New universities reform package scraps fee deregulation – May 2017

Filed under: Economy and Finance, Financial Regulation, Employment and Education, Education, Politics,

Federal Education Minister Simon Birmingham says the Government will seek to drive better outcomes for both students and taxpayers as part of its latest suite of higher education reforms.

He said the reforms started from a “clean slate” with no fee deregulation, are fundamentally fair and are focused on ensuring Australians who want to study have the support to do so, universities are properly accountable for their public funding, and costs and risks were better shared between taxpayers, students and institutions.

“These reforms guarantee students will not pay a cent up-front and no longer face deregulation of fees, while universities will no longer face a 20 per cent cut to their funding.

“Students from disadvantaged backgrounds attract guaranteed taxpayer support through their universities to help boost their learning experience and chances of completion, with the Higher Education Participation and Partnership program being enshrined as a per student legislated loading.

“New performance measures will put students at the centre of learning because retention, completion, student satisfaction and getting a job are central to the mission of our institutions of higher learning.

“Regional Australians will have more education opportunities in their communities. With changes to enabling sub-bachelor post-graduate arrangements, universities will be encouraged to enrol students in the courses that are right for them rather than solely focus on bachelor courses that do not suit every student.

“Global competition in higher education is intense and we must stay ahead of the game.

“We must also honestly confront budget pressures that rapidly rising contributions to universities have contributed to. The time to act is now to strengthen our world class higher education system and guarantee the financial sustainability of taxpayer subsidised places and our world leading student loans program into the future.”

He said key elements of the higher education reforms included:

  • Better support for students – Legislating ongoing support for the $592 million Higher Education Participation and Partnerships Program but better targeting it to students who need it most, sector-wide transparency of admissions standards and entry pathways, supporting the establishment and maintenance of up to eight community-owned regional study hubs to meet the needs of the most remote students, better distributing postgraduate coursework places to institutions where students want to study, extending Commonwealth support to approved sub-bachelor level diploma, advanced diploma and associate degree courses so more students have more pathways to higher education, ensuring no student pays a dollar upfront for their course, and for the first time subsidising work experience in industry units of study.
  • Greater transparency and accountability – Entry requirements will be made more transparent and universities will be held to account for improving retention, completion and employment outcomes, making 7.5 per cent of each university’s Commonwealth Grant Scheme funding contingent on performance against key benchmarks.
  • A fairer deal for taxpayers – Phasing in increased maximum student contributions by 1.8 per cent each year between 2018 and 2021 cumulating to a 7.5 per cent increase and meaning there is a better balance of the contribution share between students and taxpayers from 42 per cent to 46 per cent for students and 58 per cent to 54 per cent for taxpayers, lowering the starting repayment threshold for loans to $42,000 with a one per cent repayment rate, and extending a 2.5 per cent efficiency dividend in 2018 and 2019 to universities, recognising that university revenue has grown faster than costs over recent years.

“There is strong evidence that we need to get the costs of higher education under control, that universities are capable of making a contribution and that our student loans program must be made more sustainable.

“Taxpayer funded student loans stand at more than $52 billion and, without changes to address this situation, around a quarter of that is expected to go unpaid.

“Since 2009 taxpayer funding for Commonwealth supported places in higher education has increased by 71 per cent, effectively growing at twice the rate of the economy.

“Average funding per domestic student for universities increased by 15 per cent between 2010 and 2015, while over the same period the cost for universities to deliver courses increased by only 9.5 per cent, according to independent analysis from Deloitte.

“By rebalancing the share of funding between students and taxpayers and better matching the costs of courses with the money universities receive from the Government, we expect these reforms will save taxpayers $2.8 billion over the forward estimates in underlying cash balance terms.

“These reforms will begin to come into effect from 1 January 2018.”

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