Student resistance to Christopher Pyne’s plan to allow universities to raise their fees will find an unlikely champion in Clive Palmer’s senate bloc. By Sophie Morris.

PUP to fight Pyne’s uni funding cuts

Clive Palmer never finished his journalism studies at the University of Queensland in the 1970s. But the classes he took were free, thanks to the Whitlam government. He says he couldn’t have afforded them otherwise. Now he is adamant that all Australians should have that same opportunity.

As Education Minister Christopher Pyne prepares to overhaul higher education, he will have to contend with the “no-fees-for-degrees” stance of Palmer and his crucial senate voting bloc.

“My view is we should have free education at universities for Australian students,” Palmer tells The Saturday Paper. “We don’t support charging more to Australian students, that’s for sure.”

This clashes with Pyne’s desire to shift the cost of higher education away from taxpayers and towards increased private contributions, as he promises to “set universities free” to compete globally.

“Government investment alone is not enough to ensure a well-functioning higher education sector,” Pyne said in a speech in London this week.

Now he is armed with the findings of the government’s Commission of Audit, published on Thursday, which makes the case for higher student payments as part of a bid to deliver a surplus of 1 per cent of gross domestic product by 2023-24.

Commission of Audit recommendations

The five-volume report, from a panel chaired by businessman Tony Shepherd, reads as a fascinating primer on what policy changes would be open to a government whose desire to rein in spending and pare back the public sector was not tempered by the bothersome need to face voters. Needless to say, not all its recommendations will be adopted. But higher education is one area where the government is preparing to act and fee increases are on the cards.

Such increases would require changes to the Higher Education Support Act. Labor and the Greens would block this in the current senate and, from July, the Palmer United Party will hold sway.

This raises the intriguing prospect of Palmer-aligned senators emerging as the unlikely heroes of student unions: “The Brick with Eyes”, Glenn Lazarus; national service advocate Jacqui Lambie; engineer Dio Wang; and motoring enthusiast Ricky Muir.

Pyne has prepared the ground for what Universities Australia chief executive Belinda Robinson says could amount to a “fully fledged re-engineering of Australia’s higher education system”.

Three issues are under consideration. One is the extension of public subsidies to private colleges. This was recommended by a government-commissioned review, by David Kemp and Andrew Norton, and Pyne has all but endorsed it.

The second associated change is how to fund this. Kemp and Norton suggested a decrease in the per-student subsidy and an increase in fees. In other words, public funds would be spread thinner and students would make up the difference. Calculating the cost is difficult but Norton says it could grow to about $450 million a year, given current enrolments and as some students transfer from vocational training.

The third issue is whether government limits on fees should be axed, allowing prestigious universities to increase fees to boost revenue. Pyne has lent some support to this, saying he wants Australian universities to be among the world’s best and that public funds would not suffice.

Vice-chancellors are almost as nervous as they were in 1996, when another new Coalition government was wielding the budget axe. There’s a story vice-chancellors tell about that time and their first dinner with the Howard government’s new higher education minister, Amanda Vanstone.

Known for her flamboyant style and frank manner, Vanstone is said to have glanced at a bottle of wine, pointed to its percentage alcohol per volume and suggested, to the horror of the VCs, that the funding cuts might be of that order.

Sure enough, it was a tough budget for universities and Vanstone’s brief tenure as minister was marked by rowdy student protests. Kemp replaced her within a year, with Norton as his adviser.

Now Vanstone has again weighed in on the university funding debate via her role on the government’s Commission of Audit, and her close friend and acolyte, Pyne, is education minister.

Higher education is identified in the commission’s report as one of the 15 largest and fastest-growing areas of Commonwealth spending. It finds graduates benefit from their studies, through higher income, and should pay more, recommending that the student contribution to course costs rise from 40 per cent to 55 per cent. It also proposes graduates should have to pay back government loans sooner – starting when they earn the minimum wage of $32,354, instead of the current repayment threshold of $51,309 – and face higher borrowing costs.

The commission urges the government to consider options for full or partial fee deregulation, but says “further work is required” on this, noting in an appendix that “very large fee increases” could result and that: “Australian undergraduates are currently paying among the highest levels of tuition fees in the world.”

A user-pays philosophy is also apparent in the report’s recommendations for radical surgery to the health system, including increased payments for medicines and doctors’ visits and greater reliance on private health insurance.

It calls for a slower rollout of the National Disability Insurance Scheme, tighter eligibility for family tax benefits, the disability support pension and future age pension recipients, though not until 2027, as well as measures to shed some 15,000 public service jobs.

In a week when the government lost control of its budget messaging following revelations it was planning a “temporary” tax to pay off the deficit, Tony Abbott compromised on his proposed paid parental leave scheme, agreeing to cap payments for higher income earners at $50,000, down from $75,000. But the commission wants more substantial changes to the expensive policy, recommending it be capped at average weekly earnings – meaning payouts for the six-month scheme would be limited to $28,730 – with the savings redirected to supporting childcare, including nannies.

Abbott is reluctant to budge further on paid parental leave, but the budget on May 13 will adopt some of the commission’s other proposals, including on higher education.

University chiefs have become accustomed to budget cuts. Some wish they were no longer at the mercy of someone who can glance at a bottle of wine and tighten the purse strings.

Making the case for fee deregulation has put University of Melbourne vice-chancellor Glyn Davis offside with the student union. Responding to a petition demanding he join students in requesting more public funds, Davis explained the government was intent on cuts and such pleas would be in vain.

“It is not in students’ interests to reduce the quality of their education to avoid unpopular fee rises,” he wrote. “This is a choice no one welcomes, but a question we cannot avoid.”

In a plea to students to understand political reality, Davis also wrote of “a tougher message politicians pass on only in private”: that the issue simply does not sway votes.

Funding imbalances

But the changes being contemplated would affect universities in vastly different ways. Australian sandstone universities might source more revenue from students, though still shy of the generous endowments that sponsor Ivy League institutions in the United States. At the other end of the spectrum, mass-entry institutions such as the Australian Catholic University would face stiff competition on price from private colleges with lower overheads.

ACU vice-chancellor Greg Craven warns this would lead to a rise in the number of “dodgy operators” and unfair competition. “These commercial enterprises would love to be funded like universities, but have neither the research output, nor the infrastructure overheads, nor the expensive academically qualified workforce to justify it,” he wrote.

Any proposals for fee increases will trigger important debate about equity and accessibility and what a heavier debt load will mean for graduates.

But a report released a week ago by British group University Alliance also sounds a cautionary note about what it meant long term for university revenue, with public funding declining as fees rose.

“The important lesson here for those in Australia who are looking to liberalise fees for the purpose of raising funding to universities is that the trebling of fees to £9000 in England did not bring in much additional resource to English universities overall – and brought reductions for some,” says the report.

Already, the government is seeking to rein in the rising cost of higher education. Labor’s removal of limits on subsidised student places resulted in enrolments increasing from 444,000 in 2009 to 571,000 in 2013. The cost to government of these subsidies grew from $4.1 billion to $6.1 billion.

The Coalition is pursuing savings measures proposed by Labor to strip $2.3 billion from the sector, but the opposition has now withdrawn its support for these cuts.

The co-author of Pyne’s review of higher education, Andrew Norton, thinks it would be better to shift the cost to students, via higher fees, rather than cutting university funding and jeopardising quality.

“If the government is pursuing a radical reform package in higher education, why burden it with itty-bitty budget cuts that Labor dreamt up in a budget panic last April?” he says. “Instead, they should do cleaner, more systemic changes that will not have an impact on teaching and research.”

But Norton says fee deregulation – involving further fee increases – should only occur after private colleges are granted subsidies, arguing that the competition they provide will restrain fee rises.

This extension of subsidies to private providers would present a challenge to Palmer’s position. He vows to oppose fee increases, but the government would argue the measure would eliminate fees for students in private colleges, who now pay their own way.

Asked about this, Palmer says he has no problem if private colleges compete with public universities for overseas students, but he opposes fee increases for Australian university students.

He restates his uncosted Whitlamesque ideal that there should be no university fees at all. “I don’t think we should burden our brightest and best with debt before they even get into the workforce,” he says.

Student unions will no doubt cheer him on and hope that he sticks to his guns.

This article was first published in the print edition of The Saturday Paper on May 3, 2014 as "Paying the price". Subscribe here.

Sophie Morris
is The Saturday Paper’s chief political correspondent.