Higher education alarmed by A$2.3 billion cut

Alarmed vice-chancellors across Australia face a A$900 million (US$940 million) cut to their universities’ revenues with a further A$1.4 billion to be slashed from higher education over the next four years so that the federal government can generate some of the A$14.5 billion it plans to allocate to schools.

Professor Glyn Davis, chair of the main lobby group Universities Australia, said the cut was on top of A$1billion taken from the sector’s research budget less than six months ago through the mid-year economic and fiscal outlook process.

Davis said the government’s latest decision would place a severe strain on institutions that had been encouraged to expand enrolments so as to boost access to higher education. He said the further cuts were at a time when Australia sat “disturbingly” 25th out of 29 advanced economies for public investment in universities.

The surprise announcement at the weekend was defended by Prime Minister Julia Gillard, who said spending on higher education under the Labor government since 2010 had jumped by 56% and the latest decision was not a cut in government spending but a slowing in growth.

Gillard said schools needed the additional money to improve the performance of disadvantaged students, including the Indigenous and disabled, especially in public schools, which would receive the largest portion of the $14.5 billion additional spending over the next six years.

Although it seems certain that the government will introduce the higher education cuts in its annual budget, due to be handed down early next month, the controversial plan may yet be blocked in the Senate.

Even if the budget is passed, the prospects of Labor seeing any of its schemes come to fruition are remote, given the huge lead the conservative Opposition has in the polls. Voting intentions suggest Labor will be swept from office in a landslide when the election is held in September.

The so-called “savings” from higher education include:
  • • An ‘efficiency dividend’ of 2%, which means a 2% cut in government grants next year and a further 1.25% for 2015, amounting in total to A$900 million.
  • • Scrapping scholarships for students starting university for the first time in 2014 and the replacement of those scholarships with a federal loan under what used to be known as the higher education contribution scheme, or HECS, which is expected to raise $1.2 billion.
  • • Removal of a 10% discount for students who pay their HECS fees upfront, which should generate an estimated $230 million.
Announcing the changes, Tertiary Education Minister Craig Emerson said 146,000 additional government-supported university student places had been made available in 2013, a 34% increase since 2007.

But opponents of the cuts – representing almost every higher education organisation – strongly objected.

The National Tertiary Education Union (NTEU) said while school education reforms were welcome, they should not come at the cost of public investment in universities and support for their students.

“The NTEU strongly supports the increased access to university,” said the union’s federal president, Jeannie Rea, “but we maintain that the base funding per student place remains inadequate.

“Universities are already struggling to provide teaching and support to the new generations of students [and] the NTEU is alarmed that university managements will react with further staff cuts.”

Rea said universities had failed to employ enough staff to match the rise in student numbers, while too many new and replacement staff appointments were casual or short-term. Half of the teaching in universities was now being done by casually employed lecturers and tutors who were paid only for their teaching hours “and do not know if they will be working from one semester to the next”, she said.

“Maximising the outcomes of the new investment in young people’s schooling should be equalled by investment in tertiary education. Making cuts in one sector of education to fund another is not the answer. Greater public investment in all levels of education should be the priority.”

Speaking on ABC radio, Davis said the impact of the cuts in efficiency dividends would amount on average to a A$200 reduction per student and this would affect all areas where students received support in their studies, such as contact hours with their lecturers or counsellors:

“All of the things that are standard parts of the operation of all universities will get shaved; all of them have to be reduced around 2% to make this work, and to keep universities, which work on very, very fine margins, still in the black, because no university can afford to run deficits.”

He said he did not want to overstate the implications of the cuts, given that they came after a substantial period of growth in university income. But the latest decision meant that combined with the substantial cuts to research at the end of last year, the cumulative effect on universities would be significant:

“Every university will have to make savings in order to stay viable and productive. And that's a question of values. Is that the sort of country we want to be? Is that the national priority?”