Senate rejects government’s university spending cuts

The Australian Senate on Thursday rejected federal government plans to slash AU$2.8 billion (US$2.2 billion) from its grants to universities in a decision that knocks a gaping hole in its annual budget.

Minor parties in the Senate joined with the Labor opposition to refuse to pass any of the clauses in the government bill and called for an entire review of the higher education sector.

Under the proposed government changes to university funding, students would have had to meet much more of the cost of their courses. Fees were to increase by 7.5% and repayment of the money students borrowed to pay their fees would begin when a graduate was earning AU$42,000 a year instead of the current AU$52,000.

Universities were facing a 2.5% ‘efficiency dividend’, effectively a large slice from their government grants. They would also have been required to raise fees by AU$2,000 so a four-year course would cost AU$3,600, with a maximum payment of AU$50,000.

With Labor, the Greens and minor parties opposed to the bill, the government needed up to 12 members of the Senate crossbench votes to pass the legislation. But one minor group, the NXT party – named after its leader Senator Nick Xenophon – declared that without a comprehensive review into post-secondary education, “it would be wrong to support the cuts proposed by the government”.

"We have too many highly qualified young people with PhD degrees stacking supermarket shelves or making lattes. We need to do better than this," Xenophon said.

But Education Minister Simon Birmingham said he was appalled that the “troika of Labor, Greens and Xenophon parties were unwilling to make even modest reductions in the rate of spending growth the government had planned”.

“Under our reforms, spending on universities would still have increased 23% over the next four years,” Birmingham said.

Universities Australia

One of the strongest critics of the government’s planned cuts has been Universities Australia, which collectively represents the nation’s public institutions. Its chief executive, Belinda Robinson, called the Senate decision "a victory for common sense".

"This is an opportunity for government to hit the reset button and stop, once and for all, treating our university sector as a target for budget savings, when in fact it is an investment in Australia's future," Robinson said.

“We commend the Xenophon team for calling for a deeper and more comprehensive analysis of post-school education and recognising that funding cuts would strike at the heart of Australia's economic transition. They have sent a very strong message that pulling public investment out of our university system is not the way to build a stronger, more internationally competitive tertiary education system.”

Prior to the Senate vote, the NXT party announced that it would not support key measures in the government’s “proposed higher education reforms”. These included the AU$2.8 billion cut in grants, replacing subsidies with loans for permanent residents and New Zealand citizens, a scholarship system for postgraduate coursework places, and ‘performance contingent funding’ that would have required universities to reach certain performance targets to obtain full funding.

"In order to become resilient and innovative, we need an independent panel to do a comprehensive root and branch review of our post-secondary education sector, taking into account the role the sector plays in Australian society, both in economic and social terms,” Xenophon said.

“This review needs bipartisan support, and the support of the sector, to look at where we are, where we want to go, and how best to get there, both in a local and global context. This is the only way the sector, our workplaces and more importantly our students can have certainty for the future that our institutions are delivering world-leading education and creating pathways to training outside the university sector.”