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Universities warned to brace for funding cut

The Australian     |     1 July 2015

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Universities have been warned their funding will be cut by 20% almost immediately, an average of $32 million a university, if the government can get its higher education reform package through the Senate by the end of the year. The legislation,  rejected by the Senate in March, was due to be reintroduced during the budget sittings of Parliament  but has been left to “lie fallow” as education  minister Christopher Pyne presumably cultivates the Senate crossbenchers.  Most informed commentary is that the legislation has little prospects of passing in its present form.   So will the government amend the bill?  Perhaps, but it would be deprived of a double dissolution trigger if government does amend it.  We don’t think a double dissolution is likely – it’s way too complicated and high risk – but holding the legislation back keeps the option open, and Pyne himself  raised the prospect in his negotiations with the crossbenchers in March.

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SecuritisationThe sector has been thrown into turmoil after the federal Department of Education and Training published cluster funding rates for next year that applied the 20% funding cut. Under the government’s reform package, universities are expected to be able to recoup the lost funding by charging higher, deregulated tuition fees.

Vice-chancellors and peak groups were forced to seek clarification from education minister Christopher Pyne and his department last week as to whether the government intended to apply the 20% cut whether the legislation was passed or not.

“The (department) numbers assume a 20% funding cut,” University of Melbourne vice-chancellor Glyn Davis said. “So the whole sector has been ringing each other up asking what it all means.”

Davis said the sector was particularly concerned about the cut after the government withheld payments for two years under a Rudd government “efficiency dividend” for which legislation was never passed.

Universities expect to have that money finally repaid next month.

A 20% funding cut would see large universities such as Sydney and Melbourne hit a reduction in revenues of about $50 million to $60m, but regional and outer metropolitan universities, which are more dependent on teaching grants, would be particularly hard hit.

Davis said he had no idea why the department had published new rates if it had no intention of imposing them if the legislation were not passed.

“We assume it’s part of the game Mr Pyne is playing with the crossbench to try to win support for his legislation,” Professor Davis said.

Mr Pyne was due to reintroduce the legislation to the Senate in the winter sitting session, but he told radio station 2GB last week it would not be put forward until spring.

I’ve deliberately let the higher education reform debate lie fallow for a while because I wanted to give the crossbenchers and the sector some time to pause and think about how they defeated a reform for universities, students and Australia. We will come back in spring and reintroduce the bill because it is too important to let go.

Conor King, executive director of the Innovative Research Universities group, said the legislation had only a slight chance of passing.

“The legislation is not going to pass and if it were to pass it wouldn’t operate from January 1.   The department is working in the government’s hypo­the­tical world and updated the rates (to include the 20% cut).”

A spokesman for Pyne said publication of the funding rates reflected government policy: “2016 payments will be based on the rates in the act as it stands at the time. The government is discussing the practical aspects of implementation with providers.”

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See

Mistakes were made

Failure of the deregulation package and the way ahead

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16 April 2015    |    The failure of the government to carry the Senate on its proposed higher education reforms can be put down to the government’s arrogance and heavy-handedness and what would politely be called its disingenuousness. Parts of the package were not without considerable merit – for example, extending public subsidies to the students of non-university higher education providers is a long overdue fairness measure and extending them generally to sub-degree programs could considerably improve retention rates. But overall, the package was seen to be poorly conceived and fundamentally flawed – certainly in respect of total fee deregulation.

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