The issue of funding universities in their different courses has been an ongoing but unresolved debate over the past decade.
How university courses are currently funded
University courses are funded by the government at different levels through a government grant and a student contribution which together form the total price of each course.
The government then recovers the student contribution through the higher education contribution scheme (HECS).
There is currently eight funding clusters for the government in different areas of course.
Student contributions are divided into three tranches – AU $ 6,349, $ 9,050 and $ 10,596 – which correspond to eight grant levels.
Additional loading is also available for course registrations at regional campuses to reflect the higher cost of delivery in regional areas.
The total price paid for each course varies considerably. Humanities, law and commerce are rated as the least expensive. Dentistry, medicine and veterinary science are the highest.
In 2017, the funding centers will include:
- $ 12,685 for law and commerce (grant $ 2,089 and student contribution $ 10,596)
- $ 19,328 for mathematics and computer science (grant $ 10,278 and student contribution $ 9,050)
- $ 33,405 for medicine and veterinary sciences (grant $ 22,809 and student contribution $ 10,596).
Why we have this system
This funding system was first introduced in 1989 following an in-depth analysis of the relative costs of university courses.
This was an important reform, as universities could be over or underfunded compared to other universities depending on their courses and enrollment profile.
The new funding system was also introduced with HECS so that students, as well as taxpayers, can contribute to course fees (but only reimburse when they have started to benefit from their university education).
HECS levels were initially set at a uniform amount of $ 1,800, regardless of the cost of the course.
However, a major change was introduced in 1997 when HECS contributions were varied by grouping them into three levels to reflect the likely private benefits for graduates of different courses (in terms of lifetime earnings) and the cost of the course.
Students in fields such as law and medicine have traditionally paid more than students in fields such as the arts, humanities, and nursing because they are more expensive to provide.
But in some fields such as law and commerce, students now also contribute a much higher proportion of course costs than humanities students, based on an assessment of private benefits – even though the costs of courses are similar.
Problems with the current system
In 2008, the Bradley magazine concluded that the different levels of funding for university courses in Australia “seem to bear little relation to the actual cost of education or to fictitious public benefits and that the maximum student contributions per course likewise had no solid political or empirical basis “.
The review recommended that further work be undertaken to achieve a “more rational and consistent cost-sharing between costs and groups of disciplines as part of a broader review of core university funding.”
The 2011 suite Review of core funding of higher education found that although the funding on average covers the overall costs of teaching and scholarships at universities (but not the costs of research), several course areas were underfunded.
He recommended reducing the funding group from eight to five and moving some courses to different funding groups.
However, the Labor government of the day did not follow up on these recommendations.
The financing reforms announced by Minister Christopher Pyne in 2014 also proposed to reduce the number of clusters and to shift certain sectors between clusters.
But that proposal failed to make it through the Senate with the other funding reforms proposed by Pyne (including the complete deregulation of the student contribution and a uniform 20% reduction in the government grant).
The government consultation document has now also concluded that the rates for the funding bands do not reflect the relative cost of delivering the different courses. This results in cross-subsidization between courses and, in some areas, cross-subsidization of research.
Results of the government’s higher education reform process
In the consultation document, the government suggested undertaking a price review with the higher education sector overseen by a panel of independent experts.
This proposal was widely supported in industry submissions, including Universities Australia.
The review could take into account overall funding levels, funding relativities and different private contributions from students.
However, such a price revision is not just a technical exercise. It cannot be undertaken in isolation from the objectives, issues and results of the larger review.
The extent to which the government grant is intended for teaching and learning or includes a contribution to the costs of research (and if so, the level of that contribution).
The effect of the likely rebalancing of student and government contributions across all courses (to offset the 20% reduction in course funding reflected in the budget forecast).
Evidence on differential student contributions in terms of costs and benefits.
Future infrastructure needs and how it should be financed.
How innovative but costly partnerships between universities and industry to provide internships and work-integrated learning should be funded.
If the option for universities to set their own fees in designated flagship courses continues, should grants be reduced once fee levels exceed a set level?
Transition issues that will arise if funding clusters are reduced and / or prices are moved between clusters.
These are complex questions. But after nearly a decade of failed reform processes to the current funding system, the current government consultation process, and any subsequent pricing reviews, must produce a revised system of university funding in Australia that then allows for respond to emerging demands and improve the quality of results for students in all courses.