The burden of government cuts falls on the poorest students
Published: Thursday 28th September 2017
The higher education package before Parliament is the one of the greatest threats to Australian universities and their students in our history. It will demolish one of the best university systems in the world.
Its wrecking ball is the 5 per cent cut in per student funding, with another 7.5 per cent cut foreshadowed through “performance” penalties. These cuts will explode our system in three devastating detonations.
It will kill some universities outright. It will destroy the student experience in many more. It will enshrine a funding model that is inequitable and discriminatory.
The package will kill universities by financially throttling them.
The government bases its cuts on the proposition that universities are rolling in it, premised on wildly exaggerated claims about university surpluses.
Forget that these surpluses are soaked up in building programs, improvements in student conditions and provision against future shocks. Instead, look straight to the figures.
Of Australia’s 39 public universities, five are already in deficit. Nine are on margins of less than 4 per cent. This is the buoyant environment to endure a 5 plus 7.5 per cent student funding firestorm.
The homicidal mathematics is simple. Some of these universities cannot survive. Others barely will, by stripping out every conceivable benefit to students.
This will not be because they are inefficient or low-quality.
Typically, it will be because they are regional or outer metropolitan institutions without massive endowments or huge markets, serving disadvantaged students and producing health workers rather than commercial lawyers.
Remarkably, the government seems to know all this. Reports are it is “prepared to see universities fail”.
It probably thinks “failure” looks like some genteel merger of soul-mate institutions. Wrong.
Like local government, there are only two sorts of university mergers. You merge two financial problems, or a you merge a problem with a going concern.
In the first scenario, you simply produce a really big problem. In the second, the going concern resists furiously, then in self-defence asset strips its victim to a skeleton.
Politicians should understand this, especially around politically sensitive regional campuses and their communities. Death of a university means just that, with all the rippling social and economic consequences.
Other universities, even though not rich, will just survive. Here, it will be the student experience that dies.
This is a vital point. Students naturally are focused on fee increases, and lower repayment thresholds. They are right to worry.
But their situation actually is much worse. The cuts to their universities means they will pay more for a dud experience.
The 5 plus 7.5 per cent cuts will eviscerate the student experience, particularly in universities most reliant on per student funding. These are the regional and outer metros, disproportionately providing opportunities for disadvantaged students.
There is a set in order in which universities will be forced to scorch their own earth.
First to go will be regional campuses, inevitable loss-leaders. Then buildings already needed for expanded student populations, followed by expensive courses in national priority areas like science and foreign languages.
Very quickly, you get to the real kicker: student support programs, which are vital, but positively eat money. Last to go will be the research that defines a university.
We are left with a landscape of dead and dying universities, collapsing amid others devolving into poor colleges of advanced education delivering a miserable learning experience.
For which students will pay more. Bargain.
Finally, there is the miserable inequity of these cuts. Like a flat tax, they hurt those who have least, while relatively protecting rich institutions.
The government sells the package as entirely fair, with everyone getting the same initial 5 per cent cut in student funding. But the impact depends entirely on how reliant a university is on student income.
Old, established universities have multiple sources of alternative funding: historic wealth and investments; major philanthropy from alumni elites; and hordes of overseas students flocking to inner city campuses.
For them, government student funding is a small part of their budget.
But for newer universities, especially regionals, the position is reversed. They service more marginal families with children studying toward vital but low-wage professions of care. They have limited access to overseas markets, and few privileged alumni.
These universities are deeply reliant on government student funding, and will suffer disproportionately.
The figures speak for themselves. The aristocratic University of Melbourne derives only 13 per cent of its income from government student funding, with its twin – Sydney - on 15 per cent. But the great engine of social justice that is Western Sydney depends on this source for 41 per cent of funding, while Charles Sturt University – one of our biggest and best regionals – derives 36 per cent.
My own university is one of the lucky unlucky. Our students are first in family and non-privileged, studying health and education, so we are exceptionally reliant on student funding – 44 per cent of total. But with a 6.3 per cent margin and major campuses in Sydney, Melbourne and Brisbane, we can manage our reality.
Which is one reason we should speak truth to uncalibrated power when it jeopardises the entire future of other institutions.
Fundamentally, the sectoral picture will be that the richer a university is the less it will be affected by these cuts, while the more a university hangs around with poorer Australians, the worse things will be.
For some universities of opportunity, this is a death-knell. For others, it is a metronome of decay, ticking away the steady decline of investment in everything that matters to students.
For all universities, however, the 7.5 per cent penalties are a cyanide chaser to the budgetary emetic. Totally unconstrained in the legislation, a minister could cut universities according to any performance metric conceivable, from unrealistic attrition targets, to a ban on teaching French.
All of these realities mean two things. The Government must understand that 5 plus 7.5 per cent cuts are a scythe, not secateurs. Government departments have not been cut like this. Simon Birmingham is a reasonable minister, and he needs to apply that reason.
For the Senate crossbench, it has to confront these grim truths if it is to maintain credibility as a safeguard against miserably bad policy, and a protector of battlers.
That crossbench must understand that this is a policy for dead and crippled universities, and students paying more for a gutted experience.
This article first appeared in The Australian newspaper.