The government will reduce university funding by $2.8 billion in the 2017 federal budget, with students picking up part of the financial burden.
Increased course fees and a lowering of the HELP (Higher Education Loan Program) repayment threshold form part of Education Minister Simon Birmingham’s higher education reform package.
Universities will be subject to an efficiency dividend — which is an annual reduction in resources — of 2.5 per cent over 2018 and 2019.
The cost of the cuts will be partially paid for by students, with course fees set to increase and the HELP repayment threshold to be reduced from $55,000 to $42,000 as of July 2018.
While initial reports speculated that university fees would rise by 25 per cent, it is projected that by 2021 fees will have risen by 7.5 per cent. Next year, fees will increase by 1.8 per cent.
The news that students will bear an increased financial burden has been poorly received on university campuses.
University of Sydney Students’ Representative Council (SRC) President Isabella Brook told Honi that the increase in fees and lowering of the HECS repayment threshold amounted to a “cruel attack” which would “have a profound impact on students, especially disadvantaged students.”
“The proposed funding cuts to our university sector is a move towards an American style university system which is not something we should be aiming to mimic,” Brook said. “The SRC will be taking action against the budget, joining students across the country in a National Day of Action on May 17 at UNSW.”
“The Liberals have $50 billion for corporate tax cuts, but nothing for education,” said April Holcombe, SRC co-Education Officer.
Several students expressed considerable frustration at the proposed changes.
“I’m already halfway through a five-year degree, there’s no changing that now. If I’d known the exorbitant cost earlier I probably would have chosen a shorter degree and taken masters in a country where education is free, like Germany,” said Anna Rushmer, a third year Journalism student at UTS.
According to Ava McConnell, a first year International Studies student at USyd, “the increases feel particularly unfair because they don’t come with an increase in the value or the quality of our degree, so the fees just become more difficult for students to pay back”.
“Even if you forget about the ethics of making it harder for poorer kids to get into Uni and look at it simply from an economic standpoint, someone with a Bachelor’s degree is an enormous return on education investment,” said Justin Shaw, a second year Bachelor of Science (Advanced) student at UNSW. “It makes no sense for a government that talks about ‘jobs and growth’ to do this, especially while essentially giving Adani $1 billion for free.”
The government will justify the fresh wave of cuts in light of a recent Deloitte Access Economics study, which it commissioned. Based on data from 17 Universities, the study found that existing funding for most university degrees sufficiently covers, if not exceeds, the degree’s cost.
For example, the study found that one year of government funding for an engineering degree totalled $26,623, while the course’s average delivery costs were $22,514. Similarly, one year of education study receives $16,793 in funding but costs $13,845 to deliver on average.
The two notable exceptions were degrees in dentistry and veterinary science, which are particularly expensive to teach. Fairfax Media reported that the government intends to provide additional funding for these degrees to compensate for the discrepancy.
Currently, a year of veterinary studies is funded at $32,912 per student, while it costs $51,305 to deliver. One year of dentistry receives the same funding, but costs $42,799.
According to the Deloitte report, universities’ revenue increased by 15 per cent on average between 2010 and 2015, while the cost of course delivery increased by 9.5 per cent. On average, universities recorded a profit margin of 5.3 per cent in 2015. The University of Sydney listed a surplus of $157 million in that year.
A statement from Universities Australia noted that the Deloitte report “only examines the costs of teaching – and does not take account of the costs on universities to meet their other legislative obligations to conduct research, maintain buildings and support their local communities.”
According to USyd’s annual report, the majority of its surplus amount is quarantined and cannot be spent. This is because it is attached to specific philanthropic, research or investment grants.
The University listed its 2015 operating surplus — money that can be spent on day-to-day operations — at $6 million. In 2014, it recorded an operating deficit of $6 million. The University’s 2016 report is not yet available.
If passed, the government’s changes will take effect from 2018.
Note: This article has been updated to reflect the version that appeared in print in Week 9, following further government announcements.