The National Centre for Social and Economic Modelling (NATSEM), which is attached to the University of Canberra, has released new estimates of how the May Budget’s changes to university fees are likely to impact on various courses:
The actual extent of fee increases is at this point unknowable although certainly expected to be significant.
Our modelling has shown that the impact will be felt most strongly for low-pay occupations such as nursing or education, and across the board the impacts are larger for females. The impact may be modest for some degrees with strong post graduate incomes and fees that already match up quite closely to the cost of the degree such as business or law.
We analysed a range of typical courses for the University of Canberra and considered the impact on repayments for students. We assumed that students will face a repayment interest rate of 5% which is around twice that of the CPI (the existing indexation) but lower than the typical 10 year Treasury bond rate (the proposed loan interest rate) of 6% over the past decade…
An important driver of this difference is that female income trajectories are impacted by motherhood while males enjoy strong growth in incomes through their late twenties, thirties and beyond. Occupations that are dominated by females such as nursing and teaching are also occupations with relatively poor prospects for income growth…
There is the possibility that universities in a deregulated market could increase fees beyond the current funding envelope. We estimated the impact of a price increase of 20% beyond current costs.
Here, the impacts are again strongest for degrees with relatively low income prospects and for females…
As illustrated above, lower paying professions, such as nursing, are likely to be badly affected by the fee increases, with women also worst affected.
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As noted by Laura Tingle earlier this month, there is the risk that such fee increases could lead to health workforce shortages:
The fastest growing area of the workforce is health. That’s not a bad thing, given our ageing population.
Health Workforce Australia forecasts a shortage of 109,000 nurses by 2025.
You’d think that made it a pretty good career option.
The only trouble is that nursing – along with a range of allied health professions – risks being priced out of the market for rational economic career decisions by the budget…
This is for a job paying a starting income of $48,729…
The HELP debt system tends to hit women much harder than men because of the greater likelihood of interrupted work patterns, and because they are more often employed than men in lower-paying jobs like nursing.
Such an outcome is precisely what you do not want as the population ages. It would also work against the Abbott Government’s paid parental leave scheme, which is being marketed as a measure to promote greater workforce participation from women.
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Such is the contradictory nature of the May Budget.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
