Budget 2017 – Students pay more, universities have less

There were few surprises when the federal government handed down its annual budget on 9 May but there were also no cheers. Nationwide, universities and their students were appalled: The 2017 budget tabled by Treasurer Scott Morrison confirmed what the critics had called `a double whammy’ that would hit universities and their students hard.

Students will have to pay an additional 7.5% in fees to undertake their degrees by 2021, while universities face cuts of AU$2.8 billion (US$2 billion) in their federal grants. Overall, the government will slash its investment in higher education by 10%, leaving university incomes down 2.9% a year for the foreseeable future.

Under the government’s plans, the maximum increase in fees for a four-year, government-subsidised degree will be AU$3,600, with a maximum total cost of AU$50,000, although a subsidised six-year medical degree will cost a maximum of AU$75,000. Graduates will start repaying their government loans at a lower annual income threshold of AU$42,000 instead of the current AU$52,000.

“The task of creating new jobs, security and opportunities for the next generations of Australians will only be made harder by the AU$2.8 billion cuts to higher education,” said Universities Australia Chief Executive Belinda Robinson. “Universities are essential infrastructure to grow Australian skills, jobs, exports and productivity.”

Robinson said this was the government’s central theme in the budget yet the cuts to universities and increased fees for students ran directly counter to that vision. Investments in university education and research helped all Australians in the transition to a new economic era, she said, adding that as the nation’s third-largest export sector, universities contributed more than they received and were not a drag on the budget.

Universities also face an ‘efficiency dividend’ amounting to cuts of 2.5% in 2018 and 2019. Yet the dividend will then become permanent from 2019 onwards so that government funding for student places will be 4.8% lower than current levels, Robinson said.

In another controversial move, the government will withhold a further 7.5% of its total funding for ‘performance’ payments that will be taken out of the pool from which all universities compete. Critics say the AU$500 million that universities currently count on to fund salaries – their largest single annual expenditure – and all the other annual expenditures, will no longer be predictable.

According to the vice-chancellors, if 7.5% of each student’s federal funding does not follow the student, but depends on the education minister’s assessment of whether a university has met benchmarks determined by a changing set of education indicators, then the money cannot be included in a university budget.

Vice-chancellors point to the lack of any allocation of capital funding for national research infrastructure. Although the government has said it will develop a research investment infrastructure plan, that has yet to be released. The vice-chancellors have previously urged the government to review its plans to close a AU$3.7 billion Education Investment Fund, the last remaining source of infrastructure funding for universities.

No justification

In a bitter attack, the National Tertiary Education Union described the budget’s higher education section as a “swindle on students” by charging them more while cutting spending on teaching. Union President Jeannie Rea said Australian students were already paying some of the highest fees in the world, and yet public investment in universities was the second-lowest according to the OECD’s latest data.

“There is no justification for a further AU$2.8 billion cut in public investment, when universities and their students have already contributed almost AU$4 billion towards ‘budget repair’. Students will be paying more for less,” Rea said.

“For a 7.5% fee hike, students are facing bigger class sizes, more casual staff, less course choice and less face-to-face learning. The cuts to public investment in our universities will mean more insecure jobs, and even more pressure on overworked staff donating their own time to keep the system afloat.”

The government, however, must still get the budget through the Senate where it holds only 29 seats out of 76, one of the lowest ratios of any government in recent years. It failed to achieve this with last year’s budget and had to jettison plans to cut billions of dollars in spending on a wide range of areas.

The test of its capacity to negotiate the university cuts and the new impositions on students will come over the next few weeks when it tries to persuade at least 10 members of the various non-government groups to pass its higher education changes. And that is unlikely.