Opinion & Commentary
Comparison shopping
The Coalition's packages offer a better deal for universities and students than Labor's proposals
Will universities be better off under a Labor or a Coalition government? People reading the press releases coming from each side during the past fortnight could be forgiven some confusion. After some recent revisions, federal Education Minister Brendan Nelson now says Labor's funding shortfall could exceed $1billion over four years. Jenny Macklin's original response accused the Government of "clutching at straws", saying that the ALP's package was worth more than the Government's.
She is right that the ALP promises more government money than the Coalition. Labor may promise more still in the lead-up to the election. But calculating total amounts of money and identifying what strings are attached to it are crucial to making realistic comparisons. Each funding package needs to be opened to see what is inside.
The public money totals for 2005 to 2007, the period of a first Latham or fourth Howard government, are $2.27 billion from Labor and $1.68 billion from the Coalition. However, both numbers exaggerate how much universities would receive.
Several ALP policies -- changes to Youth Allowance and Austudy, making maths and science cheaper -- improve student finances but do not help universities. Bright Futures will be spent in schools and 20,000 TAFE places will be of no interest to most universities or their students. After taking these out, Labor offers universities just less than $2 billion.
The Coalition's package also needs adjusting. Its Commonwealth Learning Scholarships flow straight through universities to students, so we can take $205 million from the Government's total. On the other hand, in a triumph of accounting over political salesmanship, the commonwealth deducts "revenue" from student loan debt indexation from its total spending. To work out expenditure on universities, this $154million needs to be counted back in. So $1.63billion in public money will come from the Coalition.
Next, we need to look at fee revenue. Labor is clearly and proudly well behind the Government on undergraduate fee income, offering universities less than nothing, with a phase-out of existing full-fee places. By contrast, the Coalition's new FEE-HELP loan scheme should increase the number of full-fee undergraduates.
Domestic full-fee undergraduate numbers grew nearly 20 per cent between 2002 and 2003 without loan assistance. If we assume 25 per cent growth in 2005 with loans, and 20 per cent growth in each of the two years after, and conservatively assume per student revenue of $11,200, then this would mean $400 million over three years. During the phase-out universities might still receive $150 million, leaving a net difference between the parties of $250million.
Already announced HECS increases for government-subsidised students will make those universities about $374 million extra over three years, after taking out more students with no increases than the Department of Education, Science and Training's figures allow for. Add this to the money from full-fee students and the Coalition package comes to about $2.4billion or about $260million more than the ALP offers.
A number of universities have still to decide on HECS levels, and it would not be surprising if at least Macquarie, Murdoch, Flinders and the universities of NSW, Western Sydney and South Australia went for some increase, or if universities that decided to wait lifted charges next year for 2006 or 2007. So the Coalition's final total advantage could be well more than $300million.
Labor insists that over the long term its promise of more generous indexation of grants is worth more than the freedom to set fees. Even if true, indexation is not yet a clear difference between the parties.
The easily won increments to the Commonwealth Grants Scheme are equivalent to indexation for the next three years and the Government has a statutory obligation to review this issue by February 2005.
As both government grants and maximum HECS charges are linked to the present indexation method, the 2003 reforms will be a short-term financial fix unless it is changed.
The differences between the packages are more than just the total and where the money comes from. Apart from indexation, all Labor's spending is tied to new initiatives that, even if worthy, do not give universities independence from government. Universities need private money to avoid becoming local franchises of the University of Australia, run from Canberra. If we care about university autonomy, room to innovate and responsiveness to local conditions, freedom to spend is essential.
Although excessive micro-management comes with the Coalition's government funding, its package offers much more untied private money. A total of $600 million to $650 million more fee revenue over three years under the Coalition than under Labor is feasible. This money isn't pure profit but it will be universities making their own decisions about what to offer and at what standard.
In an election year, Labor's promise of cheaper study may appeal to prospective students, but universities taking advantage of one or both Coalition fee-charging opportunities will be better off if the Government is returned.
Andrew Norton is a research fellow at the Centre for Independent Studies.
