Parkville Station

The federal government’s 2016/17 budget brings no certainty to the future of student fees and higher education funding in Australia, with the government to “delay the implementation” of its controversial higher education reforms, pending a public consultation process.

Key points on higher education:

• There are no policy commitments in the budget about higher education
• Instead, the government is running a consultation process, although that consultation runs through the election
• With many caveats, fee deregulation is not going to happen for at least one more year
• There are no firm changes to HECS-HELP and student loans
• The ‘innovation agenda’ has not translated into an abundance of funding for research

If you want to read about the other, non-higher–ed measures in the budget, check out our full coverage.

Fee deregulation is off the table this year (most likely; for now; caveat emptor)

According to the government, “fully flexible course fees” (that is, fee deregulation) is off the table. However, its consultation paper raises the prospect of allowing institutions to charge deregulated fees for “a small cohort of their students enrolled in identified high quality, innovative courses”. What exactly would identify a course as high-quality or innovative is not discussed at all in the paper.

If the government adopted this model, it leaves open prospects for “deregulation through the backdoor”, as universities seek to have the government qualify all their courses as high-quality or innovative. No doubt the government would see this as a good outcome (deregulated fees and higher quality courses), but measuring the quality and ‘innovationness’ of a University course seems like the devil in the detail — and wouldn’t address the risk of students accruing unservicably-large debts.

With a federal election tipped for the 2nd July, it seems likely that the result of this consultation will never see the light of day: whichever party gets elected will bring their own agenda to the table.

However, by taking such a weak stand on higher education and deferring deregulation for further consultation, the government is trying to reduce the impact higher education has on the coming election campaign.

A variety of changes to HECS-HELP loans — but no clear position

The higher education consultation paper also devotes considerable length to discussing what to do about HECS and HELP. (Didn’t realise they were different things? See the box to the side.)

The basic problem articulated by the paper is cost: the government spends a lot of money subsidising university courses; and the government also lends a lot of money to students through HELP (commonly called a HECS debt)—students owe the government about $40 billion in student loans.

How to attack the first of these, the high cost of directly subsidising courses, is a difficult question for the government, because it means taking money away from someone. In the past, the government had proposed (coupled with fee deregulation) a 20% cut to the size of its subsidies. (These proposals tended to come with a change in how courses are classified, obfuscating how much an individual course’s subsidy gets cut by.)

In its consultation paper, the two options given are: the 20% cut given above, or slightly smaller cut associated with an increase in the student contribution caps (the aim, which makes for a nice soundbite, being to get the government and student to contribute 50% each of the course cost, on average). Neither sound particularly palatable, so the budget plays it safe by committing to neither.

Responses to the consultation paper are due on 25 July. Some student representatives have already raised concerns that this means the bulk of the feedback period will be during the Semester 1 exam period, for a very complicated proposal.

”Innovation” to be funded mostly through private sector

Despite Prime Minister Malcolm Turnbull spending the last six months spruiking the importance of “innovation” in the national agenda, this doesn’t translate into substantial increases in funding for basic research: there are no substantial measures announced into the funding for the Commonwealth Scientific and Industrial Research Organisation (CSIRO), the Australian Research Council (ARC) and National Health and Medical Research Council (NHMRC).

Instead of direct funding for research, the government is introduced a slate of measures aimed at encouraging small business and entrepreneurship, consistent with the general theme in the rest of the budget. This includes one of the few mentions of the CSIRO, expanding its startup accelerator programme.

The arrangements for the Research Training Scheme (RTS), which funds tuition for most local PhD students, are also not flagged in the budget as changing.

What else?

Well, it’s hard to say what is and isn’t, as far as higher education goes.

One controversial proposal in the 2014/15 budget was increasing the interest rate charged on HELP loans — currently, they are “indexed” to follow inflation. While the 2014/15 budget proposed they be raised to the government’s cost of borrowing (that is, how much the government pays to borrow money).

There’s no mention of that proposal in this budget, aside from a couple of paragraphs that proposed the indexation rate might be based on the Consumer Price Index (CPI) rather than the current Average Weekly Earnings (AWE) metric — which would be a slightly higher rate, but with too many acronyms to easily raise a fuss about.

The consultation paper also proposes adding a “loan fee” to HECS-HELP loans. At the moment, FEE-HELP loans have a 20% loan fee (meaning that a loan for $1,000 starts with a balance of $1,200), whereas there is no equivalent for HECS-HELP. In the name of consistency, the government “remains committed to applying a more uniform approach” to loan fees.

There are several other topics considered by the consultation paper, and they will no doubt be subject to much debate over the coming weeks.

All in all, this is at best a space to watch — the real question now is how much higher education takes in the upcoming election campaign, and what the tenor of that discussion is.

See also: Coverage of the rest of the budget.

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