Minister dismisses critics of university funding cuts

Minister for Education and Training Simon Birmingham has dismissed vice-chancellors’ opposition to his proposed budget cuts for higher education, saying that universities can find efficiency savings to allow for the shortfall. But universities say STEM disciplines – science, technology, engineering and mathematics – will suffer most.

“The reaction of some in the sector to the efficiency dividend proposal would suggest that they don’t believe the basic laws of business and economics apply to universities,” Birmingham said.

“However, surely, surely there are economies of scale that can be achieved from massive growth in student numbers. Surely there are efficiencies that can be gained from adoption of new technologies. Surely there are work or teaching practices that can be modernised.”

Addressing the Australian Financial Review’s Higher Education Summit on 30 August, the ministers said while university funding has been increasing over recent years, costs have been growing at a slower rate.

An analysis by Deloitte shows that between 2010 and 2015 the average cost of delivery per student increased by 9.5%. Over the same period, per student funding grew by 15%, he said.

According to a report in the Australian Financial Review, Birmingham urged universities to follow the lead of Murdoch University in scrapping academics' union work restrictions to help absorb the proposed budget cuts.

Senator Birmingham told the summit that the opportunity offered by the Murdoch decision "should be seized, and hopefully can be replicated elsewhere" in the university sector.

A landmark Fair Work Commission agreement to scrap the restrictive union conditions, made on 29 August, gave universities the ability to cut costs and absorb the 4.9% cut in higher education teaching subsidies announced in the May budget, which the government will try to pass through the Senate in the coming weeks, he said.

STEM disciplines “hit hardest”

Last week Universities Australia warned that science, technology, engineering and mathematics or STEM courses – crucial for future skills and economic growth – would be hardest hit by the government's proposed cuts to university funding.

New analysis by Universities Australia has confirmed the STEM disciplines will take the biggest hit of any field of study if the legislation passes, bearing 35% of the brunt of the AU$1.2 billion (US$951 million) in cuts.

And while government funding for each student place in a STEM course would be cut, STEM students would have to pay higher fees for those places – even though the government’s own figures show that STEM degrees make a vast contribution to the public good.

“As Australia’s economy transitions into a new high-tech era, scientific skills and literacy are going to be foundational for many more future careers,” said Universities Australia Chief Executive Belinda Robinson.

“In the next five years alone, there are expected to be an extra 126,000 scientific and technical jobs that will need higher qualifications.

“If we want Australia to be a STEM powerhouse, we can’t afford to cut public funding to train future scientists while also making science students pay more. This also runs counter to the government’s own science and innovation agenda, which recognises the need for STEM skills more broadly across our economy,” Robinson said.

Earlier last month, she warned that the proposed cuts could not be absorbed by universities “without affecting student services, infrastructure, university staff, and education programmes”.

Soaring enrolment

But in his address at last week’s summit, Birmingham said the government had embarked on a very public consultation process in the 2016 Budget using a paper that clearly set out the requirement of meeting the AU$3.5 billion financial sustainability savings outlined in the budget, mainly by a 20% reduction in Commonwealth Grant Scheme payments.

He said the paper was explicit about proposing a small reduction in the government grant per student, a small increase in maximum levels of student contributions, changes to the Higher Education Loan Programme repayments and thresholds, and methods to relocate all postgraduate Commonwealth Supported Places, among other measures.

After a year of consultation the savings target has been reduced to AU$2.8 billion, as higher education’s contribution to the drive to balance the Commonwealth Government’s budget by 2021, part of an attempt to avoid the current annual national spending of around AU$17 billion on interest to service debt, roughly equivalent to the entire budget for higher education and research.

Birmingham said previous reforms have contributed to higher spending on higher education, notably the scrapping of the cap on bachelor places by Labor in 2009, after which domestic undergraduate enrolments “soared by around one-third, putting an additional 156,000 taxpayer-funded places into universities today”.

He said that “generous indexation” has seen base teaching funding per student growing in real terms from – using 2017 dollars for comparison – just over AU$18,000 in 2011 to over AU$19,300 in 2017. “As a result – a combination of these factors – taxpayer funding for teaching and learning at our universities has increased by more than 70% since 2009, growing at a rate far faster than the economy or government revenue.”

“There’s also now around AU$50 billion worth of student debt that has been funded by taxpayers; around one-quarter of which, on current projections, is not expected to be repaid.”

Birmingham said 32% of working age Australians now hold a bachelor degree or higher, which is almost 20% above the OECD average and higher than countries like New Zealand and Canada. OECD analysis also showed that Australia has the sixth-highest level of per student funding from all sources, at nearly US$20,000, and standing at 23% above the OECD average.

When considered alongside the slight increases in student contributions, university income for Commonwealth Supported Places will be 2.8% less than would otherwise be the case.

Research funding, meanwhile, is on the increase, he said. “We’ve committed an additional AU$2.3 billion in new sustainable funding over 10 years for national scale research infrastructure under the National Innovation and Science Agenda.”

Birmingham dismissed concerns from vice-chancellors over the “modest” 1.8% fee increase for students in each of the next four years, the first such increase in more than a decade.

He quoted the words of Bruce Chapman, architect of the Higher Education Contribution Scheme – a compulsory student fees loan scheme which generates about 20% of Commonwealth funding for higher education institutions – that there is overwhelming evidence that changes to the level of the charge or the threshold payment have “no discernible effects on student behaviour or choices”.

He also said having 7.5% of a university’s Commonwealth Grant Scheme funding contingent on performance measures is good for students. “It will provide incentives for universities to do even more to improve rates of retention, completion, student satisfaction and employment outcomes.”