University funding promise ‘fails to deliver’, says new report

The Morrison government’s legislation to shake up university funding fails to fulfil two key promises, says a new report.

Education Minister Dan Tehan in the House of Representatives on Tuesday.

The Morrison government’s legislation to shake up university funding fails to fulfil two key promises it has made to the higher education sector, according to a new analysis from a University of Melbourne think tank.

In a paper, “Unravelling the Tehan Vision for Higher Education”, expert analyst Mark Warburton says the legislation, which was debated in the House of Representatives on Tuesday, hands wide discretionary powers to Education Minister Dan Tehan instead of embedding government commitments in legislation.

“In return for increasing student contributions and lowering its funding share (of the cost of teaching), the government has made two promises,” Mr Warburton, a former senior official in the Education Department, writes in the paper, published by the Centre for the Study of Higher Education, where Mr Warburton is an honorary senior fellow.

“One is that it will return this lost revenue to the higher education sector by funding more student places. The other is that, while funding caps will be permanent, they will be indexed each year in line with inflation.

“Neither of these promises are in the amending legislation currently before the parliament.”

Mr Tehan has promised 39,000 more student places by 2024 to help deal with the coming demographic bulge in numbers of school leavers.

However, the paper points out that if student places allocated by the government to particularly universities are not filled — perhaps because they are allocated to regions where there is a lack of demand — then the government will not pay universities for those student places.

If only 6000 places are not filled by students, then overall revenue for teaching may well decline compared to the 2017 level, before the government applied a cap to its teaching grants to universities.

Mr Warburton also points out that, from 2024, when the transition arrangements to the new funding scheme are complete, there is no legislative guarantee that the indexation of the funding cap will be restored, although this was a key plank of Mr Tehan’s policy.

This stands in contrast to other key elements of the package — such as the government subsidy rates for courses and the student contributions — which are indexed, Mr Warburton said.

In the paper he finds that, while the government has said it will increase the number of funded university places by 39,000 by 2023, it is effectively planning to remove subsidies from 23,000 student places.

Mr Warburton also says that the claim that 39,000 places will be delivered “is something of a mystery”.

“The ‘national priority’ places to be allocated by the minister and the growth funding formula would not normally increase student places as rapidly as is being suggested,” he writes in the paper.

“This claim requires further explanation from the government.”

Mr Warburton said he had sought clarification from the government of how the formula would work, but had not received a response.

The bill is expected to go to the Senate later this week.