Australia’s fee shake-up is overly complicated and inconsistent

The Australian conservative government’s revised Job-ready Graduates: Higher Education Reform Package 2020, uploaded on 22 June, comprises proposals for substantial changes to the country’s higher education funding.

The plan has multiple layers and will affect several areas of funding: financing a substantial expansion of the number of students; aligning the financing of disciplines with their costs of education; redressing the major under-servicing of people in regional and remote areas; and further concentrating on serving the narrow economic interests of industry.

This makes the package complicated and, in some respects, internally inconsistent. The fragmented composition of Australia’s Upper House makes it likely that at least some parts of the package will be legislated, while the fate of the big financing proposals will be shaped by the political and policy debate now developing.

For a policy that so emphasises making university funding arrangements “more transparent and accountable”, the government’s proposed financing arrangements are remarkably opaque. It seems that the government proposes to increase the number of commonwealth-supported places by about 6 per cent by 2023 and by about 16 per cent by 2030.

An earlier version of frequently asked questions (since replaced), titled “Better university funding arrangements: more transparent and accountable funding”, indicated that the government proposed to finance an increase in places partly by cutting its funding to institutions and partly by increasing student tuition fees by an average of 8 per cent. This would increase students’ average share of course financing from 42 per cent to 48 per cent.

The government makes great play of its proposal to “incentivise students and universities to focus on work-relevant qualifications” and to “incentivise study in areas of industry need”.

Accordingly, it proposes to cut student fees for several favoured disciplines, such as agriculture and mathematics (each by 62 per cent), teaching, nursing and languages (45 per cent), and engineering and sciences (21 per cent).

Conversely, the government proposes to discourage enrolments by increasing fees by a massive 113 per cent for humanities, communications and behavioural sciences, and by lesser amounts for other unfavoured disciplines.

This has been loudly criticised on policy grounds for devaluing the humanities at a time when they are as crucial as ever, and for the conservative government apparently extending its ideological culture war.

It is also incongruous that the government is proposing that humanities students pay higher fees than medical students.

In addition, the proposal has some severe technical flaws. First, there is no evidence that even substantial changes in fees backed by income-contingent loans have any effect on enrolments. In fact, the evidence shows quite the contrary.

Australia introduced fees and income-contingent loans in 1989, when the same fee was charged for all disciplines. In 1997, the government introduced three fee levels based on disciplines’ expected earning potential, raising fees for some disciplines by 124 per cent.

In 2005, fees for all fields other than education and nursing were increased by 25 per cent; in 2008, fees for business were increased by 17 per cent; in 2009, fees for sciences were cut by 44 per cent; in 2010, fees for education and nursing were increased by 25 per cent; and in 2013, the government increased fees for sciences by 85 per cent. None of those changes in fees was reflected in enrolments.

The second technical flaw is in the proposal’s expectations of degree employability. In 2019, the full-time employment rate for science and mathematics graduates, which the government claims are “work relevant”, was lower than the rate for humanities; not markedly better than the rate for other unfavoured disciplines such as psychology; and much lower than the rates for business and law, which the government also apparently wants to discourage.

Employment rates for science graduates have been consistently about 10 percentage points below the average employment rate for all disciplines for more than a decade. If there is a problem, it is not with universities’ supply but rather with employers’ demand for science graduates.

Third, the proposal is also trying to correct course costing. The government proposes to cut institutions’ total per student funding by more than 16 per cent in science, engineering and mathematics – areas of study that it says it wants to encourage – and it proposes to increase by 15 per cent institutional funding per student for business and law – fields that it apparently wants to discourage. Further, it apparently proposes to discourage institutions’ enrolments in the humanities by increasing their per student funding by 19.7 per cent.

The government reaches this apparently perverse position because it also seeks to align total institutional funding with the findings of a costing study it commissioned last year. That study found that institutions had very different costs for teaching the same discipline, but that, on average, their costs were substantially lower than current per student funding levels in STEM and nursing; and that humanities, business and law were on average substantially underfunded.

Part of the government’s cut to institutions’ funding would be redirected to a new National Priorities and Industry Linkage Fund. The department’s discussion paper doesn’t state the fund’s amount, but the government’s invitations for nominations for a panel to design the fund’s operation states that it would be worth A$900 million (£498 million). The fund would develop “internships and practicums between universities and industries in science, technology, engineering and mathematics”, and support “engagement with industry, development of industry-relevant course material, optimisation of course mix for local economies”.

This fund and the government’s insistence that universities develop “job-ready graduates” signal yet more shifting of employee induction and on-the-job training responsibilities – programming that employers in Australia, Canada, the UK and the US have cut by 40 per cent over the past two decades – to publicly financed higher education.

Gavin Moodie is an adjunct professor in the department of leadership, higher, and adult education at the University of Toronto.