Budget special: higher education revolution

As a statement of the transformative power of education the budget is all but impossible to beat

Generational change

Some 15 years back then education minister David Kemp took a proposal to the Howard Government cabinet, based on the West Review of higher education, to create a voucher scheme, for deregulated undergraduate degrees and fees. It was knocked back about an hour after it was leaked. But now Tony Abbott and Christopher Pyne have done what Mr Howard did not dare and acted on the intent of the West Review. Mr Pyne has done just about everything Dr Kemp wanted back then and in his and Andrew Norton’s recent report on demand driven funding. We are to have a voucher system for enabling courses and undergraduate degrees under another name – with demand driven funding continuing. And the market will set the price, with universities free to charge what they like. What is more, the Prime Minister has backed him, committing uncapped amounts of money to higher education in a tight budget. People who see the values of education and the market as antithetical will understandably abhor this budget but as a statement of belief in the transformative power of education it is all but impossible to beat.

Clear signals

“Tell him that your brain is worth more than your wallet!” The budget message Melbourne University Student Union urges members to send to the VC.

Where’s the money coming from?

From Treasury first, followed by students. The budget extends the higher education loans program to cover sub degree courses, diplomas and advanced diplomas and to bachelor programs taught by private providers. This will cost around $820m over three years. Universities will also be free to set their own course costs – which students will also be able to borrow – and nobody knows how much this will add to the debt Canberra carries, until graduates start earning. And when they will do they will pay more back. For a start universities will increase their course charges – who knows by how much, but if the UK experience is any indication every comparable university in a discipline will match the price leader. Students will also be slugged with a bigger per centage of the cost than now occurs. The government says it is “rebalancing the Commonwealth’s contribution towards course fees for new students with a reduction of 20 per cent on average,” (from 2016 for new students, 2020 for existing ones). This is roughly what the Commission of Audit recommended but “average” has a multitude of meanings – an increase of 20 per cent in some disciplines (law, business, for example) will mean students are not far short of paying full cost.

Small but cruel-ish cuts

Universities and researchers are also taking smallish but significant hits. As expected, operating grant indexation will be based on the CPI alone from 2016. Numbers being crunched last night indicated universities that have agreed to 3 per cent plus pay rises per annum for the next four years will be short. Doctoral students will lose $173m over three years that is now allocated to support their study. If universities do not cover this cut graduate students will be able to access the student loan scheme to pay their fees. This may not save much money but it will generate a great deal of grief. The Australian Research Council also takes another hit. Following cuts to announce specific research projects last year the ARC will now lose $75m over three years as an efficiency dividend. (In contrast the Government promises the Medical Research Future Fund will grow to $20bn.)

And the winners are

University leaders and their colleagues who believe that the education they provide is so superior to the competition that students will pay a fair price to study with them will be delighted. Universities with strong research records will also be pleased that, as Mr Pyne all but promised last week, there is $150m for the National Collaborative Research Infrastructure Strategy and $139.5m for 100 new four year Future Fellowships. But most important is the capacity universities will have to raise and spend their own new money (less 20 per cent, which will go to scholarships for disadvantaged students) on research, or teaching as they choose. While Group of Eight VCs have got what they want on deregulated fees entrepreneurial vice chancellors of teaching focused institutions will look to expanding what they offer and build cross-sector partnerships, especially with lower cost providers.

 The shape of things to come

A couple of hours before the budget Open Colleges Australia was advertising Certificate III and IV personal trainer courses available on-line. They were also offering a 20 per cent discount for up-front payment. There is going to be a lot of this about.

Who loses

However you cut it students do. They will pay more for an education that the government says gives them the foundation for careers where they will earn way more than people without degrees. But whatever they earn they will start paying it back at a marginally higher rate and from a lower threshold, just over $50,000. Still, it could be worse the Commission of Audit recommended the basic wage (around $30,000) as the starting income for repayments. Everybody who believes that education should be funded for the public good not private profit will also deplore last night’s announcements. There are also cuts to the Higher Education Participation Program, which goes to the heart of the new model. Mr Pyne will argue the new scholarships funded by universities from increased fees address equity, especially in the bush. “This will especially help students from regional Australia who often face additional challenges when pursuing study after school,” he said last night. He will also undoubtedly argue that access to “starter courses” (my phrase not his) will help disadvantaged young people prepare for university. But this will not cut it with people who know how hard it is to increase participation among young people from low socio-economic backgrounds.

Now the selling starts

Since he started as minister Mr Pyne has been working on the lines he will use to defend the budget. He has argued that education increases income and it is accordingly fair that students pay more. He has pointed to demand driven funding as creating a place for everybody able and he regularly reminds us that the loan scheme ensures nobody is excluded by course costs. Given he will have the support of many (most?) vice chancellors and some of their lobbies Mr Pyne should be able to starve opponents of oxygen. The challenge for the National Tertiary Education Union and student groups is to explain how many students will graduate owing a big debt and that universities will now be run like businesses.

An offer you can’t refuse

Austrade demonstrates why it is essential to all education exporters. “Promote your institution at Austrade’s Future Unlimited exhibition in Mongolia in September.”

 Informed reporting

The prestigious Poynter Journalism School has updated its pyramid of journalistic competence, very relevant indeed today as hacks (who me?) struggle to interpret the budget. Poynter nominates judgement, story telling, critical thinking and evidence as the foundations, which all make sense. But surely for policy and political reporters the core disciplines are economics, public policy and a bit of political history. As well as knowing how to spot the occasional sociopath.   Pay to publish A reader says it isn’t just Australia where nobody really knows what institutions spend on publication fees (CMM yesterday). However she points to the US National Institutes of Health as an indication of the enormous amounts of money involved. A few years back the Institutes alone were spending $US 30m plus on publication fees.

Know something the world needs to know? Anonymity guaranteed but lots of questions asked, stephen4@hotkey.net.au

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