Federal government introduces radical reform bill

Higher education faces its biggest upheaval in decades if a bill introduced into the House of Representatives last Thursday is passed by parliament. But the chances of the reforms being adopted in total seem remote given the opposition the government faces in the Senate, where it lacks a majority.

Under the reform plans put forward by the most right-wing government Australia has seen in living memory, funding for universities would be cut by 20%. To make up for the shortfall, they would be free to set tuition fees at whatever level they believed students would be prepared to pay.

This could lead to sharply increased costs for students who, at the same time, face changes to the federal loan scheme that could result in them having to repay their tuition loans at a much higher rate of interest than applies at present.

The reform bill

Under the government’s Higher Education and Research Reform Amendment Bill, introduced to parliament on Thursday morning, tuition fees would be “deregulated” and the present “demand-driven funding system” extended to qualifications below bachelor degree to include higher education diplomas, advanced diplomas and associate degrees.

This means private universities and colleges offering these qualifications would be eligible for the first time for government funding although this would be limited to 70% of the grants available to public universities.

Education Minister Christopher Pyne said the changes would “encourage innovation and competition among providers, and deliver greater choice and higher quality courses for students” – a view hotly disputed by academics.

The bill says that to improve access to higher education for Australians, “all higher education providers with 500 or more [government] supported places will be required to direct 20% of additional revenue to a commonwealth scholarship scheme”.

“Providers will use this funding to provide opportunities for disadvantaged students – assistance with tuition, accommodation, travel, learning support, and other living costs that might otherwise stand in the way of success,” the bill document states.

A divided sector

Vice-chancellors and their staff are deeply divided over the planned reforms. While Universities Australia, the vice-chancellors’ main lobby group, has called for the reforms to be adopted with some substantial amendments, the National Tertiary Education Union wants them to be abandoned altogether.

Universities Australia Chief Executive Belinda Robinson said parliament had a “once in a generation opportunity to shape an Australian higher education system that is sustainable, affordable and equitable in serving the best interests of students and the nation”.

“With budgets under pressure, governments faced with a myriad of competing priorities for public funding, and successive governments being disinclined to invest at the level that repeated independent reports have shown to be needed, full deregulation of higher education is needed,” Robinson said.

“Either the status quo of ongoing inadequate investment or further cuts without deregulation will condemn Australia's great university system to inevitable decline, threaten our international reputation and make it increasingly difficult for universities to meet the quality expectations of our students.”

Although universities endorsed deregulation of fees, Robinson said they believed changes were needed to assure higher education’s affordability for students and taxpayers.

Under Australia’s current student loans scheme, fees are deferred until students graduate and earn more than A$53,000 a year (US$49,000) when they start repaying their loans through a tax surcharge.

At present interest on the loan is based on a cost price index. Under the government’s plan, the interest rate will be lifted to the bond rate, which could add tens of thousands of dollars to the amount a graduate would have to repay.

Robinson said the decision to provide federal funding for private and non-university higher education providers at 70% of the subsidy for public universities “struck the right balance in recognising the different functions performed by non-university providers and universities”.

The National Tertiary Education Union, however, condemned the government over the proposed changes and said the “so called reforms” were about cutting government funding to public universities and subsidising private providers while leaving students with massive debts.

“This legislation will cut government funding to universities by 20% and allow them to charge whatever they think students will be prepared to pay. This will lead to a minimum 30% increase in fees paid by all students, while the cost of some university degrees will exceed A$100,000 [US$93,500],” said Jennie Rea, the union’s national president.

Rea said the cost of servicing student debt would also skyrocket while students on low incomes and women would be most disadvantaged. Although Australia’s most prestigious universities were likely to be the big winners, she said outer metropolitan and regional universities would struggle to break even.

“The idea that we would have a group of elite universities charging high fees to a select group of students is far from a public university system where access is based on a student’s academic ability not their capacity to pay,” Rea said.

“Making public funding available to for-profit private providers who can cherry pick popular courses, could undermine the financial viability of public university programmes. These are courses that many universities rely on to cross-subsidise the cost of research and community obligations.”

The bill seems certain to be passed by the House of Representatives but is unlikely to be adopted without significant changes in the Senate where Labor, the Greens and other non-government senators are deeply opposed to many of its proposed amendments.