EQUIPPING AUSTRALIA TO MANAGE ECONOMIC TRANSITION: THE MISSING ELEMENTS IN BUDGET 2017

16 May 2017

Federal Budgets can be as noteworthy for what they do not include as for what they do. The one handed down by Treasurer Scott Morrison on May 9 is no exception.

This is especially the case when it comes to universities and their students.

In his Budget speech, the Treasurer acknowledged the impact of the profound economic changes that challenge us. He referenced the significant impact of “technological change, globalisation and the end of the mining investment boom” and honed in on the frustrations of people being left behind.

But what was not in the Budget was a longer term vision of how the nation will really grapple with these changes and a recognition of the key role played by universities as we transition to a knowledge and technology-based economy.

The economic transition is part of a seismic shift occurring around the world as profound and unpredictable as the industrial revolution. No surprises then, that people are fearful about what it means for themselves, their families, their communities and the nation.

What is needed is a renewed resolve to support people to negotiate the changes that will be forced upon us over the next decades.

Universities and their students are at the centre of this economic transition through their education and research – and through their significant and expanding success as a national export sector.

Through their research and innovation programs, universities will help reconfigure and create the industries and jobs of the future. And in the education they deliver, universities will produce the graduates needed to meet evolving labour market demands.

The Australian university sector has demonstrated that it is one of the most respected but equally importantly, one of the most flexible and adaptable, in the world.

It is ranked as one of the most efficient and globally oriented sectors – and at the same time it has a strong local role in regional, rural and remote communities as well as the outer suburbs of metropolitan areas.

Universities are significant employers with huge spillover benefits for their local economies. They are often the mainstay of their communities. Facilities and services for their local communities range from medical and dental clinics, to community and sporting venues, and even act as emergency shelters during natural disasters.

Australian universities have demonstrated how adept they are at adapting their degree courses to suit a larger cohort of students seeking skilling and re-skilling offering more flexible timeframes, modes of delivery and content.

Box 1: Key measures proposed in the 2017 Higher Education package include:
    •   ‘Efficiency dividend’ cuts of 2.5 per cent each in 2018 and 2019
    •   Withholding a further 7.5 per cent of CGS funding for ‘performance’ payments
    •   Public/private share of funding for courses moves from 58:42 on average to 54:46 in 2021
    •   A proposed change to the repayment thresholds for HECS/HELP loans
    •   A $1394 loading for government funding of vet science and dentistry places
    •   Replacing subsidies for New Zealand permanent residents with access to FEE/HELP loans for
        all permanent residents
    •   The creation of another six regional study hubs (in addition to the two existing hubs at Cooma
        and Geraldton)
    •   Reducing the number of post-graduate places and introducing post-graduate scholarships
        from 2019
    •   Enabling courses to be capped with a review on matching places to students needs to be
        undertaken every three years
    •   Replacing the $3,271 enabling course loading with the ability for universities to charge the same
        as a fee to be covered by HECS/HELP
    •   Teaching awards to be transferred to Universities Australia to administer


Access to university for under-represented groups has also continued to improve with gains made by Indigenous students, those from a low socio-economic backgrounds and from regional and remote areas.
All this at a time when the Government is asking universities to do more - but with less.

A report in The Australian the day after the Budget noted that one in five of the nation’s universities was already in the red in 2015 – before the proposed Budget cuts amounting to $2.8 billion.

These included universities servicing some of the most remote areas in Australia and large numbers of educationally disadvantaged students.

Universities Australia has long argued that funding universities is an investment in Australia’s future – not a drag on the Budget. There are significant short, medium and long-term benefits for the whole nation that flow from the sector’s world-class education and research.

As an export earner, and as a social and cultural contributor, the benefits to the nation are vast.

The former Economics Editor of The Age, Tim Colebatch made this very point in his commentary on the Budget in his analysis for Inside Story.

“Tertiary education is already Australia’s third-biggest export industry, and if nurtured well, it could provide a vital source of income for the nation for generations,” he wrote.

Colebatch questions the thinking behind the proposed Budget cuts to university funding and the changes to the HECS/HELP scheme requiring graduates to repay loans faster.

“What is the benefit to Australia in cutting university budgets, or in creating disincentives for young people to study? I don’t get it, and I’d be surprised if the Senate does either,” was Colebatch’s view.

If we want to nurture international education, we must preserve and continue to build on the very high quality education and research offered by Australian universities.

The Budget’s higher education package had little to say about the funding of university research, even though it underpins national innovation and the success of the international education sector.

Universities were pleased, however, to see the national roadmap on research infrastructure released at the end of Budget week, and look forward to the announcement of an investment in this vision.

Still to be determined too, are the details of how the Government’s plan to introduce “performance” funding measures for universities will work.

Universities Australia stands ready to work with the Parliament to ensure this proposal does not result in perverse incentives nor undesirable consequences.
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Now, more than ever, we need strong and vibrant universities to equip Australians to deal with the mounting winds of global and economic change.