Andrew Norton from the Grattan Institute says the modest university ‘reforms’ signalled for the budget will entrench the status quo, and will affect universities more than students.
George Morgan says the universities are drifting to mediocrity, and these cuts will not help.
The headline figure is a saving of $2.8 billion over the forward estimates, and a 7.5% increase in student fees over the period. Total Commonwealth Government payments to universities over the next four years amount to of $74bn, so the impact of this $2.8bn reform package is less than 4% of the revenues to universities from taxpayers and students, according to Simon Birmingham.
Moreover, the universities can well afford it, says he, because a Deloitte Access Economics study showed that:
- between 2010 and 2015, the average cost of delivery per student increased by 9.5%, while per student funding grew by 15% (including student contributions and commonwealth grant scheme funding).
The extra cost to students will be between $2000 and $3600 for a four-year degree. Norton says that in most cases the extra charges will add less than a year to student loan repayment periods, and will not fundamentally change the economic appeal of higher education.
Changes are being made to the repayment conditions, including a one per cent levy on earners from $42,000 pa. Debtors now pay at least 4 per cent of their income from $55,000. This is a change Norton recommended.
There are other changes, designed to improve debt repayment. Presently a quarter of the $52 billion owed is not expected to be repaid.
Norton says the central issue is an effective efficiency dividend of almost 5% on the main teaching grant which cannot be offset from other sources. Universities have driven efficiency, however Morgan says:
- what passes for efficiency can often compromise the quality of education. It can mean giving students fewer curriculum choices, increasing class sizes, reducing face-to-face hours, teaching them with casual staff and substituting classroom teaching with “digital delivery”.
I understand that semesters have commonly been reduced from 13 weeks to 12. As much of the teaching is done by sessional lecturers, that constitutes pure savings. Also I understand that they prefer doctoral students over PhDs. Certainly they like to give their own PhD students a slice of the action, but doctoral students are also cheaper.
Norton says that for some universities, the efficiency dividend may not be their main problem.
- In addition, 7.5 per cent of the teaching grant will be paid on a performance basis. In a briefing for universities, government officials played down the financial risk this posed, suggesting that it was unlikely any university would lose the full 7.5 per cent. But significant sums will ride on indicators such as student retention rates and graduate employment levels, over which universities have, at best, partial control.
Another subtle change is that teaching is being decoupled from research. The Dawkins ‘reforms’ of the early 1990s eliminated the colleges of advanced education as teaching only institutions. The requirement to do research is not universal across the OECD, so perhaps no harm is being done.
On the surface, universities have escaped the horror of a 20% cut as per the 2014 budget. However, that cut would have also given them the freedom to set their own fees. The ostensible modesty of the present proposed cuts means that while the Greens and Labor will oppose them, they are likely to pass the cross-bench. Xenophon has made encouraging noises, and there is an anti-intellectual strain in One Nation’s DNA.
This anti-intellectual attitude goes well beyond One Nation in Australia. Universities have already contributed around $4 billion to balancing the budget since 2011.
We should be careful, however. University education is our biggest services export industry, and after the US and the UK attracts the greatest share of full fee-paying Asian students. Our friends across the Tasman are not happy, because they too will have to pay full fees.
Germany in 2014 decided that university education would be free for German and international student from 2016-17. One wonders how long that will last, but in Australia such a decision would be unthinkable.