Australia's unique Higher Education Contribution Scheme has been one of the great participatory and democratic reforms of the federal Labor government, according to Prime Minister Paul Keating, writes Geoff Maslen.

Mr Keating told academics in Melbourne that without HECS, 100,000 students who had enrolled in universities this year would not otherwise be there.

Under the scheme, students must meet almost a quarter of the cost of their courses but they are able to defer payment until they graduate and have an income at least equal to average Australian earnings.

"No wonder that countries around the world are coming to Australia and looking to extend this type of scheme in their own higher education systems," the prime minister said.

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Since 1988, when the scheme was introduced, the federal government had spent an additional Aus$3 billion (Pounds 1.4 billion) on higher education, with $1.5 billion of that generated by the scheme.

"Might I just say that HECS has been one of the great democratic steps in increasing participation in higher education in Australia. "Every dollar raised through the charge has gone back into the universities," Mr Keating said.

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He said that 30 per cent of the students enrolled in higher education since the advent of the HECS charge had come from low-income families.

Mr Keating added: "It is neither wool, nor the mountains of coal or iron ore that are Australia's great natural advantages but education and training.

"They are fundamental to our prosperity and are the answer to sustaining our health and prosperity as a nation."

Mr Keating said the increase in the school retention rate across Australia, from three in ten students staying on to the final year in 1983 to eight in ten today, was "nothing short of a revolution".

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He added: "We would have remote claims to being a clever country, we could not be a clever country, if only three young people in ten were still completing secondary school.

"The great leap in the participation rate is the core reason why we have been able to expand the university system."

The great challenge had been to extend the capacity of the system.

In the past ten years, "when this policy really got the wind behind it", the government had created 16 new universities the size of Melbourne University.

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"Since 1983, when Labor was first elected to office, university enrolments have jumped from 360,000 to just under 600,000. That is a massive increase," he said.