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IN MY OPINION

Radical changes proposed for Australian higher education

Reforms probably won’t be as sweeping as the coalition conservative government would like.

By GAVIN MOODIE | JUN 25 2014

Many Canadian provinces have aspirations for postsecondary education that are similar to aspirations in Australia – most of these jurisdictions would like to increase the number of college and university graduates while maintaining or improving the quality of the education and the global standing of their institutions. But the policies and approaches in Australia differ markedly from those in Canada, and they are about to differ even more – that is, if the changes recently proposed by the Australian federal government are adopted.

Beginning in 2012, the Australian government removed limits on the number of undergraduate students that public universities could enrol. The removal of caps saw enrolments increase markedly as universities absorbed pent-up demand for higher education, but then enrolments plateaued as that demand was met. The policy also led to wide variations in enrolments in different programs and universities as the institutions responded more directly to student demand.

Now there is a new, conservative coalition government in Australia. In its first budget this May, the new government announced four major changes to postsecondary education beginning in 2016 that it stated will “help create a world class, sustainable higher education system.” These are the changes the federal government announced:

  • It will cut course subsidies by an average 20 percent, so that instead of providing 60 percent of the funding for teaching per institution, on average, it promised to provide about half.
  • It will make course subsidies available to all registered higher education institutions, including two private, not-for-profit universities, one for-profit university, and 139 other private baccalaureate providers. (The government is consulting on whether it should subsidize non-university higher education providers at a lower rate than universities because the former are not mandated to conduct research.)
  • It proposes to deregulate tuition fees completely, allowing institutions to charge whatever fee they want for the first time since 1975.
  • It plans to increase interest on student loans from a rate based on the consumer price index to one tied to the government’s cost of borrowing.

Any one of these announcements would be a big – and unexpected – change to Australian higher education. Together they would be a radical transformation. Predictably they have provoked some strident opposition and extensive discussion. Analysts have proposed various scenarios of the effects of the changes, with perhaps the most authoritative coming from the association representing universities, Universities Australia.

Will the result be the two-tiered system that some observers anticipate and that students are protesting? Will it lead to different categories of institutions that some people hope will occur? I suspect it won’t lead to either of these scenarios but rather will result in a more explicit, ordered and steeper hierarchy of institutions by fees, and hence by funding, research performance, status and elitism. These are my reasons.

The status quo in Australia already differs markedly from the situation in most provinces of Canada. Since 1989, Australian university students in accredited programs have had access to universal income-contingent loans to cover all their tuition fees. New graduates don’t start repaying their loan until their annual income reaches $53,345; then they pay four percent of their income towards their loan balance. Repayment rates increase in steps, up to eight percent for students with an income over $99,069.

The Australian government estimates that the proportion of new student debt that won’t be repaid will increase to 23 percent in 2017-18, up from its current level of 20 percent. Since unpaid debt likely will grow if the new changes are all passed into law, a future government may reintroduce student lifetime borrowing limits.

The fourth big change proposed by the new Australian government is to increase interest on student loans from the consumer price index, which preserves loans’ real value, to the government’s cost of borrowing, which is currently 3.8 percent. But observers expected that rate to rise to approximately 4.5 percent over the medium term. The government hasn’t announced any plan to suspend or even reduce interest accrual on student loans. So, interest would accrue while students are studying and while graduates are working part-time, on parental leave, volunteering or in low-paying jobs. It is therefore a regressive plan for loan repayment.

The government will face hurdles in getting the changes implemented into legislation and passed by Senate. The Australian senate consists of 12 senators from each of six states, regardless of big variations in population, and two senators from each of the two small internal territories. Senators are elected by a single transferable vote, which usually leads to two outcomes: First, the governing party rarely has a majority in the senate. Second, the senate’s balance of power is held by small parties and independents.

There’s much discussion now on how senators may vote; some senators have fuelled the debate by making no statement and others have confused it by stating contradictory positions. The government and universities would like a bill passed by the end of this year, but neither the timing nor the outcome of a senate vote is easy to predict, and debate in the senate could extend into next year. In the end, it is entirely plausible that many of the changes will be watered down by the senate.

Dr. Moodie is a Toronto resident and an adjunct professor of education at RMIT, an Australian university.

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  1. Paul Sileika / July 23, 2014 at 2:13 pm

    Very interesting, Gavin. I look forward to hearing more about how the situation in Australia develops.

  2. Gavin Moodie / July 23, 2014 at 2:38 pm

    Thanx Paul. I’d be happy to report further, with the editor’s indulgence. The Government hasn’t submitted a Bill to Parliament yet, but hopefully the Senate will vote on it by the end of the year when there might be something further substantive to report.

    In the meantime the Government’s proposals are provoking divisive debate amongst and to some extent within Australia’s analogue of the U15, many of which support the proposals, and most other Australian universities which generally oppose the more radical changes proposed.

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