Mr. Fergal Costello:

I will pick up on some of Mr. Boland's points. I will talk through the process by which we have engaged in what we call "strategic dialogue" with the higher education institutions. It is one that we are developing. We are still learning as we go through this. To date, the process has been quite successful in terms of what we tried to achieve. It is a process that has been looked at by other countries as to how to provide a model for future direction and steering of higher education.

The process is underpinned by a set of national priorities identified by the Minister and agreed by Government. That is the starting point. The priorities identified were economic renewal and development at national and regional levels; social cohesion, cultural development and equity, both nationally and regionally; public sector reform towards greater effectiveness and efficiency; and restoration of Ireland's international reputation. That sets the backdrop.

Within that, there are specific objectives for the higher education system set out for 2014 to 2016 and it is against those that the system will be held accountable. Those objectives are to meet Ireland's human capital needs across the spectrum of skills by engaged institutions through a diverse mix of provision across the system and through both core-funding and targeted initiatives; to promote access for disadvantaged groups and to put in place coherent pathways from second level education, further education and other non-traditional entry routes; to promote excellence in teaching and learning to underpin a high-quality student experience; to maintain an open and excellent public research system focused on the priority areas identified by Government and the achievement of other societal objectives and to maximise research collaborations and knowledge exchange between and among public and private sector research actors; to ensure that Ireland's higher education institutions will be globally competitive and internationally oriented, and Ireland will be a world-class centre of international education; to reform practices and restructure the system for quality and diversity; and to increase accountability of autonomous institutions for public funding and against national priorities.

Taking those national objectives as a starting point, each higher education institution, HEI, was requested by the HEA, having regard to its mission and strengths, to set out how it proposed to address those high-level objectives set out by the Minister. The HEIs were also required to state specific targets and objectives that would be met over a three-year period. Those proposals and submissions of the institutions were reviewed by the HEA, with the advice of a panel of external experts, both Irish and international, and were the subject of negotiation with each HEI. Out of that process came what we call a "compact" between the HEA and each institution. This compact is our reference point to monitor performance by the institution over the three-year period.

By aggregating the individual compacts, we are in a position to provide an overall picture of system performance, as well as considering individual institutional activity. Where system performance is identified to be falling short of national objectives, the HEA can engage with all or some institutions to realign objectives, the better to meet those national objectives.

It is important to stress that in designing the process, the HEA has been aware of international evidence that this should be a dialogue rather than a simple command and control approach. The autonomy of our institutions has proven to be highly valuable, providing creativity, innovation and efficiencies that could not have otherwise been achieved. The strategic dialogue seeks to work with that concept of autonomy, not to compel institutions to deliver objectives but to require institutions to conduct a searching self-evaluation as to how they, depending on their own particular strengths and capacities, can deliver against the national objectives set out.

As part of the system, as part of our accountability responsibility, the HEA is required annually to make a report to the Minister for Education and Skills on the performance of the system against national objectives. As Mr. Boland outlined, we made our first report in mid-2014. The key findings in that first system report include the following. The Irish higher education system is a high performing system. This is demonstrated by certain features, such as the resilience and responsiveness of the system during the economic crisis when 25,000 extra students came into the system, which facilitated retraining and up-skilling at a time of declining budgets. The report also found that there is an essential need to facilitate further growth in student numbers, and such growth should be planned not only in terms of higher education but in terms of post-secondary activity - the range of opportunities that are available in higher education and further education. In the compacts, the system of institutions has committed to further reform and has set challenging targets in key areas, such as participation, access, research and internationalisation.

The decline in funding, together with that sharp growth in numbers, means that the system is becoming more fragile. Key areas of concern we identified were the sharp decline in staff-student ratios, emerging skills shortages in an increasing range of labour market areas and difficulties in sustaining widening access to higher education.

The report also found enablers are required to allow the system to continue to contribute, in particular through reform of the regulatory framework within which our institutions operate. The failure to meet the objectives the Minister has set out is not just a failure for higher education but is a failure in terms of broader Irish societal and economic competitiveness and development. The full findings are contained in the system report, copies of which we have forwarded to the committee.

In 2015 we are currently completing an interim review with institutions of their performance to date, and intend in autumn 2015 to more formally review progress against the performance targets set. Those findings will in turn inform funding allocations to institutions for 2016 with up to 10% of funding allocations for 2016 contingent on performance against those established targets.

The new process is a major reform of Irish higher education. It has already improved the transparency and accountability of the system not just to the HEA and Department, but to a wider public. There remains much to be done, and that work is ongoing. We would welcome an opportunity to return to the committee at a future date and provide an update on the progress we are making.