Victorian government’s mental health levy could drive up university students’ fees

Struggling universities could be forced to raise student fees or cut key research programs in the wake of the state budget.

The state government’s mental health levy could drive university fees higher and force key research programs to be dumped, it is feared.

University bosses have been left incensed at their inclusion in the levy scheme that will generate $2.9bn over four years to fund a $3.8bn mental health services overhaul — the centrepiece of the government’s state budget.

It will see universities forced to contribute millions of dollars towards the levy annually.

Monash University, Australia’s largest tertiary institution, has already estimated its levy contribution to be up to $11 million per year.

University insiders say the move could trigger a renewed push towards deregulation of the sector that would leave universities free to raise fees to recoup their levy contribution.

It is also feared key research programs will be dumped as universities battle ongoing financial hardship as a result of the coronavirus pandemic.

Figures from the peak university body, Universities Australia, showed more than 140,000 enrolled students were unable to study at Australian campuses after the Federal Government closed the nation’s borders last year.

They also reported 17,3000 jobs were lost in 2020 and an estimated $1.8 billion in revenue compared to 2019.

“Universities already do a huge amount of work in the area of mental health research which is of great benefit to the community,” one source said.

“It would now be entirely reasonable for a push toward deregulation to begin so universities can set their own fees in response to this levy.

“They feel hoodwinked”.

Monash, Australia’s largest university has already estimated its levy contribution to be up to $11 million per year. Picture: Andrew Henshaw

It is understood universities were blindsided by the levy announcement and confused about why they were not exempt in line with private schools and charities.

Opposition higher education spokesman Matt Bach said the decision to include universities in the levy scheme made no sense.

“Now is not the time to be slugging Victorian Universities with more taxes,” he said.

“We desperately need our world-class higher education sector to continue to provide a great education to young Victorians, and to produce cutting edge research on – among other things – mental illness.

“For some of our universities, this new tax will amount to $14 million every year. That will inevitably mean savage cuts to courses, jobs and research.”

Duncan Maskell, Chair of the Victorian Vice-Chancellors’ Committee, said the university would seek an urgent meeting with government.

“Victorian Vice Chancellors were surprised to learn that the payroll tax levy will apply to local universities given our charitable status and given we already spend a great deal of money doing so much work in mental health,” he said.

“We are seeking an urgent conversation with government to understand the rationale for this and to ensure that all relevant information is with the government prior to this policy being put before parliament.”

Treasurer Tim Pallas was unapologetic about the impost on universities.

“This government has spent a lot of time and effort investing in universities during this difficult time,” he said.

“There’s not one jot of assistance out of the federal government.

“Everybody has to make a contribution to assist with those who haven’t done particularly well during the pandemic.”

Originally published as Victorian government’s mental health levy could drive up university students’ fees