Ahead of the year’s federal election, ANUSA and Woroni are collaborating on a set of articles outlining key election issues.
Education policy makers must balance two things: providing a world class education that equips young Australians with skills which benefit the economy; and ensuring everyone has equal access to this education. What is more, they must do so without placing an undue burden on Australian taxpayers, both present and future.
The major parties have always disagreed on how best to strike this balance. Nowhere was this disagreement more pronounced than in 2014, when the Liberal party unveiled a plan which allowed for the complete deregulation of university fees, alongside a 20% cut to funding for higher education.
Following backlash from students and other concerned parties, the Liberal party ‘deferred’ this plan for 12 months. However, the Minister for Education Simon Birmingham has recently announced he intends to ‘refine and improve’ the plan for the 2016 upcoming election.
The Labor party have opposed this plan from the beginning. They argue fee deregulation would usher in an era of $100,000 degrees, and therefore compromise equity of access to education. Labor have promised that if they are elected, they would not deregulate fees, and reverse any cuts to funding for higher education. The Greens also oppose deregulation, and also stress the importance of protecting international students from being exploited by exorbitant fees.
In this report, I will outline the education policies that have been proposed by the major parties, and discuss the impact these policies will have on our future. However, in order to understand these policies, we must understand the context in which they have been proposed.
The Liberal party has stated that their policies are an appropriate response to the unsustainable tax burden that the current funding model represents. In the period since 2009, the cost to the taxpayer of funding higher education increased by 59%. In the same period, the economy only grew by 29%. Liberal commentators describe this discrepancy as unsustainable and unfair. To redress this situation, the Liberal party will likely propose to reduce funding to higher education by 20%.
Predictably, there is disagreement over whether the amount of taxpayer money currently invested in higher education is appropriate. The Labor party are proud of their move to increase funding to higher education from $8 million in 2007 to $14 million in 2013. They argue this investment in education will pay off for Australia – as we undergo a period of economic transformation, we require highly educated graduates to drive innovation, productivity, and creativity.
In light of this, the Labor party have committed to ensuring Australian universities remain internationally competitive, not by deregulating fees, but by paying more money per student. If elected, the Labor party have promised to increase funding per undergraduate student per year to $11,800 in 2018. This represents 27% (or $2,500) more than the plan proposed by the Liberals.
Labor’s proposed increases to federal funding would reduce the costs borne to students – reducing the cost of a five year medicine degree from $125,000 to $52,000, and the cost of a four year law degree from $86,000 to $42,000. Moreover, Labor have committed to legislating a Student Funding Guarantee, and to indexing the funding to ensure the value of the contribution is not eroded over time. This move is estimated to cost $2.5 billion in the first four years of implementation.
Having outlined the proposed funding models, I will analyse the impact of each policy.
The Liberal party’s proposal to cut federal funding to higher education by 20% begets an important question: how will universities make up for the shortfall in income? Universities Australia Chief Executive Belinda Robinson has suggested that fees would likely increase by 30% to offset the reduction in funding, and maintain the quality of education expected by students and employers. If this funding cut is coupled with the deregulation of tuition fees, there would be no way to prevent universities from charging exorbitant fees.
Not only would this increase in tuition fees deter students from accessing higher education for fear of accruing this debt, this policy would also contribute to the national student loan debt problem. The structure of Australia’s current HECS system (where domestic students do not have to pay any fees upfront) means there is no ‘cap’ on how much universities can charge for tuition, as they are not constrained by how much students are currently able to pay. This is part of the reason fees are currently regulated, to prevent universities from saddling unsuspecting students (who have no choice but to attend university in Australia) with a crippling amount of debt.
If fees are deregulated, Labor suggests students may graduate with more than $100,000 in student loan debt. Not only is this a substantial burden on the individual, student loan debt is also a burden on the taxpayer – the very burden that the Liberal policy was intended to alleviate. Of the projected $11 billion cost of unpaid higher education loans over the next 10 years, deregulated fees would account for more than $1.2 billion.
This analysis suggests that deregulating fees only pushes the problem into the future. If the Liberal party policies go ahead, we should also anticipate substantial changes to the HECS loan scheme, as the government attempts to redress the debt problem they inadvertently create. This may include following recommendations from the Grattan institute to lower the point at which graduates must start repaying their debts, from $54,000 per annum to $42,000 per annum. The same report also recommended adjusting repayment thresholds so high income earners pay back their loans sooner.
This observation brings us to the question at the heart of the debate about education policy (sometimes referred to as darkness) – who pays, and when. Should we use taxpayer dollars to invest in a more prosperous future for all, or should we ask the primary beneficiary of education (i.e. the student) to foot the bill for their own education? There are no easy answers to these questions – but hopefully this report has helped you to understand those proffered by the major parties in the 2016 election.