Analysis by Cadence Economics for Universities Australia finds the graduate-cutting funding freeze will harm both Australia’s economy and the Government’s tax take.
It reveals that fewer graduates, due to the freeze, will cut federal tax revenues by between $2.2 billion and $3.9 billion, and cost the national economy between $6.9 billion and $12.3 billion over the next 20 years.
For every Australian who misses out on a university qualification due to the Government’s funding freeze, the cost to GDP is $471,000 and $152,000 in lost tax revenue.
Universities Australia’s Chief Executive Belinda Robinson said the figures showed clearly that the university funding cuts are a false economy.
“It’s a simple equation — less university funding means fewer skilled graduates, a hit to labour market productivity, and less tax revenue for government,” Ms Robinson said.
“The work tells us that this short-term Budget saving will create unnecessary long-term economic pain by eating into future tax revenue and productivity, and damaging our economy,” she said.
Last week, Deloitte Access Economics predicted the Budget will be $7 billion stronger than forecast in December — when the university funding freeze was inflicted.
“There is no justification for persisting with this economy-curbing freeze,” Ms Robinson said.
“By reversing the university funding freeze, an economic own goal would be avoided,” she said.
“For all the talk of an ‘infrastructure Budget’, education and research are critical infrastructure that will generate Australia’s long-term economic growth.”
“This is the infrastructure that will enable us to compete with our economic rivals who are investing heavily in these areas.”
“We should make the investment now to prepare Australians for an economic future that will demand higher skills and education for more of our population.”