The Australian is reporting today that the Abbott Government will compromise on its university reform package in a bid to gain passage through the hostile Senate.
The Government has reportedly flagged that it will abandon its proposed 20% cut to university funding provided the Senate allows universities to set their own course fees – a move that would likely blow another $2 billion hole in the Budget.
The compromise is designed to gain the support of South Australian senator Nick Xenophon and Palmer United Party senators Zhenya Wang and Glenn Lazarus, who voted against the bill last year when it was narrowly defeated 33 against to 31 for.
However, the compromise also risks losing the support of senators Bob Day and David Leyonhjelm, who appear unwilling to support a package that does not create savings for taxpayers:
“If the government gives too many concessions to people who like spending other people’s money then they’ll lose my support because I don’t like spending other people’s money,” Senator Leyonhjelm said.
While the compromise abandoning of the 20% cut to university funding is good news for prospective students, the fact is they would still face an increase in costs if fees were deregulated. In turn, Australian students – who already pay a higher proportion of their tuition than those in most OECD countries – would likely face significant increases in debt levels, acting as a millstone on their futures.
The impact on women and certain professions would also be particularly bad, as NATSEM’s Ben Phillips has demonstrated when modelling the likely HECS debts of female scientists, nurses and teachers based on typical career trajectories.
It is also unlikely that the university reforms, under their new make-up, would improve the Budget, and could even make it worse-off. As noted by Professor Stephen Parker, vice-chancellor of the University of Canberra:
A fundamental feature of HECS is that the Government forwards all the money upfront to the University. So if fees go up…, the Commonwealth shells out more from day one. Default will rise. More students will work overseas – legitimately, this is not evasion – and so only through some arcane aspect of accounting standards can this even look as if it is a savings measure.
This isn’t a savings measure: it is ideology in search of a problem.
Moreover, there is no guarantee that the increased fees would be used by universities to improve the quality of teaching. Rather, it is just as likely that they would be used to pad universities’ administration departments, to beef-up research, to pay for lecturers’ junkets, or any number of other follies.
A broader concern is that the barriers facing Australia’s youth are already becoming increasingly prohibitive, and the Coalition’s university reforms would only add to the pain. Not only will most graduate with higher debts under the Coalition’s plan, but they are also likely to face poor job prospects following the hollowing-out of the economy over the past decade, as well as increasing automation.
Add to this Australia’s sky high housing costs, and a tax system that will increasingly punish income earners while largely ignoring wealth, and the future facing many younger Australians is looking increasingly downbeat.
