The Turnbull Government has all-but abolished the demand driven system, introducing a cap on public funding for undergraduate student places. And there is a freeze on Commonwealth Grant Scheme funding, with the 2017 amount, cemented for the next two years. All up, yesterday’s Mid-Year Economic and Fiscal Outlook estimates these, and other less expansive changes, will save $2.2bn over the forward estimates, down $500m from the original plan in the May budget.
From 2020 universities must meet unspecified performance targets to qualify for an increase in public funded places. The base for any increase will be 2017 actual enrolments, with growth set at the per centage increase of the working aged population.
The new cap on funding for places returns the university system to the ad hockery prevailing before demand driven funding, when universities could “over-enrol” as many students as they chose but only receive discounted Canberra cash per head.  Under the new arrangement universities will be able to enrol as many extra students as they choose but the government will only pay them the student contribution to the cost of the place.
As expected, students will also begin to repay their study debt once they reach a lower income than now, although it is $45 000 instead of the $42 000 base announced in the budget. But there is no increase in payments under the HECS HELP loan scheme.
The government has abandoned a range of proposals it did not have the numbers to pass in the Senate, including a proposed 2.5 per cent cut per annum in CGS funding for next two years. It has also dropped a plan to require students to borrow for enabling courses.
However, the budget proposal to expand sub degree places in universities, which some welcomed is also gone. These places, along with what the government calls 3000 “under-utilised” Commonwealth supported masters places will be “better aligned” with student demand.
MYEFO has left research funding untouched, yesterday signalling its continuing credentials by announcing $70m for the National Computational Infrastructure to buy a new super computer. And in-line with its expressed support for disadvantaged student programmes, the government defied widespread media predictions to leave the Higher Education Participation and Partnerships Programme in place.
While university lobbies focused on funding and capped student numbers, a modified version of the budget proposal many feared most attracted little attention yesterday. In May, the government proposed to tie public funding to performance measures, expected to focus on each university’s undergraduate attrition rate and employment outcomes. The new plan is to reward universities which meet performance criteria by allowing them to increase funded enrolments. Measures of success are not decided, with the government expected to consult universities in the new year.

The Innovative Research Universities spoke for the system yesterday in condemning MYEFO;

“the government’s planned freeze on university funding is a simple act of revenge that ignores the cogent reasons the Senate has not passed its last higher education package.  Revenge is a dish best not eaten.”

The IRU argued demand driven funding is not yet dead, but in its newly infirm state incapable of continuing a job still to complete.  “Higher education is more available but it remains badly distributed.  A funding freeze, and then limited increases according to national population growth, will embed that mal-distribution for a further generation –  if allowed to go ahead.” The IRU called on the Senate to defend demand driven funding, which is still set in legislation; “allowing a future government to see sense and embrace universities as essential to building the capabilities required in the Australian workforce of the future.”

The Australian Technology Network also deplored the big policy switch in yesterday’s announcement.

“Effectively signalling the end of the demand driven system, with no legislation or debate represents a significant and retrograde step” ATN Executive Director, Renee Hindmarsh said.

“Debate about higher education funding has largely focused on the increased costs since the introduction of the demand driven system. We accept that higher education does not exist in an economic vacuum. But this debate should also recognise the social and economic contribution universities make to society, yet this has been overlooked.”

Peak body Universities Australia was quick to denounce the package yesterday, saying the funding freeze will force universities to cut student numbers.

“Under this freeze, even if a university simply seeks to maintain its current number of students, this would mean a real cut, … for universities that are still growing their student numbers to meet the needs in their local communities and regional economies, this will be an even deeper cut,” UA chair and Monash U VC Margaret Gardner said.

The “effective cut” of $2.1bn “would result in a smaller share of Australians having the chance of a university education in future. The decision to uncap student places in Australia was an historic reform that lifted skilled graduate numbers to meet Australia’s labour force needs and contributed to social inclusion,” she said.

However, UA quietly welcomed the survival of equity programmes and no reduction in research funding.

The Regional Universities Network was even unhappier than other groups, discounting the government’s announcement of eight regional study hubs, with president Greg Hill (University of the Sunshine Coast VC)  warning that an end to demand driven funding will undermine good policy.

“The government has encouraged the growth in university places through the demand driven student system, and our universities have responded by building new infrastructure, putting on new courses, and undertaking outreach activities to lift aspiration for university study. This will go to waste because universities will not be able to enrol more students,” Professor Hill said.

There was less than little support for the government and that was qualified. The Australian Academy of Science welcomed the NCI’s new computer (above) but added; “the Academy remains concerned about the potential impact of the higher education measures on both the pipeline of STEM graduates and vital research that is undertaken in Australian universities.”

But it was left to the Group of Eight to let the world really know what some universities think.

“Today is the benchmark of diminished higher education policy, from a government determined to bypass the legislative process that so rightly indicated majority opposition to the ill-considered cuts to university funding; savings presented as reform rather than the blatant cuts they are, and which today they are so clearly exposed to be” chair and University of Queensland VC Peter Hoj said yesterday.

Professor Hoj also slammed the government’s plan to allocate extra undergraduate places based on performance measures.

“It is all very well to go on about performance measures and visibility of our decisions and successes but it is our universities who can get no sense re what the government plans in these areas. It is the government that remains opaque – not us.”

However, the Group of Eight, not a strong supporter of the demand driven system, did not mention the cap on Commonwealth funded places.

Yes CMM said last Friday’s was the last edition for the year – but who can resist MYEFO!  However this is definitely it – look for the next issue on January 16.