Monthly Archives: November 2014

Australian Higher Education Reforms

Dear Australian Senators,

My name is Jake and I recently completed a PhD at an Australian University. I have been lucky enough to have a significant proportion of my studies funded through scholarships, but today I speak to you on behalf of my friends, my family, my fellow students and future generations on the need for you to block the government’s upcoming legislation on “Higher Education Reforms”.

We currently sit in a critical moment of Australia’s history where we need to decide what will drive our future economy. This is particularly important as our mining sector is starting to reduce its dominance and many of our mass manufacturing industries have become unviable. I truly believe that if there is one sector in which we should be investing it is that of Education. We have the opportunity, the skills and the ability to become a world-leader in knowledge development, and by creating much closer ties between Universities and Industries, we can put that knowledge to use by spurring innovation within our own borders, leading to the development of niche, high-technology manufacturing within Australia.

The Education system is also critical to our future tax revenue base. Despite the Federal Education Minister’s repeated accusations that the ‘taxpayer’ funds over 50% of Higher Education Fees, he would do well to remember who those ‘taxpayers’ indeed are. We know that graduates of university do earn more money – that is not disputed – but they in turn also pay much more tax – and that is great for our country. We want the next generation of Australians to be highly educated, well renumerated, so that we can, in turn, expand our tax revenue base to fund more education, health and infrastructure programs.

The education minister should also note that the OECD’s Education at a Glance 2014 report, in fact states that Australia’s public expenditure on tertiary education only accounts for 45% of total funding. This is far below the 70%/30% average split in public/private spending amongst OECD nations. Australia also spends only 5.8% of GDP on all levels of education (0.7% on tertiary education), below the OECD average of 6.1% of GDP.

In the OECD’s report, they also show that the total public cost of providing a man in Australia with tertiary education, compared with a man only obtaining secondary education, is $USD 20,575 (OECD Average = $USD 38,044), but this is compared with a total public benefit of                $USD 124,441 (OECD Average = $USD 144,390), providing an internal rate of return of 12.9% (OECD Average = 11.9%). For women the internal rate of return is even greater at 13.5%    (OECD Average 10.5%). These figures show just how great an investment tertiary education is for our society, and how we should be doing more to encourage both men and women to study at university – not be discouraging them through increased private costs.

The figures I have presented focus purely on the funding of education, but it’s also important to remember that higher levels of education are also associated with lower levels of depression, obesity, smoking – all factors that significantly affect Australia’s economy and productivity. Higher levels of trust and volunteering are also associated amongst those you obtain tertiary education.

We are presented with the argument by some Vice-Chancellors that the university sector is under-funded, and the OECD figures appear to support this, however, putting unreasonable burden on university students is not the solution. We are happy to shoulder some of that load, but if costs must be increased, let’s instead look at simply raising the current cap on fees slightly higher – not completely deregulating the system where universities can charge whatever they want.

Higher Education does not operate like a normal market. If you are to enrol in a degree at a particular university, you likely will not know whether that is the right degree or even the right university for you, until 2, 3 or 4 semesters into the program. Universities market themselves based on reputation and prestige, but this not always reflective of the level or quality of education provided, and thus, an adequate price signal is not operating to allow students to properly assess which option is best for them.

As a former PhD student, I am also deeply concerned by the prospect of individuals having to pay to do research. PhD students form the strong foundation of research-capability in this country. In comparison to many other countries they are poorly renumerated, and it is very difficult to encourage top undergraduate students to undertake a research degree. We should be looking again to encourage further collaboration between research students and industries to find alternative ways to fund research, rather than penalising the very people who give up 3 or 4 years of their future career to further knowledge development in this nation.

Does the education minister honestly believe that with an average degree costing $100,000+ this will not affect undergraduate enrolments?

This is certainly not something Australians should be aiming to achieve, particularly when many other countries are going in the opposite direction. In countries like Sweden – where I have studied for a number of years – all education is free; in fact students are paid to study at university, and mature age students are given the opportunity to reskill themselves for free too. But today I am not arguing for a free education system, I simply am asking you to maintain a fair education system here in Australia.

We are told that the HECS system provides us with the opportunity to study a $100,000+ degree. In other words, the Education Minister wants to write a blank cheque for universities, with the loan underwritten by the taxpayers. He already has made claims about the burden of HECS debt on the nation, and the 20-30% of students not paying their debt back – either due to becoming a parent or moving overseas.

Let’s fast forward 5 years though, where this level of debt has at least tripled due to deregulation of fees, and a larger percentage of Australians are choosing to go and work overseas due to the lack of investment in our Education System and the skyrocketing levels of debt – will an Australian government really maintain a HECS system under these conditions? I think not, and then we will be left with an Education System where providers may charge whatever they like, and HECS will be abolished due to ballooning debt levels and less-privileged individuals will not be able to afford to undertake a higher education degree in Australia. This is not the system I want my younger family, friends and my own children to grow up under.

Instead, let’s inspire future generations to educate themselves, and importantly allow mature age students to economically reskill themselves after their first or second career. Let’s aim for a future Australia that is highly-educated and well renumerated, instead of one that is dictated by the affordability of our education system.

It is a basic human-right to have the opportunity to educate yourself, and we need to find alternative ways to reform the sector and increase levels of funding. Deregulation is not the answer and I urge you to reject the upcoming bill in the Australian Senate that plans to do so.

Thank you for your time.