A proposed levy on?international students¡¯ fees remains the most fiercely contested element of?the Australian Universities Accord¡¯s final report, despite evolving into a?far broader co-contribution scheme.

The report recommends a?Higher Education Future Fund to?finance university infrastructure and student accommodation. The target capital of A$10?billion (?5.2?billion) would come from universities¡¯ ¡°untied own source revenue¡±, based on?their individual ¡°capacity to contribute¡±, and matching federal government funding.

The concept expands on a?suggestion in the accord¡¯s interim report last July. Its rationale is that resources in a sector with uneven wealth should be shared around to address the lack of dedicated infrastructure funding.

The proposal could see universities relinquishing a percentage of their earnings not just from international students but also from investments, patents, contracts, cafe leases, parking meters and domestic postgraduates¡¯ fees.

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The report says universities would be required to pay such levies only once broader reforms were in place. But University of Melbourne vice-chancellor Duncan Maskell warned that the ¡°new tax on universities¡± would weaken Australia¡¯s ¡°productivity, innovative potential and prosperity¡±.

University of Sydney vice-chancellor Mark Scott, chair of the Group of Eight, which represents research-intensive universities, said ¡°taxing the very system the report identified as underfunded¡± was ¡°extremely poor public policy. It?will¡­undermine our hard-won and enduring successes in international education and damage our global reputation [and] our capacity to retain skilled graduates to underpin a productivity revival.¡±

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Australian National University (ANU) analyst Andrew Norton also opposed the proposal. ¡°We¡¯ve had experience with these funds before. Eventually, the government closes them down and takes all the cash.¡±

He said it was unrealistic to expect the government to fork out A$5?billion for an infrastructure fund on top of other accord recommendations costing tens of billions of dollars. ¡°It¡¯s almost as if they¡¯ve set it up to stop it happening.¡±

But University of Technology Sydney vice-chancellor Andrew Parfitt, one of the levy¡¯s , said his idea had always involved government co-investment.

¡°It¡¯s been simplified significantly in the narrative in recent times around a tax on the rich, but it¡¯s actually a structured investment proposition. [There are] guard rails around affordability [and] how it will be built up over a period of time. It¡¯s¡­a sensible policy direction to ensure that we have the capacity to pick up opportunities as they arise, and manage risks as they materialise.¡±

Universities Australia chair David Lloyd said it was significant that an independent panel had recognised the need for such a mechanism. ¡°I?don¡¯t think a single institution in the country would argue against the creation of a higher education future fund, [but] individual institutions will have very different views on how that should be funded.

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¡°As it¡¯s articulated, it¡¯s a leveraged fund. That gets a tick. You can only take out if you put in. That gets a tick. And it¡¯s linked to your ability to pay, which gets a tick. There¡¯s obviously been quite a lot of consideration.¡±

Education minister Jason Clare said he had an ¡°open mind¡± about the proposal. ¡°Some universities hate it; other universities love it. Everybody understands we need more affordable student accommodation. The question is how you do it,¡± he said.

He told the that he would be unlikely to include philanthropic contributions in any levy. ¡°As you would rightly expect, [donors] want [their money] spent on certain things.¡±

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Mr Clare signalled support for a proposal to ease pressure on low-income graduates by reorganising student loan repayments. Under the current approach, former students repay a percentage of their entire income once their earnings exceed the repayment threshold. The report recommends a ¡°marginal¡± system in which they repay only a percentage of their earnings above the threshold.

Modelling by ANU emeritus professor Bruce Chapman, architect of Australia¡¯s student loans system, had found that graduates on A$75,000 salaries would repay about A$1,000 each year under this approach. ¡°That¡¯s something that could provide an immediate cost-of-living benefit for people after they finish uni,¡± Mr Clare said.

The report does not specify percentages or thresholds. Professor Norton said that unless a marginal system included higher repayment rates and reduced thresholds, low-income graduates could pay towards loans for their entire careers and retire owing more than when they started.

¡°We¡¯ve got all this fuss about indexation and ongoing debt,¡± he said. ¡°For some people, this system would make that worse, because they¡¯ll be repaying less each year. There¡¯ll be more indexation [making] it harder¡­to ever fully repay. That would need a lot of pretty careful modelling to work out implications for both students and the commonwealth.¡±

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john.ross@timeshighereducation.com

• New targets ¨C including 1.8?million subsidised domestic students by 2050, with parity participation by equity groups, 80?per cent of working-age Australians having tertiary qualifications and 55?per cent of 25- to 34-year-old Australians having degrees
• Australian Tertiary Education Commission ¨C with roles including policy development, planning, accountability, pricing, funding allocation, data collection and negotiation of mission-based compacts
• Needs-based funding ¨C subsidies to cover additional costs of teaching disadvantaged, Indigenous and disabled students and of teaching in regional areas
• Fee-free preparatory courses ¨C fully funded enabling courses, widely available at no?cost
• Loans and fees ¨C including unspecified changes to Job-ready Graduates package, introduction of a marginal repayment system and elimination of indexation charges on payments already made
• Income support reforms ¨C including changes to eligibility criteria, increased PhD stipends and technical analysis of further options
• Financial support for students undertaking unpaid placements ¨C including payments from state governments and private sector employers
• Additional research funding ¨C including more grants for basic research and research overheads and a fund to incentivise impactful research
• Higher Education Future Fund ¨C A$10?billion nest egg to finance infrastructure and student accommodation, co-funded by universities and the federal government
• Implementation advisory committee ¨C to guide education minister on implementation issues