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Universities outside the prestigious Group of Eight (Go8) stand to lose a larger share of their total revenue through government funding cuts because of their greater reliance on the Commonwealth Grant Scheme (CGS), new analysis shows.
A union briefing paper suggests regional and outer suburban universities could lose between 5.4% (University of Wollongong) and 8.9% (University of the Sunshine Coast) of their total revenue, but the impact on the Go8 universities ranged from 1.4% (Australian National University) to 4.1% (University of Adelaide).
The government’s higher education package includes a 20% cut to average public subsidies under the CGS, but the impact on the commonwealth contribution to each course varies depending on discipline. The impact on university finances is further affected by the fact that each institution has a different reliance on CGS as a total share of revenue.
As Labor launched a campus-based campaign to fight the reforms despite the education minister, Christopher Pyne, signalling his willingness to compromise, the National Tertiary Education Union (NTEU) warned that non-Go8 universities faced tough choices on how high they would be able to raise fees to compensate for the loss of revenue and still attract students.
Commonwealth-supported university places are funded via the CGS, with Pyne arguing that an average 20% cut in the commonwealth contribution per place would achieve a fairer split between the amount borne by taxpayers and students.
The NTEU analysis cites the latest Department of Education university finance data from 2012, showing that CGS and related grants accounted for about 25% of Australia’s public universities’ total income.
“This means that a 20% cut to CGS funding would result in a 5% cut in total income,” the briefing paper says.
It says the cut “will not impact equally on universities” and will have the heaviest effect “on regional and outer metropolitan universities that are traditionally more reliant on CGS funding as a source of income”.
The figures assume each university maintains the share of CGS and related funding it received in 2012, and assumes the 20% average cut in funding per place is the only policy change.
The government has proposed deregulation of fees, allowing universities to increase student fees to make up for the lost revenue, and the extension of CGS funding to include sub-bachelor pathway programs and private providers. The latter elements are promoted by the government as a way to help disadvantaged students enter higher education and equip them for further study.
The NTEU national president, Jeannie Rea, said she was concerned that Australia would end up with “a much more divided system” where universities with more resources, which are less reliant on the CGS funding, would be in a position to charge more.
Rea said regional and outer suburban universities, which were most reliant on CGS funding and knew the pressures on their students “very well”, would have “real difficulties” weighing up how much they could increase fees while keeping them affordable enough to attract enrolments.
“Trying to find that price point … is actually quite difficult,” she said on Monday.
The Grattan Institute’s higher education program director, Andrew Norton, who was commissioned by Pyne to review demand-driven funding, said pricing decisions were “difficult in every business because of the risk that competitors will offer goods or services that are better value for money”.
“Universities also need to avoid risking compromising their social missions,” Norton said. “Because of these risks, most universities are likely to respond cautiously if given the freedom to set their own fees.”
The Go8 has been leading the charge for deregulation of fees, with the chairman, Ian Young, telling the National Press Club last month that the policy would “give universities the freedom to be brilliant” and focus on their main strengths.
Young, who is also the Australian National University’s vice-chancellor, said several Go8 universities were looking to downsize over time and increase the amount charged to each student, arguing this would “free up” more capable students to attend other institutions – “a trickle-down or a flow-across effect”.
A spokesman for Pyne said the reform package would “extend the demand-driven system to diplomas and other pathway courses and for the first time ever offer commonwealth-funded places to non-university higher education providers, meaning more students than ever will have the opportunity to study”.
“The NTEU has been peddling various pieces of hysterical so-called modelling since the budget that has been routinely dismissed by universities and others,” he said. “By placing university funding on a sustainable footing, expanding opportunities for more students and freeing universities to compete, the government is securing the future of higher education in Australia.”
The opposition leader, Bill Shorten, visited the University of Melbourne on Monday to step up Labor’s campaign against the higher education changes, which are also opposed by the Greens. Given the Palmer United party’s stated opposition to fee deregulation, the package is doomed in the Senate unless a compromise can be reached.
In a stump speech, Shorten said universities must be “accessible to all” and called for rallies on campuses across the country “to send a very clear message to the Abbott government and to the Senate: hands off our education system”.
Shorten said the decision to cut funding, deregulate fees and increase interest rates on student loans represented “a trifecta of shame which will destroy the dreams of ordinary Australians to send their kids to university”.
He said it was “deeply cynical” of Pyne to argue for a reduction in public funding on the basis that university graduates made more money than people who did not go to university but still subsidised those degrees through their taxes.
“I have never met a parent in the working class or the middle class of this country who merely because they didn’t get the opportunity to go to university does not want their child, who they love, to have the opportunity to go to university,” Shorten said. “Education in this country is indeed a public benefit and the whole nation grows, the whole nation blooms and blossoms, is nourished by the power of education. This is a government who knows the cost of everything and the value of nothing.”
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