The 2017–18 Budget removes the unlegislated proposed changes
to higher education funding arrangements contained in the 2014–15 Budget (which
amounted to savings of $3.4 billion). The replacement measures
proposed in the 2017–18 Budget provide a similar quantum of savings, at an
estimated $3.8 billion over five years, representing the largest savings
measure in the Budget.
In the 2016–17 Budget the Government announced that it was reviewing
the unlegislated 2014–15 measures, and delaying proposed implementation pending
further consultation. To support this
consultation process it released a discussion paper, Driving Innovation, Fairness and
Excellence in Australian Higher Education.
On 1 May 2017 Minister Birmingham announced the Government’s response
to these consultations, which forms the basis of the measures in this Budget.
Funding of Commonwealth supported places
supported places (CSPs) are the subsidised undergraduate and some
postgraduate coursework places available to domestic students at all public
universities and some private institutions. Universities receive the funding
for these places through student contributions (with most students taking out
Higher Education Loan Program (HELP) loans to finance their contributions) and
the Commonwealth Grants Scheme (CGS). The split between student contributions
and government funding (via the CGS) varies depending on the field of study.
For example, in 2017 a student undertaking a law degree will contribute $10,596
to the cost of their study, while the Government contributes $2,089; someone
studying science or engineering courses will contribute $9,050 compared to a
government funding of $17,071; and a student in the humanities will contribute
$6,349 with a government contribution of $5,809.
In this Budget, the Government is proposing to ‘rebalance’
the relative contributions of students and the Government, increasing the
student contribution towards their tuition from an average of about 42% in 2017
to around 46% in 2021. This will be through a
combination of increasing student contributions by 7.5% (1.82% annually over
four years from 2018) and introducing an efficiency dividend of 2.5% in each of
2018 and 2019 on the CGS payments to institutions. Overall, this will mean an
estimated reduction in the base funding for CSPs to most universities of
between 2.6% and 2.9% depending on their course mix.
The Government has justified this reduction by noting that universities ‘appear
to have become more efficient over time, especially as they have achieved greater
economies of scale’.
HELP repayment thresholds
While increasing student contributions will have some impact
on students, the major effect on students of the proposed changes in this
Budget will be in relation to Higher Education Loan Program (HELP) repayment
arrangements. These changes represent the first major amendments to the
repayment arrangements since 2004–05, although a new lower income threshold of
$51,596 at a repayment rate of 2.0%, applying from the 2018–19 tax year, was
legislated in 2016., 
The Government is proposing a significantly reduced minimum
repayment threshold of $42,000 in
2018–19, with a repayment rate of 1.0% of income, compared to the current
minimum of $55,974 for 2017–18, with a repayment rate of 4.0%.
In addition, it is also proposing to increase the proportion of income required
to be repaid at most income levels above the minimum. The Budget also proposes
that, from 1 July 2019, these thresholds will be indexed to the
Consumer Price Index rather than Average Weekly Earnings.
This measure is in response to growing concerns about the
level of HELP debt and, in particular, the proportion of debt not expected to
be repaid. The Government estimates
that in 2016–17 some 23% of new HELP debt will never be repaid; the proposed
Budget measures, in addition to changes requiring repayment of debt by those
living overseas from 1 July 2017, is expected to reduce the
non-repayment level to around 17% in 2017–18, through increasing the proportion
of debtors who are paying back at least part of their loan each year.
The impact of this proposal varies across the income scale,
with the greatest relative impact for those with incomes just under $52,000,
who will have a tax increase of 2.5% resulting in an increased payment of some
$1,300. Based on 2016 taxation
data, these changes would increase the number of those repaying their HELP debt
from around 350,000 to over 500,000, out of a total of more than 2.2 million
debtors. These new payers will be
in the lower income ranges with the greatest relative impact.
It should be noted that these new repayment arrangements would
apply to all HELP loans, as well as VET Student Loans, Trade Support Loans and
Student Start-up Loans.
Other funding measures
There are a number of other changes to higher education funding
proposed in this Budget including:
- 7.5% of the CGS funding to universities to be contingent on
performance from 1 January 2018. For 2018 funding, universities will be required
to participate in the reform of admissions information and cost of teaching and
research transparency initiatives, while the metrics to be used to allocate
this funding in the longer term will be developed in consultation with the
sector during 2017–18.
- Ceasing access to CSPs for most permanent resident visa holders
and New Zealand citizens. Currently, these students are able to access CSPs but
are not eligible for HELP loans. It is proposed to change these arrangements so
that these students are eligible for HELP but are required to pay the full cost
of their courses. Students who are enrolled prior to 1 January 2018
will retain their current eligibility, while those on permanent humanitarian
visas and eligible New
Zealand Special Category Visa holders who meet the long-term residence
requirements will continue to be eligible for both CSPs and HELP loans.
- Replacing the loading for enabling courses, which are offered to
under-prepared students to assist them in undertaking further higher education
qualifications, with a student contribution which may be paid through HELP. At
present the Government allocates places for these courses and then provides a
loading for each place.
- Introducing a scholarship system for postgraduate coursework
CSPs, enabling students to choose the university at which they wish to study.
Current funding arrangements allocate CSPs to specific institutions for
specified courses meaning that, in some cases, students undertaking the same
degree at different universities are covered by different funding arrangements.
It is also proposed to reduce the allocation of CSPs for postgraduate
coursework by 3,000 places a year from 1 January 2018 in line with
- Extending the demand-driven system to include CSPs in
sub-bachelor level diploma, advanced diploma and associate degree courses at
public universities for students who have not completed another higher
education qualification, thereby removing the current caps on places in these
- Providing CGS funding from 1 January 2018 for Work
Experience in Industry units undertaken by students which provide a credit
towards a Commonwealth-supported qualification.
All the funding measures will require legislation for
The Higher Education Participation and Partnerships Program
(HEPPP), which provides funding to universities to conduct activities to
improve the access, retention and completion rates of students from low
socio-economic status (SES) backgrounds, is to be reformed. From 1 January
2018, the HEPPP will be split into two components, one of which will provide a
loading of $985 per low SES student and performance funding for universities that
improve their success rates for low SES and Indigenous students, while the
other component will have a greater focus on evaluative research and outreach
programs. This measure will
The Promotion of Excellence in Learning and Teaching in
Higher Education program will cease, with responsibility for the Office of
Learning and Teaching Digital Repository and for Teaching Awards being
transferred to Universities Australia. This measure does not require
Support for the regions
Several budget measures seek to improve the access to higher
education of students in regional areas:
- $15.0 million over four years has been provided to establish and
support up to eight regional study hubs to support students in regional areas
undertaking distance study
- $12.5 million will be provided over six years to assist with the
establishment of the Central Coast Medical School and
- $24.0 million over four years will be provided to establish a
Rural and Regional Enterprise Scholarships program to provide at least 1,200
scholarships of up to $20,000 for students undertaking undergraduate,
postgraduate or vocational training and education qualifications in priority
areas of study.
These measures do not require legislation.
Information and figures in this brief have been taken from the
following document unless otherwise sourced: Australian Government, ‘Part 2: expense
measures’, Budget measures: budget paper no. 2: 2017–18.
Australian Government, Budget
2017–18: budget overview, 2017, Appendix D: major savings.
J Griffiths and M Harrington, ‘Tertiary education’, Budget
review 2016–17, Research paper series, 2015–16, Parliamentary Library,
Canberra, May 2016, pp. 49–51.
Australian Government, Driving
innovation, fairness and excellence in Australian higher education,
Department of Education and Training (DET), Canberra, May 2016.
S Birmingham (Minister for Education and Training), A stronger, sustainable and student-focussed higher education system
for all Australians, media release,
1 May 2017. For details of the proposals see Australian Government, The higher
education reform package, DET, May 2017.
Australian Government, Allocation
of units of study to funding clusters and student contribution bands according
to field of education codes 2017, DET, n.d.
Australian Government, Higher education reform package, op.
cit., p. 10.
Ibid., pp. 13–14.
Ibid., p. 12.
K Jackson, Higher
Education Support Bill 2003, Bills digest, 56, 2003–04,
Parliamentary Library, Canberra, 2003, pp. 2–3.
Savings (Omnibus) Act 2016, Schedule 1.
Australian Government, Higher education reform package, op. cit.,
Australian Government, Driving innovation, fairness and excellence in
Australian higher education, op. cit., pp. 19–20.
Australian Government, Portfolio
budget statements 2017–18: budget related paper no. 1.5: Education and Training
Portfolio, p. 55; and for information on the repayment
arrangements for those living overseas see Australian Government, ‘Overseas
obligations’, Australian Taxation Office (ATO) website.
Australian Government, Higher education reform package, op. cit.,
Parliamentary Library estimates based on ATO, Taxation
statistics 2014–15: Individuals—Table 20; debtors figure from Australian
Government, Driving innovation, fairness and excellence in Australian higher
education, op. cit., p. 19.
Australian Government, Higher education reform
package, op. cit., p. 27.
Ibid., p. 23.
Ibid., p. 22–3.
Ibid., p. 21.
All online articles accessed May 2017.
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