How will Australia’s ‘budget crisis’ affect students?

Prime Minister and Treasurer Joe Hockey

Emily Burley makes sense of the changes to university funding suggested by the Commission of Audit report.

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PHOTO: Prime Minister Tony Abbott and Treasurer Joe Hockey.

On the first of this month, Treasurer Joe Hockey released the National Commission of Audit report. Spanning more than 1200 pages, the report lists 86 budget recommendations with the aim of minimising Australia’s so-called ‘debt crisis’.

These recommendations cover Australia’s 15 biggest spending areas, and suggest cuts to services and payments such as the pension, healthcare and the National Disability Insurance Scheme. While the report is not the budget, its proposals may be adopted when the budget is released on Tuesday 13 May.

The report’s suggested changes to university funding have been the cause of outrage among many students (even inspiring the hijacking of ABC’s Q&A program on Monday). Due to the obvious impact such changes would have on us as students, I thought I’d take a look at the two key suggestions for university funding.

Deregulation of university fees

In perhaps the more controversial of the two suggestions, the report proposes university fees in Australia be partially or fully deregulated over the next 12 months. Deregulation would remove caps on how much universities can charge for their degrees.

Those in favour of deregulation believe higher fees will compensate for decreasing government funding per student, and keep university education at a high standard. It is believed that allowing universities to determine their own prices should improve efficiency through competition that would drive innovation and quality improvements. Higher fees could allow Australian universities to compete on quality with prestigious institutions such as Harvard and Stanford.

On the other hand, some say we only have to look at the United States’ education system to see why fee deregulation is a bad idea. Rather than freeing students, deregulation may limit access to education for the poor and disadvantaged. We could see a two-tiered system, with the best education offered to those who can afford to pay premium prices, and less-wealthy students restricted to underfunded universities with fewer resources.

While both arguments have merit, we should consider whether improving the quality of Australia’s already world-class education is worth limiting access to education for disadvantaged students. Perhaps we can find funding for university education elsewhere (maybe we don’t need all 58 of those fighter jets?) It is important to note the Commission of Audit does not propose any immediate deregulation, although this is certainly something we will continue to hear about over the next year.

Check out what the University of Newcastle’s Vice-Chancellor Professor Caroline McMillen has to say about fee deregulation here.

Students to contribute more to education costs

At present, the government pays 59 per cent of bachelor tuition costs, with students paying the other 41 per cent. The Commission of Audit report proposes a shift in these figures, with the government paying 45 per cent and students paying 55 per cent.

These new figures would see Australia drop to the bottom of the Organisation for Economic Co-operation and Development (OECD) in terms of government contribution to higher education costs.

The report also recommends university graduates begin repaying their education loan once they earn minimum wage (around $32,000), rather than the current threshold of $51,000. Furthermore, it is suggested that the interest on these loans be increased.

Some of these proposals are alarming, with many students already struggling to pay their education expenses. The Commission of Audit report seems to reflect how little value our nation places on higher education; education should be considered an investment and not an expense. While these recommendations indicate the direction the upcoming budget will take, we’ll have to wait until next week to see which of the proposals are implemented.

What do you think of the recommendations for university funding? Comment below or continue the conversation on Twitter with @emilyburley and @yakmedia.