Budget 2016: Full deregulation scrapped but new set of cost saving proposals planned

The government’s higher education announcements for the budget have largely focused on a set of proposals up for discussion with implementation delayed until 2018. These proposals, which are more measured than those of 2014, come in response to strident criticism from amongst the student community and the inability by the Government to pass their previous proposals in the Senate.

In the government’s paper, Driving innovation, fairness and excellence in Australian higher education, Minister Birmingham promises to “ensure there is a reasoned and evidence-driven discussion on higher education reform, without full university deregulation.” Even so, the government has already budgeted for just over $2 billion in savings over the next four years based on these proposals.

“To allow for finalisation of reform details and further input from the sector, experts and students, higher education reforms will not commence until 1 January 2018,” Birmingham said.

In terms of the cost-sharing element of degrees, the discussion paper proposes two options. The first proposes a 20% cut in the government contribution to university degrees. The second proposal calls for a small reduction in Government grants per student with a small increase in the maximum capped student contribution amount. This reflects slightly more conservative measures than the alternative option, equating to an approximately 50/50 cost sharing burden between students and the government.

Although the concept of “fully flexible” fee deregulation has been scrapped, the Government is still proposing that certain flagship degrees be eligible for additional revenue from student contributions. This would give universities “the freedom to set fees for a small cohort of their students enrolled in identified high quality, innovative courses,” in areas where universities have particular expertise.

ANU elite degrees such as the PhB and Engineering R&D might be eligible under this proposal, however, these types of programs cannot make up more than 20% of the university’s student cohort. To ensure that any fees set for flagship degrees are reasonable and fair for students, the Government is suggesting two measures that could be implemented – either the monitoring of fees from an independent body, or the reduction of government subsidies to universities who price their flagship degrees above a certain level.

For postgraduates, several areas of change have been recommended, but as with the rest of the paper, the proposals are more consultative than concrete policies and do not have any costings associated. These changes promise to add additional levels of transparency and consistency to the subsidisation of postgraduate places, as well as increasing the subsidies for programs with ‘significant community benefit’. There is also a suggestion to introduce a demand driven funding system for some or all postgraduate courses.

The Paper suggests a set of proposals related to the HELP program to reduce costs to the government and increase rate of repayments. Changes could see people repaying HELP debts at a lower threshold than the current minimum (4% of $54,000) and higher contribution percentages of repayment for high income earners. Currently, the highest repayment rate is 8% for incomes over $100,520.

Thresholds will also be indexed according to the Consumer Price Index as opposed to average weekly earnings growth, in an effort to combat an estimated 19% of unrepaid HELP debt, a figure which the government has predicted will further balloon.

Amongst other initiatives devised to increase rates of repayments, the government is also considering a household income test for HELP repayments, as well as the recovery of assets from deceased estates. The most significant proposal in this area is the introduction of a loan fee that is similar to what vocational students currently pay under the VET-HELP scheme. The two figures are 5%, which will cover “only a fraction of relating to debt not expected to be repaid,” and also 20%, “which would enable the Government to recover most of the costs associated with debt not expected to be repaid”. This would mean either a 5% or 20% increase to overall amount deferred as part as your HECS debt.

Regional and outer metropolitan universities, which the ANU is classified as, would be eligible for additional money for infrastructure under either a fund or a loan system. This seeks to assist these universities in adapting to local market conditions and improving their long-term financial viability.