The impact of the government's university funding cuts

The collective cries of the higher education sector were loud and clear as the Federal Government announced a $2.2 billion cut to university funding in its Mid-Year Economic and Fiscal Outlook (MYEFO) delivered in December 2017. According to the Turnbull government, these cuts were designed to consolidate chronic overspending in the Federal Budget while simultaneously improving the sustainability of higher education in Australia. However, members of the tertiary sector – from vice-chancellors and educators to pundits and students themselves – believe that these cuts will be anything but beneficial to the future of Australian higher education.

What does it all mean?

We agree – deciphering government and policy jargon can be quite a task. For that reason, we’ve analysed the Coalition’s proposal to get to the bottom of these funding cuts.

The Federal Government has proposed capping the amount of Commonwealth Grant Scheme (CGS) funding provided to each university for bachelor degree places at the 2017 level of funding for the 2018 and 2019 financial years. This essentially means that a two-year freeze has been placed on the amount of funding that universities receive towards undergraduate commonwealth-supported places, which will be capped at the amount paid by the government during the 2017 financial year. Universities will be granted enough funding to cover a certain amount of places; if they want to take on extra commonwealth supported enrolments, they won’t receive any additional grants from the government. Analysts have predicted that this will amount to a funding shortfall equivalent to 10,000 university places, driven by a 1.5 per cent reduction in government grants for 2018. To summarise it all up, these cuts mean that universities will virtually have to cap their intake of government-funded places until 2020.

What has already happened?

Solutions to recovering savings have been debated since the 2017 Federal Budget. Initial proposals from the Coalition focused on cumulatively increasing university course fees by over seven per cent and lowering the HECS debt payback threshold from $55,000 to $42,000. The Senate blocked this legislation, leaving the government with few options to alleviate Budget overspending on higher education.

Government-funded university places in Australia have been capped before – in fact, they only became uncapped in 2009 when the Rudd government implemented higher education policy changes. The sector reverted to a demand-driven system, where universities could accept numbers of enrolments that matched student demand. This scheme gave an extra 140,000 students access to university between 2009 and 2015, developing a legacy of increasing admittance into higher education that has its roots in the Whitlam government’s era of free tuition. Demand-driven approaches to university enrolment have been hailed as a success by educators and analysts alike for its integration of students who would previously have missed out on tertiary education – most notably those with disabilities, from a regional area or of a low socioeconomic status (SES). Despite its inclusivity, the demand-driven system has increasingly come at a cost to the government and society by extension.

What will the impact be?

• Harder for prospective students to go to university: with talk of higher course fees, increases in full-fee paying places and a minimum ATAR of 60 as the cut-off for admission into all university courses, higher education experts believe that potential students will literally be pushed and priced out of tertiary courses. Cuts to funding will have a pronounced effect upon regional students, as the programs designed to get them to university will suffer from underfunding and other capping measures.
• Potential for skill and qualifications erosion: economists have predicted the arrival of a noughties baby boom in 2020, where 18 to 25-year-olds will experience the most growth out of all population brackets. With growth comes higher demand, and analysts are concerned that reverting to a capped tertiary system will result in a restricted supply of university places that simply won’t meet these increasing needs. This means that a generation of new university students are in danger of missing out on the education opportunities afforded to their parents, creating a possible shortage of tertiary-developed skills, knowledge and innovation in the workforce. Important but expensive courses such as nursing, science and engineering may experience profound skill erosion, as budget pressure on universities may force them to underfund programs and resources that are crucial to developing expertise.
• Cancellation of courses: since the implementation of the government’s funding freeze, Australian Catholic University (ACU) has cancelled dozens of courses across its Sydney, Melbourne, Brisbane, Canberra and Ballarat campuses. This could become a trend as budget pressure forces universities to cease intakes for courses that will be underfunded or have low enrolment numbers, potentially leaving thousands of students without a university place.
• Diminishing student services: reductions in government funding will see universities cut back on budgets in non-core areas such as marketing, administration and student support. The potential underfunding of counselling and mental health services means that students may not have access to adequate psychological support, while quality career advice could also be left wanting. Regional campuses may feel this squeeze the most, as figures show that rural universities such as Central Queensland University (CQU) are already being forced to scale back student services investment due to 15 per cent reductions in government funding.