AUSTRALIA: Sigh of relief at budget outcome

Facing a multi-billion dollar black hole in its budget strategy and the prospect of oblivion at the next election, Australia's minority Labor government nevertheless brought some joy to the nation's vice-chancellors and their academics when it handed down its annual budget on Tuesday.

Although the government had warned it would present a "tough" budget and bring the country into surplus within three years, despite predicting a AUD$23 billion deficit (US$25 billion) over the next 12 months, the government has treated universities quite well. Indeed, it appears generally to have renewed its support for a reform programme outlined in 2009 following a full-scale review of the entire higher education system.

One of those reforms begins next year when the government will lift a cap on the number of students a university may enrol. Fears that the government would not meet this commitment, leaving universities with thousands of extra students with no government subsidies, proved unfounded and it now says universities will be funded for all students enrolled from 2012.

As well, spending on universities will in future be indexed to maintain its real value while funding for the indirect costs of research will be increased to 50% of the competitive research grant pool.

Because the government relies on the support of three independents based in rural areas, regional universities and metropolitan universities with regional campuses came out the big winners. They will receive an additional $110 million over the next four years to meet the higher costs of delivering education.

The vice-chancellors' lobby group, Universities Australia, described the budget as "positive and supportive of higher education" and said it was pleased government remained committed to university education and research as key drivers of Australia's future prosperity and well-being.

"The budget provides reassurance and stability for universities, enabling them to plan for sustainable growth," UA Chair Professor Peter Coaldrake said. "[The government's] commitment to expand the number of university places according to student demand, and improve indexation of core university funding from 2012, have been honoured."

Coaldrake said the reforms were critical to the university sector meeting the government's participation and equity targets for higher education, including having 40% of Australia-s 25-34 year olds attain a qualification at bachelor level or above by 2025.

Faced with overwhelming opposition from the medical profession, scientific groups and the general public, the government also backed away from imposing heavy cuts to medical research funding. Cabinet leaks in early March implied that the government planned to cut $400 million from the National Health and Medical Research Council, which funds the major portion of Australia's medical research.

Over the following eight weeks it appeared at times as if the entire academic workforce, along with medical and health organisations, had united to condemn the planned cuts. Last month, more than 12,000 Australians took to the streets in 'Rallies for Research' to protest against the cuts. The government received hundreds of letters backing medical research along with a petition with 12,000 signatures.

The research and general communities had expressed concern that cutting the medical research budget would delay or halt patient access to new treatments, diagnostics and preventive medicines for cancer, heart disease, diabetes and a myriad of other conditions.

The outcry clearly had its effect with the budget papers showing the government had responded with funding for the council maintained at $850 million for 2011-12.

Professor Doug Hilton, Director of the Walter and Eliza Hall Institute in Melbourne, had led the opposition and said he was delighted that the government was committed to continued investment in medical research.

But while medical research has been protected, other science initiatives were not so fortunate: Australia's Cooperative Research Centres programme faces a cut of $33million over the next four years and spending on the Collaborative Research Networks scheme was reduced by $21 million in the final two years of forward estimates.

Despite budget estimates indicating four-year funding of $3 billion for the giant Commonwealth Scientific and Industrial Research Organisation, the CSIRO faces its first cut in a decade next financial year. Environmental and climate science suffer strategically scattered cuts and agricultural research funding will be reduced by more than 8%, affecting core areas such as grains, meat, dairy and horticulture.

But the government has committed billions to boost vocational education and training and will recruit more skilled migrants from overseas to meet a huge shortfall in highly trained workers, especially in the resources sector where mining is experiencing an ongoing boom. States prepared to reform their technical and further education colleges stand to gain $1.75 billion while industry will receive $560 million to tackle the skill shortages.

The government's advisory body, Skills Australia, will be expanded to create a national workforce and productivity agency to operate a fund to deliver 130,000 new training places over the next four years.

A professor of accounting at Deakin University, Graeme Wines, was sceptical of the budget and its forward estimates, arguing that the figures set out by the government were unreliable. Wines noted that the federal budget three years ago projected a surplus for each of the following two years of $19 billion whereas this year's budget presented them as deficits, not surpluses, amounting to $49 billion and $23 billion respectively.

"Hence, the total turnaround in the budget outcome for the two years from that projected three years ago, amounts to $110 billion," he said. "Budget credibility must increasingly be questioned given the many uncertainties inherent in forward estimate figures."

If he's right, universities may find the future is not quite as rosy as they first imagined it would be on Tuesday evening.