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In the media: Balancing the books

Adelaide Advertiser, 18 Mar 2015

By Peter Jean

A major political roadblock has left our universities wondering how they can remain financially viable, as PETER JEAN reports.

E DUCATION Minister Christopher Pyne this week described himself as a “fixer” who knows how to be politically “nimble”.

But Mr Pyne does not appear to have been nimble enough to avoid a major roadblock in the path of his plan to set up Australia’s universities for a financially secure future by uncapping student fees.

The failure of the Federal Parliament to agree on a way forward has left universities wondering how to remain financially viable without allowing quality to decline. Australia’s higher education providers are struggling with the challenge of trying to educate more students and maintain research output without funding certainty.

The number of university students in Australia has grown rapidly from about 400,000 in 1989 to 1.3 million in 2013. Government expenditure on higher education was projected to hit $6.7 billion in 2015 more than double the spending in 2005.

The Government’s solution was to uncap fees and let universities charge students whatever they thought was a fair market price. As they do now, students would be able to borrow the money for their studies from the Government, and pay it back at a concessional rate of interest once their annual incomes reached $50,000.

Massive scholarship schemes would be created to ensure bright high-school graduates from low-income backgrounds and country areas could afford to go to university.

Meanwhile, the Government would cut university funding by 20 per cent.

Despite reassurances from Education Minister Mr Pyne, many families worry about the possibility of their adult children being saddled with excessive student loan debts, while at the same time trying to get into the housing market and raise children of their own.

The Government has effectively backed down on the funding cut but a majority of senators are still sceptical about fee deregulation.

Universities are known as places for the rigorous exchange of ideas: philosophy and theology students argue over the meaning of life and future architects discuss the best way to design the homes of the future. But the battle of ideas about the future funding of higher education has been less than-inspiring.

The Government put its vision up for debate.

Labor has waged a successful war against “$100,000 degrees” but is not ready yet to outline what it would do in government to ensure the university sector remains viable.

Peak body Universities Australia is adamant something has to change and funding certainly is desperately needed but it has been reluctant to offer an alternative vision to that of the Government.

University staff and student unions believe that higher levels of taxpayer investment in universities is the answer.

Many minor-party and independent senators are open to students being charged more but want they safeguards.

THEY can point to the case of private health insurance, where the Health Minister must approve premium increases.

Independent Senator Nick Xenophon has told the Government he would be willing to allow universities to charge students between 10 and 15 per cent more while an independent inquiry into university funding is conducted.

When compared with their peers in other economically advanced nations, Australian students pay a lot of money to go to university.

Compared with other OECD countries, spending on higher education as percentage of GDP is 1.6 per cent. But public investment in higher education as a proportion of GDP is the second lowest just ahead of Japan.

Employees who are university graduates tend to earn between $300,00 and $540,000 more in taxes than other Australians during their lifetimes, according to Universities Australia research. That sounds like a reasonable return on an average government investment of between $40,000 and $45,000 per degree.

Tight budgetary circumstances mean the Government would struggle to keep boosting funding for universities as student numbers grow.

That’s why the Govern ment wants students to contribute more towards the cost of their own education through income-con tingent loans.

But when students fork out to go to uni versity, they aren’t just contributing to the cost of their own course, they are also providing a hand some subsidy to other universi ty opera tions, especially academic research.

Left-wing think tank the Australian Insti tute argues that if students were not forced to cross-subsidise research, their fees could be cut by between $1200 and $2050.

STUDENTS benefit from their universities being centres of research because it gives them the opportunity to be taught by top researchers based on campus. But research is conducted for a wider community benefit.

Vice chancellors attending a higher education conference in Canberra last week described funding uncertainty as “catastrophic”.

They used to complain that uncertainty about federal funding meant they could only plan 12 months ahead.

Now even that is impossible.

Government funding decisions announced in the May Budget are sometimes overturned in the December midfinancial-year Budget update.

It’s more than likely that by the end of this week, the vice chancellors will still be scratching their heads about how to plan for the months and years ahead.

Source: Adelaide Advertiser

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