Education Minister Simon Birmingham has revealed $2.1 billion in revised cuts to universities as he scraps the former Gillard government’s demand-driven system, a move one education expert says is “much worse” than the Coalition’s now-dumped May budget reforms.
The government had sought to repair the budget by $2.8 billion through the introduction of a 2.5 per cent efficiency dividend, an increase in fees and the lowering of the HELP debt repayment threshold, but the suite of budget measures was rejected by the Senate earlier in the year.
On Monday, as Treasurer Scott Morrison outlined the Mid-Year Economic and Fiscal Outlook, the government confirmed it had found a way to claw back $2.1 billion from the sector without legislation.
Under the new package, funding for universities will be frozen for two years and then tied to working age population growth from 2020.
Senator Birmingham argued on Monday the nation needed to “face up to the task of putting our higher education costs on a more sustainable, responsible path”.
He slammed universities for turning a “blind eye to the challenges confronting both the federal budget and higher education”, saying the new measures would force them to “focus on the needs of students”.
Senator Birmingham also unveiled a revised plan to lower the threshold when students start paying back their loans when they earn $45,000, up from $42,000 under the previous plan, but $10,000 less than the current threshold of $52,000.
A cap on the amount students can borrow for a degree will also be introduced, with $104,440 for the majority of students, and $150,000 for those studying medicine, dentistry and veterinary science.
‘A much worse measure’
Andrew Norton, a higher education expert at the Grattan Institute, said the new package represented the “end of the demand-driven system”.
Mr Norton, who conducted a review of the demand-driven system under the Abbott government, told The New Daily the policy would mean “fewer students will go to university” over the medium term.
“This is a big turnaround, and it’s been driven not by any fundamental dissatisfaction with the demand-driven system, just that their other savings have been blocked by the Senate,” he said.
“As a result, they’ve done something that doesn’t need Senate approval, even though it’s a much worse measure than the one they put up in May.”
Mr Norton said that the system had “some problems at the margins” but was an “overwhelming success”.
“I’m actually very sad about it. I think it was one of the most important reforms over the last generation of higher education policy,” he said.
“We’re going backwards ending it this way.”
‘Frozen in time’
Aimed at increasing the proportion of young people with undergraduate degrees to 40 per cent, the former Labor government’s decision to remove the cap on university places saw domestic undergraduate enrolments grow by 33 per cent between 2009 and 2016.
But completion rates have fallen over the same period while student debts have grown. Meanwhile, it is estimated that one quarter of all new student loans are not expected to be repaid.
Labor’s education spokeswoman Tanya Plibersek said on Monday the new reforms “effectively put a cap on the number of uni places, taking us back to the bad old days of John Howard”.
The sector’s peak body, Universities Australia, was furious about the new reforms on Monday, saying it meant university funding would be “frozen in time”.
“And for universities that are still growing their student numbers to meet the needs in their local communities and regional economies, this will be an even deeper cut,” Universities Australia chair Professor Margaret Gardner said.
National Union of Students president Sophie Johnston said despite the reduced cuts there were “no silver linings” in the new package.
“This plan is just a way to go behind the Senate for a budget that they couldn’t get through,” she told The New Daily.
“I’m really concerned about the end of the demand-driven funding model that has meant so many people that didn’t have access to education could go to university.”