One of the most common myths about Ireland is that we have a superior education system. In fact, we do not at any level. However, as we have seen over the last couple of years, the deficiencies in our system are increasingly commented upon by well intentioned Chief Executives of major foreign companies that have invested in Ireland.

The deficiencies in our educational system are particularly evident in the second and third levels. At second level we have a dysfunctional school year with substantially fewer teaching hours devoted to our young than elsewhere. Our school holidays too make no sense and are duplicated no-where else. In mathematics and science the results are relatively poor. This is hardly surprising as fewer than half our secondary school teachers of mathematics are specifically trained to teach mathematics. We are nowhere near the top quartile in our performance generally and the absence of accountability and autonomy in secondary schools is deeply worrying for the future. The OECD’s Programme on International Assessment scores us badly for mathematics and science. In science we rank just above average. The result has been lower points required for admission to university courses in science and engineering. John Herlihy of Google has commented on the adverse affect this has had on Ireland’s capacity to attract a large engineering centre for Google.

Here, as with just about everywhere else in the Western world, we are told that our future depends on our success in having a first rate third level system. The National Development Plan 2007-2013 states, ‘…that the quality of Ireland’s higher education system is vital to our social, cultural and economic well-being.’ In one respect we have done well: we are one of the better performers in the OECD in terms of graduation output and this is no small achievement but this should not give us much consolation if the quality of our degrees decline relative to similarly advanced economies.

Let me be clear: I recognize that our current straitened circumstances will preclude dramatic advances in funding. I accept the priority that the government must give to reducing the budget deficit which literally threatens the future of our state. But I think there are other areas of great waste in the public services that should be the main focus of government attention. Even before the current crisis it had been established by the OECD that investment at the top level would require us to increase our spending by 47%. To achieve parity with Finland which has a widely admired knowledge based economy would require us to increase our spending by 23%. This is particularly regrettable because Ireland, even before the crisis, was spending less than the average on education and more than the average on other areas, (for an example, health). The core Exchequer funding to the seven universities in Ireland in 2010 will be 24.5% lower than in 2009 levels. Whilst this will be offset by some additional income mainly through the ‘free fees initiative’ the overall reduction will be 6-7% over 2009 levels. This is the case notwithstanding the fact the Irish universities student/staff ratio for 2008/09 was 19.6 : 1. In Warwick University it is 13.6 :1 and York 13.1 : 1. This ratio is likely to get much worse with the continued expected surge in student numbers from 160,000 it is today to 200,000 by 2020. Even if we cannot in the short term hope to emulate our peers in other developed economies we should not let things get worse.

Accepting, therefore, that our main focus should be not just reform of the system but also supplementing the income of the universities from other sources, to where can we turn for more financial support?

First of all let me turn again to the question of fees. This has been effectively removed from public debate because political parties refuse to face up to the issue. They cannot be allowed to do so. The fundamental issue is that we can either refuse to have student fees and suffer the serious decline in the standing of our universities which will take effect virtually immediately or we can look at what has been done elsewhere and follow the recommendations already provided by independent analysis from the, OECD, Royal Irish Academy, the Higher Education Authority, the university heads and the National Competitiveness Council. Are all of these to be summarily dismissed by our political system? Our young deserve better. We should explain that fees do not necessarily mean an actual payment by students.

Look at the British system. The British system is based on student loans. These are only to be repaid when the borrowers are earning £15,000 or more and the amount one repays is directly related to earnings: borrowers repay 9% of their income above £15,000. Borrowers are charged an interest rate equal to inflation which is, of course, less than the government’s cost of borrowing. I need hardly add that those who have third level education have a substantially increased likelihood of earning power beyond those who do not have third level education. In addition there are various schemes to help the disadvantaged.

The British Higher Education Authority has established that since the introduction of the fees scheme there has been a significant increase in the participation of young people in higher education. Furthermore Higher Education Funding Council for England research shows that in the last five years there has been, ‘a significant and sustained increase in the participation rate of young people living in the most disadvantaged areas (representing 20% of young people)’. The research doesn’t attempt to analyse what might have happened without the 2006 reforms but the results are still telling. And this is just one example. There are many others.

Apart from the absolute necessity to revisit the decision not to proceed with fees I would like to touch upon a couple of other issues that have to be taken on frontally. First of all I would like to correct a headline which has been cited to me numerous times since it appeared in the Irish Times. It was alleged in a headline that in a speech I gave I spoke of reducing the number of seven Irish universities. I never said anything of the sort. What I did say was that Ireland should not have seven full service research universities. I repeat it today. Nor do we need every degree in every university. Nor should we have scientific research in each of our universities in every area. In addition, we badly need a policy for rewarding excellence not merely in research, where there has been some real progress (through Science Foundation Ireland and now latterly PRTLI – Programme for Research in Third Level Institutions) but also in teaching. The progress in research funding is evident from the latest government funding figures for PRTLI which appear to significantly differentiate on the basis of ability to deliver. I congratulate the Taoiseach, the Minister for Education and the Department for having a robust but fair process to lead to this conclusion.

In most other places there is a clear tendency to seek out excellence and to have institutions of third level in leadership positions – France, Germany, Australia, China, India and the USA provide examples. The French have granted increased autonomy to twenty universities and President Sarkozy has spoken of creating, ‘the best universities in the world’. Similarly Germany’s, ‘excellence initiative’ seeks to support leading research universities. Denmark too has been moving. It reduced from twelve to eight the number of universities and created three national research institutes. In both New Zealand and Scotland the core grants from the state for universities contain a portion that recognizes the quality of teaching and research performance. In Ireland the Higher Education Authority does not formally award separate teaching and research elements of the core grant made to universities. About 5% of this grant is distributed on the basis of research performance but this is largely based on PhDs, student numbers – and is too small to have an effect. So, in core funding we do not really differentiate and should do so here also and not merely in the grants under the PRTLI.

In England and Wales the Higher Education Authority in its Strategic Plan notes, ‘that there are some things that other universities can do better, and that limited resources would be better concentrated where they will be most effective.’ In Ireland we often appear to prefer to duck the political issues involved in a differentiation. If we continue to base the bulk of our funding on the number of students we will ultimately end up in a position where because of the huge numbers of students relative to teachers there is no way that students have direct contact with their professors, lecturers or tutors.

Another point that deserves comment is the fact that, currently, we invest substantially more per student in Institutes of Technology than in universities. Now I am a believer in the institutes. Massachusetts Institute of Technology and Georgia Tech are amongst the very best third level institutions in the world and we need similar excellence here. A national higher education system must meet diverse social and economic demands; it must address the needs of the academically accomplished and those with limited prior educational attainment. It must accommodate those with extensive social supports and those with few and it must serve the complex technical demands of the knowledge and the equally complex requirement to better understand ourselves and our society and conserve and contribute to our cultural heritage that is the particular but not exclusive remit of the social sciences and humanities. So we need highly autonomous institutions with different missions, objectives, strengths and capacities which together meet national needs. We need first class institutes of technology and these too should specialize and differentiate themselves.

We have 7 universities and 14 institutes of technology with a total of 165,000 students. New Zealand, with a population of 4.4 million has 8 universities and 20 institutes of technology. Scotland has 15 universities serving 205,000 students (having converted the polytechnics to become universities post 1992). The funding models in Scotland and New Zealand are similar: institutions receive a core grant from the State some of which is awarded for volume and quality of teaching activity and some of which is awarded for research performance. This latter allocation is an important differentiating factor with research universities receiving significantly more funding than other institutions.

In Ireland the core grant per student (which should include an amount that is research related) is greater in institutes of technology than in universities. The total figure for this undifferentiated funding is €710million and is approximately €5,000 per full time equivalent student for the universities compared with €7,000 per student for the institutes of technology. There is no rational explanation that I can find for this.

The conclusions to be drawn from the evidence are therefore clear. We need more funding for our universities in particular. The grants for research are moving in the right direction and the government is to be commended for the development of Science Ireland. However, core funding cannot be ignored and remain undifferentiated on the basis of quality. This core funding urgently needs to be strengthened and also needs to be changed from a system that simply rewards numbers to one which rewards performance. In addition, we absolutely cannot run away from the issue of fees. Others have not done so and have recognized that graduates earn more and should be in a position to repay loans. The earnings premium for 30-44 year olds with tertiary level education relative to upper secondary education is, after all, 59% in Ireland.

Our duty now must be above all to our young. At all levels our educational system needs to be prioritized. This is not all about money either. It is more than anything about empowering schools and third level institutes – but empowerment linked to clear accountability.