Labor has bold ambitions for higher education. On coming to office, Education Minister Jason Clare announced a belt-and-braces review of the higher education system by engineer Mary O’Kane.
O’Kane’s report — backed by Clare — eventually recommended a huge expansion of the university sector, aiming to enrol 80% of Australian school leavers in tertiary institutions by 2050. According to its Portfolio Budget Statement, the Department of Education estimates a whopping $240 billion “additional income would be added to the economy over the period to 2050”.
But there’s nothing in the budget to deliver this ambition. There’s no funding pathway to deliver all these new university places for domestic students. Instead, last night’s statement “is the first stage of a multi-year reform agenda to achieve this target.” Time will tell.
It’s not a complete bust.
There is some new money for higher education: $1.1 billion in new funding, which will be welcomed by the sector. The funding is targeted to relatively constrained priorities, such as the government’s $427 million commitment to paying students on nursing and social work placements, and $350 million for “UniReady” courses that help disadvantaged students prepare for university study. These courses have a good reputation for helping students from regional and remote areas get a leg up on their first year of studies, lowering drop-out rates. Charles Darwin University is getting a new medical school worth $25 million.
The fine print of higher education legislation delivers healthy indexation to Commonwealth-funded university places, as well as to the Australian Research Council. This means that the big-ticket line items of the higher education system will enjoy significant nominal funding increases in the coming years.
The budget also contains the government’s previously announced easing of HECS and HELP indexation, which will shave some off some of the nastiest increases to student loans in recent years. This government says it will wipe around $3 billion off the total value of HECS and HELP debts, even though the measure is budgeted at only $239 million. Presumably, the remainder of that write-down will fall out past the forward estimates.
Speaking of the never-never beyond the forward estimates, there is a mysterious $2.7 billion mentioned arriving in 2028, but not budgeted in the forwards. We weren’t able to confirm what this figure represents. One expert we talked to suggested it might be the long tail of the HECS-HELP re-indexation, while the ABC’s Conor Duffy thinks it might be spent on future priorities emerging from the Universities Accord. Either way, it’s two federal elections from now.
Perhaps the most important decision of the education budget is something it didn’t do. There is no rejig of the Coalition’s failed Job Ready Graduates (JRG) policy, which dramatically hiked student fees for courses like arts degrees.
No-one in the sector thinks JRG has worked, and Mary O’Kane’s Universities Accord was scathing on its flawed logic and bungled implementation. Nevertheless, JRG survives… probably because the government is okay with the much higher student fees it brings in. $50,000 arts degrees are here to stay.
A small funding item with a big policy impact is the budget item to fund the new universities regulator, the Australian Tertiary Education Commission. The commission is the beginning of a new era of higher education governance. It will be given the power to make crucial decisions on how many students each university gets, a radical change from the current “demand-driven” system in which institutions can enrol as many students as they like. The free-wheeling era of university competition may be coming to a close.
Another small announcement with significant consequences is a decision to force universities to give at least 40% of their student amenity fees to student organisations. These were the old student union fees that John Howard found so objectionable that he removed the right of the student organisations to collect them. Universities have been helping themselves to the proceeds ever since.
Obliquely but unmistakably, the budget also confirms the biggest policy shake-up of all: the government’s decision to cap international student numbers.
The cap on international students has terrified the sector, for obvious reasons. Decades of underfunding have encouraged Australian universities to seek extra revenue from the lucrative international student market. They’ve been surprisingly successful, and higher education has become one of Australia’s biggest export markets. As Bernard Keane pointed out this week, there is a curious disconnect between a government claiming it wants to expand the higher education sector and the announcement that it wants to clamp down on the sector’s most important revenue source.
The latest policy catchphrase is “managed growth”. The new Tertiary Education Commission will become the arbiter of how many students each university is allowed, which will instantly make it the most important player in the entire sector.
International students don’t just cross-subsidise domestic students. They also help pay for university research. As the lobby group of the rich universities, the so-called Group of 8 points out, “the Universities Accord has laid bare the structural deficiencies of research funding for Australian universities that are the backbone of Australia’s innovation system.” Despite Anthony Albanese’s ambitions to make things in Australia, there is no new funding for research in this budget. Instead, another review has been announced, pegged as a “strategic examination” of research and development.
There is a way to expand tertiary education and research while reducing our reliance on international students: more government funding. This won’t come cheap. It will also require political courage, which seems to be in relatively short supply during the first term of the Albanese government.
