senate includes criteria for membership (exhibit one at p 4953) which appear to reflect the sort of balance between executives and staff and student representatives that the Agency suggests is relevant in its own guidance: see exhibit 6, BAE4 at p 152. But the fact Mr Stacey and Mr Wesselius were the only attendees at the meeting – and the only individuals who appear to have been appointed to the academic senate – suggests the criteria for membership are not being applied. If the criteria are not being applied, it is unclear how the board can argue there is a properly constituted academic senate.
Barque points out that it has not commenced operations, so it should not be judged because the machinery of academic senate is yet to be fully engaged. There is something to that, but the standard does require that the governing body demonstrate what it is doing to protect academic quality and integrity.
Even if I look past the fact the arrangements are yet to be realised, I remain uneasy about whether Barque has (or likely could) satisfy the standard contained in s 3.7. My concern arises in part from the organisational arrangements which contemplate academic senate reporting to the board and providing the governing body with advice. At one level, that arrangement is unexceptional: the board is the governing body, after all. It is ultimately responsible for the entire business. But even allowing for that fact, the status of academic senate must be handled carefully. It must enjoy and be seen to enjoy a measure of functional autonomy and independence from management so it is able to speak authoritatively on issues that go to academic integrity. I suspect academic senate will be perceived as being weak while Barque does not have a core of academic staff who enjoy institutional arrangements that make them comfortable enough to speak truth to power. I do not mean to suggest Barque must inevitably embrace employment arrangements that incorporate traditional concepts like tenure. I also acknowledge it has produced a policy on freedom of intellectual enquiry (exhibit one at p 5181) and that it has gone to some lengths to establish regular policies and processes that protect and empower stakeholders to varying degrees. But I have also explained that Barque is a small organisation that bears many of the features of a family business. The fact that power within the organisation is so clearly vested in a handful of individuals means Barque has a particular challenge when it comes to communicating “a clear and discernible separation between corporate and academic governance”. It is not clear whether Barque has done enough in this regard, or what else it might do.
In all the circumstances, I am not satisfied Barque meets the standard in s 3.7.
3.8 The higher education provider’s corporate and academic governance arrangements demonstrate:
· The effective development, implementation and review of policies for all aspects of the higher education provider’s academic activities including delivery of the higher education provider’s courses of study by other entities;
· The maintenance of academic standards, with appropriate mechanisms for external input, in accordance with international conventions for good academic practice; and
· Effective quality assurance arrangements for all the higher education provider’s higher education operation, encompassing systematic monitoring, review and improvement.
Section 3.8 sets out the last of the standards at issue in this case. It must be said at once that I was provided with a large number of policy documents which suggest Barque has expended considerable effort in preparing for its launch. I was told the Academic Quality and Integrity Committee is responsible for producing the policies in question. Its terms of reference are reproduced in exhibit one at p 5502. That committee has even produced a policy on policies: I refer to the Policy Creation and Review Policy and Procedure document which is reproduced in exhibit one at p 5094. Barque points out this policy has been benchmarked against other higher education providers and suggests it has been accepted by the Agency for other purposes. If it has been accepted for other purposes, Barque argues, it should satisfy the requirements in s 3.8.
I have carefully examined the Policy Creation and Review Policy and Procedure document given it is of central importance to the argument in relation to this standard. It is inevitably a document expressed in general terms. It appears to strike all the right notes. It sets out the objectives of the policy and articulates the principles the committee follows in the policy making and review process. It explicitly invites staff, students and stakeholders to identify opportunities for new policies or for amendments of existing policies. It provides for staff in particular to identify opportunities for improving policies, and the importance of stakeholder engagement in the policy development and review process is acknowledged. The policy also charges the committee with responsibility for the regular monitoring and reviewing of existing policies. The steps which must be followed over the life time of a policy are set out.
While the document is characterised by its aspirations, they are worthwhile aspirations all the same. It provides a framework for developing good policy in an orderly way. But Barque points out there is more.
Barque points to its industry council, which is involved in the review of courses and related matters. The industry council has terms of reference but its role is outlined in the Course Curriculum Approval, Amendment, Review and Discontinuation Policy and Procedure document. That document is reproduced in exhibit one at p 5189. The industry council is tasked with reviewing the program and graduate attributes to ensure the course meets the needs of industry. It is one way of securing appropriate external input. Barque noted the industry council has already successfully provided input in relation to the MBA Advanced course which required consultation with the Computer Society of Australia and other industry bodies.
I was also referred to Barque’s Benchmarking for Quality Assurance and Enhancement Policy (reproduced in exhibit one at p 5271). That policy describes a benchmarking process and refers to benchmarking partnerships. I was also told Barque is a member of an industry body which provides access to benchmarking data. That is all to the good.
The Agency has criticised aspects of the policy development and review process. It questioned whether the academic quality and integrity committee created many of the policies which Barque has exhibited, and expressed concern that the board did not appear to take an active role in reviewing policies. In written submissions, the Agency noted Barque had said the senate and academic quality and integrity committee ‘inherited’ some of the infrastructure. The reference to a framework being ‘inherited’ perplexed the Agency. In its outline of submissions provided before the hearing, Barque clarified that the academic senate and the academic quality and integrity committee ‘inherited’ the policies in the sense the board had approved the matrix before the two policy bodies had come into existence. The Agency was also particularly critical of the way in which the board had conducted a review of the policies and the policy-making process. The Agency suggested in its submissions that the review was cursory and lacking in substance. The Agency worried that this led to “what might charitably be described as the ‘borrowing’ of policy documents from established higher education providers”. Barque provided more information about the review in its outline of submissions which explained the way in which the board went about the review on that occasion. Barque says different aspects of the review were conducted by each board member having regard to that board member’s skills. That is not entirely reassuring: I have already explained I have concerns about the adequacy of the higher education expertise in the board. Having said that, Barque makes clear in its written submissions that it accessed appropriate external advice.
I am satisfied Barque has made determined efforts to meet this standard. The organisation is small and has few staff and executives to carry out the policy development and review process – especially in advance of being registered. It has obviously used precedents for many of its documents that are used in other organisations, many of which are much larger. It remains to be seen whether the policy matrix will work. But there is an infrastructure in existence. It will probably be modified a good deal if the organisation were to be registered and commence trading, but that is not unreasonable. I am satisfied this standard is met albeit that I would require undertakings, such as an undertaking requiring regular reviews and independent evaluation, to eliminate any doubt.
CONCLUSION
It is accepted that registration might be subject to conditions. It is also possible to adjust the term of registration, although registering Barque for a much shorter term might imply a lack of confidence that would undermine its marketing efforts. I am satisfied a number of the issues identified by the Agency might, if considered in isolation, be usefully addressed through the imposition of conditions. I have referred to a number of undertakings the applicant has offered to provide. But conditions only take us so far. Barque has fallen short in relation to a number of the standards in ways that are unlikely to be successfully addressed with undertakings and conditions. In particular, I have significant concerns about the reasonableness of the projections and the adequacy of the financial resources available to Barque. In those circumstances, Barque has not satisfied me it meets Standard 2.1 and 2.2. I also think it has not come close to satisfying standard 3.7. While I have identified other standards where Barque falls short, I accept most of the issues could usefully addressed through conditions and undertakings – but the issues arising under standards 2.1, 2.2 and 3.7 are more problematic and must be re-thought. In those circumstances, the reviewable decision that was deemed to refuse registration must be affirmed.
I certify that the preceding 105 (one hundred and five) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe
....................................[sgd]....................................
Associate
Dated: 24 January 2020
Date(s) of hearing: 2 and 3 July 2018 Date final submissions received: 16 November 2018 Counsel for the Applicant: Mr C Botsman Counsel for the Respondent: Mr C Lenehan SC and Mr D Delany Solicitors for the Respondent: Mr M Gao, Australian Government Solicitor
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