Source: Alamy

Austerity bites: Coalition government plans 20 per cent cut to teaching funding

Australia¡¯s regional universities will be hardest hit by radical higher education reforms that include a 20 per cent cut to per-student funding and deregulation of tuition fees, according to a mission group leader.

Proposals to cut federal higher education spending by about A$1.5 billion (?825 million) a year are likely to be passed by the lower house of Australia¡¯s Parliament when it returns to session later this month.

But Labor and the Green Party, the largest opposition parties, have vowed to block the reform package when it reaches the upper house, the Senate, where prime minister Tony Abbott¡¯s Liberal-led Coalition government does not hold a majority.

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The cuts are part of the Coalition¡¯s austerity programme, in which it plans to slash government spending by as much as A$70 billion a year within a decade, despite Australia having one of the lowest deficits of any developed nation.

Much of the opposition to the changes relates to plans to allow universities to raise tuition fees to help compensate for the loss of direct state aid.

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At present, the undergraduate fee cap ranges from A$6,044 to A$10,085 a year, varying with the type of course. Unions say fees will need to rise by at least 30 per cent to replace the lost grant money.

But some sector observers predict that fees will rapidly rise to the level charged for overseas students, which at the most prestigious institutions are far higher. In 2013, the University of Sydney charged overseas undergraduates up to A$40,000, rising to about A$62,000 in medicine.

Teaching-focused universities in rural areas believe they will be disproportionately hit by the reforms. They say they will not be able to raise fees sufficiently to replace lost government revenues without driving away their potential students, who are twice as likely to come from low-income backgrounds as those at urban universities.

Elite institutions serving more affluent urban areas, such as the Group of Eight (the equivalent of the UK¡¯s Russell Group), will cope better with the changes, said Caroline Perkins, executive director of the Regional Universities Network (RUN), which represents six large institutions located outside Australia¡¯s state capitals.

¡°We cannot put up fees in the same way that the Group of Eight can, which would mean we¡¯d have less money to educate students who are more expensive to teach in any case,¡± said Dr Perkins.

Minister vaunts new scholarships

Christopher Pyne, the minister for education, has argued that the increase in fees will allow universities to raise more money for scholarships, thereby increasing the aid available for poorer students.

Under plans similar to those introduced in England, $1 out of every $5 in higher fee income would go towards new Commonwealth scholarships for undergraduates from disadvantaged backgrounds.

But this presents universities with a catch-22, according to Dr Perkins, who said that although raising fees would allow them to raise money for scholarships, higher fees could scare off disadvantaged applicants.

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Alternatively, students may opt for metropolitan universities whose greater financial clout would enable them to offer better bursaries, added Dr Perkins.

¡°When students go to the city, only about 5 per cent come back, but about 60 to 70 per cent of those educated in the regions remain there,¡± she continued.

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¡°If talented individuals such as engineers and healthcare workers are drawn away from rural areas, that will hurt rural economies, which are seeking to diversify away from just mining or agriculture.¡±

Her concerns have been echoed by the National Tertiary Education Union, which has published a breakdown by institution of how the cuts will fall.

As teaching-related per-student grants account for about 25 per cent of university income, the cuts would mean an average 5 per cent drop in overall income, said the union.

However, the University of the Sunshine Coast in Queensland, a member of the RUN, would lose 8.9 per cent of total income ¨C more than double the proportion the Group of Eight¡¯s University of Sydney would lose (3.4 per cent).

The NTEU report quotes former University of Melbourne vice-chancellor Kwong Lee-Dow as saying that ¡°rural and regional students will be disproportionately affected¡±.

Plans to extend loan funding to an estimated 85,000 students on sub-degree courses and at for-profit private providers are also criticised in the NTEU report.

The government¡¯s package also contains controversial plans to link the interest rate on student loans to the government bond rate, rather than to inflation, meaning that graduates will pay an interest rate of up to 6 per cent ¨C up from 2.9 per cent now.

Senate may turn down or alter plans

Attention is now turning to negotiations and political horse-trading likely to occur in the Senate to allow the package of reforms to pass.

Several senators from smaller parties, such as Ricky Muir of the Australian Motoring Enthusiast Party and mining tycoon Clive Palmer, whose party holds three seats, could play crucial roles in amending the legislation and ultimately determining its fate.

Meanwhile, Belinda Robinson, chief executive of Universities Australia, has condemned Labor¡¯s refusal to negotiate any of the proposed changes, saying it places universities in a ¡°pretty invidious position¡± as it has not suggested any alternative to the cuts.

Although the RUN¡¯s Dr Perkins is opposed to the cuts and the fee rises, she believes that if the former go through, it will make the latter a regrettable necessity.

¡°We are most concerned that the cuts will get through, but there is no deregulation [to allow higher fees],¡± said Dr Perkins, warning that this scenario would be ¡°a disaster¡±.

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jack.grove@tsleducation.com