Second Reading of the University Autonomy Bills by Minister for Education Mr Tharman Shanmugaratnam during Parliament Sitting on 21 Nov 2005

SECOND READING OF THE UNIVERSITY AUTONOMY BILLS BY MINISTER FOR EDUCATION MR THARMAN SHANMUGARATNAM DURING PARLIAMENT SITTING ON 21 NOV 2005

Mr Speaker, Sir, I beg to move, that the Bill be now read a second time.

2. As Singapore progresses towards a knowledge-based and innovation-driven economy, our three universities – National University of Singapore (NUS), Nanyang Technological University (NTU) and Singapore Management University (SMU), will have a key role to play in producing graduate manpower, enriching our human capital by providing quality education, and excelling in research to create knowledge and wealth for Singapore .

3. Our universities are already well-recognised today. Yet, the global university landscape is changing rapidly. Our universities have to compete in this new landscape to get the best faculty and students, including the best Singapore students. They also have to develop own world-class capabilities in specific fields. To achieve this, a new model of governance for our universities is necessary, to give them autonomy to chart new directions, to differentiate themselves, and to focus on developing excellence. Global trends indicate that there are imperatives for many countries such as Japan , Denmark and Finland to reform their universities by devolving more autonomy to them. For example, Japan enacted the National University Corporations Law in 2003 to transform its national universities into independent administrative corporations with more autonomy. Denmark enacted a new University Act in 2003 to transform the Danish universities into self-governing institutions, each with their own Boards of Directors with a majority of external members (including the Chairman) to guide the university Rectors and management in the strategic development of the universities.

4. In April 2004, we initiated the University Autonomy, Governance and Funding (UAGF) review to find an appropriate model of autonomy for our three universities. The UAGF Steering Committee, chaired by then 2^nd Permanent Secretary (Education), LG(NS) Lim Chuan Poh, released its preliminary report and recommendations on 6 Jan 2005 . Its key recommendation was to corporatise NUS and NTU into not-for-profit public companies limited by guarantee, or in short, Autonomous Universities. SMU, which is already established as a public company limited by guarantee at the onset, has always been an Autonomous University .

5. The MOE International Academic Advisory Panel (IAAP) met in Jan 2005 and discussed extensively the UAGF recommendations. It strongly endorsed the move to transform NUS and NTU into Autonomous Universities, just like SMU, to enable them to achieve teaching and research excellence, raise their international standing and enhance their students’ learning experience. The IAAP also made several useful observations. Chief among these observations was that university education at the three universities must remain accessible and affordable. There must also be greater accountability with increased autonomy. The IAAP endorsed the enhanced accountability framework for the Autonomous Universities, to assure the public that the universities’ missions remain aligned with our national strategic objectives and that the quality of university education continues to be enhanced.

6. Mr Speaker, Sir, the Members of this House will recall that at this year’s Budget debate, the Committee of Supply had deliberated on the UAGF recommendations. The Government announced its acceptance of the UAGF recommendations in April 2005. The move to transform NUS and NTU into Autonomous Universities marks the beginning of the next major phase of our universities’ development.

7. As I shared at this year’s Committee of Supply debate on my Ministry’s budget, we have good people in our universities, principally the university Council members, particularly the chairmen, and key management, faculty and staff. I am confident that these good people that we have in the universities will also develop a culture of collegiality that is characteristic of all top universities.

8. With the proposed changes, our three Autonomous Universities will be able to exercise the flexibility to chart directions, and create a unique university experience for their students. They will be able to compete effectively in the global university landscape.

9. Our experience with SMU as an Autonomous University has given us confidence that the proposed model of governance for NUS and NTU will work. But the two larger and more complex universities – NUS and NTU, will need time to change, and we should give them time to change.

10. Mr Speaker, Sir, I am pleased to inform the House that the change process has already commenced at the universities. Both the NUS and NTU Councils, together with their respective university management and faculty, have embarked on their strategic reviews to set their future course.

11. The granting of autonomy to NUS and NTU will fundamentally be a catalyst for change in culture in our universities. It will bring greater collective ownership and proactive participation from the university stakeholders - the university Council (they propose to call them Board of Trustees instead of Council members after corporatisation), the university management, faculty, staff, students, and alumni.

12. Mr Speaker, Sir, the three Autonomous Universities will remain as key academic institutions in Singapore . The Government remains committed to provide substantial funding. We want to ensure that they continue to contribute to the well-being of Singapore and its people, not just economically by producing graduate manpower to support the economy, but also in propelling Singapore up the curve of knowledge creation through a concerted investment in R&D capabilities. Hence, the new Acts for our Autonomous Universities will allow my Ministry to ensure that the university sector as a whole meets these national objectives. MOE also has the fundamental responsibility and will work closely with the universities to ensure that university education remains affordable, accessible and is of the highest quality.

13. It is critical that we strike a correct balance between autonomy and accountability, and continue to give our universities the freedom to chart their own strategies and directions, and to differentiate themselves. In this regard, the NUS and NTU (Corporatisation) Bills are in line with the existing SMU Act. The new legislation aims to safeguard the Government’s strategic interest in the university sector and yet, give the universities the autonomy to be nimble and responsive to the dynamic landscape. The approach we have taken is to retain those clauses from the existing NUS and NTU Acts which are still relevant, albeit with some modifications in the new Acts, and to include new clauses arising from the UAGF recommendations. The operational matters are incorporated in the university company’s Memorandum and Articles of Association (M&A), as in the case of SMU. As an additional safeguard, any amendment to the M&As would require the consent of the Minister for Education, as provided for in the SMU M&A today.

14. The NUS Bill also provides the legislative provisions to transfer NUS’ property, rights and liabilities to the successor university company, and will repeal the existing NUS Act which establishes NUS as a statutory board.

15. Let me now highlight the key clauses of the NUS (Corporatisation) Bill.

KEY CLAUSES OF BILL

Role of Government

16. It will remain the Government’s responsibility to continue to steer the strategic direction of the overall university sector and ensure that our three universities meet strategic national priorities. This is provided for in Clause 5, and will largely be operationalised through the Policy Agreement that will be signed between MOE and the university, as part of the enhanced accountability framework that is being put in place.

17. Strong governance structures are critical to the success of the university. As such, the Minister for Education will continue to appoint the university’s Board of Trustees (BOT), as provided for in Clause 6. We must appoint the right people as Trustees. They play several critical roles: firstly, to provide leadership and guidance on the strategic directions for the university; secondly, to appoint and appraise the President of the university; and thirdly, to ensure the responsible use of the university’s resources and maximise their returns.

Enhanced accountability

18. The enhanced accountability framework for the Autonomous University , as reflected in the new Clause 4, will comprise the following:

(1) Firstly, a Policy Agreement to be signed between each

university and MOE that stipulates the key policy parameters

articulated by MOE which the university must abide by in order

to receive Government funding. Some of the policies

include tuition fee setting framework and broad admissions

criteria, as well as adequate cost control measures to ensure

that resources are utilised optimally. The Policy Agreement is

not cast in stone, and will be reviewed and updated from time

to time.

(2) Secondly, a Performance Agreement, formulated by the

university and agreed upon by MOE, is an ex-ante declaration

of what the university sets out to achieve in the areas of

teaching, research, service and organisational development.

This Agreement will be reviewed every five years. In addition,

MOE and each university will work out and agree on the

number of graduates to be trained by the university in broad

clusters on an annual basis. The performance of the

university will be reviewed annually in the four areas of

academic teaching and curriculum, research outcomes

and training, contribution and service to the wider community,

and organisation development matters. It would include such

issues as the breadth of the curriculum that the universities

seek to achieve and targets for the percentage of students

going on overseas exchanges.

(3) Thirdly, the existing MOE’s Quality Assurance Framework for

Universities (QAFU) that includes an on-site external validation

of the university’s performance by an MOE-commissioned

external review panel. The validation will be carried out once in

every 3 to 5 years. The Panel members comprise prominent,

experienced local and foreign corporate and academic

leaders. This process is already in place.

19. In order to ensure that the Autonomous Universities remain fully accountable for the use of public monies, the new Clause 9 provides for the Ministry to have continued full and free access to all records relating to financial transactions of the university company, and can make such records available to the public.

20. The Minister for Education’s consent would also have to be sought for the university’s functions cited in Clause 7 of the Bill, such as the disposal of property, winding-up of the university company, as well as the addition, deletion or alteration of the university company’s constituent documents.

21. My Ministry is mindful that we want to give our universities the autonomy they need to excel, and not be encumbered by unnecessary procedures and processes. I am confident that we will be able to find the right balance between autonomy and accountability.

Transfer provisions

22. Parts III and IV of the NUS (Corporatisation) Bill provide for the transfer of property, rights, liabilities, employees, and others, from NUS as a statutory board to the corporatised NUS. This is to ensure a smooth transition from NUS’ statutory board status to its new identity as an autonomous university company.

Dissolution of Academic Staff Provident Fund (ASPF) Scheme

23. Separately, the First Schedule of the NUS (Corporatisation) Bill provides for the dissolution of its existing Academic Staff Provident Fund (ASPF) and transfer of the balance of the ASPF assets to the Central Provident Fund (CPF) Board.

24. The ASPF started at a time when the CPF did not exist. For greater cost effectiveness for the benefit of the ASPF members, the NUS Council made the decision in October 2003 to dissolve the ASPF and merge it with the CPF. NUS will bear all costs relating to the closure of the ASPF and ensure that no member is disadvantaged. NUS has also sought feedback from current and past ASPF members. The response has been positive.

25. MOE, NUS, MOM and the CPF Board have worked closely on this matter and the necessary legislative provisions for the dissolution of the ASPF and the subsequent transfer of balance of assets to the CPF are included in the First Schedule of the NUS (Corporatisation) Bill.

CONCLUSION

26. Mr Speaker, Sir, our universities have done well. But it takes more to become great universities. The 3 University Bills to establish NUS, NTU and SMU as Autonomous Universities will lay the foundation and position our universities well to become leaders among Asia-Pacific universities, and to be up to the best internationally in specific fields. This will allow our universities to be key strategic assets for Singapore as we stake our claim in the knowledge-based economy.

27. As they enhance the quality of education, MOE and the universities will ensure that university education remains accessible and affordable for Singaporeans. No Singaporean admitted to university should be denied a university education because of financial constraints.

28. Sir, I beg to move.