Botched budget forces implementation backdown

Budget launches in Australia generally attract praise and condemnation, depending on which side of politics the commentators are from. Only rarely is a budget almost universally condemned by the public – but this has happened with the first budget of Prime Minister Tony Abbott’s right-wing government.

So unpopular has the government become as a result of a budget that has slashed spending and increased charges for students, parents and pensioners that if an election were held now, it would be thrown out of office.

Plummeting polls and community outrage have forced cabinet ministers from Abbott down to try to placate their constituencies.

Federal Education Minister Christopher Pyne has had to backtrack on his plan to reshape the higher education sector by unilaterally deregulating tuition fees, removing limits on what universities could charge students while at the same time cutting government funding of universities by 20%.

Angry reactions

Students, academics and even timid vice-chancellors reacted angrily to the news.

Last week, students held a ‘national day of action’ that saw thousands marching down city streets and protesting at university visits by government ministers.

Abbott’s alarmed security detail warned him against visiting Deakin University outside Melbourne although angry students were only preparing to greet him with loud cries – not physical assaults.

Pyne and Abbott gave conflicting accounts of when the deregulation would apply, when fees would rise and when changes to the national student loan programme known as HECS – Higher Education Contribution Scheme – would take place.

Finally last weekend, Pyne contacted university vice-chancellors across the country seeking their advice on implementing the fee deregulation.

This was after initially ignoring the government’s own Commission of Audit inquiry into Australia’s finances which, while recommending deregulation, also said “considered consultation” should be undertaken with the sector.

Loudly protesting vice-chancellors called on Pyne to reconsider the lack of talks.

On Sunday, they received a letter from Pyne’s department advising that a consultative process would be set up, including face-to-face meetings and information sessions, culminating in a workshop on 25 June to discuss equity issues.

Confusion, now consultation

Belinda Robinson, chief executive of the main lobby group Universities Australia, welcomed the government’s decision, saying a number of design and implementation issues in the budget needed to be scrutinised.

Robinson said the problem areas included the start date of fee-deregulation, the impact of compounding interest rates on student debt levels – which could deter poorer students – and how the government’s new scholarship system would work.

Under the Pyne plans, universities would be able to impose whatever tuition fees they wanted from the start of 2016, accredited private universities and colleges could join the federal funding system, and students taking out government loans to cover the (rising) cost of tuition would pay a far higher rate of interest.

With widespread confusion surrounding Pyne’s planned upheaval of higher education, students enrolling this year were unsure if they would face higher tuition fees and real interest on their loans in 18 months' time.

In response, Deakin University vice-chancellor Professor Jane den Hollander announced that Deakin’s fees would be maintained at pre-budget levels for all students enrolling in 2014 until they completed their courses. Victoria University followed suit and others are expected to adopt the same position.

Posgraduate fees also rise

Although undergraduates are facing the biggest changes, it became clear last week that the new fees schedule would also apply for the first time to postgraduates undertaking research as part of their degrees.

Masters and doctoral research students will also face compound interest charges on the loans they took out to cover their undergraduate fees.

With the additional cost of interest repayments and their own course fees, research students could see the cost of a PhD rise from almost zero to A$30,000 (US$27,710). Yet up until the budget was announced, the great majority of research students did not pay fees because of the role they play in boosting research and innovation across the various faculties.

Postgraduate researchers carry out much of the day-to-day investigatory work for their supervisors as well as acting as tutors to undergraduates, usually for very little pay. Under the government’s plans, they will now be charged fees of up to US$4,000 a year.

Most will have brought with them the unpaid loan they took out to complete their undergraduate degrees and will then work for three or more years on a PhD while the debt accumulates compound interest.

“On an undergraduate debt of say A$60,000 – which may be modest as the majority of postgraduate researchers are at Group of Eight institutions, and these institutions are likely to have the highest undergraduate fees – a four-year PhD would cost an additional A$10,000 in interest on the undergraduate debt alone,” says Dr Emmaline Bexley, a lecturer in higher education at the University of Melbourne.

“And that’s at today’s 10-year bond rate – the rate to which interest on HECS is pegged. If the bond rate rose to or above 6%, at which the new interest rate on HECS is capped, accumulated interest would be more than A$15,000 over four years.

“Add to this the A$7,000 to A$16,000 that getting a PhD will cost in fees, and our brightest students will need to think very carefully about whether a PhD is really worth it.”