Views on the bills
2.1
The proposals in the Medicare Levy Amendment (National Disability
Insurance Scheme Funding) Bill 2017 (the Medicare levy bill) and 10 related
bills seek to fill the gap left by previous governments in the Commonwealth's
contribution to funding the National Disability Insurance Scheme (NDIS), and to
ensure the NDIS is fully funded into the future.
2.2
Submitters to the inquiry were unanimous in their support for a fully
funded NDIS, with many expressing no opinion as to the appropriate mechanism by
which funding certainty should be achieved.
2.3
This chapter examines the evidence received in relation to the NDIS
funding gap; and the use of the Medicare levy and the NDIS Savings Fund Special
Account to fund the NDIS. The chapter then focuses on the Nation Building Funds
Repeal (National Disability Insurance Scheme Funding) Bill 2017 (the Funds
repeal bill), as much of the evidence received for the inquiry concerned the closure
of the Education Investment Fund (EIF).
The NDIS funding gap
2.4
During the public hearing, Mr Michael Brennan from Treasury, explained
how the funding gap in Commonwealth funding for the NDIS was calculated,
including how the shortfall over 10 years would accumulate to $55 billion:
Our estimate of the shortfall is defined as being the
difference between projected NDIS expenditure, which is still based on the 2011
Productivity Commission study and its views about medium-term projection, and
the two other main sources of funding, namely the pre-existing Commonwealth
disability spend and the Commonwealth's share of the DCAF [existing
DisabilityCare Australia Fund], which would amount to a shortfall in the 2019–20
year in order of $3.8 billion and a shortfall over the 10 years, out to 2027–28,
with a total of $55 billion.[1]
2.5
To bridge this gap, the Medicare levy bill and the 10 related bills:
-
increase the Medicare levy by half a percentage point from 1 July
2019, resulting in an estimated gain to revenue over the forward estimates of
$8.2 billion;[2]
and
-
credit in excess of $7.2 billion of uncommitted funds from the
Building Australia Fund (BAF) and the EIF to the NDIS Savings Fund Special
Account once it is established.
2.6
The following chart illustrates how these changes will operate to cover
the Commonwealth's NDIS contribution and funding from 2019–20 to 2027–28.
Figure 2.1–Chart of Commonwealth's NDIS contribution and
funding sources[3]
Source: Budget 2017–18, Budget Paper No. 1, Statement
3: Fiscal Strategy & Outlook, p. 3-10.
Support for using the Medicare levy to fund the NDIS
2.7
The majority of submitters to the inquiry fully support the use of the
Medicare levy to fund the NDIS.
2.8
Recognising that the NDIS is an insurance scheme for all Australians, National
Disability Services (NDS) maintained that 'the Medicare Levy is an appropriate
channel through which Australians can share the cost of the NDIS'.[4]
2.9
In its submission to the inquiry supporting the use of the Medicare levy
to fund the NDIS, Disabled Peoples' Organisations Australia (DPO Australia)
highlighted that:
The Medicare Levy is a permanent element of our tax system,
where everyone contributes to the cost of essential universal services
according to their ability to pay. The Medicare Levy increases the revenue base
into the future and provides a high level of certainty that essential,
universal services are available when they are needed.[5]
2.10
Ms Therese Sands from DPO Australia, advised the committee that DPO Australia
had consistently supported the role of the Medicare levy in providing a revenue
base into the future for the NDIS:
We advocated for and supported the 0.5 per cent increase
introduced by the Labor government in 2013, and we welcomed the 2017–18
coalition government budget measure to increase the Medicare levy by 0.5 per
cent from July 2019, which is given effect by this bill. A 0.5 per cent
increase in the Medicare levy will increase the revenue base for the NDIS into
the future and provide a high level of certainty that NDIS funding is secure.[6]
2.11
Ms Kirsten Deane, representing Every Australian Counts (EAC) and the National
Disability and Carer Alliance (NDCA) also endorsed the use of the Medicare levy
to fund the NDIS, outlining two main reasons for this support:
The first is that we are pleased that securing that source of
funding would take it out of the budget cycle. It takes it out of the realm of
politics. It identifies a secure, reliable, adequate source of funding to fully
fund the scheme. The second reason we support it is that we do think it is
fair. The scheme is available to every Australian, should they require it.
Should they themselves acquire a disability or should they have a child with a
disability, the scheme would be there if they needed it. So we think an
increase in the Medicare levy is a fair way to fund it.[7]
2.12
NDS and DPO Australia also agreed with EAC and NDCA that an important
benefit of using the Medicare levy to fund the NDIS is that it removes the
issue from the budget cycle and political battles; and ensures that its funding
is not associated with the need to find savings, or linked to cuts to other
essential human and social services programs.[8]
2.13
Similarly, representatives from the Australian Council of Social
Services (ACOSS) endorsed raising and reforming the Medicare levy as the
best way to fund the NDIS whose costs are projected to rise substantially over
the coming decades. Mr Peter Davidson from ACOSS, advised the committee
that:
It is fairer than rationing services or raising user charges,
which would undermine universality and the insurance principle underpinning the
NDIS, and also fairer than proposals to reduce funding for other human services
programs to fund the NDIS. While Medicare levy revenues are not strictly
hypothecated to these expenditures, the levy instils public confidence that
these universal services have a robust source of funding that is not bound too
tightly to the vagaries of the annual budget process. It also means that future
governments will be held to account to provide those universal services.[9]
2.14
Queensland Advocacy Incorporated, an independent, community-based
systems and individual advocacy organisation and a community legal service for
people with disability, asserted that it is vital that the NDIS continues to be
funded as a social insurance scheme and does not become part of welfare funding
that is then subject to the whims of the political party of the day:
The NDIS must not become the focus of an ongoing political
battle each budget cycle. Rather the Government should take leadership and
introduce sustainable measures that will ensure the financial viability of the
NDIS into the future.[10]
2.15
In contrast, the Australian Nursing and Midwifery Foundation queried
whether other mechanisms for funding the NDIS should be pursued:
Tying the Medicare levy to funding the NDIS risks creating a
prejudice among the community that disability is increasing health care costs
without the benefit of providing increased health services for all.[11]
The proposed increase in the Medicare
levy
2.16
Many submitters agreed with the government's proposal to increase the
Medicare levy from 2 to 2.5 percent, from 1 July 2019 to fund the
Commonwealth's contribution to the NDIS. For example, noting that the Federal
Budget revealed a gap in 2019–20 of $3.8 billion in the Commonwealth funding
required for the NDIS; and that the gap expands to almost $5 billion the
following year, NDS argued that:
The increase in the Medicare Levy will bridge this gap. It
will add to existing savings, the Commonwealth's share of the DisabilityCare
Australia Fund (also funded through the Medicare Levy) and existing
Commonwealth expenditure on disability services.[12]
2.17
That said, some stakeholders queried the comprehensiveness of the levy,
and whether the proposed increase should apply to all income earners.
2.18
In June 2017, three peak disability organisations—ACOSS, DPO Australia
and the Australian Federation of Disability Organisations (AFDO)—issued a joint
statement calling on Parliament to secure funding for the NDIS based on three
principles:
-
The NDIS must be available to all eligible people.
-
Everyone should contribute to funding this universal system according
to their ability to do so.
-
Through a progressive tax system where people with higher incomes
contribute a higher share of their income, and the ability for people to avoid
contributing their fair share is restricted.[13]
These principles were endorsed by submissions made to this
inquiry by the NSW Council of Social Services and ACT Council of Social
Services;[14]
and expanded on in ACOSS' submission.
2.19
Support for the universality and insurance principles that underpin the
NDIS aside, ACOSS noted that there may be a 'more progressive way' to raise the
same revenue proposed in the Medicare levy bill and the nine related consequential
bills.[15]
Although not endorsing one particular approach over another, ACOSS put forward
four alternative options to reform the Medicare levy, each with a view to creating
a more equitable tax system that lessens the impact on low income earners and
restricts tax avoidance by those who have the means to contribute.[16]
2.20
In evidence before the committee, Mr Davidson from ACOSS argued that
people are currently avoiding paying the Medicare levy by using various tax
shelters, such as holding funds in private trusts. To guard against this, ACOSS
proposed that:
...the Medicare levy surcharge thresholds use a broader
definition of income than taxable income. In effect what that does is render
ineffective each of those tax shelters. So the income is added back in, and
people are taxed on the totality.[17]
2.21
On this issue, Mr Davidson emphasised that ACOSS have 'been raising the
need for broadening the base of income taxes generally, including the Medicare
levy, for quite some time'.[18]
2.22
In considering the proposed increase in the Medicare levy, the
Queensland Government expressed concern that:
An increase to the Medicare levy is, in effect, an increase
in personal income tax. At a time where wage growth nationally is restrained
the increased levy can be expected to reduce the welfare of individuals and
working families.[19]
2.23
Another submitter to the inquiry also contended that people aged 65
years and older should also be exempt from the increased Medicare levy as they
are excluded from receiving assistance from the NDIS by reason of their age.[20]
2.24
However, ACOSS brought to the committee's attention the fact 'that
almost 40 per cent of households are exempted on the basis of their low
incomes' from paying the Medicare levy.[21]
Indeed, in his Second Reading Speech, the Treasurer, the Hon Scott Morrison MP,
pointed out that low-income earners will continue to receive relief from the
Medicare levy through low-income thresholds for singles, families, seniors and
pensioners:
People who are exempt from the Medicare levy, such as blind
pensioners and people who are entitled to full free medical treatment for all
conditions under Defence Force arrangements or Veterans' Affairs repatriations
health card (gold card), will continue to be exempt.
A number of other tax rates that are linked to the top
marginal rate and the Medicare levy will also increase in line with this
change, and these include increases in the rate of fringe benefits tax and
superannuation excess
non-concessional contributions tax.
In these bills, the same exemptions, the same carve-outs, the
same protections for vulnerable Australians that exist for the Medicare levy
exist for the increase in the Medicare levy to fully fund the National
Disability Insurance Scheme.[22]
2.25
Mr Richard Maher from Treasury, explained the impact of the proposed
increase in the Medicare levy on someone earing $85,000 and someone earing
$50,000 in 2019–20:
Someone on $85,000 currently pays $1,700. That would go up by
$425 to $2,125...A single person on $50,000 currently pays $1,000 and their extra
contribution from 2019–20 would be an extra $250.[23]
2.26
Further, in terms of progressivity, Associate Professor Ben Phillips
advised the committee that the package would improve the progressivity of
income for Australia. Associate Professor Phillips explained that the Medicare levy
is mildly progressive:
...in that the Medicare levy doesn't kick in until the low
$20,000s. In terms of the way the system works, because it comes in,
effectively, with a taper at the lower income, it wouldn't really impact on
persons or families under the mid-$20,000 mark.[24]
The NDIS Savings Fund Special Account
2.27
Following the proposed increase in the Medicare levy, one-fifth of the
revenue raised by the Medicare levy in aggregate will be credited to the NDIS
Savings Fund Special Account once it is established.
2.28
The National Disability Insurance Scheme Savings Fund Special Account
Bill 2016 (NDIS Special Account bill) would assist in meeting NDIS funding
commitments by establishing a new ongoing special account under section 5 for
the purposes of the Public Governance, Performance and Accountability Act
2013.[25]
The purpose of the special account is outlined in section 6:
-
to assist the Commonwealth to meet its funding obligations in relation
to the National Disability Insurance Scheme Act 2013;
-
to make payments to the NDIS Launch Transition Agency for the
purposes of the Agency; and
-
to reduce the balance of the Account (and, therefore, the
available appropriation for the Account) without making a real or notional
payment.[26]
2.29
In evidence before the committee Mr Michael Brennan from Treasury,
confirmed that the intention of the NDIS Savings Fund Special Account was to
ensure that the Commonwealth will always be able to meet, as far as the
vagaries of all projections allow, the NDIS funding commitments going into the
future.[27]
Mr Brennan explained that the NDIS Savings Fund Special Account is a
special account within the Consolidated Revenue Fund (CRF) that provides 'a
greater linkage between the revenue that's being raised for this purpose and
the expenditure'.[28]
Credits to the account
2.30
Credits to the account would be committed for a period of ten years and
made from a number of Commonwealth sources, while debits would be made for the
specific purpose of funding Commonwealth shortfalls related to the NDIS.[29]
Sources of credit may include:
-
underspends and net savings from the NDIS and other portfolio savings,
as determined by the Minister for Social Services;
-
discretionary decisions by the Prime Minister or the Cabinet (for
example, to establish a starting balance at the special account's
commencement); and
-
decisions by the Prime Minister or the Cabinet about identified
savings from other Commonwealth portfolios.[30]
2.31
The government states the NDIS Special Account bill would have a
negligible financial impact over the forward estimates. The special account
would sit within the CRF and, as such, would not incur any Public Debt Interest
or management costs.[31]
2.32
While some participants in this inquiry queried whether the NDIS Savings
Fund Special Account was necessary,[32]
this inquiry is focused on the Medicare levy bill and 10 related bills, and not
the establishment of the NDIS Special Account. As noted previously, the Senate
Community Affairs Legislation Committee conducted an inquiry into the NDIS Special
Account bill and recommended that the bill be passed.[33]
The need for long-term funding certainty
2.33
The overwhelming majority of the submissions and participants in this
inquiry stressed to the committee the urgent need to secure long-term funding
for the NDIS.
2.34
In speaking about the need for certainty in NDIS funding, Ms Kirsten
Deane, Campaign Director, EAC, and Executive Director, NDCA put the current
situation in context:
For many years, disability was not a very high political
priority, and that's how we ended up with a very highly rationed, broken and
fragmented scheme. People with disability and their families remember those
days and they worry that they will fall to the bottom of the priority list
again. That's why the security issue is so important to them. It is not that
long ago when security wasn't assured and we were operating in a very broken,
highly rationed, fragmented and inefficient scheme. The longer the debate drags
on the more anxious people are that that is where we are going to return.[34]
2.35
This was echoed by a number of other submitters, including Ms Mary Walsh
the mother of a son with intellectual disability and complex needs, and a
long-term advocate of the NDIS, who took the view that:
I don't believe that the NDIS will ever achieve what it is
meant to achieve unless it is fully funded. I believe the best way of doing
that is through the Medicare levy. There is no doubt that...there has to be
secure funding. And as someone who is dealing with—I no longer have that
personal situation but I am working with many families and, at the moment, they
are so stressed out because some of their plans are coming back with fewer
funds. There is such a feeling of insecurity around them that I have seen
families totally distressed.[35]
2.36
Ms Therese Sands from DPO Australia declared that 'finalising secure,
sustainable and sufficient funding for the NDIS cannot be delayed any further'.
Ms Sands told the committee:
There are great risks to allowing sustainable funding for the
NDIS to become an election issue, with the NDIS constantly part of political
debate and commentary and with community support for the NDIS being eroded.
People with disability need certainty so that they can focus on ensuring that the
NDIS delivers its outcomes.[36]
2.37
The committee also heard from Ms Stephanie Gotlib from Children and
Young People with Disability Australia, who informed the committee that:
On the ground level, with young people with disability and
their families, at the moment I would say there is, due to a number of reasons
but due to this ongoing debate about funding, great uncertainty about the
future of the scheme. I think there's a strong belief by people that we're
heading for caps on the scheme...[37]
2.38
In evidence before the committee, Ms Kirsten Deane representing EAC and NDCA,
also spoke of concerns, confusion and worry about the NDIS that had been raised
with NDCA by young people with disabilities and their families. Ms Deane
maintained that:
Locking in the funding as soon as possible will...give people
certainty. We are four years into the operation of the scheme and we still have
not secured an adequate and reliable funding base. This undermines people's
confidence in the scheme and that it will be there for them when they need it.
Sorting out the funding issue will also allow us to get on with the job of
making sure the NDIS is the best it can be.[38]
2.39
NDS shared Ms Deane's view about 'getting on with the job'; noting that
'with funding secure, the focus must turn to ensuring the NDIS is implemented
well to deliver on its great promise for people with disability'.[39]
2.40
Even those submitters who did not support the proposal put forward in
the bills to fund the NDIS recognised the immediate need to secure long-term
funding for the scheme. For example, Mr Alan Blackwood, representing the Young
People in Nursing Homes National Alliance, while not endorsing the particular
proposal put forward in the Medicare levy bill and 10 related bills, agreed
that 'the NDIS is a positive reform' that 'needs to be secure'.[40]
Committee view
2.41
The committee believes that a fully funded NDIS is essential to ensure that
Australians living with disability are provided with high-quality care, both
now and into the future. However, the committee acknowledges that current sources
of funding are insufficient to cover the Commonwealth's NDIS contribution, and
that this puts Australians living with disability at risk.
2.42
Evidence presented to the committee from the disability sector
established that there is an urgent need to secure sustainable and sufficient
funding for the NDIS to give Australians living with disability confidence in
the system. The committee recognises this need and is confident that the new
measures will deliver this certainty without cuts to other essential human or
social services.
2.43
The committee agrees with stakeholders that the Medicare levy is a
permanent element of our tax system, where everyone contributes to the cost of
essential universal services according to their ability to pay. The committee
considers that asking Australians to contribute to the cost of the NDIS
according to their capacity will ensure the NDIS is guaranteed and secure for current
and future generations.
2.44
The committee endorses the findings of the Senate Community Affairs
Legislation Committee's inquiry into the National Disability Insurance Scheme
Savings Fund Special Account Bill 2016. In particular, the committee considers
that this bill will establish a mechanism by which funding intended for the
NDIS is secured for that purpose, when and as it is needed.
2.45
The committee is encouraged by the broad support for increasing the
Medicare levy to fund the NDIS, and is of the view that the proposed increase
in the levy combined with the establishment of the NDIS Savings Fund Special
Account is the best way to fully fund the NDIS, and to give certainty to Australians
living with disability.
Nation Building Funds Repeal (National Disability Insurance Scheme Funding)
Bill 2017 (the Funds repeal bill)
Background
2.46
The BAF and the EIF were established on 1 January 2009 by theNation-building Funds Act 2008, after being announced in the
2008–09 Budget in response to the Global Financial Crisis.[41]
2.47
The BAF aimed to:
...enhance the Commonwealth’s ability to make payments in
relation to the creation or development of transport infrastructure,
communications infrastructure, energy infrastructure and water infrastructure,
and to make payments in relation to eligible national broadband network
matters.[42]
2.48
The EIF aimed to:
...enhance the Commonwealth’s ability to make payments in
relation to the creation or development of higher education infrastructure,
research infrastructure, vocational education and training infrastructure,
eligible education infrastructure and to make transitional Higher Education
Endowment Fund payments.[43]
2.49
In the 2014–15 Budget, the government advised that the BAF and the EIF
would cease operation on 31 December 2014. It also advised that it would
establish the Asset Recycling Fund (ARF) on 1 July 2014 to facilitate the government's
investment in new infrastructure. The ARF was to include around $2.4 billion of
uncommitted funds from the BAF; and around $3.5 billion of uncommitted funds
from the EIF.[44]
2.50
In May 2014, the government introduced the Asset Recycling Fund Bill 2014
in the House of Representatives to set up the ARF. However, it lapsed at
prorogation of the parliament.[45]
2.51
In the 2016–17 Budget the government advised that it would not be
proceeding with the ARF. Instead, it advised that it would continue to progress
the closure of the BAF and EIF and that:
The uncommitted funds intended for the ARF, including from
the BAF and EIF, will instead be credited to the National Disability Insurance
Scheme Special Account and used to reduce the Commonwealth's debt and future borrowing
requirements.[46]
2.52
The Funds repeal bill repeals the Nation-building Funds Act 2008 in
its entirety,[47]
which, in effect, implements the government's decision to close the BAF and the
EIF. The uncommitted funds in the BAF and the EIF will be transferred to the NDIS
Savings Fund Special Account once it is established.
2.53
Representatives from the Department of Finance informed the committee
that there is only one payment of $2 million to be made from the EIF and that
beyond that 'no new commitments [had been] made from the EIF since
30 July 2013'.[48]
2.54
As stated above, the NDIS Savings Fund Special Account is intended to be
a special fund established as a means of providing a protective mechanism in
the event of a NDIS funding shortfall.
2.55
As no evidence was received regarding the closure of the BAF, the next section
of this chapter focuses only on the closure of the EIF.
Industry perspective on the Education Investment Fund
2.56
While lending their full support to the effective and appropriate
funding of the NDIS, representatives from the higher education sector expressed
concerns about the closure of the EIF and the redirection of the uncommitted
funds away from higher education purposes. Some submitters and witnesses also
cautioned that the loss of EIF funding would be compounded by the measures
proposed in the Higher Education Support Legislation Amendment (A More
Sustainable, Responsive and Transparent Higher Education System) Bill 2017.[49]
2.57
Higher education stakeholders provided examples to the committee of how
EIF funds had supplemented university contributions and other funding to support
research infrastructure projects for both higher and vocational education
training around Australia. For example, Monash University drew the committee's
attention to how infrastructure funding from the EIF,[50]
supplemented by other investment made possible:
-
the Green Chemical Futures building, which is 'dedicated to
facilitating academic and industrial research within the chemicals and plastics
sector';[51]
and
-
the New Horizons building, which is 'a collaborative research
environment creating new multi-disciplinary research opportunities for
industry, engineers, scientists, researchers and government in the fields of
future manufacturing, modelling and simulation, biological engineering and
renewable energy'.[52]
2.58
Similarly, the University of Sydney highlighted its use of EIF funding to
establish the Charles Perkins Centre, the home of the Centre for Obesity,
Diabetes and Cardiovascular Disease; and the Sydney Nanoscience Hub 'which houses
the Australian Institute for Nanoscale Science and Technology and two core
national research facilities (in microscopy and microanalysis, and
nanofabrication)'.[53]
2.59
The University of Melbourne also provided numerous examples of research
infrastructure projects that were partially EIF funded. These included the
Peter Doherty Institute for Infection and Immunity; the Centre for Neural
Engineering; and the Advanced Human Imaging Facility.[54]
Regional Australia
2.60
The Academy of Science noted that disbursements from the EIF had
supported numerous critical research infrastructure facilities, including in
regional Australia, specifically:
...a $48 million National Geosequestration Laboratory at CSIRO,
the National Institute for Nanoscience, a Centre of Excellence for Transport
Technology, and projects designed to ensure sustainable energy for the Square
Kilometre Array project in Western Australia.[55]
2.61
Universities Australia also pointed to teaching and research
infrastructure around Australia that had been partially funded by EIF,
including:
-
Charles Sturt University's National Life Science Hub;
-
Swinburne University's Factory of the Future;
-
James Cook University's Science Place for Northern Queensland at
Townsville; and
-
investments in vocational education infrastructure in places
including Darwin, Dubbo, Echuca and Port Hedland.[56]
2.62
Innovative Research Universities (IRU), whose members are based in outer
metropolitan and regional areas, submitted that closing the EIF would 'be
particularly deleterious for regional research and education capacity'.[57]
Reflecting on the need for the whole of Australia to have multiple sites of
research excellence, IRU explained that:
IRU members teach 18% of all students in regional campuses
across Australia, a significant student cohort that requires dedicated research
facilities and opportunities. Through our research, we contribute to the
building of regional research systems across Australia. The impact on regional communities
is significant where their universities have the research infrastructure to win
grants and tap into research funds such as the Medical Research Future Fund
(MRFF)...The infrastructure challenge is particularly acute, with few options to
raise funds...The loss of the remaining EIF funds will hinder the universities
capacity to deliver across Australia.[58]
2.63
La Trobe University relayed similar concerns about the potential
regional impacts of the closure of the EIF:
Without significant improvements in regional education
outcomes, there is a high risk that the 'brain drain' of talent from the regions
to metropolitan universities will strip our regional and rural communities of
the talent they need to actively participate in the transformation to a
knowledge economy.[59]
2.64
Likewise, the University of Newcastle, who supplemented their own $40 million
contribution with $30 million from the EIF and $25 million from the
NSW Government, to establish 'NeW Space' at its Newcastle CBD campus to house
its Faculty of Business and Law, presented evidence that:
...NeW Space will deliver $1.3 billion in economic benefits to
the Hunter Region from 2013–2022, including $200 million in construction to the
regional economy. A further $134 million is estimated to flow annually from the
emergence of the Newcastle CBD as a vibrant student hub.[60]
The value of research infrastructure
2.65
Industry stakeholders that appeared before the committee spoke of the
wider benefits of research infrastructure to the community, the economy and
industry.
2.66
In speaking to the committee, Professor Ian Hume, a Fellow from the
Australian Academy of Science, highlighted the potential of transformative
research to improve the lives of disabled Australians, such as 'robotics, advanced materials, advances in
neurophysiology and advanced computing'.[61]
2.67
Group of Eight also highlighted the health and medical outcomes from
projects it had led that received funding from the EIF. These included: research
into the causes of autism spectrum disorder; antibiotic development; the use of
crops to develop pharmaceuticals; and the identification of a gene whose
discovery will help treat sepsis.[62]
In evidence before the committee Ms Vicki Thomson from Group of Eight, expanded
on this, observing that:
EIF has enabled research that has saved lives, enhanced
lifestyles and ensured the survival of key economic sectors by modernising and
making them more productive. It has created jobs and its benefits have flowed
through local economies.[63]
2.68
As explained by Flinders University, the benefits of investment in
research infrastructure relate not only to the provision of high quality
research and education:
...but also wider community benefits such as the creation of
direct and indirect jobs (including in construction), economic growth and
export earnings from international education that support industries such as travel
and tourism, retail and student accommodation.[64]
2.69
These views were echoed by others, such as Monash University, who
observed that schemes such as the EIF 'have delivered benefit to the Victorian
and Australian community'.[65]
2.70
The committee also heard from Ms Catriona Jackson from Universities
Australia who described the flow-on benefits of good teaching and research:
Universities are flourishing paths of not just regional
communities but communities all over the country, and not just as institutions
that employ lots of people. There are enormous flow-in and flow-out benefits,
which form an enormous part of national prosperity, quite apart from the
contribution Australian universities make to the economy through international
education, which sees us as the third largest exporter in it.[66]
2.71
A number of universities also drew attention to the reputation of
Australia's universities in the international community, and argued that
without the EIF Australia's ongoing international competitiveness would be at
risk.[67]
In evidence before the committee, Ms Vicki Thomson from Group of Eight explained
that:
...the only way we are assessed internationally is through our
research. That is the only ranking we have. And the only way international
students and investors can make an assessment as to whether they're going to
invest in our universities, our research and our students is around our
high-quality university rankings. We saw in the last rankings two universities
in China pip us at the post, because they are investing in their research
infrastructure.[68]
2.72
Professor Andrew Vann, from Universities Australia and Charles Sturt
University, conveyed to the committee that while the higher education sector is
more efficient than it used to be, it is reliant on international student revenue
which requires the sector to maintain their international research reputation.
Professor Vann expressed concern that:
The risk for us is that other countries like China are
investing massively in their education systems. Other countries like Canada have
invested massively in their research infrastructure in a way that we haven't in
Australia, and the risk is that we lose that reputation. There are other places
people could go than Australia to study. We do not want to see the system come
tumbling down, and there is a risk of that if we aren't able to maintain the
investment that maintains our reputation.[69]
Funding sources for research infrastructure
2.73
While being opposed to the closure of the EIF, Australian Catholic
University (ACU) explained that they were one of only four public
universities who had not received funding from the EIF, but instead funded
recent development of buildings and physical infrastructure out of retained surpluses
and conservative debt funding:
ACU invested a total of $450 million in capital works during the
period 2010–2015. This was achieved through prudent financial management and
careful planning around the introduction of the demand driven funding system.[70]
2.74
In contrast, while some universities have recently funded research infrastructure
by generating operating surpluses, the IRU reported that between 2010 and
2015 surpluses for its members had fallen:
Across 2010 to 2015 the surplus of revenue over expenditure
has fallen from 13% to 5% as universities have reworked expenditures to focus
on ensuring their future sustainability. While between 2010 and 2015 revenue
rose 21%, with revenue from students rising much more than revenue from the
Australian Government, expenditure has risen 33%, with that on depreciation and
amortization nearly doubled, increasing by 95%.[71]
2.75
However, as demonstrated above, funding for research infrastructure has
come from a variety of revenue resources, other than university revenue surplus
(such as state government funding and private investment), demonstrating as Ms
Vicki Thomson, from Group of Eight, put it: 'that EIF is but one part of
infrastructure funding'. Ms Thomson also informed the committee that all
universities would have innovative financing models, including public-private
partnership models.[72]
Likewise, Universities Australia observed that:
Australian and international universities, Australian and
publicly funded research agencies, international research facilities or
collaborators, local and international foundations and philanthropists and multinational
corporations all have a track record of co-investing in Australian research
infrastructure.[73]
2.76
Drawing on the work of the Higher Education Infrastructure Working
Group (HEIWG) which was established to examine how universities support
their teaching and research infrastructure requirements, the Department of
Education and Training (the department) informed the committee that:
A key finding of the Higher Education Infrastructure Working
Group (HEIWG) report was universities are in the main capable of relying on
their own operations to fund and finance their capital investment.[74]
2.77
The department also provided the following examples of universities
across the higher education sector that have funded capital research
infrastructure projects not involving EIF:
Under a joint venture arrangement between La Trobe University
(25 per cent) and Department of Primary Industries (75 per cent), formed to
construct, manage and operate a biosciences research centre on university land,
a 25 year build-operate-maintain contract was entered into with a private
sector company.
Queensland University of Technology (QUT) has entered into a
joint venture arrangement with University of Queensland, Mater Medical Research
Institute and Queensland Health (each having equal holdings through a unit
trust) for the Translational Research Institute Facility. QUT has a licence
agreement, originally valued at $25 million, to occupy the research building
for 30 years with an option for a further 20 years at peppercorn rental. QUT
makes an ongoing contribution to operational costs.
The University of Melbourne, which received contributions
from third party institutes towards the construction of the Neuroscience
Building in exchange for the right to occupy space at a peppercorn rental for
42 years. The capital contributions received by the university have been
treated as rental in advance.[75]
2.78
The department explained that less than 20 per cent of infrastructure
funding to universities came from capital gains from government. Noting that
between
2011–2013, 79 per cent of universities' $10.6 billion investment infrastructure
came from operating surpluses, net of capital grants and after depreciation is
added back.[76]
The department maintained that:
Overall the Australian university sector is in a good
financial position to continue this practice, with an increase in revenues,
solid operating surpluses, and significant cash and investment reserves
reported across the sector in 2015. Base funding across the sector has grown
from $7 billion in 2009 to $12 billion in 2017, an increase of more than 70 per
cent. University funding will continue to grow year-on-year (just at a slower
rate) and teaching funding (including loans) will increase by 23 per cent over
the next four years.
The HEIWG found that, for most universities, their strong
balance sheets, richness of assets and low gearing, make these institutions
attractive to the capital markets sector.[77]
Government funding for higher
education and research
2.79
The committee sought evidence from the department as to what other resources
were available to the higher education sector to fund research infrastructure.
2.80
The department confirmed that $17.2 billion will be provided in funding
for higher education and research in 2017 and that this is projected to
increase to $20.2 billion by 2020. While this funding is not dedicated to
building education and research infrastructure, the department made clear that
it allows 'substantial flexibility for providers who can choose to spend
taxpayer funding on various activities, including capital infrastructure'.[78]
2.81
In addition to the $17.2 billion above, the department also brought the
committee's attention to government funding for research that is provided
through other portfolios. In particular, the department advised that across all
portfolios, an estimated $10.1 billion was provided for research and
development in 2016–17.[79]
2.82
Further, the department advised that, through the National Collaborative
Research Infrastructure Strategy (NCRIS) the Australian Government funds national
level research infrastructure. Between 1 July 2013 and 30 June 2017, $678.8
million was provided to support NCRIS projects. [80]
2.83
The department also advised the committee that ongoing NCRIS funding was
secured by the announcement of $150 million per annum (indexed) from 1 July
2017 as part of the Government's National Innovation and Science Agenda. The
department commented that this would see over $309 million provided from 1 July
2017 to 30 June 2019.[81]
2.84
The department informed the committee that 26 research infrastructure
projects across Australia are currently receiving funding through NCRIS; and provided
the following table to demonstrate the projects and funding allocation for 2017–19.
Figure 2.2–NCRIS Operational Funding 2017-19[82]
| Facilities and Projects |
Lead Agent |
Funding |
| Astronomy |
Astronomy Australia Ltd |
$18,300,786 |
| Atlas of Living Australia |
CSIRO |
$9,747,135 |
| Animal Health Laboratory –
Collaborative Bioresearch Facility |
CSIRO |
$3,076,076 |
| Australian Microscopy and
Microanalysis Research Facility |
University of Sydney |
$7,540,746 |
| Australian National Data
Service |
Monash University |
$19,469,363 |
| Australian National Fabrication
Facility |
Australian Fabrication
Facility Ltd |
$25,812,473 |
| ANSTO Nuclear Science Facility |
ANSTO |
$13,684,596 |
| Australian Phenomics Network |
Australian National University |
$9,246,909 |
| Australian Plant Phenomics
Facility |
University of Adelaide |
$7,787,745 |
| Australian Plasma Fusion
Research Facility |
Australian National University |
$761,575 |
| Australian Urban Research Infrastructure
Network |
University of Melbourne |
$4,402,401 |
| AuScope |
AuScope Ltd |
$15,421,894 |
| Bioplatforms Australia |
Bioplatforms Australia Ltd |
$29,243,481 |
European Molecular Biology
Laboratory
(Australia's associate membership) |
European Molecular Biology Laboratory |
$8,200,000 |
| Groundwater |
University of New South Wales |
$448,950 |
| Heavy Ion Accelerators |
Australian National University |
$3,300,244 |
| Integrated Marine Observing
System |
University of Tasmania |
$29,563,127 |
| National Computational
Infrastructure |
Australian National University |
$11,397,257 |
| National Deuteration Facility |
ANSTO |
$1,264,086 |
| National eResearch
Collaboration Tools and Resources |
University of Melbourne |
$10,425,404 |
| National Imaging Facility |
University of Queensland |
$6,201,968 |
| Pawsey Supercomputing Centre |
CSIRO |
$12,001,813 |
| Population Health Research
Network |
University of Western
Australia |
$9,039,347 |
| Research Data Services |
University of Queensland |
$11,000,813 |
| Terrestrial Ecosystem Research
Network |
University of Queensland |
$12,545,078 |
| Translating Health Discovery |
Therapeutic Innovation
Australia Ltd |
$7,710,947 |
Source: Department of Education and Training data. Total funding:
$287,593,665.
Committee view
2.85
The committee acknowledges the strong level of interest shown by the
higher education sector in the Nation Building Funds Repeal (National
Disability Insurance Scheme Funding) Bill 2017.
2.86
The committee fully supports Australia's higher education sector and
values the benefits its research delivers to the community, the economy and
industry. The committee also recognises that funding from the Education
Investment Fund has been used to supplement university revenue surplus, as well
as other public and private investment, to establish critical research infrastructure,
particularly in regional areas.
2.87
The committee acknowledges the concerns expressed about the closure of
the Education Investment Fund and the redirection of the uncommitted funds away
from higher education purposes. However, in the committee's view the government
provides substantial alternative forms of funding to the sector; which in
combination with universities innovative financing models and other public and
private investment, is used to establish and maintain critical research
infrastructure ensuring Australia's universities maintain their reputation and international
competitiveness.
2.88
The committee also notes that the Education Investment Fund was
established in 2009 in response to the Global Financial Crisis; that no new
commitments have been made from the fund since 30 July 2013; and that the fund
was ear-marked to cease operation in the 2014–15 Budget. The committee is of
the view that transferring the uncommitted monies from the Education Investment
Fund to the NDIS Savings Fund Special Account presents a significant step
toward addressing the urgent need to secure long-term funding for the NDIS.
Recommendation 1
2.89
The committee recommends that the bill be passed.
Senator Jane Hume
Chair
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