World insight: Australia defers HE funding reforms as loan debt mounts up

After 18 months of heated debate, bold reform of Australia's higher education funding was deferred until at least 2018 in the nation's federal budget last week while public consultation takes place. 

Thus, the pace of policy reform has come near full circle for the Liberal coalition government, elected in 2013 proclaiming there would be no change for universities for at least two years. After less than a year, education minister Christopher Pyne surprised everyone with a comprehensive reform package, which would have thrown open Australia's much-admired public university student loans (HELP) to private colleges and preparatory courses, and deregulated fees.

This would have allowed each institution to set its own prices, to recoup income lost from a 20 per cent cut the government was determined to make to per-student grants. 

While vice-chancellors were near united in their support of deregulation, the proposal was pilloried by the Labor opposition and education unions for threatening young Australians with "$100,000 degrees". What followed was the most animated university policy debate seen in Australia since the 1980s. Pyne's flamboyant advocacy for reform was relentless, but not enough to persuade cross-benchers in the Senate, where the reforms were eventually blocked. 

With a change of prime minister in late 2015, Pyne moved to the science portfolio. His successor, Simon Birmingham, clearly sees politics more as the art of the possible. Birmingham's deferral of the package has deftly defused tempers, and the discussion paper he has released makes large across-the-board fee rises now seem less likely. 

At the same time, his manoeuvre navigates at least part of the Senate problem. A reform introduced without consultation or mandate was the complaint repeatedly voiced by independent senator Nick Xenophon, and given that Xenophon is predicted to hold the balance of power in the Senate after the coming election, public consultation during the election campaign seems calculated squarely to neutralise his objections. 

Birmingham's discussion paper, Driving Innovation, Fairness and Excellence in Australian Higher Education, is an insightful document. It recognises that two central problems face Australia in present higher education funding arrangements: the rapidly expanding cost of the sector, which for seven years has grown at twice the rate of the economy thanks to a “demand-driven” system in which limits set in the number of students the government would assist were removed; and the exploding national debt from unpaid HELP loans, currently increasing at A$1.7 billion (£866 million) per year, and projected to be nine times worse within a decade. 

On the latter – reducing the national HELP debt – the paper proposes, among other things, reducing the repayment threshold, which would bring Australian student loan repayment arrangements more in line with those in the UK and New Zealand. 

On the former – reining in the growing sector cost – the paper is more controversial. The 20 per cent cuts would proceed, with universities making up the income loss through "flagship deregulation", in which each university could deregulate a small cohort of high quality and innovative courses, and through raising student contributions from the current average of 42 per cent to 50 per cent of their course costs.

This would not be a draconian increase and would come after a decade with no increase in student contributions in Australia. Nevertheless, it has not been welcomed by student organisations.

Meanwhile, in Canada's budget this year, Canadian universities were granted C$2 billion (£1.1 billion) more over the next three years, recognising their changed circumstances and growing importance to the economy and the international innovation agenda.

In Australia, where conditions are similar, the Liberal budget has resolved a university funding change of the same quantum, just in the opposite direction: A$2 billion less, not more. Notably, in this the Labor opposition is little different from the Liberals, having itself projected cuts just as deep when in government. 

Sadly, there seems no will on either side of politics in Australia to address the root cause of the sector's cost expansion. This would mean bringing enrolment numbers back under control, through rethinking what might be a better approach than the “demand-driven” system to lifting the participation of the disadvantaged. Evidence that success at university depends more on effective preparation at schools than on eased university entry seems to be ignored. 

Essentially, both sides of politics seem resigned to seeing available funding spread ever more thinly – rather than focused on adequately supporting a finite number of students, chosen equitably from all parts of society as those with demonstrated aptitude to succeed at university. In Australia, shrinking per-student public support for universities appears here to stay.

Warren Bebbington is vice-chancellor of the University of Adelaide.

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