Back in our spring (their fall), the Government of Australia announced a new university funding policy, which consisted of:
- Cutting per-student public funding by about 20%; but,
- Subsequently allowing funding to rise along with enrolments (this is known in Australia as “demand-driven funding”);
- Simultaneously de-regulating all tuition; and,
- Allowing the interest rate on student loans to rise from equal to inflation to equal to the government’s 10-year bond rate (i.e. actually placing a real interest rate on the loan).
Understandably, students opposed the idea, while high-prestige universities loved it. Other universities were less keen, but figured student dollars are more reliable than government dollars, and so mostly backed the reforms (albeit without much enthusiasm). The opposition Labour Party opposed the policy and made some substantive critiques of it here, but offered no counter-proposal other than the status quo, which isn’t great for universities either.
From the start, the potential hitch to this plan has been that, while the Liberal/National coalition has a solid majority in the House, the balance of power in the Senate is held by the Palmer United Party (imagine Ford Nation run by a successful self-made businessman rather than a crack-head with the impulse control of a five-year old), and the Motoring Enthusiast Party (yes, really). That doesn’t matter so much in terms of implementing spending cuts – Australia sets caps on spending, but the government of the day is free to spend less without parliamentary approval – but it does matter for tuition where policy changes require an Act of Parliament. And so there has always been the possibility that if the budget legislation stalls, government funding to institutions could be cut without institutions being able to raise fees to compensate.
Many insiders (mainly from within universities themselves) have suggested that if the government ditched the interest rate policy, the hard feelings of recalcitrant VCs and disappointed students would be smoothed over enough to allow the policy through. However, Clive Palmer has, to date, been adamant that he’s in favour of free fees, and no fiddling around with interest rates is going to change his mind. And while he’s been known to make deals on other issues (notably climate change), he’s not left himself much room for deal-making.
The government will avoid putting the proposals to a Senate vote if there’s a chance of them being rejected. With the House soon breaking for Christmas, it’s looking likelier than ever that a vote won’t take place until 2015, leaving institutions in a bit of a tizzy. The big universities wanted the deal done months ago so they could announce their new fee structure (to date, Western Australia is the only institution brave/crazy enough to do so), and start reaping the rewards of a big fee increase; now, they have virtually no basis on which to do any budgeting because they have literally no idea what their income will look like in 2016.
All of which makes deciphering what the policy will look like in practice an exercise in pure theory. Without some idea of institutional pricing strategy, there’s no way to model the program’s effects. With no model to work from, it’s anyone’s guess as to how this will play out – a state of affairs that sits just fine with the doom-mongers and headline-writers who enjoy talking about $100,000 degrees.
If I were a betting man, I’d probably put my money against deregulation becoming law in 2015. But Aussies tend to give their governments second terms even if they are a complete shambles (see: Kevin Rudd, Julia Gillard), and a new government might have a better mandate to push this through come 2016.