Government backs down on deregulation of tuition fees

The new government of Prime Minister Malcolm Turnbull has backed away from plans to allow universities to set their own tuition fees and announced that funding arrangements for 2016 will not be changed.

The government, meanwhile, will hold further consultations with the sector on future reforms.

Speaking at a conference in Melbourne last Thursday, Turnbull’s new Education Minister Senator Simon Birmingham said legislation allowing for tuition fee increases, which had been rejected by the Senate under former education minister Christopher Pyne, would not be reintroduced before the election, due at the latest by January 2017.

The bill would have enabled vice-chancellors to set their own fees, creating alarm among students and other critics of the bill that some degree courses could cost in excess of A$100,000 (US$70,700), leaving graduates facing a lifetime repaying debts incurred under the government FEE-HELP scheme, previously known as HECs.

In a speech at the conference, Birmingham said the legislation's repeated failure to pass the Senate had created "an air of uncertainty for our higher education sector" and that something had to be done.

"With only three months left in 2015, it is necessary to give both universities and students certainty about what the higher education funding arrangements for 2016 will be," he said. “Any future reforms, should they be legislated, would not commence until 2017 at the earliest."

Birmingham told journalists later that this would give him and the prime minister time to discuss the reforms and consult with universities, vice chancellors and students about what was possible “to address some of the challenges".

Background

When it was introduced as part of the former Abbott government’s budget last year, protests broke out on university campuses across Australia. Both the Labor Party and the Greens also opposed the legislation and a cross-bench of independent senators joined to reject the bill in the senate.

Birmingham told the conference that the previous Labor government had lifted the limits on the number of bachelor-level undergraduate places supported by government grants but had not provided a sustainable basis for funding the so-called “demand-driven system”. Nor were reforms or funding incentives structured in a way that established an effective or informed market.

“The demand-driven system has seen unprecedented and largely welcome growth in higher education participation, with a projected increase in federally supported undergraduate places of more than 25% between 2009 and 2015,” he said. “While this expansion of the system has provided opportunity and choice to more Australians than ever, it has come with a budgetary cost: Australian government expenditure on higher education teaching and learning has increased by 55% from approximately A$8.6 billion in 2009 to A$13.3 billion in 2015.”

Birmingham said it was in part because of this growth in spending that Labor had announced cuts of more than $6.6 billion in higher education and research between 2011 and 2013. So the first challenge would be to find a sustainable, stable basis for funding the demand-driven system – “where funding incentives help to create informed and rational decisions by providers and students alike”.

“The alternative, mooted by some of my political opponents, is for the number of bachelor degree places to be recapped under a 'government knows best’ approach, where some students who could otherwise go into higher education are locked out.”

Birmingham said he would consult with the higher education sector, students, employers, his senate colleagues, and other stakeholders on how the government could best meet the challenges of finding a sustainable basis for students, universities and taxpayers “to fund an adaptive and world-class higher education system, with fair, equitable access for students”.

But Labor’s higher education spokesman, Senator Kim Carr, said the policy on universities setting their own fees needed to be scrapped, not just delayed. Birmingham’s announcement simply meant that the potential for A$100,000 degrees and “an Americanisation of the university sector was alive and well", Carr said.

"Pyne's package continues in all its glory," Carr said. "This is a policy that doesn't need to be delayed, it needs to be scrapped. We are more than happy to fight the next election on this issue."

Universities Australia responds

Higher education’s main lobby group, Universities Australia, described Birmingham’s announcement as “a much needed circuit-breaker”.

"The debate must now focus on how we deliver strong and sustainable funding that enables our universities to continue the world-class education and research that Australia needs," said Universities Australia Chief Executive Belinda Robinson.

"In citing fair access, quality and sustainable funding, the minister has put his finger firmly on the key challenges confronting universities in positioning Australia for future prosperity.”

Robinson said the confirmation that next year's funding would be unchanged gave the sector hope that the Abbott government’s proposed 20% funding cut (equivalent to A$1.9 billion) for university education in future years could be scrapped.

"There can be no justification for a cut of this magnitude, particularly when Australia currently sits in second last place among advanced economies for the level of public investment in tertiary education as a proportion of GDP,” she said.

"We really need to lift the level of investment in universities if we are to succeed in meeting the challenges that our minister has so clearly articulated in assuring a world-class university system."