Ben Phillips, principal research fellow at the National Centre for Social and Economic Modelling (NATSEM), has presented analysis claiming that the Abbott Government’s plan to deregulate university fees would raise inflation and drain billions of dollars from the Budget over the long term, rather than saving taxpayers money as originally intended. From The Canberra Times:
The inflation rise would have a knock-on effect on the budget through higher benefit payments linked to the consumer price index, Mr Phillips said.
“Only under the most optimistic fee scenarios would it be likely that the proposed package would save the government money in the future,” Mr Phillips told Fairfax Media. “The fiscal outcome is not likely to be a deficit reduction measure. Rather it would increase the deficit into the future”…
Mr Phillips said a 50 per cent increase in student fees – which he described as a cautious estimate – would lead to an approximate 0.7 percentage point increase in the CPI. This would cost the budget approximately $1 billion extra a year in payments to welfare recipients including pensioners, carers and the disabled…
The government’s commission of audit found the budget would not benefit from higher fees and could be left worse off because of an increase in bad loans.
The findings support those of Professor Stephen Parker, vice-chancellor of the University of Canberra, who in December noted:
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.
There is another avenue by which higher university fees could damage state and federal budgets: by reducing enrollments in private schools.
Indeed, some of the parents that I have spoken to about this issue have said that they are now considering sending their children to secondary public schools and using the money saved to help pay for their child’s university education.
Budget issues aside, I remain opposed to the Coalition’s university reforms for a number of reasons.
First, Australian students already pay a higher proportion of their tuition than those in most OECD countries, and fee deregulation would likely result in significant increases in student debt levels, acting as a millstone on their futures.
Second, the impact on women and certain socially beneficial 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.
Finally, there is no guarantee that the increased fees would be used by universities to improve the quality of teaching/courses. Rather, it is just as likely that they would be used to pad universities’ administration departments, to beef-up research, or any number of other follies.
Thankfully, the cross-bench senators are standing firm and have retained their opposition to the Coalition’s university reforms, meaning they are unlikely to ever see the light of day.