As the Parliament begins debating legislation on Wednesday to consider a further $2.8 billion cut to Australia’s public investment in higher education, many global economic powers are headed in the opposite direction. They’re gearing up in the high-stakes global race to expand the skills of their workforce, to create new jobs, new technology, and new industries from research breakthroughs. China has been building the equivalent of almost a new university every week. And South Korea, which has doubled its research spend as a percentage of GDP over the past two decades, now has 47 per cent of its 25-34-year-olds with a bachelor’s degree – compared to Australia’s current 30 per cent. India has a goal of a higher education enrolment rate of 50 per cent by 2030.
Government funding of universities matters for exports, innovation and new jobs. Economic forecasts suggest that up to 40 per cent of the jobs that exist today will disappear within two decades. Australia needs to seed new enterprises to replace the ones that are already being lost across our economy. Our graduates – supported by the research in our universities – will be a major catalyst and creator of those new jobs and businesses. Australia also needs to capture a bigger proportion of the investment of global companies. Global investors seek out strong research capacity and highly educated workforces. And, as international students can choose anywhere in the world to study, we have to continue to ensure that Australia’s universities safeguard quality to continue to attract them in a fiercely competitive global market.
Could hit regional universities
Australia’s universities are also large employers in their own right, with over 120,000 employees (spending well over half their revenue on people) across a wide range of occupations and buying services that support the employment of many thousands – over 40,000 – more.
So why weaken the very university system on which our economy and our nation will rely to create new jobs, grow our economy and bring in a record $23 billion a year in export income?
We already know that many regional and state economies are poised precariously. In South Australia, which has been hit hard by manufacturing shutdowns, job losses in higher education would have a ripple effect across the state economy. The legislation would cut $90 million out of the state’s three public universities. Modelling suggests this would cost up to 220 jobs. Labour market expert Professor John Spoehr warned that the cuts would put further upward pressure on SA’s already challenging unemployment rate.
Across the country, it’s the same in the regions and in the growing metropolitan areas. Charles Sturt University estimates the proposed cuts would result in the loss of up to 90 employees based in rural and regional New South Wales – which could lead to the loss of 270 jobs in those communities. Victoria University, which serves Melbourne’s battling western suburbs, would also face a major challenge to absorb the cuts – given it is currently in deficit. It estimates it would have to cut at least 50 jobs.
Some would have you believe Australian universities aren’t committed to making efficiency gains. This simply isn’t true. The reality is that our universities are amongst the most efficient in the world. In fact, the Universitas21 index ranks Australia’s university system third in the world for its “output” – graduates and research – despite sitting in 15th place for investment in the system.
Over the past decade, in particular, universities have sought to make precious funding go further and do vastly more for the communities and the nation we serve. We’ve faced rising fixed costs such as utility bills, and we have lost access to our national infrastructure building fund so that all maintenance and construction of everything from lecture halls to laboratories must be found by universities themselves. Since 2011, universities and students have already contributed budget cuts of $3.9 billion, and we have been tasked with doing even more to repair the federal budget.
Last week, the minister accused the sector of responding to the proposed cuts as if we “don’t believe the basic laws of business and economics apply to universities”. But here are some basic economic realities: the estimated federal budget deficit is declining, and first-year student enrolment growth has now tapered off. And another economic reality: you cannot inflict a further billion-dollar funding cut to universities – on top of those already made – without causing job losses, fewer student services, and harm to Australia’s regional economies and our country’s future.
Already one in five universities has an operating deficit. Further cuts will push more into the red. This is not a prophecy of doom, but simply pointing out the facts of how these cuts will affect university budgets and the communities we serve.
The government has suggested that its funding to universities would still grow by 23 per cent if this legislation is passed. This is misleading. This is a real cut over the next four years. Students will accrue higher debts but universities will have less to spend on their education, fewer staff to teach, fewer staff to support students, and less money for education that draws on the latest and best knowledge.
The pace of economic change around the world and in Australia is quickening. We can expect more disruption, and new ways of working.
Which brings us back to the key questions at hand.
Will these cuts to universities make Australia a smarter country? Will they make us a more prosperous country? And will they help to keep jobs and wages in Australia at a time when others are looking to seize a global advantage?
I think they’ll do the opposite.
Professor Margaret Gardner is chair of Universities Australia.
Published in The Australian Financial Review.