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GDP spending on higher education set to fall to half OECD average

The Australian    |   13 May 2015

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Spending on higher education as a proportion of GDP will fall from 0.56% in 2015 down to 0.48% in 2018, well below the OECD average of 1%, an analysis of the 2015 Budget figures has determined.

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Budget 2015 (2)According to Vin Massaro, an honorary professorial fellow with the  Centre for the Study of Higher Education, higher education spending is slated to drop from $9.3bn in 2015, to $8.9bn in 2016, $9.1bn in 2017 and back to $9.3bn in 2018, representing a drop in GDP every year.

Massaro told The Australian  that “we need to have a serious conversation about the sustainability of uncapped enrolments if the per capita funding levels are going to continue to slide and each place is to be funded at the same level irrespective of the institution and its research performance.”

While the budget was based on an assumption the government’s reforms would pass the Senate, the Grattan Institute’s Andrew Norton says there would be both positive and negative consequences on forward estimates of the reforms not passing.

The reform package had two significant costs: added subsidies from more students becoming eligible for Commonwealth supported places, and added doubtful HELP debt from fee deregulation,” writes in his Commentary from Carlton blog.

“From this perspective, the budget is overstating likely higher education spending.”

However, (it) is also assuming that per student subsidies will be lower than in fact they will be, as the government is still pursuing per student funding cuts averaging 20%.”

He said the previous government’s efficiency dividend also appeared to be included in the budget estimates.

“From this perspective, the budget is understating likely higher education spending,” he said.

While net effects of the changes is difficult to calculate from the information presented in the Budget, Norton says “the forward estimates understate likely government spending on the CGS by between $2.5-$3.7bn”.

“In other words, universities will receive between $2.5bn and $3.7bn more than the budget papers suggest.”

While the government sliced $300m from the Sustainable Research Excellence (SRE) program yesterday, universities will not be badly affected because of indexation increases for the fund.

Education department papers, even with the cut, SRE funding will grow from $193m in 2015 to $210m in 2016 and up to $229m in 2019.

 

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