Cuts and fee rises ‘inevitable’ options for Australian budget

Australian universities’ support for keeping the system of uncapped student numbers “inevitably” means that a government seeking budget savings will look at measures such as cutting funding per place and raising fees, according to an expert who advised ministers on future plans.

Ahead of May’s federal budget, press reports have suggested that the government is set to drop the 20 per cent funding cut that has remained on the table since a proposal to deregulate fees – later abandoned – was announced in 2014.

But The Australian reported that there was little doubt among vice-chancellors that “students will be slugged with higher fees” and tougher terms on student loan repayments. A funding cut of 3 per cent – much less than the 20 per cent that has loomed over the sector – was also expected via an “efficiency dividend”, it added.

In October 2016, the Liberal-led government unveiled an expert advisory panel to help it develop a future plan for higher education, and tasked it with considering more than 1,000 submissions made in response to a policy options paper published by the government earlier that year.

The idea of deregulating fees on “flagship courses”, included in the policy paper, is reported to have been dropped after failing to win support from the sector.

Andrew Norton, higher education programme director at the Grattan Institute thinktank and former adviser to a Liberal education minister, was one of the panel’s four members.

“The pressure to save money in higher education is due to the government’s overall financial difficulties,” he said. “The discussion paper they [ministers] put out with the 2016 budget essentially said that they needed to save money, but would listen to views on how best to do that.

“Most submissions to the government on the discussion paper favoured keeping the demand-driven system [that uncapped student numbers], so there was little support for historically the most common way of saving money, freezing or reducing the number of student places.

“That inevitably displaces policy back on to the measures that are being talked about: a reduction in overall spending per place, students paying a greater share of the funding rate, and reduced spending on student loans through a lower threshold for repayment and/or a loan fee.”

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Mr Norton, who was co-author of a 2013 review of the demand-driven system for the government, which recommended that caps should not be reimposed, said that of the measures apparently under consideration, universities “would least want reduced spending per student place. The other measures would not affect their revenue unless student demand dropped as a result.”

Australia’s demand-driven system, introduced in 2009, has come in for criticism from the Group of Eight, which represents research-intensive universities. The group argues that it could put the higher education budget under unsustainable strain.

But Margaret Gardner, the vice-chancellor of Go8 member Monash University, who takes over as Universities Australia chair in May, recently told Times Higher Education that the system was the “right policy response” to the notion that the knowledge economy had arrived.

She also warned against funding cuts. Ministers “have to make a judgement about the level of that investment and we would say that it is vital and that the level of investment, which has been cut over recent years, should not be cut further”, Professor Gardner said.

john.morgan@timeshighereducation.com