The Federal Minister for Education Simon Birmingham is a slippery character. When he appeared on the ABC’s 7:30 Report pre-budget to discuss the Liberal Government’s policy on tertiary education, his strategy was not surprising, but it was illogical. Presenter Leigh Sales started with the following statement:
The annual cost to the Federal Government of subsidising university degrees for Australian students is set to skyrocket over the next decade… an ABC Freedom of Information investigation has found the Government is preparing to write off billions of dollars in [university student loan] payments as the …bad debt soars.
Minister Birmingham responded by blaming the previous Labor government for policy changes that led to a blow-out in the cost of loans for vocational education students. This is something quite separate from the income-contingent concessional loan system for university students. So when asked about oranges he spoke of lemons.
The scandal of the privatisation of technical education in Australia is well known. When various state governments decided to provide public funding to private vocational education colleges, they decimated the state system and encouraged several fly-by-night fraudsters into the market. These companies used dubious recruitment methods (like handing out IPads) to secure the enrolment of students who were ill-prepared for study and unlikely ever to complete. Labor Senator for Education Kim Carr gave the following examples to ABC’s Background Briefing: Cornerstone Investments received $46 million from the Federal Government, enrolled 4,200 students, and graduated just 2. That’s a cost per graduate of $23 million. The College of Creative Design and Industry received $35.5 million from the Government. It enrolled 3,500 students, and only 30 graduated: a cost of $1.1m per graduate. To link the massive blowout in the VET sector, most of which occurred under the Abbott government, with the funding for universities indicates either that the Minister is ill-informed, or intentionally muddying the waters around post-school education funding in order to scare the punters into believing spending on our universities is out of control.
Ironically current government proposals for universities may well bring about such a situation. The Parliamentary Budget Office reports student debt will grow rapidly over the next decade ‘driven mainly by projected increases in student fees from 2017 due to the announced higher education reforms’. This projection is based on the assumption that the government’s 2014-15 budget reforms, which had been blocked by the Senate, would be implemented.’ The report predicts an average increase in fees of 40%, as ‘universities will increase their fees to recover the reductions in subsidies under the Commonwealth Grant Scheme’. Leigh Sales pointedly questioned the Minister on this. The report by the Parliamentary Budget Office shows ‘the student loans program will go from costing the budget about $1.7 billion this financial year to more than $11 billion in 2025-’26. Simon Birmingham says he ‘would dispute’ the Parliamentary Budget Office’s claim, refuting their projections as merely ‘factors’ to be ‘mindful of’ and pointing instead to increasing enrolments.
There will likely be an increase in student numbers. The PBO document states that the number of students accessing loans ‘has grown by 11.2 per cent annually over the past five years, partially driven by the policy decision in 2009 to introduce a demand driven funding system’ and that ‘It is likely that in a deregulated market, universities will further increase fees’. Leigh Sales again pressed the Minister on this point: The PBO’s calculations did not blame the blow-out in fees between 2017-26 on increasing student numbers but on a deregulated market. Minister Birmingham deflected the blow, again laying the blame on vocational education blow-outs and increased enrolments.
He claims that the burden on taxpayers is minimised, although does not make the reasoning clear. It doesn’t take much nous to work out that a 40% increase in fees means that (say) a $35,000 degree increased to $50,000 – and for which the University is paid up-front – is going to have an impact on the budget. Nor is there any explanation as to how, if (say) 20% of students don’t repay their loans, the burden for the taxpayers is going to be reduced. The public purse has already paid the institution for the students’ education. The onus, my dear taxpayers, is on us. Panama tax haven anyone?
So all in all, the current Minister for Education, Simon Birmingham, seems to be following – albeit warily – in the footsteps of his predecessor, Christopher Pyne. Nothing has really changed. The public is still being sold a lemon, and the taxpayer will have to pick up the burden. The threat of a deregulated university sector still hovers like a spectre, ominous, threatening, and undefined. According to the PBO, if the university sector is deregulated there will be a substantial cost increase, but the implications are not clear: ‘the lack of information on the impact of [student] loans on the budget and the incomplete costs presented in budget measures relating to [the student loan scheme] has meant that the financial consequences of the policy changes are not transparent and therefore not well understood’. This is a huge gamble with the future of higher education. It’s also another burden that baby-boomer politicians who received free tertiary education will pass on to future generations, who once more have been sold a lemon.
National Alliance for Public Universities
The views and opinions expressed above are personal and belong solely to the author.