James Griffiths and Marilyn Harrington
The 2016–17 Budget marks another step in the ongoing process
of attempting to reform Australia’s tertiary education sector.
Proposals for reform in the 2014–15 Budget have been extended and modified
through successive negotiations and consultation processes, with the savings
continuing to be accounted for in the Budget. The 2016–17 Budget is an
opportunity to assess which policy proposals remain.
Changing the structure of higher
The main higher education changes in the 2014–15 Budget were
a shift to a more user-pays, market-based model, with greater competition from
private providers and changes to funding arrangements for universities and
students. The most contentious
proposals were an average 20 per cent reduction in government
subsidies to higher education providers for undergraduate student places under
the Commonwealth Grants Scheme (CGS) and deregulating undergraduate student
Many of these changes were to commence on 1 January 2016. However,
neither these initial reforms nor later amendments were passed by Parliament.
The 2015–16 Budget did not address the 2014–15 reforms.
As one of his first acts as Minister for Education and
Training, Senator Birmingham announced in October 2015 that the remaining higher
education reforms would be delayed until 2017 at the earliest and consultation
would follow. The Mid-year Economic
and Fiscal Outlook 2015–16 estimated the cost of this delay would be $331.2 million
from 2015–16 to 2016–17.
In the 2016–17 Budget, the Government has announced it will abandon
its proposal to deregulate fees, resulting in estimated savings of $2.0 billion
over five years from 2015–16. It is unclear how the $2.0 billion savings
have been calculated, given the 2014–15 Budget did not account for any specific
expenses associated with fee deregulation. The 2016–17 Budget also
identifies a cost to this measure of $596.7 million over five years in
underlying cash balance terms.
The Government proposes to retain the other features of its
higher education reform package, including the reduction in CGS subsidies, the
extension of CGS places to non-university providers and sub-bachelor qualifications,
and the lowering of the Higher Education Loan Programme (HELP) repayment
threshold. It is proposed that these remaining changes will now be implemented
Future of the higher education
In conjunction with the 2016–17 Budget, the Government
released a discussion paper presenting its case for change and setting out
proposed reforms for the higher education sector.
A number of options are presented, including reductions in government subsidies,
changes to HELP and limited fee deregulation for specific ‘flagship courses’. It
rules out fee deregulation across the entire higher education sector.
The savings from the 2014–15 higher education budget
measures have never been legislated, but they continue to appear in the budget forward
estimates. While these original measures are considered in the discussion
paper, other policy options that are presented suggest the future shape of
higher education reform may change.
Other higher education budget
Ensuring informed choice for
Many of the assumptions in the higher education reforms rely
on informed choice. Research suggests that the more students pay, the more they
focus on the quality of their education and the more discerning they are about
The 2016–17 Budget seeks to enhance informed choice for
students by providing an additional $10.1 million over four years for the
Tertiary Education Quality and Standards Agency (TEQSA). This funding will
enable TEQSA to respond to the growth in provider registrations and course
accreditations and build its capacity ‘to investigate and respond to
developments in the higher education sector’.
The Quality Indicators for Learning and Teaching website
will also be enhanced, with an additional $8.1 million over four years, to
provide students with more information about higher education providers.
Savings through ‘efficiencies’ of $20.9 million over four
years have been identified for the Promotion of Excellence in Learning and
Teaching in Higher Education program—a program designed to increase the quality
of teaching in the higher education sector. This amount is more than
half the program’s existing allocation. The higher education sector is
concerned about this development because these funds are the sole financial
incentive to improve the quality of university education.
Access and equity in higher
The 2016–17 Budget includes measures which will affect
access and equity programs within the higher education sector.
Efficiencies of $152.2 million over four years have been identified
for the Higher Education Participation Program.
Since the 2014–15 Budget, savings of $208.5 million have been made to this program,
which funds higher education providers to better recruit and retain low socioeconomic
status (SES) students who might otherwise not participate in undergraduate studies. 
There are also budget measures affecting support for
Indigenous higher education. The Budget redirects $9.7 million from the Prime
Minister and Cabinet Portfolio to the Education and Training Portfolio to
consolidate funding for the Bachelor Institute of Indigenous Tertiary
Education. Three existing Indigenous programs (the Commonwealth Scholar
Program, the Indigenous Support Program, and the Indigenous Tutorial Assistance
Scheme—Tertiary Tuition program) will be consolidated into one program. This
does not appear to impact on the funding available under these programs—the
measure is intended to allow more flexible and responsive support for Indigenous
Australians in higher education.
Vocational education and training
There is no new money for vocational education and training (VET)
in the 2016–17 Budget. As TAFE Directors Australia has noted, ‘investment in
skills education is largely ignored or deferred indefinitely’.
VET expenses under the Education function are estimated to decline
from $1.9 billion in 2016–17 to $1.5 billion in 2019–20—a decrease in real
terms of 27.6 per cent. This decline is mostly
the result of the cessation of the National Partnership (NP) on Skills Reform.
The NP has been reviewed, but a new agreement has not been concluded.
Funding for VET also appears under the ‘Other economic
affairs’ sub-function. These expenses are expected to decline by 4.8 per cent
in real terms from 2016–17 to 2019–20. This is largely the result of the
redirection of $247.2 million over five years from the Industry Skills Fund,
which supports the training needs of small and medium enterprises.
The future of VET FEE-HELP, one of five loans available
under the broader HELP scheme, is under consideration. Prior to the Budget, the
Government released a discussion paper to guide its redesign.
The higher education discussion paper released with the Budget also considers
VET FEE-HELP as part of its broader review of HELP.
See: Parliament of Australia, ‘Higher
Education and Research Reform Amendment Bill 2014 homepage’, Australian
Parliament website; J Griffiths, Higher
Education and Research Reform Bill 2014, Bills digest, 69, 2014–15,
Parliamentary Library, Canberra, 2014; Parliament of Australia, ‘Higher
Education and Research Reform Bill 2014 homepage’, Australian Parliament
website. Both Bills were negatived on the second reading.
Of interest in this context is the Parliamentary Budget Office (PBO)
estimate that fee deregulation accounts for $1.2 billion in projected Higher
Education Loan Programme (HELP) costs from 2015–16 to 2025–26
Education Loan Programme – supplementary analysis, supplement to report
no. 02/2016, PBO, 2016, p. 2.
For further information about the Industry Skills Fund, see: Australian
Skills Fund’, business.gov.au website.
See Australian Government, Redesigning
VET FEE-HELP: discussion paper,
27 April 2016. See also: K Loussikian, ‘Full extent of debt disaster will not be known for years’, The Australian, 7 April 2016, p. 2; J Sloan, ‘Vetting of landscape is recommended policy lesson’, The Australian, 3 May 2016, p. 12; K Carr (Shadow
Minister for Higher Education, Research, Innovation and Industry) and S Bird
(Shadow Minister for Vocational Education), Here’s a three word slogan Minister: fix VET mess, media release, 10 April 2016.
All online articles accessed May 2016.
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