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A few cuts, no thrills for unis in 2016 Budget

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4 May 2016

Budget 2016

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The government has pushed consideration of proposed university reforms, including a 20% cut in funding, out beyond the election, until 1 January 2018 and it has ruled out full fee deregulation.  It has released an options paper, to guide a consultation process, canvassing a range of alternative fee measures.

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The 2016 Budget also sees an efficiency dividend of $1.2 billion on legislated dropped but the Higher Education Participation and Partnerships Program has been cut by $152 million to $553 million over four years.  The Office of Learning and Teaching has been abolished, with the resulting $18 million in savings going to TEQSA and the Quality Indicators in Learning and Teaching website.

The deferral of the university reforms, pending the outcome of a consultation process, is chimerical, intended to neutralise, as far as possible, university funding and student fee subsidies as an election issue.  As quite clearly set out in the options paper, a re-elected Coalition government can be expected to enthusiastically pursue its agenda of reducing public funding to higher education and shifting a greater proportion to students, merely by means other than those originally proposed by Christopher Pyne.

As stated in the paper, in finalising legislative reforms the government will need to adjust subsidy and student contribution rates to meet the financial sustainability savings outlined in the Budget.  Over $2.5 billion dollars in unlegislated funding cuts remain stubbornly on the books, despite having failed twice to pass the Senate in this term.  The options presented for the next term, “dependent on other structural savings or expense measures adopted as part of these reforms” (which provides a little wriggle room as to the precise form of reform), are:

  • reduce the Government’s contribution by 20% on average, as first proposed in the
    2014-15 Budget
  • a “small” reduction in the government grant per student, and a “small” increase in the maximum capped student contribution that institutions may charge, such that students and taxpayers contribute equally to the cost of higher education courses (on average).

Sounds a lot like the last plan, with the meaning of “small” being in the eye of the beholder.

In giving universities the “flexibility to innovate”, the paper refers approvingly to the notion of “flagship courses”, as originally proposed in the report of the Review of Base Funding in 2011. Under this scheme, universities would be:

….given the freedom to set fees for a small cohort of their students enrolled in identified high quality, innovative courses.  This would deliver the benefits of differentiation, excellence and innovation among universities while giving certainty to all Australians that they could still access fee capped places.

As to non-flagship courses, while fees would not be fully deregulated, they could be partially deregulated by a substantial lifting of caps: and it would need to be substantial (50% or more?) to allow for the emergence of the innovation and differentiation between universities which purportedly drives this reform agenda (rather than budget issues).

Still, blessedly perhaps, graduates are certain to have somewhat more time to pay down their student debt.  The consultation paper presages changes to FEE-HELP, including dropping the repayment threshold from around $54,000 to something in the range of $40, 000 to $45,000.  There’s also some likelihood of the introduction of a hefty loan fee.  The paper notes that, currently, HECS-HELP loans have no loan fee, while FEE-HELP undergraduate loans and VET FEE-HELP loans attract a 25% and 20% fee respectively.  While the government has previously proposed to remove the loan fees to create a level playing field for students and providers in all sectors, the paper notes that “charging a loan fee for all loans would provide an efficient mechanism to help defray the costs of running HELP”:

….a loan fee of 20% as currently applies to VET FEE-HELP would enable the Government to recover most of the costs associated with debt not expected to be repaid. It would similarly provide for greater equity and reduce the cost pressures for undergraduate FEE-HELP students but with a greater increase in costs for students in Commonwealth supported places.

As Conor King of the IRU suggests, take a look at Andrew Norton’s (Grattan Institute) proposals for a useful guide to what is possible, including recovering debt from deceased estates.

The 2014-15 Budget proposed a number of measures to expand opportunity and choice for students, including the extension of Commonwealth support to all undergraduate courses at all registered higher education providers and the uncapping of places in sub-bachelor courses at public universities. While these reforms are still provided for in the Budget, extension to non-university providers is seemingly off the agenda, “noting that growth in enrolments has continued to increase at non-university providers despite the absence of Commonwealth funding” (which won’t matter as much, if at all, if a loan fee is introduced for FEE-HELP and fees hiked).  It’s also looking that uncapping places in sub-bachelor courses is unlikely in the near future.

The government is appointing an expert panel to advise it on reform options.

Written submissions can be made until 25 July 2016.

 

See
Driving Innovation, Fairness and Excellence in Australian Higher Education
Uni options paper key to resolving policy tug-of-war – Universities Australia
Budget provides higher education clarity from the Government – IRU
RUN welcomes consultation but cut to HEPPP will hurt regions – RUN
$50 billion infrastructure package but investment in skills ignored – TDA
Budget 2016: No plan for higher education except to cut funding and make students pay more – NTEU
Federal election caution puts major reform on the backburner – The Australian

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