Sorry for the lack of new threads lately – you know the story,
snowed under by assessment items and job applications etc.
Given our vested interest in the higher education sector, I thought it was only logical that this blog open a discussion about the recent announcement of funding cuts to Australian universities. A summary of the cuts can be found here.
Try to think of this decision from a (benevolent) policy-maker's perspective. How would this policy be analysed in terms of equity and efficiency? Where are the funds going and does this seem like a logical trade-off? What would you have done differently? Are there any other issues regarding higher education policy that you would like to discuss (e.g. vouchers vs. the current HECS system, competitiveness of the sector, sustainability)?
Sound off in the comments below!
My two cents: Gonski recommended school reforms, but he did not recommend how they should be funded. It seems counter-productive to me that the government is redistributing funding from universities to schools, when part of the goal of improving the quality of Australian schools is to encourage more students to attend university. In the end, we may get more kids choosing to study at university, but with less funding the quality of that university education will undoubtedly fall.
ReplyDeleteIn theory, removing the discounts for early repayment of HECS debt should be a big cost-saving for the government. But then consider the purpose of the discounts – they are not only designed to reduce the cost of education to students, but also an attempt by the government to recover some of these funds sooner rather than later, as the present value of a dollar is worth more than its future value. Given the huge amount of unrecovered HECS debt in Australia (almost $1 billion) (see, for instance http://www.theaustralian.com.au/higher-education/unrecovered-hecs-debts-are-heading-towards-1bn/story-e6frgcjx-1226323201326), the longer term effect of removing the discounts could have negative consequences for the national budget (i.e. more people may not repay their debt). The impact on equity would be minimal though, because poorer students tend to transfer a larger proportion of their fees to HECS. Their decision to complete tertiary education should not (in theory) be influenced by the removal of these discounts.
Finally, student start-up scholarships (e.g. the ~$1,000 you receive each semester if you are on Youth Allowance) are set to become income-contingent loans (ICLs). On balance, this policy seems reasonable – the scholarships, like HECS, are designed to help students fund the necessary costs of their education, except instead of fees, these costs are text books, parking, stationery etc. You could argue that since these scholarships, like HECS, also assist students in gaining an education that allows them to contribute to the economy in the future (through higher income, taxes, productivity, and innovation), students should have to repay these scholarships once their income reaches a certain threshold. However, the counter argument here is how far can the government truly go with these ICLs? Should we also be expected to repay tax benefits our parents received on high school expenses because completing high school allows us to contribute more to the economy? Individuals with higher levels of education tend to earn higher income, thus you could argue that their increased tax payments more than compensate for these start-up scholarships they receive as a student, and turning them into ICLs would be double-dipping by the government. This policy could also have a deterrent effect on the demand for higher education, particularly among students who do not pursue high-earning careers and for whom repayment of these loans would constitution a higher proportion of their income.
I personally believe the budget is a smart move, just unfortunate for those already in high school and hence will not enjoy the benefits of the (hopefully) improved school system in the future and still miss out on the university funding.
ReplyDeleteBeyond this simple exchange of funds, I believe education in Australia is become far too soft with most students coming out the other end being no better off then if they had of commenced work as a junior and worked their way up (taking on certain certificates or training modules along the way).
The main issue I have with university funding at present is its apparent "equality" being purely derived on a means test etc. There is no requirement for students to achieve strong grades to receive youth allowance and that is appalling. There are students studying medicine, unable to work many hours a week but also unable to receive youth allowance as they were never able to work enough due to their contact hours to be classed as "independent". Meanwhile, the arts major has had a reasonably easy first year and made the threshold to be classed independent and then can receive the payments and have no recourse if they do not achieve HD's (they just need not be kicked out of uni). Students see youth allowance as their right.. it should not be a right, it should be earned and maintained through hard work; I'm sure the Gov could spend a bit more on Schools if they implemented that criteria (either through savings in youth allowance payments/payments for students to go to uni or an increase in production from an increase in intelligence at the top of the bell curve).