Senate inquiry into uni fee deregulation

31 October 2014

“Pass higher education bill with amendments”


The Senate inquiry into the government’s proposed suite of changes to higher education has now reported. The committee came up with five recommendations, some of which were foreshadowed by Education Minister Christopher Pyne and by media reports but which Pyne has since discounted.  Gwilym Croucher summarises the report and the issues that confront the crossbenchers who will decide the outcome.


In the wake of a Senate committee report, Christopher Pyne faces an uphill battle to get his higher education legislation through. AAP

In the wake of a Senate committee report, Christopher Pyne faces an uphill battle to get his higher education legislation through. AAP

What does the report say?

The committee, chaired by Nationals senator Bridget McKenzie, recommends that the bill be passed, but in doing so also suggests some adjustments to the bill. It first recommends that in developing the guidelines for the Commonwealth Scholarship Scheme, the government should address:

… financial barriers faced by students from low SES [socioeconomic status] backgrounds and regional communities.

The report calls for preferential access for students living away from home and those having faced low-socioeconomic disadvantage.

The report goes on to recommend that the government develop a structural adjustment package to provide funds for providers to transition to a “fully deregulated system”. As has been widely speculated, the report suggests this tailored assistance should cater to regional and rural students and students facing disadvantage.

A key recommendation in the report is the re-examination of the HELP indexation rate, which the current bill proposes to be matched to the cost of borrowing for the government (the 10-year bond rate).

Alongside this, the report recommends that HELP debt be recovered from Australians living overseas, a measure explored by Andrew Norton.

The Greens and the ALP both provide dissenting reports. The Labor senators on the panel, as was to be expected from their public comments, argue that the Senate should reject the bill in its present form. In doing this, they propose that the government introduce a separate bill, which will “deal with the non-controversial matters”.

By this, the Labor senators mean extending funding for research through the Future Fellowships scheme, changes to HECS for certain New Zealand citizens and the change of name for Federation University. The first of these is most problematic. Pyne has indicated that funding for research announced in the budget may not be forthcoming if the bill fails to pass. This is a situation that would have deep ramifications for Australia’s research effort and clearly something no side wants to be seen as responsible for.

The Greens go further in their recommendations, suggesting too that the bill be rejected by the Senate but calling for an inquiry to investigate the benefits of funding increases and, to match long-held Greens aspirations, the abolition of student fees altogether.

The committee’s report recognises that while the demand-driven system is an historic achievement, it comes at a significant cost to public revenue. The main report and dissenting reports acknowledge in different ways that the current state of affairs is ultimately unsustainable.

So what does this all mean?

The prospects for the bill rely on the support of the crossbench senators. Members of the Palmer United Party have indicated that they do not support deregulation. Their leader, Clive Palmer, said on Tuesday that he is strongly opposed.

It would appear the fate of the bill lies in this man’s hands

If the Pyne package goes down, it does not resolve the key challenge for Australian higher education: ensuring it is fair and sustainable. There is no getting around the fact that good higher education is a substantial investment for any society, especially in a mass system like ours.

Why does higher education need additional funds per student? Although subsidies per student have gone down, the system is still operating. Universities are still solvent.

The answer in part is that higher education is very labour-intensive. There is the promise that technology will one day mean that universities and other providers can do more with less, but this is not an immediate option.

Universities, like pretty much any public or private organisation you can name, can be more efficient. But this does not mean they are inefficient. Unpredictable funding cuts, competition in the international student market and rising student numbers thanks to the introduction of the demand-driven system have forced universities to do more with less over the last few decades.

As the system has expanded, higher education in Australia has relied on different sources of income, primarily domestic fees through HECS and international student fees.

Who should pay for higher education?

If the Palmer United Party and the Greens were to make higher education free again for all students, it could probably be done for A$6-7 billion a year (depending on what assumptions are made). This is a modest cost to pay for Australia’s future skills needs, bearing in mind Australia’s welfare spend of $146 billion and a defence budget of $29.2 billion. Out of a Commonwealth budget of around $400 billion, free student education seems possible if you really want it.

However, there is wide support for the idea that students should contribute something toward their higher education, and that the present HECS-HELP system is a fair way to do it.

The question of how much they should pay is important, but must be viewed as part of a wider debate about how Australia ensures it has a viable higher education system for students to attend.

Implicit in the argument about student debt is an assumption that a high-cost degree neither is fair nor represents value for money to the individual student.

It is Australia’s expanding system that is central here. If higher education is an elite cottage industry with fewer than one-tenth of the current student numbers, it can be very expensive and inefficient to run but is forgiven because the total cost to the public is low. When the system is built for well over a million students, the public have different expectations.

Both the cost to the individual student and the total cost of maintaining a quality system are important. Both proponents and opponents of the changes have told us so, and both argue for what they see as a fair deal for all. Deregulating fees is one mechanism, but not the only mechanism.

It is hard to say exactly what the cost of delivering higher education is, and there have been very serious attempts. Both the Bradley review of the future of higher eucation and the Lomax Smith review of base funding provide useful insights but not definitive answers. Proponents of deregulation argue the market can deliver a fair deal.

But irrespective of what experts conclude, it is the wider public that need to be convinced of what they and students should pay. There is limited public support for dramatically increasing public funding to higher education but wide support for access and participation. More students with less funding will ultimately mean education quality suffers. A thorny problem indeed.

This article by Gwilym Croucher  (University of Melbourne) was originally published on The Conversation.

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