Leyonhjelm: University reform would eliminate our deficit

Taxpayers would save $35.3 billion under a radical Liberal Democrats plan to abolish public funding of tertiary education and apply home-loan interest rates to student debt.

by Bernard Lane | Editorial Page Editor
The Australian, October 17th 2017

An end to federal funding for teaching and research in universities and training colleges would add $35.3bn to the budget bottom line by 2020–21, according to a costing by the parliamentary budget office.

“It is a pretty healthy figure in terms of savings — that would ­almost eliminate our deficit ­immediately,” said Liberal Democrats NSW senator David Leyonhjelm. The budget deficit forecast for 2017–18 is $29.4bn.

The rationale for the policy is to shrink government, relieve the burden on taxpayers and allow the market to get better performance out of the education sector.

Senator Leyonhjelm admitted no government today would terminate tertiary funding but said the mood would change as Australia kept heading down the road to a Greek-like financial crisis with ­unsustainable debt. He said his party’s tertiary education policy was “affordable, reasonable and I think an eminently sensible ­approach but we’re not a very sensible country at the moment”.

Universities Australia chief executive Belinda Robinson said the Liberal Democrats’ full suite of “scorched earth” policy proposals were “right out there on the far side of crazy”.

“This is basically a blueprint to kill the Australian economy, decimate government revenues, trash the nation’s $28.6bn a year income from international education, and turn our world-class research capability into a wasteland,” she said. “It’s spectacularly cavalier about the policy settings needed to secure Australia’s future.”

The PBO analysis predicts a “substantial” drop in demand for student places with deregulation of the university sector, and a spike in tuition fees and debt for those students still keen to enrol.

Senator Leyonhjelm said he was not troubled by fewer students on campus.

He expected university fees might roughly double but institutions could be forced to engage in “a sort of discounting war” to keep fees at a level the market could live with. He said loss of public money for research would push universities to pursue projects more in line with industry needs.

It could also make redundant the jobs of 364 (or 40 per cent) of the federal bureaucrats who work on post-secondary education, Senator Leyonhjelm’s office said.

Senator Leyonhjelm’s party also wants to cut the cost to taxpayers of the student loan scheme, which has about $50bn in outstanding debt, and plans to introduce amendments along these lines to the government’s higher education bill.

However, the lion’s share of savings in the policy comes from cutting off federal funding, not from changes to student loans, which contribute only $760 million by 2020–21 and $320m by 2027–28.

Originally published by The Australian on the 17th October, 2017 as “Call to End Funding by Liberal Democrats is on ‘Far Side of Crazy’