Grattan Institute Proposes Cuts To University Subsidies; Coalition Take Notice

Like thousands of students enrolled at Australian universities, Monash University Music student Francis Macindoe has a HECS (Higher Education Contribution Scheme) debt. Living away from home with a finite income, Francis admits it can be difficult to find novel ways to stay afloat.

“I’ve been sleeping on my sister’s couch, sleeping on a buddy’s floor… I couch surf; you could say that… I’m living off $50 dollars a week, so $20 bucks goes on cigarettes and then I’ve got $30 bucks to go wild on,” he says.

Francis will be one of thousands of tertiary students affected by proposed cuts to university subsidies, which were recently suggested by the Grattan Institute Federal Government think tank.

Graduate Winners: Assessing the Public and Private Benefits of Higher Education, a report compiled by the Grattan Institute’s Higher Education Program Director Andrew Norton, suggested that government funding of tertiary courses should be reduced, and that students should be required to pay more. The findings of the report propose that university students should be willing to invest more money into their courses. The rationale for this is that they are likely to earn a higher income after graduating than someone without a tertiary qualification. On average, subsidies account for 60% of the cost of a domestic student undertaking a university degree. The study suggests that the Federal Government should cut up to $3 billion dollars of its spending on higher education subsidies.

Australian students already pay a larger percentage for higher education than many of their OECD (Organisation for Economic Co-operation and Development) counterparts, with only Japan and the United States charging more for tuition fees in a study of 18 countries. The OECD’s findings also report that higher tuition fees can put pressure on students, particularly low-income earners, in the absence of a robust scheme of public subsidies.

Critics of the report argue that it is irrelevant for universities with a large percentage of students from disadvantaged backgrounds, or those who are struggling financially. Increased financial requirements on students would effectively bar many from pursuing higher education because of an inability to support themselves while studying.

Francis knows well the stresses and instability that financial hardship can bring.

“It’s pretty crazy; I’m always on my toes. I’m always moving around so it’s like everything is really hectic and fast paced. It’s: What am I doing? Where am I eating? Where am I sleeping tonight? When am I going to practice? What am I going to do?”

Andrew Norton writes that, under the current Higher Education Government Subsidy Scheme, graduates stand to benefit far more than the general public, gaining quality employment and earning a higher income. “Tuition subsidies therefore merely redistribute income to students and graduates. The general public – particularly those who do not go to university – are worse off… Given these large benefits, and with the HELP student loan scheme in place, most students would take their courses regardless of the size of the subsidy.”

“People go to university anyway, and effectively society will still get the same benefits… people are driven primarily by their interests, and there are very stable interests in humanities and preforming arts, even though they have pretty poor financial outcomes compared to other courses,” he says.

Chief Executive of Universities Australia, Belinda Robinson, said in a recent interview with Radio National that the findings of the Grattan Institute’s report suffered from a narrow scope.

“I think one of the key issues here is the very narrow definition that the Grattan Report has applied in terms of the public good… I can’t remember a time when a policy maker or politician has referred to a slightly higher level of volunteering by graduates, or a stronger civic engagement, being used as an argument for supporting public investment in universities.”

“The idea that student decisions are insensitive to price, there’s a little bit of an inconsistency there, because the report ultimately recommends that there is a case to be made for a public subsidy for some courses where lifetime earnings may be low, but on the other hand is using the argument that we’re insensitive to price when it comes to making decisions about the courses we choose,” she said.

The idea that higher fees will not deter students is echoed by Francis, who says he will stay at university even if fees are increased. Despite this, rising fees will do nothing to ease his financial difficulties, and will likely lead to him having increased debt in the future; disadvantage is hard to escape.

“I’m not going to let the government step in front of what I want to do, and if they want to try and do that… I’m going to find a way around it. It would not stop me from going to university.”

“I mean, if they want to kill the arts, they’ll fucking kill the country,” he says.

The report predicts that the debt created by taxpayer-funded higher education tuition subsidies will grow to $7 billion dollars by 2015, as holding a bachelor degree or equivalent becomes necessary in more job sectors.

It has been suggested that the Coalition has begun to pursue the idea of a 25 per cent increase to university HECS fees, with those in favour arguing that the rise would fail to have a negative impact because students are not forced to begin repaying their HECS debt until their incomes reach $50,000 per year.

The inventor of the HECS loan scheme, Bruce Chapman, agreed that a rise in fees would be unlikely to deter future students from undertaking an undergraduate degree, but also argues the difficulty of measuring the public benefits of subsidising tertiary education.

“The evidence is universities could increase the cost of degrees by 25 per cent and there would be no impact on student enrolments,” he said.

The Coalition is also said to be deliberating reintroducing the capping of university places, a move which could result in a loss of 200,000 student admissions. The Labor Party has been responsible for the creation of 150,000 extra tertiary students since removing the cap five years ago.

The Grattan Institute’s report argues that individuals can and are willing to pay more for a degree. When universities were last permitted to raise student fees, a number of tertiary education providers raised this to the maximum 25 per cent increase allowance; the number of university students continued to surge upwards regardless.

The proposal to deregulate fees is seen by many as a slippery slope, which could lead to allowing universities the freedom to increase student fees at leisure.

Fresh in everyone’s minds should be the 2010 United Kingdom protests, a series of student-led demonstrations against the controversial hike of higher education fees. The more recent London Riots of 2011 were found by the Riots Communities and Victims Panel, an independent body set up by the Federal Government to understand why the riots occurred, to be the latest in an ongoing saga of a generation of disenchanted youths.  Young people’s employment and education prospects are suffering after the GFC, with fewer entry-level jobs available and substantial cuts to educational benefits and subsidies. This comes in spite of Conservative UK Prime Minister David Cameron’s continued insistence that the riots were caused by a surge in criminality, materialism and opportunism, rather than as the result of widespread social issues like deprivation, the rising cost of living and unemployment.

Compared with Britain, Australia fared relatively well in the aftermath of the GFC. But with recent TAFE cuts readily being rolled out and dire predictions of rising tertiary fees having caught the eye of conservative politicians, it isn’t difficult to consider similar scenes here. Instead of burnt out cars in Bristol there will be smashed storefront windows in Carlton. Clashes between police and rioters in Tottenham will be mass sit-ins at Federation Square.

When university becomes so expensive that it is inaccessible, or that debt burdens graduates to the extent that it inhibits the entirety of their working lives, we can say it is no longer viable. Is that time now?

Frances asks me if I want to hear a joke.

“What’s the difference between a music graduate and a pizza?”

He pauses.

“A pizza can feed a family of four.”

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Emma Nobel

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