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What should government and students contribute towards university degrees? from

Federal election 2016: higher education policies to watch out for

In the lead up to the 2014 election, the then opposition leader Tony Abbott pledged that universities would be subject to “masterly inactivity” if the Coalition won the election.

He was almost right: universities and their students have now suffered three years of government not making a major change to how higher education is resourced.

Higher education needs certainty for the future, with clarity for the coming decade about the balance of government and student investment.

The 2016 election is likely to feature two distinct approaches to how to resolve universities’ revenue pressure to deliver the teaching and research expected of them.

The Coalition’s approach

The Coalition’s policy preference is clear:

  • contain government expenditure over time;
  • use flexible student charges to ensure universities have the needed resources;
  • extend the system to all higher education providers aligning funding and quality regulation systems.

However, it is yet to release an updated proposal for its higher education reforms.

The 2016 budget is expected to announce some of the government’s revised position but likely not the whole policy.

These will mostly be positions: legislation to implement changes will have to wait for the new parliament.

The challenge is that the fiscal restraint the government wants is in conflict with addressing the public reaction to the current policy position of a deep cut to base funding and substantially higher student payments.

What Labor wants

The Labor policy emphasises the need for additional public investment. Its commitments to date would maintain current funding into the future, rejecting the proposed cuts to core funding from both sides since 2013.

Labor now needs to commit additional funding beyond that to meet its policy ambition of an effective publicly funded university system backed by current levels of student payments. Some of this may come from in its election research policy statement.

What will not feature in election debates is how to assist universities position themselves for the future as modes of education keep developing but the underlying product remains the same.

Five issues will dominate discussion:

Who should go to university: is open demand funding the right approach?

The pressure remains on funding all interested students who meet university admission requirements. The direct cost of the Gillard policy is now largely met, with future growth in student numbers incremental.

There remains lingering sentiment that universities should only be for the brightest on the assumption that that was once the case.

The future reality is that it is hard to be employed without a vocational, education and training (VET) or higher education qualification.

What should government and students contribute?

The rationale is clear for government to support higher education through directly funding universities and advancing money for students’ payments with the students to repay later in their lives.

It ensures that all Australians can gain the post-school education and training they need to underpin their future employment. The return to government is higher personal earnings which stimulates economic activity and taxation revenues.

There is endless discussion about the balance between the direct and indirect investment. One consequence of the election outcome will be an endorsement either to increase the student contribution and constrain the government (Coalition) or hold the student contribution to current levels and increase the government (Labor).

Getting HELP student loans right

There is growing pressure to alter the Higher Education Loans Program (HELP). HELP is still often called HECS which refers only to student payments in publicly supported university places, which now comprise around 57% of HELP only.

The Parliamentary Budget Office has highlighted that funding for HELP is not counted against the main budget since notionally the funds are a loan and asset for government.

Its hyperbolic extrapolation that much of the advance for students is not repaid ignores that for the base HECS-HELP program those advances mostly replace previous direct government payments.

The real options to tighten HELP are those Andrew Norton has proposed which would make repayment kick in at lower incomes, but not as low as between 1998 and 2005, and try to recoup more from those overseas or who die. These amend the detail without harming the scheme.

Should we fund education and research separately?

There is agreement across the parliament - Coalition, Labor and The Greens - that university research must link much better to research end users - business, government and community bodies.

The government’s National Innovation and Science Agenda (NISA) offers incentives for businesses to engage with universities and other research bodies. The challenge is how well business and investors respond.

NISA also improves the incentives for universities to support industry driven research.

It is less clear that Labor supports these changes, and quite clear that senator Kim Carr doubts the capacity to assess the value of research for end users in a system that can balance excellence in research for Australia.

The sleeping giant of research funding is the question of where government funds the salary for academics who research.

Right now it is funded through the Commonwealth Grant Scheme, the base government grant which most assume is an “education” grant.

But the question is clear: should education and research be fully split out and if so, how?

Impact of international student recruitment

The government’s revised international strategy is set to be released just before the budget as the government clears outstanding business before the election is formally called.

One aspect to watch for is whether the various elements to support international research and innovation engagement are drawn together better, to balance the standard emphasis on student recruitment.

There is broad support for the international education role of universities but it also draws out latent concerns about foreign nationals being in Australia, arguments that they supplant Australian students and longer term take not create jobs.

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