University cuts help pay for Gonski school reforms

The higher education sector is to take heavy budget cuts to help pay for the government’s Gonski school funding plan, a key measure in Julia Gillard’s bid for re-election. About A$2.3 billion will be saved…

Tertiary education minister Craig Emerson has outlined heavy cuts for the higher sector to help pay for the Gonski school reforms. AAP image/Alan Porritt

The higher education sector is to take heavy budget cuts to help pay for the government’s Gonski school funding plan, a key measure in Julia Gillard’s bid for re-election.

About A$2.3 billion will be saved in the portfolio over the budget period, through a mix of measures that target both universities themselves and those paying fees.

In addition, another A$520 million will be harvested by the cash-strapped government from capping the tax deduction people can get for their self-education expenses.

The tertiary education measures include an efficiency dividend for university funding of 2% next year and 1.25% in 2015. The dividend will average A$300 million a year, a total of A$900 million over the budget period.

The 10% discount available for paying fees upfront is to be removed and the 5% bonus for voluntary repayments of HELP debts will also go, producing savings of about A$230 million.

Student start-up scholarships will be converted into loans, repayable along with students' university fees after people are earning a specified level of income. This will save A$1.2 billion.

Tertiary Education Minister Craig Emerson said that taking account of the A$2.3 billion savings, Commonwealth funding for higher education would still continue to increase sharply, as would the number of higher education places.

The Gonski school funding plan will be discussed at Friday’s Council of Australian Governments meeting, with the government currently frantically trying to negotiate a deal with the states.

“Prime Minister Gillard has committed to making every school a great school,” Dr Emerson said.

Treasurer Wayne Swan announced that from July next year work-related self-education expenses will be more fairly targeted through an annual cap of A$2,000 a person.

Mr Swan said the majority of those with self-education expenses would not be affected – the typical claim for formal qualifications was A$905, less than half the proposed cap. For other expenses, such as conferences, seminars and workshops the typical claim was only a few hundred dollars.

He said the present uncapped system provided an opportunity for people “to enjoy significant private benefits at taxpayers' expense.

“Without a cap on the amount that can be claimed under this deduction, it’s possible to make large claims for expenses such as first class airfares, five star accommodation and expensive courses.”

Universities Australia said the A$2.3 billion represented the biggest reductions in funding to the university system and student support since 1996. Almost A$1 billion would be cut from university revenue with the remainder of the burden falling on students.

Chair of Universities Australia, Glyn Davis, said the cuts came on top of the A$1 billion stripped out of the system less than six months ago in the government’s mid year budget review.

“We are concerned at the long-term impact these cuts will have on university research and education,” Professor Davis said.

“The magnitude of the cuts made to the sector over the past six months will challenge the ability of universities to continue to meet the high standards of educational quality expected of them. These cuts also come at a time when Australia already sits, disturbingly, 25th out of 29 advanced economies for public investment in universities – as a percentage of GDP.

“For students, the loss of a range of income support measures will be compounded by the inevitable withdrawal of existing academic and professional support services provided by universities.

“This comes at a time when global competition has never been more fierce, when our competitors are investing heavily in higher education because they recognise that funding higher education and research is a long term investment in their country’s future well-being.

“Our market research shows that 88% of parents want their children to go to university, 93% consider universities as important in providing the skills and knowledge for tomorrow, and 87% support an increase in funding for universities."

Opposition leader Tony Abbott said the only way to get the investment needed in education and disability reform was to have a government able to deliver a stronger economy.

Greens leader Christine Milne said: “Cutting one area of education to fund another is wrong.

“These funding cuts are a direct result of the Government’s failure to fix the mining tax.”

Country independent Rob Oakeshott said there must be no more cuts for the tertiary education sector in the budget.

Independent Andrew Wilkie said the decision was robbing Peter to pay Paul and he would not support it.