Crunch time for higher education reform as legislation faces an unstable Senate
In Summary
This Christmas, what universities and their prospective students most need from our federal politicians is certainty and predictability.
Twelve months into the most recent journey of reform, which kicked off with the commissioning of the review by David Kemp and Andrew Norton in November last year, we have a clear sense of where the Abbott government wishes to take Australian higher education.
However, concerns remain over the likely impact of the reforms on the cost of degrees, and a negotiated outcome remains elusive.
Faced with a high degree of political uncertainty, some universities have held off on undertaking long-term financial planning because of the wide range of possible outcomes that may emerge from the present impasse.
These range from swingeing cuts to discretionary research grants all the way to full deregulation and the revenue boom that would follow.
The shape of the Senate has now changed following Jacqui Lambie’s defection from the Palmer United Party, but last week’s vote on the Future of Financial Advice reforms provided some guidance on how the new Senate crossbench may approach similar issues.
There are some obvious parallels to be drawn.
Through FoFA, the government sought to deregulate the provision of financial advice, removing red tape and giving representatives of financial services firms a freer hand in charging fees and commissions.
Through the higher education reforms, the government is seeking to give universities a free hand to charge uncapped student fees, while opening up the market to a wider range of non-university providers to stimulate competition.
In both cases, the government has approached the debate with conviction and purpose, and has worked hard to persuade the public of the positive outcomes that would flow from proposed deregulatory reform.
In both cases, though, it has proven difficult to win over a sceptical public to accept the underpinning proposition that deregulation will produce tangible benefits that exceed the perceived costs, whether to consumers or to students. Influenced by consumer groups concerned that deregulation of financial advice would expose investors to greater risks and higher costs, the Senate voted to preserve the status quo.
With the crossbench now more fragmented in the wake of Lambie’s declaration of independence, navigating any contentious bill through the Senate now takes on an even higher degree of difficulty.
The danger for universities is that to get anything resembling the proposed higher education reforms through the Senate, a series of parochial deals may need to be cut. There is a risk that if six votes are required to ease the package through the Senate, state-based earmarks could be attached to the bill with senators claiming funding wins for particular favourite universities.
This may give the government a path to passage of the legislation but leave behind a hodge podge of special deals that will undermine the objective of creating a coherent funding model in which universities and private higher education providers compete on a level playing field.
The broader problem — and one that universities are now unwittingly embroiled in — is that the Palmer United Party remained stable long enough to approve the government’s many revenue reduction measures but is now losing influence at a time that the government most needs Senate support to pass spending cuts to balance the budget.
This makes it all the more imperative for the government to find a way to implement its proposed 20 per cent cut to university funding as a contribution towards meeting its commitment to return the federal budget to surplus.
Neither Labor nor the Greens will provide the government with any support in this endeavour.
Politically, the university cuts give both those parties a platform to claim the moral high ground. Both will continue to try to outdo each other in the depth of their opposition to any sensible reform.
With the potential cost of degrees likely to continue to dominate debate, the key to securing passage of the higher education legislation remains how the government goes about addressing concerns about how the reforms will hit the hip pocket.
The current package places a lot of faith in the power of the market to keep fees low and, of itself, this looks like a thin protection.
If the government can come up with a credible mechanism to ensure that student fees do not rise too fast and too far, a negotiated outcome remains possible. That would be an excellent outcome both for universities and the students who begin their higher education journey on the other side of Christmas.
Andrew Dempster is head of corporate and government affairs at Swinburne University of Technology.