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Universities deregulated, Medicare weakened, welfare overhauled: Budget

Lane Sainty, Georgia Kriz and Justin Pen report on the Federal Budget’s ramifications for young people.

Photoshop by Andrew Passarello. Good movie by George Lucas.

University fees will be completely deregulated and students asked to pay 20 per cent more for their degree, in measures presented in today’s Federal Budget.

Treasurer Joe Hockey has introduced a raft of spending cuts and regressive methods of revenue-raising in the Abbott Government’s first budget.

The changes have played into a broader narrative around needing to balance the budget, with Hockey saying “This Budget is not about self-interest. It is about the national interest.”

In particular, changes in the areas of higher education, health and welfare policy will hit university students.


Higher Education: “We are a nation of lifters, not learners”

The Budget will force massive changes upon higher education providers and students, with most reforms set to kick in in 2016.

In line with recommendations made by the Kemp-Norton review, universities will be able to determine the cost of the degrees they offer from July 2016.

“Some course fees may rise and some fall,” said Hockey in his budget address.

This comes despite the Commission of Audit conceding “uncapping university fees could lead to very large fee increases”.

“While universities are currently able to set student contributions below the maximum level, almost no universities have taken up that opportunity,” the Commission found.

The Bradley Review of Higher Education released in 2008 further suggested that “prices at [more established universities] would rise very sharply” due to an assortment of factors including reputational status and locational advantages. The Commission of Audit also noted that, when the United Kingdom lifted the maximum price of tuition by 300 per cent, all tertiary institutions took on the highest possible fees.

In addition to the likelihood of a real fee increase, the proportion paid by students is set to rise, on average, by 20 per cent.

Currently, students pay approximately 41 per cent of the total price of their degrees. Changes introduced in the federal budget will see students pay 61 per cent. This fee increase is 6 per cent higher than was recommended by the Commission of Audit.

Revenue raised by these savings has been slated to pay for the expansion of the demand-driven system, which will see the creation of Commonwealth Supported Places for higher education diplomas, advanced diplomas and associated degree courses.

To counteract the effect these fee hikes would have on access to education, the Coalition will require universities to redirect 20 per cent of additional revenue raised, to Commonwealth Scholarship schemes (CSS), which will aim to increase the participation of low socioeconomic students.

“One dollar out of every five dollars in additional tuition revenue will be used to fund scholarships to those from disadvantaged backgrounds”, said Hockey.

Significantly, revenue for this fund is to be exclusively drawn from the difference in price of degrees under the current system and the new, deregulated system. If, for instance, a university made $200,000 from fees in the current system and $300,000 under the deregulated system, $20,000 of this difference would be placed in the university’s scholarship scheme.

The determination of low SES eligibility, however, remains the ambit of individual institutions, a Treasury spokesperson told Honi. The Government would merely provide “guidance” for the operation of these schemes.

A report compiled by the Melbourne University’s Centre for the Study of Higher Education in 2008 further noted that “scholarships, bursaries and fee remissions [were] not the entire solution to increasing access,” citing complementing factors such as the insufficient provision of Youth Allowance.

In 2012, only 8.64 per cent of students enrolled at Sydney University came from low SES backgrounds, compared to the national average of 15.7 per cent. In the same year, less than 10 per cent of University of New South Wales students, and less than 5 per cent of students from the Australian National University came from low SES backgrounds.

Changes to the Higher Education Loan Programme (HELP) scheme have also been introduced. Currently, the interest rate on HELP loans is fixed to inflation. Under the changes, the interest rate will be tied to the cost of federal borrowings, equivalent to the yields on ten-year bonds issued by the Government. This rate remains strictly higher than the rate of inflation, but will be capped at 6 per cent.


Health: From universal healthcare to specialised wealthcare

The Budget introduces a rise in the cost of basic healthcare for all Australians, with Hockey announcing the introduction of a $7 co-payment for GP visits from July 1 2015. The co-payments will apply to 70 per cent of GP visits, with exemptions for some services which target patients with particular, ongoing health needs.

All savings from health expenditure reform will be invested in the newly created Medical Research Future Fund (MRFF), a $20 billion investment fund directed at medical research. It is projected to reach its target of $20 billion by 2019-20 and will be capital-protected, meaning that funds distributed from the MRFF will not exceed its interest earnings, ensuring that revenue from the fund is not depleted over time.

The MRFF fund will receive $5 from every $7 co-payment, with the other $2 going to the provider. There are no absolute exemptions to the GP visit co-payment, with holders of healthcare concession cards and children under 16 required to pay $7 for their first ten visits in any given year.

“Health services have never been free to taxpayers so patients are being asked to make a modest contribution towards their cost,” said Hockey.

The previous bulk billing incentive paid to providers will be replaced by the Low Gap Incentive, which will now be paid to providers who charge the $7 co-payment, and who cease charging concession holders and children under 16 after ten visits. The incentive will not change in value.

Medicines subsidized by the Pharmaceutical Benefits Scheme (PBS) will become more expensive, with general patients now required to pay an extra $5 for all medicines listed as part of the PBS. Concession cardholders will pay an extra $0.80.

Changes to the Medicare Safety Net have also been introduced, which lower the point at which Medicare will cover a patient’s out-of-pocket medical costs. Under soon-to-be implemented changes from the previous Labor government, the thresholds will be $654.30 for single concessional patients and $2,050 for single non-concessional. However, under the changes released in the Budget, that threshold will drop to $400 and $700 respectively.

However, the lowered threshold will be coupled with an increase in the costs covered by the patient after the rebate is applied. Previously, after reaching the safety net threshold, 100 per cent of additional costs were covered by Medicare. That has been decreased to 80 per cent.

These reforms were deemed necessary “as a result of Labor’s poor Budget management, wasteful spending and increasing debt,” said Minister for Health Peter Dutton.

The Government will save just over $1.5 billion dollars through the changes to Medicare, the PBS and the safety net, which will go into the MRFF.


Welfare: Work for the prole

Work for the Dole will be re-introduced from January 1 2015, with jobseekers up to 30 years old applying for either Newstart or Youth Allowance now required to participate in Work for the Dole activities. The mandatory work requirements will not apply for people engaged in study, workplace training, or who have a serious disability.

Under the new arrangements, the payment cycle will take on a cyclical structure, with payments only available every other six months. Applicants will have to wait for a six-month period before receiving the benefit, which can be shortened by one month for every year of work prior to receiving the benefit. They will then receive the benefit for six months while participating in a 25 hours per week of Work for the Dole requirements.

From thereon, the benefit and work requirement will be cut off for another six months and then both reinstated for another six months. This pattern will continue in an on-and-off-again fashion until the person receiving the benefit turns 30 or finds employment.

Work for the Dole activities may involve horticulture, painting community buildings and labouring, a Treasury official said.

In other changes to youth welfare payments, the Newstart minimum age is being raised to 25 across the board, meaning those aged 22-24 will only be able to access Youth Allowance. This signals a decrease in payment for 22-24 year olds currently receiving Newstart, which has a maximum per fortnight payment of $510. They will be moved on to the Youth Allowance payment, which has a maximum $414 per fortnight payment.

Another measure introduced in the Budget dictates that students will not receive payments while on an overseas holiday unless they are studying or involved in a family emergency.