Australia, along with New Zealand, was among the first countries where higher education grappled with the virus. In Canada, where term starts at the beginning of January, international students all made it into the country before the virus really hit; in Australia, where it starts in March, they didn’t. This led to an immediate hit in the region of A$3-5 billion (which is a lot, considering that fee income in 2018 from international students was about $9.5 billion). Universities Australia predicts the total cost out to 2023 could rise to $16 billion (and you thought Aussies were natural optimists).
As mentioned in a spring round-up of national responses to the pandemic, the Australian government’s reaction to requests for bailouts has essentially been “get bent”. Not only was there no money forthcoming, but universities were very specifically excluded from the Australian version of the Employer Wage Subsidy because…well, here we need a slight diversion into recent history.
Since 2013, Australia has been governed by a Liberal-National coalition which, like one or two governments here in Canada, is all-in on the culture wars on universities, asking why-are-we-training-so-many-sociologists and that kind of thing. They’ve been looking to stick the knife into the sector more or less since they got elected. In 2014 and again in 2015, they tried to hit the sector with a 20% cut in government grants offset with a complete de-regulation of fees, but on both occasions the measure failed in the Senate where the government does not have a majority (I wrote about this here, here and here if you want background).
And matters rested there until COVID came along. After swatting back a couple of bailout requests, the government came up with a completely unrelated new initiative, which involved:
- Increasing the number of university places by 39,000 places over the next 3 years and a further 61,000 on top of that by 2030. (ok, promising)
- At the same time, substantially lowering fees for students in preferred disciplines – fees in Agriculture and Maths will drop by 60%; teaching, nursing, clinical psychology, English and languages by 46% and science, health, architecture, environmental science, IT, and engineering by 20% (interesting, tell me more)
- The Government not adding a single penny to institutional funding (wait, what?)
- The whole thing is being paid for by jacking up fees in management and law by 25% and doubling those in some Humanities and Social Sciences programs by about 100%.
The intention, quite clearly, is to entice students out of fields which are considered “bad” and into those considered “good”. There are three grounds for skepticism. The first is that in Australia as in Canada, there isn’t a whole lot of difference in either short- or medium-term outcomes between humanities and social sciences on the one hand and physical/biological sciences on the other, which undercuts the ostensible reason for the change. The second is that it’s not even clear that differential tuition fees like this will change student behaviour given that fees are not paid up front and total repayments are limited by an income-contingent formula. And third, pointed out by the excellent Andrew Norton, it’s not clear that the combination of a new funding formula and a new fee formula is any more efficient at inducing institutions to offer more places in the fields the government claims to want to boost.
There are some other measures in the package, relating to funding for regional – i.e. rural – institutions and some funds for linking with industry that look interesting but in a devil-is-in-the-details kind of way, but the substance of the proposal is in the changes to fees and formulas.
The government thought that offering fee reductions to a little over half of all students meant that difficult cross-bench (i.e. neither Liberal/National nor Labour) Senators would overlook the fact that the government was sticking it to Arts students for ideological reasons. But the Coalition is a couple of votes short of being able to pass the measure in the Senate, and two weeks ago, the whole set of measures was in effect tabled in order to allow the upper chamber an inquiry into the matter. This suggests the measure probably won’t pass the Senate unaltered – but how big the changes will be is not known.
This is one to keep an eye on. Most countries do not vary student fees much by program: Canadian universities do to some extent, as do New Zealand’s, but Australia is the only country (AFAIK) where the government itself sets the differential fees. It’s possible – though unlikely, given the nature of the income-contingent system in Australia – that this fee gambit might work and push students out of “undesirable” fields. If that happens, I would not be surprised to see this kind of idea spread in our direction – and given our student aid system, it is likely to cause a whole lot more havoc with enrolments up here than it does down there.
Tomorrow: the Netherlands.
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The net effect of the Australian conservative government’s proposed changes to higher education financing would be to cut funding per student. Some of this may be returned to universities as research grants, but these would be highly likely targeted on favoured fields and institutions.
The Australian HECS/HELP income contingent repayment scheme, although described as a loan program without a financial need test is in practice a tax liability program re-payed on the basis of taxable income post-graduation. Repayments, which are in effect tax surcharges, are scaled from one to ten percent, starting at what in Canada would be called the “average industrial wage.” Its net cost to government is determined actuarially as students extinguish their liability faster or slower depending on the labour market and personal choices, for example, parenting as an alternative to employment. The current Australian government plan that you describe well may have a symbolic effect but its presumed incentives on student choice might not over-ride the basic design of HECS/HELP. If tuition fees are lowered for some programs, graduates of those programs might be employed more frequently but not necessarily paid more because, if the incentives work, supply will rise to meet demand (assuming the Australian government knows more than most free market governments about future demand for labour). If tuition fees are raised for other programs, which, like Management and Law, are on the high-end of the repayment scale, the rate of repayment will be longer as graduates will have higher tax liabilities, and possibly there will be fewer of them. If, as you say, the government will not “add a single penny” to institutional funding, it must be banking on an actuarial balancing act that assumes graduates of “preferred disciplines” will not only be employed more frequently, but will also have higher taxable incomes, and that graduates of other disciplines (“non-preferred”?) will, despite higher tax liabilities, continue to enrol and re-pay at current rates. Symbolic, yes. Otherwise, an exercise in fiscal sorcery that will not at the same time pay for expansion of capacity.