28 June 2016
Stephen Parker, the soon to retire vice-chancellor of the University of Canberra, was an implacable opponent of the Coalition’s university deregulation package. But from being a red hot issue during most of the last term of Parliament, higher education has hardly figured in the election campaign. The Coalition has slipped the electorate a mogadon and seemingly gotten away with it. The mogadon will wear of after the election, should the Coalition returned.
Higher education policy during the Abbott government was highly controversial and probably a component of Tony Abbott’s undoing.
Not since the Dawkins reforms of 1989-90, if at all, had higher education been so prominent in public debate.
In his 2014 Budget, then Treasurer Joe Hockey proposed to reduce the Commonwealth Grants Scheme (CGS) to universities by 20%. But he would allow tuition fee deregulation, so that domestic undergraduate students could be charged up to the fee levels of international students, subject to a requirement to create a scholarship pool for students from low socio-economic (SES) backgrounds. Commonwealth-supported places (“HECS” places) were to be extended to sub-degree courses and to private providers.
A real rate of interest would be applied to graduate debtors, existing and future, but this was dropped in an attempt to get the measures through the Senate.
Most commentators agreed that fee levels under deregulation would have risen substantially, perhaps by up to 300%: far more than was required to replace the 20% cut to the CGS.
Relative absence of competition would give most universities the headroom to do this, and the international evidence was that universities do use up all the headroom they are given.
Students would be prepared to pay, it was said, because the income-contingent loan scheme blunted the price signal.
By the time students knew what they had done and whether their degree had been a good investment, it would be too late and they would be saddled with significant debt until middle age.
The opposition Labor party built a campaign around “$100,000 degrees”, and critics raised the spectre of the Americanisation of Australian higher education.
The measures were defeated twice in the Senate, higher education was nightly news, and the eyes of the university world were on Australia.
Given this background one might have expected higher education policy to be front and centre of the 2016 campaign.
But while there has been some distant yapping, this dog has not really barked at all. Why?
One reason may be that Liberal higher education policy is now obscure; perhaps deliberately so – a small target strategy.
Their policy document on education contains almost nothing on universities. It is claimed that “under the Turnbull government, funding for universities is at record levels” at over A$16 billion, but this is the result of an expanded sector introduced in the Rudd-Gillard era.
Similarly, it is said that support for students through the loan scheme is at a “record level”, but this is also the consequence of previous Labor government policies.
So, if we are to divine what the real Liberal higher education policy is we must dig into the 2016 Budget and interpret comments made by the education minister and prime minister during the campaign.
Liberals’ plan for a 20% cut to teaching grants
In the Budget on 3 May, and in an options paper released that night, it became clear that the 20% cut to the CGS – basically teaching grants – remains policy, albeit deferred for one year. The forward estimates assume it, and the return to surplus timeline – an election plank – relies on it.
After the election, we are told, consultation will be carried out over some options, such as fee deregulation for “flagship” courses and re-balancing commonwealth and student contributions.
We are assured, however, that “full” deregulation of domestic student fees has been dropped for good.
The best one can make of this is that Liberal policy has, as its starting point, a cut of 20% to university teaching grants (being the major component of higher education expenditure cuts amounting to $2.5 billion over the forward estimates), but the actual cuts might turn out to be less if students are required to pay more.
The increase in student payments might be softened if the 2014 expenditure policies to extend HECS places to sub-bachelor places and private providers are dropped, but the conclusion is inescapable.
Unless students are required to pay significantly more, universities will face major cuts.
Worse for universities now than under Pyne?
Arguably the 2016 situation is worse for universities than the 2014-15 proposals, because it is not at all clear that the cap on domestic student fees will be raised sufficiently to compensate for the 20% cut in government funding.
On average, it is thought, an increase in student fees of about 30% would be required to compensate for a 20% reduction in commonwealth funding.
Education Minister Simon Birmingham could not, however, bring himself to say the words “20% cut” when interviewed by David Speers on Sky News.
David Speers: “…The 20% funding cut remains in your forward estimates, is that right?”
Simon Birmingham: “And as I said to you before, that is recognising the fact that over the recent history, we’ve seen growth in spending on higher education run at twice the rate of the general economic growth. So there is a real financial sustainability problem there.”
David Speers: “So you do still want a 20% funding cut?”
Simon Birmingham: “We still certainly want to find savings in higher education.”
Until recently, it was possible that the new option of limited fee deregulation might still have put universities in a better position than the proposed cuts would suggest. Then the prime minister weighed in.
In the Leaders’ Debate on 17 June, Malcolm Turnbull made clear that deregulation would only be for a “small number” of flagship courses.
So what had been only an option was now upgraded to policy.
Given all this, why have Labor (and the Greens, and Nick Xenophon) not made more of an issue that was clearly playing well for them in 2014-2015?
After all, universities will face major cuts which will only be substantially alleviated if students are slugged instead. And if universities are not to be cut at all, the student fee increases could be as much as 30%, which sounds like the sort of thing that students might protest against. Are they just relieved it isn’t 300%?
One possible explanation is that it takes two to tango, and with the Coalition keen to keep higher education out of the campaign there is only so much traction to be had by repeated references to it.
The government presumably knows that it is unlikely to win any new votes in this area but it has considerable potential to lose existing ones, hence the silence.
Another explanation is the view that the two major parties have much in common on higher education.
Another is that news editors do not think higher education is sufficiently front of mind for electors to warrant extensive coverage in the general media, particularly if no one is occupying a university administration building at the time.
Another is that even with the 24/7 news cycle there are only so many column inches or air-time minutes available, and events in Europe and the US have been using up oxygen.
Another could be that Universities Australia, the peak body, continues to be in a difficult position and cannot mount effective opposition. UA likes to remain politically neutral, its member universities have divergent interests, and it wants to be on good terms with whoever is the incoming government. So attack ads in an election campaign are not really their bag. (Such anxieties do not seem afflict other bodies, like the Australian Medical Association, however.)
Whatever the explanation, it is a lamentable situation. Universities are vital to the future of a civilised and prosperous society. They face very significant cuts which could only be fully averted if students pay more. But Australian students already pay a higher proportion of the costs of their education than in much of the developed world.
One could be forgiven for not protesting in 2013, when Tony Abbott looked into the camera shortly before the election and said there would be no cuts to education.
But now we know there will be cuts if they are re-elected (it won’t be a breach of an election promise) and no one is protesting. It is a curious incident.