BILLS;Higher Education and Research Reform Amendment Bill 2014;Second Reading – 01 Dec 2014

 I rise to speak on the Higher Education and Research Reform Bill 2014. It gives me an opportunity to point out the vast ideological differences between Labor’s approach to higher education and the approach of those economic vandals opposite. It also allows me an opportunity to talk about how the Abbott government’s regressive changes to higher education will impact on the one university in my home state, the University of Tasmania.

It is important that we are having this debate, because higher education is one of the key drivers of Australia’s economic productivity. The way Australia invests in higher education is a key determinant of our global economic competitiveness. Not only does Australia need to invest in higher education, but we need to ensure equity of access. After all, higher education is a powerful tool for lifting disadvantaged families out of poverty and giving people the opportunity to succeed in life.

Labor has a proud record of investing in higher education. We lifted investment in universities from $8 billion in 2007 to $14 billion in 2013. We boosted the student population of Australia’s universities to 750,000, putting another 190,000 students on campus. But despite the massive increase in student numbers, the additional funding we put into higher education still translates to a 10 percent real increase in funding per student. Not only are there more students at university since Labor came to government in 2007, but there have been massive increases in the number of students from disadvantaged backgrounds. Indigenous student numbers have been boosted by 26 per cent, regional students by 30 per cent, and there are now an extra 36,000 students from low-income families going to university compared to 2007.

Labor also invested $4.35 billion in world class education and training facilities through the Education Investment Fund, including $500 million earmarked for regional Australia. By contrast, what we have from the Abbott government is a plan for the Americanisation of Australia’s university education system. Why we would want to copy the United States by adopting a system that has been a disaster for equality is beyond me, especially at a time when the US is actually trying to move in the other direction and re-regulate universities.

Nobel-prize winning economist, Professor Joseph Stiglitz, was quoted in TheSydney Morning Herald in July this year as saying, ‘Countries that emulate American model are kidding themselves.’ He cautioned that deregulation of universities would lead to greater inequality. Professor Stiglitz did not pull any punches. He described the Abbott government’s proposal as ‘absurd’, ‘a crime’ and ‘a way of closing off opportunity’. At a forum at Central Queensland University, Prof. Kwong Lee Dow, former Vice-Chancellor of Melbourne University, talked about the impact of the changes on rural and regional communities:

… students will be paying significantly more, and rural and regional students will be disproportionately affected.

In poorer communities, including regional and rural communities, families will not be able to meet these higher fees so the institutions will have less funding and so become less competitive over time.

While deregulation will push up fees for university courses there are two other elements of the Abbott government’s plan that will lead to making university education less affordable. They are introducing a real interest rate on all HECS-HELP debts and cutting funding for university courses by up to 37 per cent. The funding cuts for university courses are completely arbitrary. Some courses have had an increase in their subsidy while others have been savagely cut.

Universities Australia estimates that to make up for this cut the cost of engineering and science will have to increase by 58 per cent and environmental studies will have to increase by 110 per cent. According to analysis by the National Tertiary Education Union, course fees will have to increase by an average of 30 per cent to make up for these cuts. This is the major component of the $3.9 billion of cuts provided for by this bill, the others being changes to indexation of university funding and cuts to the Research Training Scheme.

With this bill and the savage cuts announced in the budget, this government proposes to hack a massive $5.8 billion out of our universities; $5.8 billion of cuts will gut our universities, yet this government promised no cuts to education, amongst other things, before the election. This is a betrayal of every student, prospective student and parent who voted for this government.

Not only will students pay more for their degrees through higher course fees but they will pay more through the introduction of real interest rates on their university debts. The government wants to increase the interest rate on HECS-HELP debts from that of the consumer price index, typically around two per cent, to the government bond rate, capped at six per cent. The current government bond rate of 3.8 per cent is quite low, historically, and the rate more typically sits between five and six per cent. Seven-hundred and fifty thousand undergraduates and 250,000 postgraduate students, as well as 1.2 million graduates with existing HECS-HELP debts, will be hit with thousands of dollars of additional interest on their loans after 2016.

At least under the current scenario of CPI indexation, if a graduate does not earn enough to make compulsory repayments their debt maintains its value in real terms. Without even factoring in the government’s changes, the current outstanding HECS-HELP debt is projected to grow over the forward estimates from $26 billion to $42 billion. Bank of America Merrill Lynch economist Saul Eslake has warned that higher interest rates on university loans could deter many students from studying as they weigh it up against other investment decisions. Talking to the Hobart-based newspaper, the Mercury, Mr Eslake said:

It would be irrational for people not to consider the cost in relation to their working life, in the same way as when you borrow to buy a house.

Mr Eslake has warned that there would be a particular deterrent effect for women, who earn less than men on average over their working life. Prof. Bruce Chapman, the architect of the Higher Education Contribution Scheme, more commonly known as HECS, has modelled the impact of the higher interest rates and found that they will result in graduates on lower incomes paying 30 percent more than their wealthier counterparts.

Returning to the deregulation issue; Dr Geoff Sharrock, program director at the University of Melbourne’s LH Martin Institute has described fee deregulation for the Group of Eight universities, as a ‘license to print HELP debt’. Dr Sharrock has modelled scenarios for Group of Eight universities which have shown medical degrees costing over $200,000 without even taking into account the interest on the debt. Modelling by the National Tertiary Education Union—or NTEU—found that an average degree could cost between $40,000 and $65,000, with medical degrees increasing to $180,000.

Universities Australia modelled the potential cost of engineering and nursing degrees and found that an engineering graduate could have a HELP debt of over $100,000 and repay it over a period of 20 to 25 years, compared with the current debts of less than $50,000 and a repayment period of 14 to 18 years. A nursing degree could cost over $50,000 compared to around $24,000 under the current arrangements. Those opposite say our claims of $100,000 degrees are scaremongering, but you cannot fault the modelling.

And the Prime Minister himself has conceded that deregulation will lead to higher fees. When he addressed the G20 meeting in Brisbane, Mr Abbott said:

… we have tried to deregulate higher education, universities, and that’s going to mean less central government spending and effectively more fees that students will have to pay.

In justifying these massive fee increases, the government puts forward the argument that students only pay 40 percent of the cost of their degree and have average additional earnings over their working life of $1 million.

There are several reasons why this argument is flawed. First of all, at the time HECS was introduced the 80-20 split between the taxpayer and student contributions to the cost of a degree was roughly what was considered to represent the public benefit to the country and the private benefit to students. The 40 percent contribution students make towards the cost of their degree used to be 20 percent when the HECS system was introduced. There are no suggestions that over this time graduate earnings have doubled, or that they will increase again if we increase the student contribution.

Secondly, because we have a progressive income taxation system in Australia graduates who earn more also contribute back through higher rates of tax. And finally, there are many more professions that require a bachelor’s degree to qualify for entry than before—for example, nurses and teachers—but these occupations do not lead to high rates of pay. Because of the lower rates of pay for these occupations, higher HECS-HELP fees and higher rates of interest could lead to many potential students being deterred from studying nursing or teaching. What will that do to the supply of skilled graduates for these professions? What impact will that have on the health and education systems across the states and territories of Australia?

As if this will not be disastrous enough for the supply of qualified nurses and teachers, this bill also discontinues the HECS-HELP benefit, a scheme which provides an incentive for graduates of certain courses to take up a related occupation. This benefit was designed to address Australia’s shortage of skilled workers in mathematics, science, statistics, education, nursing, midwifery and early childhood education. Some graduates who made study decisions based on this policy will now be hit with debts that they did not plan for.

A particularly concerning aspect of the deregulation agenda is the proposal to offer Commonwealth supported places to non-university higher education providers. The Victorian Liberal government tried something similar by introducing contestable funding for vocational education and training, opening up the market to non-TAFE providers. This led to a massive increase in government expenditure for courses which failed to get students in jobs or fill skills gaps. Similar concerns have been found in a two-year inquiry into for-profit colleges by a United States Senate committee, which found that they charged higher than average tuition fees and spent considerable resources on recruitment and marketing but little on student support. The Australian Skills Quality Agency has already raised concerns about the misleading marketing practices of many training providers, including guaranteeing qualifications without the need for assessment, claiming that qualifications can be completed in unrealistically short timeframes, and guaranteeing students jobs on completion when the provider is not in a position to make such guarantees

We have a robust system of accreditation of higher education providers in Australia, and undermining that system will substantially undermine Australia’s reputation for quality higher education. The evidence from other jurisdictions is that fully contestable funding does not benefit students, it just benefits training providers who are seeking to make a profit with little or no regard for the welfare of their students. The current vice-chancellors have not been particularly complimentary about the government’s proposed changes, no matter what Senator Seselja has tried to put across. Let me tell you what some of them have had to say. Professor Warren Bebbington, from the University of Adelaide, said:

… it is starting to look as if the student debt burden for many under the proposed reforms might well be worse than in the US.

Professor Linda Kristjanson, from Swinburne University, said:

… deregulation will inevitably lead to much higher fees for our students … Over time, full fee deregulation will lead to a higher education system characterised by the ‘haves’ and the ‘have nots’.

Belinda Robinson, the Chief Executive of Universities Australia, said:

… if we’re not careful, what we will start to see is a situation where students are being deterred not only from participating in university study but from in fact taking time out of the workforce to do things like raise children, because it will be such a financial burden for them once they re-enter the work force.

For the most refreshingly blunt contribution, we have Professor Stephen Parker, from the University of Canberra, which Senator Seselja is so keen to talk about:

… these changes, taken together, are: unfair, unethical, reckless, poor economic policy, contrary to the international evidence and being woefully explained, raising suspicions about how much thought has actually gone into them.

… it is the combination of all these components that makes this the worst piece of policy I have seen in Australia in my 26 years here …

Professor Kwong Lee Dow, former Vice-Chancellor of the University of Melbourne, in a speech on 25 July this year, talked about the impact the government’s plans would have on rural and regional communities. Professor Dow said:

In poorer communities, including regional and rural communities, families will not be able to meet these higher fees, so the institutions will have less funding and so become less competitive over time.

Despite the overwhelming evidence about the devastating impact the Abbott government’s policies will have on rural and regional universities, the Nationals, the so-called party of the bush, is once again selling out their core constituency. I have given many examples in previous speeches to this place about how the Nationals have abandoned the interests of the people they purport to represent, and this is just another example to add to the list. It behoves the Nationals in the Senate and in the other place to explain to rural and regional Australia why they would support a plan that will gut regional universities—like the University of Tasmania in our home state, Mr Acting Deputy President Whish-Wilson. It seems clear to me that the coalition is not a partnership on equal terms. Instead, the Nationals just roll over to their Liberal masters and accept their free market ideology, regardless of the impact it has on their constituents in the bush.

If the Nationals do not represent regional Australia then who do they represent? They do not believe regional Australia should have decent telephony and broadband services like their city counterparts. They do not think regional Australia should have access to trade training centres, GP clinics or bulk billing doctors. They do not think regional Australia should have modern infrastructure. And now we see that they do not think regional Australia should have access to affordable, quality higher education either.

On the subject of education in regional Australia, I will now turn my attention to my home state of Tasmania. We have one university, the University of Tasmania. UTAS is of particular importance to Tasmania because it is a major economic driver, not just as a provider of tertiary education and research but as the state’s biggest employer. Of the government’s $5.8 billion in cuts to universities, UTAS is expected to have $113 million cut from its budget over the next four years. Vice Chancellor Professor Peter Rathjen warned about the difficulties UTAS will experience in the face of these savage cuts when he said:

The ability … to recoup those reductions in revenue through fee premiums may be limited by the economic circumstances of the island … Those subjects that we do not teach, the research that we do not conduct, or the social programs that we do not support are unlikely to be replaced easily by other providers.

UTAS has said that the cuts to their funding are so devastating that they will be presented with the choice between significantly raising fees, cutting courses, abandoning research and even closing one of their northern campuses. In August this year, I joined a forum hosted by my Tasmanian colleague, Senator Brown, and the shadow minister for higher education, Senator Carr, at the University of Tasmania. Invited to the forum were representatives of staff and student groups, as well as other university stakeholders. There was universal agreement among the stakeholders that the Abbott government’s proposed changes to higher education would result in low-income families, regional students and women being worse off. Tasmania, having a higher proportion of low-income families, is a place where many students already struggle to make it to university.

This bill—and the government’s whole higher education agenda—breaks so many of Mr Abbott’s pre-election promises. He promised ‘no cuts to education’. He promised to lead a ‘government of no surprises’. His education minister, Mr Pyne, said that the government would not raise university fees. The Liberal Party’s Real Solutions policy document promised to ‘ensure the continuation of the current arrangements for university funding’. And, in February last year, Mr Abbott told a conference of Universities Australia:

First and most important, we will be a stable and consultative government. If we put in place a policy or a programme, we will see it through. If we have to change it, we will consult beforehand rather than impose it unilaterally and argue about it afterwards. We understand the value of stability and certainty, even to universities.

Obviously, the value Mr Abbott once placed on stability and certainty has now been thrown out the window.

In concluding my contribution to this bill, I ask those opposite: what is the rationale for these changes when we have a system of higher education contribution that has served Australia well for decades? Is it just a crude grab for cash? Is it another savage cut to prop up tax breaks for billionaire miners or your profligate Paid Parental Leave scheme for millionaire mums? Or is there something more ideological underlying this push?

We know from the government’s approach to other issues—paid parental leave, universal health care, superannuation, pensions and income support for jobseekers—that this government believe that your opportunity in life should be driven by your wealth. They will deny it, but policy after policy and bill after bill brought into this place demonstrate that this government is about entrenching wealth and privilege and punishing the vulnerable and disadvantaged. They have demonstrated it with tax breaks for billionaires, with $50,000 cheques for millionaire mums, with their GP tax, with their pension cuts and with their cuts to income support for jobseekers. Now they are demonstrating it again with a scheme that will ensure that students on low incomes or from disadvantaged backgrounds cannot afford a university education.