Consequences of the university funding cuts

In April, then-Minister for Tertiary Education Craig Emerson announced the federal government would be looking to make $2.3 billion in budget savings from the higher education sector in order to help fund and implement the ‘Better Schools Plan’, better known simply as the Gonski reforms. The core principle behind the Gonski reforms is that every Australian child should have access to the best possible education, regardless of location, income, or the type of school their parents have chosen for them.

While predominantly a Labor initiative installed by the previous Gillard government, the Coalition has confirmed that it will keep the ‘Better Schools Plan’ at least for the 2014 year if elected, in order to provide funding certainty.[1] The university funding cuts will therefore be proceeding as planned even after Abbott’s decisive victory over Labor on Saturday, with the Coalition suggesting that the best the higher education sector hope for is no further cuts. [2]

The proposed cuts covering the period from now to 2017 are detailed as follows:

  • Student Start-up Scholarships will be converted to HECS style loans, accounting for $1.2 billion worth of saving. In 2013, eligible students were able to claim a total of $2050 in two half-yearly payments, which will no longer be an option for students beginning in 2014.
  • $229 million by abolishing the 10% discount students receive when paying their HECS payments up-front, thereby greatly reducing the incentive to do so; and
  • Imposing a $900 million cut to all Commonwealth grants that universities receive which goes toward teaching, learning and administration. As a result of this cut, universities around Australia will be forced to reduce their operating budgets as compensation. [3]

The removal of Student Start-up Scholarships in particular will raise the debt of disadvantaged students by $6000-7000 for the standard three-year degree. Students who are in need of this extra support the most will find it increasingly difficult to justify their decision of undertaking a university course, making it harder for them to enter. After all, the choice of attending university boils down to whether the benefits of having a degree, the skills acquired and connections made exceeds the costs of enrolment, subject fees, and very significantly the time and effort it takes to graduate. Indeed, the scholarship cuts are a backwards step to another one of the government’s priorities to increase the access of disadvantaged students in tertiary-level education. [4]

It is not simply disadvantaged students that will be affected by the cuts however; average university students and the economy as a whole will suffer as a consequence. Professor Sandra Harding, Vice-Chancellor of James Cook University and chair of Universities Australia has said that a recent study conducted by Universities Australia revealed that 80% of full-time university students will have to find a job whilst studying. [5] The study also showed that a third of undergraduate students regularly miss classes because of employment obligations already, and changes to student loans will surely make it harder for students to balance study and work.

Assuming a correlation between attending class and overall performance, we may see a decline in the quality of Australian graduates over the coming years as students find it harder to support themselves during their university lives. This could deliver a substantial blow to the economy, with Australia’s labour force becoming less-skilled and hence less productive as a result. Additionally, the increase in student debt inflicts a negative externality upon the economy as graduates may become less likely to purchase commodities such as cars or a house under their massive pile of debt.

Furthermore, universities themselves will undoubtedly be swift in their response to the $900 million cut to their operating grants. The fundamental study of economics revolves around the allocation of scarce resources. With resources becoming scarcer due to the budget cuts, universities will have to compensate by taking measures that ultimately reduce the quality of education their students receive.  While not all universities have announced exactly how they will manage the cuts to their operating budgets, the National Union of Students (NUS) believes that it will be done through a variety of methods. [6]

To be more precise, a few of the approaches suggested by the NUS include, but not limited to, ‘shutting down of courses with low enrolments’, ‘delays in upgrading infrastructure’, ‘halting the growth of enrolments’ and ‘cuts to student support services and non-SSAF grants to student representative organisations’. Indeed, the Melbourne Law School has decreased the number of Commonwealth Supported Places for the upcoming 2014 cohort and beyond in what one can only assume to be a direct consequence of the university funding cuts.

While the Gonski reforms are a fine attempt at alleviating hardships faced by younger students at primary/secondary institutions, the irony is that the welfare of older students and the quality of education taught at the tertiary level will be traded off.

As the Vice Chancellor of the University of South Australia Professor David Lloyd explains, “You can’t just move the funding around and hope to fix the problem; you need a comprehensive plan that crosses sectors, recognises the impacts of one part on another, and brings about improvement in the whole system”.

The Coalition claims that they will ‘work with the sector to grow higher education as an export industry and to support international students studying in Australia’. As education spokesperson Christopher Pyne reveals, this simply means the Abbott government would encourage more international students to study in Australia to help fund universities by increasing access to post graduation working visas. History has shown that in the past when the Coalition were in power, universities became reliant on the fees international students pay due to the higher education cuts the Howard Government imposed. [7]

Does the Abbott Government plan to introduce even more international students to help subsidise the fees of domestic students? Or do domestic students still receive the brunt end of the deal? What is known however, the Abbott Government has posted no news or shown any commitment to increase funding to support the ever-growing university student population.


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[3] NUS Research Briefing Notes on Cuts to Student and University Funding






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