Student loan repayments feed federal cuts in public spending

The Australian government is using millions of dollars of income generated by the Higher Education Contribution Scheme to reduce its own spending on universities.

With more than Aus$500 million (Pounds 180 million) a year coming in from students repaying their HECS debt, the government has been able to claim it is maintaining grants to institutions while cutting its own expenditure.

The Labor opposition has accused federal education minister David Kemp of imposing a 21 per cent spending cut on universities over five years to 2001. Labor education spokesman Mark Latham said that, in the budget last month, total spending on all forms of education between 1996-97 and 2001-02 was planned to fall by 6 per cent.

During the budget debate, Dr Kemp announced that Aus$5.4 billion would go to higher education next financial year. This included operating grants, research and infrastructure spending. But when student contributions through HECS are deducted, this is much less. Amounts paid by government from tax receipts to higher education will fall from Aus$3.38 billion in 1996-97 to Aus$2.68 billion in 2001-02. "That's a decline of almost 21 per cent - a huge amount," Mr Latham said.

Students are expected to repay their HECS debt at the rate of about Aus$1.5 billion a year within three years. Accumulated HECS debt is nearly Aus$4 billion - 90 per cent should be recovered. The figures indicate that taxpayer contributions to universities next financial year will be down by more than Aus$100 million - from Aus$2.96 billion this year.