University funding cuts are looming, big business is booming

we also found some pictures of a young Simon Birmingham in an old issue of On Dit, 1994.

Under the Turnbull government, the current funding structure for the tertiary education sector will be subject to a major shake-up in the interest of greater transparency and accountability to both tax payers and students. The proposed reform to the model is set to see a price spike in tuition fees, payment contributions re-proportioned while gutting a hasty $2.8 billion in education funding.

Birmo and his ticket, Regenerate!

Key points:

  • Full deregulation of university fees, as recommended in the 2016 federal budget, will definitely not be going ahead
  • However, there will be significant changes towards the student repayment structures
  • Student contributions to increase, while tax-payer contributions will decrease
  • Loan repayment threshold to be lowered to $42,000
  • Save the date for the Federal budget: 9 May
“Greater transparency and accountability for both tax payers and the students”

In his address to university leaders, business groups and students, Minister Birmingham has thrown out the audacious budget suggestions made by his predecessors in the Liberal Party (shout-out to Christopher Pyne’s 2014 deregulation of fees). Starting from a “clean slate” this education package shows a calculated attempt in balancing the conflicting demands of financial sustainabilty and deliverance of quality education. The Minister reiterated that the policies proposed were based on the findings in a 2015 report by Deloitte Access Economics and consultation with key stakeholders.

Student contributions to increase, tax payer contribution to decrease

Since the HECs/HELP scheme was introduced back in 1989, student enrolments in tertiary education have only increased. Commonwealth supported students currently pay for 42% of their degree while tax payers foot 58% of the bill. Under the proposed changes, tax payers will subsidise 54% leaving students paying a higher share of 46%.

Loan repayment thresholds to be lowered significantly

Graduates who earn more than $52,000 are required to start paying back their HECs/HELP loans. Minister Birmingham proposes that graduates earning $42,000 will start paying back their student loans with a 1% repayment rate which will be indexed to counter inflation. It is calculated that a graduate on the minimum salary threshold will be paying back their loan at $8 per week. Graduates earning more than $84,500 will pay back their loan faster at 7% costing around $17 per week.

Through the lowering of the income threshold, all students will inevitably start paying back their loans earlier on in their careers.

Introduction of Key Performance Indicators to address retention rates

With a suggested $2.8 billion in funding cuts, universities will be fiercely competing for more government funding. At least 7.5% of funding will be contingent on the universities’ performance in two key areas: student performance (retention and completion) and transparent reporting (admission numbers and finances). It is possible that universities falling short of these targets will not receive funding from the Government Grants Scheme.

Other juicy bits

  • Contrary to rumours that the program would be axed, the Higher Education Partnership — which encourages students from low SES backgrounds to attend university — will be embedded into legislation with its funding streams refocussed.
  • Universities can introduce 2 year diplomas and sub-bachelor courses to better equip students with the current industry demands
  • $37 million will fund the creation of new postgraduate scholarships
  • Veterinary and dentistry to get a boost in funding due to the high expenses in running these courses.
  • In the hope of driving innovation, money will be invested into integrating work experience and industry training opportunities with study.
  • This juicy policy statement from Birmo in 1994
You can read the rest of this interview here.

The Deloitte Access Economics report remarks on Australia’s shift towards the tertiary services sector and provides imperative evidence that investment in education brings about both public and private social and economical benefits.

In an effort to deliver a quality education, drive innovation and improve accessibility, the Turnbull government sees fit to adopt a laissez-faire approach to education reform by reducing public expending on the sector.

Of course, these proposed changes are essentially just a wish-list. For Birmingham’s wishes to come true, the Liberal Party will need to past the legislation through the senate — which might be acheivable with the support of key cross-benchers. If passed, the proposed measures are likely to take place from 2019.

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