With the Turnbull Government opposing reforms to Australia’s property tax lurks, ruling-out significant reform to Australia’s superannuation concessions, and yet flagging cuts to corporate taxes, the Coalition has had to come up with other ways to raise Budget revenue. And it appears that university funding will be on the chopping block, according to Fairfax:
Fairfax Media understands other options under consideration include:
•Raising the caps on student fees so students pay an average 50 per cent of the cost of their education, up from 40 per cent currently.
•Lowering the repayment threshold so that graduates pay back their debts sooner.
•Abandoning a plan to extend direct federal government subsidies to private colleges.Vice-chancellors expect the government to release a policy options paper for higher education within weeks, but are bracing for a tough budget. The deregulation of student fees and a 20 per cent cut in funding still remains official government policy…
The Turnbull government is [also] considering the controversial move of collecting student debts from the dead…
There is certainly merit in collecting HECS debts from deceased estates and cutting direct federal government funding to private colleges, where rorting has been widespread.
However, it remains my view that slashing university funding is shortsighted and would deal yet another unfair blow to Australia’s youth. Let’s go over the counter-arguments once again.
First, Australian students already pay a higher proportion of their tuition than those in most OECD countries, and fee deregulation along with funding cuts would very 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 demonstrated when modelling the likely HECS debts of female scientists, nurses and teachers based on typical career trajectories.
Third, the higher fees associated with deregulation could actually worsen the Budget, since under HECS, the Government forwards all the money upfront to the University, and given defaults would likely rise.
Fourth, there is also 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, to pay for lecturers’ junkets, or any number of other follies.
Finally, there is the productivity cost. Malcolm Turnbull has gone to great lengths (and taxpayer expense) to spruik his so-called “innovation agenda”. But surely having a highly educated young workforce free from crippling student debts is a prerequisite for achieving such an outcome?
Thankfully, the Labor Party has proposed a more sensible policy.
By addressing the negative gearing and CGT rorts, and in the process raising some $32.1 billion over 10 years according to the Parliamentary Budget Office, Labor can actually afford to raise university funding, which it has pledged to do:
Labor says its higher education plans will cost $13.8 billion over 10 years, while the Coalition’s policies will cut the spend by $12 billion over the same period…
The federal opposition announced last year that it would take a policy to the federal election which promised to guarantee funding which it claimed would deliver $2500 more per undergraduate place than the Coalition. By 2018, a university will receive $11,800 a year per student, rather than $9300 under the current trajectory. The funding will be indexed to inflation, meaning it will rise to $12,100 the next year. It claimed this would cost the budget a net $2.5 billion over the first four years…
The government is locked into a plan the Parliamentary Budget Office says will cut $12 billion over 10 years, Senator [Kim] Carr said.
“Labor’s plan puts $13.8 billion back into the system over the same time period”, he said.
The barriers facing Australia’s youth are already becoming increasingly prohibitive, and the Turnbull Government’s university funding cuts and deregulation would only add to the pain. Not only will most students 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, as well as increasing automation. This policy also makes a complete mockery of Turnbull’s “innovation agenda” which is all about highly educated Australians driving productive, disruptive ideas and investments.
Add to this Australia’s sky high housing costs, which Turnbull has himself endorsed, 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.
In defending Australia’s property tax rorts, while slashing funding to universities and deregulating fees, the Turnbull Government has effectively launched a war against Australia’s youth.
