University funding to be 'frozen' in time by federal cuts

Planned federal cuts of more than AU$2 billion (US$1.6 billion) would mean university funding was 'frozen in time' and would force severe reductions in student numbers, according to Universities Australia.

The comments followed the release last month of a new government scheme under which funding for universities will be frozen for two years and then tied to Australia’s working age population growth from 2020.

Chair of the national higher education organisation, Professor Margaret Gardner, said the government’s effective cuts to university budgets would hit hardest in regional areas where student enrolments were lowest.

“Under this freeze, even if a university simply seeks to maintain its current number of students, this would mean a real cut,” Gardner said. “And for universities that are still growing their student numbers to meet the needs in their local communities and regional economies, this will be an even deeper cut.”

The federal government announced just before Christmas that university funding would be held at current levels for two years from 1 January 2018. In addition, students would have to start repaying their federal loans much earlier, with repayments beginning when their annual incomes reached AU$45,000, down from the current AU$56,000.

The government has also imposed a new lifetime limit on government loans to students, capping the amount they can accrue at AU$104,440 in total – or AU$150,000 for medicine, dentistry and veterinary science students.

But Gardner said Australian students already paid a significant share of their higher education costs compared to many other nations, and vice-chancellors shared the concerns of their students about this proposal.

They would also closely monitor the impact of the government’s decision to reduce domestic postgraduate coursework numbers by 3,000 places.

“The decision [by a former Labor government] to uncap student places in Australia was an historic reform that lifted skilled graduate numbers to meet Australia’s labour force needs and contributed to social inclusion,” she said.

“This freeze will put budget pressure on universities to offer fewer places in courses that are expensive to teach but hugely needed such as nursing, science and engineering.”

Gardner said economists and experts were already warning about skills shortages in these critical areas. Yet the government’s decision would end up restricting access to the kinds of courses Australia needed the most.

The National Tertiary Education Union, or NTEU, said the government’s decision meant that students would be paying for Prime Minister Malcolm Turnbull’s plans to slash corporate taxes and those of wealthy individuals.

NTEU President Jeannie Rea said the government planned to reduce spending on universities by more than AU$2 billion while going ahead with tax cuts for wealthy Australians and big corporations.

The government emphasised the need to position Australia for the future yet totally ignored the need for university graduates in current and new fields, Rea said.

“The proposal to freeze funding for students at current levels is nothing but a crude money-saving exercise which flies in the face of the objectives of the demand driven funding model,” she said.

Under this scheme, universities were able to boost their enrolments to meet student demand and then receive increased federal grants. The government has now effectively scrapped this so the costs of any enrolment increases after July this year will have to come from the universities’ own budgets.

Rea said the likely outcome would be a “misallocation of places and pockets of unmet demand”.

“The reality is that the current market mechanism has not improved the quality of education, but rather universities have enrolled more students in the hope that economies of scale will kick in."

'Taught on the cheap'

“The big issue remains that the base funding of federal support for student places has not increased and now students are being taught on the cheap. Universities have been relying on international student fees to subsidise domestic students’ education but this is unacceptable,” Rea said.

Rea said the union was deeply sceptical of a claim by Education Minister Simon Birmingham that after the two-year freeze, bachelor courses would receive additional funding if they met performance outcomes.

“This is not sustainable and responsible planning. This is merely another funding cut smokescreen,” she said. “What’s more, it’s a major cut of more than AU$2 billion without any discussion with universities, their staff and students. The Senate rejected the government’s previous attempts to slash higher education funding, so they have gone about it behind closed doors and without public debate.”

The Council of Australian Postgraduate Associations, or CAPA, said its members were disturbed by the government’s proposal to adopt an “institutional outcomes and industry needs” approach in approving postgraduate numbers.

CAPA President Peter Derbyshire said giving industry too much input into available postgraduate places in different courses was “pernicious” because industry needs and economic circumstances were prone to rapid changes.

“Therefore, any decisions made on the basis of industry demand are at risk of becoming outdated by the time that graduates are produced,” Derbyshire said.

“Second, it demonstrates short-sightedness in regard to the skills and knowledge brought by graduates from fields not traditionally valued by industry.”

He said the new but as yet undisclosed allocation method for funding postgraduate places was “another random thought bubble” without any clarification as to what the methods would mean for higher education or for students.

Responding to the outpouring of criticisms, Minister Birmingham said Australia had to “face up to the task” of putting higher education costs on a more sustainable, responsible path.

Birmingham attacked the universities for turning a “blind eye to the challenges confronting both the federal budget and higher education”. He said the new measures would force vice-chancellors to focus on the needs of students.