Is This Where We're Heading?


On 26 October 2010 the Federal Government announced the much-anticipated Higher Education Base Funding Review. The Government had signalled its intention to commission this review in the 2009-10 Budget as an outcome of the Bradley Review of Australian Higher Education — and most people in the sector have been looking forward to the opportunity to redress decades of underspending on higher education in Australia.

Between 1995 and 2004 Australia was the only country in the OECD to reduce public expenditure on higher education in real terms. That is, in 1995 about 65 per cent of higher education funding was public, and by 2004 it was about 47 per cent. In 2010, higher education receives approximately 43 per cent of its funding from the public purse. So who pays for the shortfall?

Exactly a fortnight before Australia announced the Base Funding Review, the Browne Report was released in the UK. Entitled "Securing a Sustainable Future for Higher Education", this document is a frightening example of how wrong things can go. The Cameron Clegg Coalition Government has already responded, and its reforms are set to place the burden squarely on students to fund higher education. Students will pay more, for starters — up to £9,000 per annum. Payments will be deferred until graduates earn more than £21,000 but they will be required to repay their debt at 9 per cent per annum; the debt will incur interest whenever the graduate is earning above the threshold.

While at university, every student will have access to a non-means tested living allowance of £3,750 and low-income students (with a family income less than £60,000) may be eligible for additional grants of up to £3,250. None of this applies to postgraduate students, however, who are assumed to have enough savings to support themselves.

As a result, the UK is set to become one of the world’s most expensive countries in which to study, passing Australia by quite a margin (we currently sit fourth in the OECD after the US, Japan and Korea). It’s been greeted with dismay by many in the UK, including the National Union of Students , who are holding a national day of protest today.

What impact is the Browne Report likely to have on Australia’s own review, if any?

Australia’s response to the UK’s recent decision to reduce the number of work hours permitted on an international student visa to 10 per week is illustrative. In Australia, international students may work 20 hours per week, and the Council of Australian Postgraduate Associations (CAPA), along with the Australian Human Rights Commission (AHRC), has been calling to have the restriction removed as we believe it is a basic infringement of human rights and leads to exploitation in the workplace. In every meeting where DIAC is present, they cite the UK’s new limit as an argument for why our 20-hour limit is "generous". You tell me whether the UK’s policies impact on ours.

Yet there are some promising signs that Australia will not go down the same pathway as the UK, not least the clear recommendations in the Bradley Review that we not increase the burden on domestic students, and that Australia in fact needs to increase its public base funding contribution by 10 per cent, a move supported by Universities Australia (UA) . UA has data to suggest that the best formula for a civil society is when higher education expenditure is about 2 per cent of GDP Australia’s is about 1.7 per cent and shared 50/50 between public and private funding.

Australians had a brief hiatus from paying university fees between 1974 and 1988 — all degrees were free for those years. The Dawkins Reforms introduced the Higher Education Contribution Scheme (HECS) along with the new fees, allowing students to defer payment until such time as they earned an income. This was seen as a good way to ensure those who gained the most private benefit from higher education made some contributions to it at such a time as they were reaping those benefits. While hardly uncontroversial, most people, including current students, are broadly in support of the current system, so long as fees don’t outstrip the benefit.

In Australia, HECS/HELP is not repayable until you earn above $44,912 from which point you pay a rate of 4 per cent of all that you earn. HECS repayments aren’t staged like income tax, and so are akin to a "regressive" tax. As with the Browne Report’s recommendations, this is well above the poverty line (which for a single person is just above $21,000), but still somewhat below average Australian earnings of those without any higher education. Surely repayments should be deferred until the graduate is earning above that average, as that is one of the private benefits often cited as a rationale for student fees.

Anotable difference between the Browne Report’s proposal and the current Australian situation is there is no interest payable on a HECS/HELP debt, though the debt is indexed to CPI. Perhaps if the interest was targeted back into higher education it would be defensible, but the Browne Report goes so far as to skim money off student fees as an "incentive" to universities to keep below the £6,000 cap.

The plan for a levy on fees between £6,000 and £9,000 works like this. Firstly, the student incurs a debt of over £6,000. The government then charges a levy at a sliding scale on amounts above £6,000 and the university doesn’t receive the full fee being charged to the student for their degree. Meanwhile, the student continues to pay taxes, of which less are directed to higher education as there is greater reliance on student contributions.

Wait, what? In the Cameron Clegg response to the Browne Report they asserted that funds raised through such a levy would be targeted at access programs such as scholarships — but this looks like sleight of hand given the announcement in the Comprehensive Funding Review (CSR) of an 80 per cent cut to public funding overall, and a total cut to public funding of the arts and humanities.

The Education at a Glance 2009: OECD Indicators Report confirmed the public benefits of higher education. It claims that on average, the net public benefit to society for every male student who receives higher education is $50,000. According to the report’s author, "In virtually every country, the public benefits of higher education outweigh the costs."

In one of the most basic schools of ethics the pursuit of a joyful life, of pleasure, is the most worthy aim. Crucially, the pursuit should not be at another’s expense — one’s pleasure should never cost another theirs. Surely higher education in its truest form — the pursuit of knowledge and contribution to the global public good – is an excellent example of how the pursuit of a joyful life should not and does not impinge on others’ joy. It seeks to create more understanding, and better outcomes for society as a whole. When we transform this worthy aim into a market-driven exercise where the most competitive institutions and students win, we lose sight of the global public good, for, by definition, how can a competition result in a situation in which everybody wins? Let’s hope the outcome of the Higher Education Base Funding Review doesn’t take all its cues from the UK.

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