Australia's Reform: Increasing Equity Through Cuts?

There is something cynical about a proposal that claims to make higher education more equitable for all by reducing funding.

June 13, 2017

Higher Education in Australia faces a substantial disruption in how it develops in the wake of proposed changes presented by the Minister for Education, Simon Birmingham. Underpinning the proposal is a government saving of nearly 3 billion dollars. Spinning the word “savings” makes it sound like a good thing but universities are questioning how cutting funding to higher education will benefit anyone in the future.

The 2.8 billion dollars of “savings’ will primarily come from charging students more— the maximum student contributions will rise by 1.8 % per year between 2018 and 2021, ultimately reaching 7.5 % more than it is now. At the same time the federal government contribution will fall by a comparable amount. Students will be paying more for their degrees.

Australian students will contribute to the cost of their degree by way of the Higher Education Contribution Scheme. The mechanism is simple—once a graduate is employed with earnings reaching a determined amount, the Taxation Office deducts an indexed amount before the debtor receives it. This financial year, the compulsory repayment threshold is $54,869. Under the new proposal, the threshold will fall to $42,000 in 2018. Not only will students have to pay more for their courses, they’ll have to start paying it back sooner. Bear in mind that Australia’s minimum wage is $34,250.00 so the lower repayment threshold doesn't leave much breathing space.

But wait, there’s more! In Australia tuition fees are subsidised through the Commonwealth Grant Scheme (CGS). The government intends to cut funding by 2.5% in 2018 and another 2.5% in 2019; then the government will allocate another 7.5% according to a set of, as-yet unspecified criteria, but obviously intended to leverage influence in the sector.

And, to make a complete mockery of Australia’s positioning itself as the “clever country” the number of Commonwealth Supported Postgraduate places will be cut by 10% (translating to 3,000 across Australia). CSP places will be allocated according to demand for places and other criteria, again as-yet unspecified. 

It seems somewhat ironic (being charitable) that the proposal trumpets an emphasis on increasing equity in the system. Equity means ensuring that all qualified students have opportunities to progress productively through the system with appropriate support when needed. It is difficult to see how cutting spending and increasing student debt burden will do that.

The country’s elite universities point out that the economic rationale for the proposal is “shonky”. The CEO of the Group of Eight (Australia’s equivalent of USA’s Ivy League), Vicki Thomson, points out that the sector contributes around $22 billion annually to the national coffers and should be considered a “source of revenue” not a cost.  She argues that the current funding model for research and teaching of local students is significantly dependent on international students, philanthropy and business deals and will ultimately become unworkable. Australian research universities spend a combined amount of around $6 billion on research but receive a maximum of $2.5 billion from the government for research funding. It doesn't take an expensive degree in accounting to recognize that that this isn’t going to be viable in the long term.

There is something cynical about a proposal that claims to make higher education more equitable for all by reducing funding. It seems to have little to do with future-focused education and more with economic grandstanding. In a wealthy country like Australia, access to university should be available to all who are capable of being successful—creativity, innovation and expertise should be nurtured.  These proposals make that much more difficult.



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