The National Development Plan 2007-2013 expresses something that we all know to be true and that is ‘the quality of Ireland’s higher education system is vital to our social cultural and economic wellbeing’. It is vital from a social point of view because it enables individuals to properly develop the talents which they have to their own benefit and to the benefit of society as a whole. It is vital in terms of our cultural wellbeing because, most importantly, our value system is the essence of our culture and if we cannot explain and understand our value system we will have no culture at all. As to our economic wellbeing we are a country largely bereft of natural resources and so the truism that our most vital natural resource is our people is particularly true here. If we do not use the potential to the maximum effect the consequences will be impoverishment that extends beyond the economic but penetrates the very fibre of our society. Society after all is made up of individuals and if we do not develop individual potential we have fundamentally failed as a society. However, let me be clear, to discuss third level education essentially in terms of economic advantage is to denigrate the purpose of a university – so well and famously portrayed by Cardinal Newman.

I believe that Ireland has a far greater belief in the quality of our third level education than is justified by the facts. Certainly we have done far more than many others in terms of the numbers that avail of third level education in Ireland. Indeed we are one of the highest performers in OECD in terms of graduate output. We can be immensely proud of this achievement. Indeed we compare very favourably with many countries which historically we would have looked up to in terms of education. Now we have a situation where 57% of school leavers go onto third level. The total numbers are extremely impressive as between universities, teacher training colleges, National College of Art and Design and other institutions. There are over 68,000 full-time under-graduates and there were 16,000 graduate students in the 2006-2007 academic year. In addition, the Institute of Technology institutions had over 51,000 under-graduates and 1,500 post-graduates in the same year. These figures are testimony to the institutions concerned and also the broader reaches of our society where clearly education is greatly valued. However, we must be clear that the mere analysis of numbers at third level institutions does not provide anything like a full picture and there are clear deficiencies that are evident in our system. Maybe indeed they are part of the system itself.

Let us start with the question of spending. I appreciate in this that there are other government priorities too and we are currently living in very difficult times, but we should at least be clear about the facts and then consider what conclusion we should draw from them.

The facts are that we are below the OECD average in spending and this average takes account of some very low figures elsewhere (for example, in Mexico). Even being at the average in spending would be less than that required.

If we were to aspire to the top levels of spending in the OECD we would have to increase the total funds available by 47%. Even, if we were to achieve parity with Finland (a country that is much admired in its recent economic performance, particularly in knowledge based activities and one which we could reasonably compare ourselves) but which is ranked only No.9 in the OECD, then we would have to increase our spending by 23%. Now spending counts today as we all know. Irrespective of how dedicated or efficient our third level educational institutions are (and I certainly do not know of any evidence that suggests that they are more efficient or effective than others) lower spending inevitably results in poorer facilities and in poorer teacher/pupil ratios. These necessarily impact on the quality of our degrees. It is only too obvious that in some countries in the European Union, particularly in the Latin belt, large numbers in class sizes have resulted in poor relative performance. If we were to head in this direction it would be a shame. It is also evident that support staff levels in Irish third level institutions are much less than in competitor countries. This also impacts on the quality of teaching.

It is not that I wish to express this debate in terms of competition with other countries, that is not the point. The point is that comparative evaluation establishes what one can and should do for one’s own students and the standards one should seek to emulate. Nor is this a question of economic advantage because one cannot and should not look at third level institutions simply as a means to enhance economic performance by attracting more investment and stimulating innovation and business start-ups. Education as everyone here knows has a far broader purpose and our universities in particular have a crucial role in cultural and societal development.

There is a greater focus in university circles than elsewhere on the global league tables for universities and one must accept that they are important not least in attracting overseas students. But I do not consider them to be of great merit and their limitations are self-evident. However, it is gratifying to note nonetheless that in the Times Higher rankings Trinity College Dublin have moved into the top 50 at No.49 and University College Dublin from 177 to 108. University College Cork and Dublin City University have also improved. These rankings are often more marketing tools for universities and graduates rather than mechanisms for decisive measurement. I think that classifying complex educational institutions by a single number is absurd. But they do provide a starting point for discussion and behind the figures there seems to be more than a grain of truth. Certainly the numbers are often uncannily linked to academic staff/student ratios.

For an example, our ratios are less favourable than those pertaining in either Edinburgh or Copenhagen Universities both of which might be considered as reasonable comparator institutions and this point has been brought to the fore by the heads of UCD and TCD. Looking through information such is as available on this more generally, I think that the reputations and standings of universities are significantly linked to their financial capacities.

The Department of Education in its grant activities should have a profoundly important role to play in rewarding superior performance rather than simply spreading out grants on an equal basis around the country on the basis of the head count of students irrespective of performance. This issue is crucially important and the Department is aware of it but political interference in almost every aspect of our Irish life over the decades has required a spreading of benefits often on a basis that is not adequately performance related. It would seem inevitable that capitation grant payments inevitably result in more money going to those institutions with layer classes and the result of this is to disadvantage any university which seeks excellence rather than numerical strength. We really have to develop centres of excellence on an objective basis and incentivise and reward them appropriately. Everyone cannot claim equality in every subject and better performance needs to be measured and rewarded. It does not matter where the successful institutions are or what they are, be they universities or Institutes of Technology, but the best have to be differentiated and the aversion to comparative evaluation must cease.

A couple of general observations: It should surely not be necessary to say that the primary function of the university is to teach. Research is, of course, important, but must always be recognised as subsidiary to teaching and there must be a mechanism available to deal with bad teachers. This, in the first instance, should be in trying to improve performance. In order to establish which teachers are bad, and for that matter, which are good and deserving of commendation for it, it is necessary to have proper evaluation including proper qualitative student feedback. I have certainly heard elsewhere that simple point scoring is not a way to achieve this, but it is necessary to get qualitative commentary. It is also important surely to tie good teaching to promotion and to obtain criteria for evaluation.

So the evaluation process must involve peer evaluation as well as student evaluation and both of which should be qualitative and not quantitative. One suspects that it may be the case in Ireland (as it certainly is in the United Kingdom) that there is way too much time given by teachers to administration. This, in turn, must adversely affect the quality of what they are doing. Having spoken to a number of academics who have experience on both sides of the Atlantic it is clear that there is a much more open and transparent system in many of the United States universities than over here. Tenure is more difficult to achieve in most top class US universities than it often is on this side of the Atlantic. This is not to say by any means that the US is by any means perfect but its standards in many areas should be seen as the comparative measure that we look to.

To say something on the reaction to Irish students abroad. Anecdotally, it must be said that they are well perceived. A lot of this is related to their communication skills and presentation. They have a capacity to relate to people and do not carry obvious chips on their shoulders, nor are they seen as having difficulties in relating to people more generally. However, it is true to say that there is evidence that they have deficiencies. A recent report by the Export Skills Group concluded that, while on average Irish graduates are perceived by employers to compare well with their Northern and Eastern European counterparts, they are not perceived as well on maths and accounting skills. I have also been told by some of the Heads of Irish universities about the difficulties in the quality of students coming from our schools system, particularly in the area of science. They have spoken of the need for pre-training before admission and, one suspects, that the conclusion in the World Economic Forum Competitiveness Report 2008/09 that ranked the quality of our educational system as a whole much higher than the equality of maths and science education (7th as against 23rd).

As I have said on other occasions I really believe that we have to be prepared to address head on the issues of teaching problems, and there are problems which go beyond the university systems straight into the secondary area. I am glad that the current Minister for Education has been prepared to do some blunt talking on this.

Let me now turn to the issue of third level fees. It is inevitable that we have to turn to this subject unless we are prepared to accept that there will be significantly lower expenditure on our third level educational system per capita than that of our peers in Europe. It is a binary choice: we either stay as we are (and this will have negative affects on the education which our students receive relative to their peers) or we increase funding. If we choose the latter course then either the State pays for it – which would be great if they were prepared to do so – or individuals will have to pay. We really must have the courage to look at the problem in a serious way. It is argued that the introduction of university fees will damage social equality. It has to be said however that low income families were always exempt from fees in Ireland and under all circumstances must remain so. The question is whether there is good reason to look at this issue not least because of the advantages that university education definitely brings to those that who avail of it. So the question really is should those who benefit from university education make a contribution towards the cost of that education or should this be a broader societal response with a broader constituency paying through taxation even though they do not benefit.

The other alternative, in my view is that we will have a sub-standard third level education system. In this debate it should be accepted that it is better to be university educated from the point of view of earning power. This is indisputable. There is a much lower unemployment rate amongst graduates and the earnings premium of 30 – 44 years with third level education relative to upper secondary education is 59% in Ireland. There is no evidence whatsoever that this premium is declining with the larger number of Irish graduates that have been going through our system in recent years. All over the world governments are recognising this reality by devising schemes for fee paying often through the use of loans systems. Everywhere steps are being taken to ensure that no reduction in the access to third level results to those who come from disadvantaged parts of our society. Here on the other hand, we appeared until recently, paralyzed in confronting the issue even thought the independent analysis from the OECD, The Royal Irish Academy, the Higher Education Authority and the university heads that wrote to the Irish Times a couple of months ago have underlined that we must do so. The National Competitive Council too has come a number of its annual reports suggesting that the introduction of graduated fees within the under-graduate cycle. I admired the current Minster for Education and Science for having the courage to raise this issue for debate, but as I said recently in the inaugural Erasmus Lecture, I wonder whether the person giving this lecture in one or two year’s time will be able to point to change. For me at least this one acid test of whether we are up to the challenge of our time because if we are unwilling to even look seriously at this issue and debate its pros and cons I do not know how we can be confident of our ability to deal with far greater challenges in other areas.

The next issue that I would like to address is a vexed issue of different kinds of institution in the third level. Today we have a binary system with universities and Institutes of Technology and other issue specific institutions. This diversity should be seen as a strength. The perils clearly exposed by the rush of polytechnics to become universities in the United Kingdom should be salutary but, as usual, some would seem to wish to follow the same course apparently believing that this is a matter of status. This should not be the case. It certainly has not diminished the standing of MIT or Georgia Tech in the US that they do not describe themselves as universities. We have to stop everyone trying to do the same thing and thus being judged on the same institutional basis. We need a heterogeneous system with variety in our institutions. Even with the university sector surely we should have specialisation. One or two, for example, should specialise in Mandarin, Arabic or Oriental Studies.

So too with Research. Here the Programme for Research in Third Level Institutions has a great deal to commend it. The standards of objectivity by Science Foundation Ireland need to be emulated across the system as a whole. Its processes are the cause of its success and processes require entirely independent evaluation.

This question of independence in education must have general application. The third level institution of the future must have rigorous and independent governance and must be rewarded for performance which, of course, includes research. The UK which comes out well from comparative analysis, for example, has a budget per student about twice as large as the average for all universities in the country. We need wage setting autonomy and perhaps less endogamy in Ireland (that is we have a higher percentage of faculty trained in-house to PhD level).

The Breugel Institute has concluded in a study that research performance of a university is:

Positively correlated with the size of its budget per student;

Negatively correlated with its degree of public ownership;

Positively correlated with its budget autonomy;

Positively correlated with its hiring and wage setting autonomy;

Negatively correlated with its degree of endogamy.

In the US the same appears to be true in research and resoundingly so. Thus, for example, given investment in higher education produces far more patenting in States where the universities are more autonomous.

None of this is an argument for private ownership of universities. Sweden and Switzerland, for example, are amongst the best performing countries in the third level and their universities are mostly publicly owned.

The Breugel Study concludes that while increasing budgets in Europe is important (with the EU spending an average 1.3% of GDP on higher education compared to 3.3% in the US) it must be combined with good governance. This in turn requires more autonomy, which crucially must be accompanied by greater performance evaluation. There may be more than one type of system but a good one must be meritocratic, flexible, specialising and autonomous. Its accountability must be assured by real evaluation and assessment from which consequences must flow.

This is the text of a speech first delivered by Peter Sutherland to the National University of Ireland Centennial Conference.