Universities will be forced to eliminate programs covering poorer students and high-end research and may have their overall student numbers capped at current levels to achieve the $2 billion in cuts the federal government needs to make to meet budget savings.
With proposed savings of nearly $3 billion stalled in the Senate by opposition from Labor and the Greens, Education Minister Simon Birmingham is targeting university spending that can be slashed without parliamentary approval – a move that has sparked open hostility between Canberra and the sector.
On the chopping block are programs due for funding renewal on January 1, including the Higher Education Participation and Partnerships Program (HEPPP), which helps students from low-income families get into uni, and two high-end research funding programs. Cutting these alone would save $2.04 billion.
Separately (and more worrying for the university sector) the government is considering holding funding for student numbers at 2017 levels, which would force universities that want to continue expanding to make savings from their own budgets.
Under the so-called demanddriven system, university growth has effectively been uncapped, allowing the sector to expand by 11 per cent since 2012, although the growth rate has tapered in recent years as funding cuts have hit.
For the last two months, Mr Birmingham has been aggressively warning universities they need to lift their performance to produce graduates who are more employable.
‘‘Taxpayers need to be confident that the record funding universities are getting is being used effectively,’’ he said last week when criticising the tertiary sector for a deterioration in the time it takes graduates to get jobs.
The universities say they’ll hit back over financing costs.
‘‘It’s a braveminister that cuts equity funding,’’ says the chief executive of the Group of 8, Vicki Thomson, who represents Australia’s major universities.
This year the HEPPP fund paid $147.5 million to lower socioeconomic students. But it’s been cut by $247.5 million since 2012.
‘‘It would look mean to cut it any further,’’ Ms Thomson said.
‘‘And if there are cuts to research funding, that significantly hampers Australia’s ability to compete with other nations. And it’s at odds with the government’s national innovation agenda.’’
The director of the higher education program at the Grattan Institute, Andrew Norton, said as the December 31 deadline approaches universities should be worried. ‘‘If you’re a uni
and you’re planning to expand, you could lose some money. And if you are in an expansionary phase, you will lose out,’’ he said.
Mr Norton said the bigger issue was the threat to the principle of the demand-driven system, which was the result of major reform in the sector in 2012.
‘‘They could present this as a pause in the demand-driven system. But although it’s not the end of it, it will break confidence in the demanddriven system.’’
The chief executive of Universities Australia, Belinda Robinson, said if the government withheld funding for universities it risked a severe backlash from voters.
‘‘To go ahead with cuts to nonlegislated spending would be in direct contravention of the will of the people.
‘‘There’s been a clear message from the Senate,’’ she said.
‘‘And an Essential poll after the May budget found 56 per cent of respondents disapproved of the proposed cuts and 60 per cent disapproved of the proposed increase in student fees.’’
Ms Robinson said universities won’t rant and rave, but they will wage a public information program to tell the public about the consequences of cuts to access and equity.
She said she’d be surprised if the government went for research money, since this would contradict its own innovation agenda.
Australia is already slipping on research spending. Ms Robinson says in Britain the government has just lifted R&D spending to 2.4 per cent of GDP, while in Australia the figure was 1.88 per cent.
Grattan’s Mr Norton said it was unlikely both the major research funding programs would be cut. Canberra is aware that if it needs to save money in higher education, it needs to do it in a way that causes the least political pain.
However, there’s no doubt the Treasury is looking for savings, and senior education commentators acknowledge Mr Birmingham will have to deliver savings from his portfolio to protect the integrity of federal budget targets. Since he’s blocked from cutting legislated spending, he has no option but to smash programs and thresholds not embedded in law, most of which renew on January 1.
‘‘Higher education savings are built into the budget,’’ said one commentator who prefers to remain anonymous. ‘‘You can’t increase the size of the deficit to accommodate the education outlook. The Treasurer won’t have it.’’
The vice-chancellor of the University of Melbourne, Glyn Davis, says he’s disappointed the federal government has not worked with universities over funding proposals.
‘‘The proposed budget cuts and underdeveloped policy changes would undermine the vast economic activity that public universities generate and sustain for the nation,’’ he said.
The universities say they’ll hit back over financing costs.
