University Funding Reportedly to be Cut Substantially in Federal Budget 2017

2 May 2017
The Daily Telegraph, May 2, 2017

by Claire Bickers

LABOR is pledging to block a $2.8b funding cut to the higher education sector which will force students to pay off loans earlier and make degrees more expensive.

Shadow Education Minister Tanya Plibersek hasn’t ruled out blocking all of the reforms though.

Speaking to reporters in Sydney this morning, she said Labor would examine the detail of the Turnbull Government’s proposal to see if there were measures the party would support.

Ms Plibersek rejected suggestions the increased fees were not that large an impost on students.

“Students in Australia are already among the highest contributors to the cost of their own university education, so adding thousands of dollars to the cost of the degree is unfair,” she said.

“We also know that those students are repaying back debt at the same time as every other expense is hitting them, they’re starting a family, trying to buy a house.

“If students do well from their university education, if they become highly paid professionals, they will make a contribution through the tax system on top of repaying their HECS debt, for the rest of their lives.”

Under the planned changes, announced by Education Minister Simon Birmingham last night, students studying a four-year bachelor degree will pay between $2000 and $3600 more over the duration, and all can be deferred on the income-contingent HECS-HELP loan scheme.

Students will also have to replay loans earlier once they start earning. The repayment threshold for their loans will kick in at $42,000 from mid-2018 — a substantial drop from the current $55,000 threshold.

The Government will also impose a two- year efficiency dividend on teaching funding.

Labor also announced an efficiency dividend of 2 per cent during the Gillard Government, which would have cut $2.3 billion from its spending on higher education to fund the Gonski school reforms.

Ms Plibersek said Labor stood by its record on higher education.

Australia’s top universities have also slammed the proposal.

The Group of eight, which represents six Australian universities ranked among the world’s top 100, says the cuts will hurt students and impact Australia’s standing as a study destination for international students.

Go8 chief executive Vicky Thomson hit out at the announcement this morning, saying it was the opposite of the Prime Minister’s focus on innovation.

“We have a Prime Minister and Minister and a Government who say universities are the engine rooms ... of the national economy,” she told Sky News.

“We can’t be the engine room if you continually cut our funding.”

Ms Thomson said the announcement was a “disaster averted” as the cuts were less severe than those proposed in the 2014 budget.

She also welcomed the preservation of the Higher Education Participation and Partnership Program and research funding.

But said: “We cannot welcome a package which is characterised by cuts to university funding and increases to students, especially given our contribution to the broader economy.”

“The success of our thriving education export industry rests on its quality and quality requires investment for the long term.

“This package does not provide a long-term vision for the future which will sustain this success or Australia’s standing.”

Speaking at a dinner for university leaders in Canberra last night, Minister Birmingham insisted the changes would not affect Australia’s reputation as an attractive study destination for foreign students. The education of international students is Australia’s third largest export.

Monash University Vice-Chancellor Margaret Gardner asked the minister how Australia could sell the quality of its education services to international students in the wake of another budget cut. Senator Birmingham responded that he is confident the decision will make universities more sustainable in the long term.

“We believe they can absorb such an efficiency dividend without it having any detrimental impact on their bottom lines or teaching or learning,” Senator Birmingham told a conference room of university sector representatives on Monday night.

He is hopeful the federal opposition will support the package but has already started discussions with Senate crossbenchers just in case.

Universities Australia chief executive Belinda Robinson agreed with the Go8, that the run counter to the government’s innovation and skills agenda, which aims to keep highly-skilled jobs in Australia in a competitive global economy.

She pointed out the further cuts come on top of $3.9 billion slashed since 2011, and are in addition to a $3.7 billion proposed cut to university infrastructure funding.

Meanwhile, some students are unimpressed with the prospects of paying more and paying back their fees earlier.

About a dozen students rallied outside the Canberra hotel where the minister made the announcement, chanting “Birmingham go to hell, take your uni cuts there as well”.

National Union of Students president Sophie Johnston said the package was as to be expected — “a war on students and young people”.

“We’re quite concerned about the increase in student contributions,” she told AAP, adding there was no silver lining on university cuts.

Australian Industry Group chief executive Innes Willox told AAP there was a lot in the package to like, especially measures to make students more job-ready and extra engagement between institutions and employers.

Senator Birmingham framed last night’s announcement by pointing to a report by Deloitte Access Economics which showed universities receive enough funding, through government and student fees, to cover the costs of teaching most degrees.

The report shows the average cost of delivery per student grew 9.5 per cent between 2010 and 2015, while funding per student grew by 15 per cent.

Universities received $19,285 per student place in 2016.

Government figures show the average cost of an undergraduate place is $16,000 and for postgraduates $20,000.

The government acknowledges funding in some areas — such as dentistry and veterinary studies — didn’t cover the cost of delivery but says the vast majority of courses could be delivered cheaper than the level of funding provided.

Senator Birmingham says this showed the record level of funding for universities had grown beyond the cost of their operations.

“Universities have a vital role to play in Australia but many mums and dads are feeling the pinch of tighter budgets at home and want to know their tax dollars are being used effectively and efficiently,” he said on Monday. “Universities need to invest taxpayer money judiciously and with appropriate public scrutiny and accountability.”

Opposition leader Bill Shorten said the Turnbull Government should be finding money in the budget by not going ahead with corporate tax cuts rather than making university students pay more to go to university.

Shadow Education Minister Tanya Plibersek also slammed the proposed efficiency measures.

The government should not be “slashing” money from education to repair the budget, Ms Plibersek said.

She also questioned the Deloitte report’s credibility.

“Isn’t it surprising that when the government commissions a company to do a report to justify cuts to university funding and increases to student costs that the report comes out saying we should cut university funding and increase student costs,” she said.

Ms Plibersek also laughed off suggestions Labor had promised similar efficiency measures, saying funding for education had nearly doubled to $14 billion under the Rudd and Gillard governments.

Universities have tried to pre-empt any funding cuts with an analysis the sector says shows it has contributed $3.9 billion to the budget bottom line in recent years. The sector’s peak body says there is no capacity to absorb further cuts.