University funding changes do not hit the mark

The funding changes are not likely to boost skills in the areas that we need.

Australian universities produce more than 350,000 graduates each year. Graduates that will teach the next generation, graduates that will nurse and heal us, graduates that will design and help build our cities and towns, and graduates that will push forward frontiers to progress and better our communities.

Our universities generate some of the brightest ideas and solutions – solutions and ideas that we are so very dependent upon right now.

Australia has become a world-leader in the delivery of quality university education. Several of our universities rank among the best in the world and the sector is Australia’s third biggest export industry.

Despite these contributions to our community and the economy, the sector is being overlooked in the current pandemic.

It was ineligible for JobKeeper and other government supports, even though it was one of the hardest hit sectors. The sector is expected to lose more than 20,000 jobs in the next six months and announcements of job losses, wage freezes and cuts to course offerings are now regular news items.

And to top this off, the recently announced proposed reforms to university fees will ultimately mean that the sector will take another hit, with the Commonwealth government investing less in the sector overall – to the tune of $1.7 billion each year.

Granted, the government has committed to an additional 39,000 domestic places over three years. However, even in the highly unlikely scenario of all additional placements commencing in 2021 and enrolling in courses that attract the highest Commonwealth contribution – this would only cost the government just over $1 billion per year. The sector will still be facing an overall decrease in government investment if the proposed changes in their current form were to go ahead.

The proposed changes are designed to incentivise students to ‘make more job-relevant decisions’, with STEM (science, technology, engineering, maths) and health fields the stated government focus. But the changes ultimately cut total funding to STEM and some health fields.

The reforms reduce student fees in science and engineering by almost $2,000 per year and at the same time reduce government funding by more than $2,700. As a result, courses in science and engineering receive almost $5,000 less per student.

Similarly, agriculture – an important broader national priority area – faces a cut to course funding overall of almost $3,500 per student.

Reductions in total funding do bring total fees closer to the median costs of these courses – at least as they stood before COVID-19 – but these costs are likely to change, especially for subjects that had a high proportion of international students cross-subsidising fees for domestic students.

Rather than emphasising the total lower investment in higher education, the reforms emphasise the reduction in student fees in courses that train for jobs of the future.

Specifically, that 60 per cent of students in target areas will have lower or unchanged fees in priority areas. But this is hardly ‘targeting’ those priorities if ultimately these disciplines are faced with lower investment overall.

The majority of students in the remaining 40 per cent are studying courses in society and culture and face fee increases of almost $8,000 per year and a reduction in Commonwealth funding of almost $10,000.

The increases in student contributions in these fields are so large, it overwhelms reductions in other fields. As a result, students face fee increases of more than $830 million per year in total.

The proposed changes also disproportionately impact women, who make up more than two-thirds of enrolments in society and culture courses.

Students in these fields will now cover 96 per cent of their course costs instead of 45 per cent. This is by far the highest student contribution and women studying subjects in this field will now collectively be paying an additional $1 billion each year.

For some targeted areas skills shortages are evident, particularly nursing, and are likely to continue as the pressures of our ageing population become more apparent. But the nursing sector faces significant worker retention issues that require policy responses which focus on employment conditions, rather than just the number of graduates.

Recovering from the COVID-19 recession requires investment in the skills of Australians, particularly in fields that boost productivity growth or are expected to offer significant jobs growth. But the proposed changes do not quite hit the mark.

Associate Professor Rebecca Cassells and Dr Steven Bond-Smith are at the Bankwest Curtin Economics Centre.