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‘Tumultuous’: The seismic change hidden in Tehan’s plans for unis

Big hikes in student fees that could be a disincentive to study some degrees, particularly the humanities, dominated the headlines. But buried in the fine print was another story – one that, if the package passes parliament, will trigger fundamental changes in the way universities teach and research, and will have profound implications for students, institutions and the country.

COVID-19 has created the biggest crisis in decades for Australia’s higher education sector. International student revenue, which pays for much of its research, has dried up due to border closures. Demand for domestic places will surge as studying or retraining becomes a more attractive option in the worst job climate since the Great Depression. And the Coalition government, which put a brake on funding even in boom times, is managing many other compelling demands on the public purse.

Education Minister Dan Tehan’s fee proposals, announced last Friday, were an attempt to begin addressing those problems without spending any extra government money.

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An outcry over a steep rise in student fees for humanities degrees followed, but overshadowed news that the government was also proposing to reduce its own overall share of funding for domestic students and spend the money it saves on creating extra places for them.

If the changes are passed by parliament, students will pay a greater proportion of the overall domestic teaching bill than the Commonwealth for the first time in decades, albeit through HECS-HELP, a government-funded loan scheme.

Even in degrees it hopes to encourage with cheaper fees, the government will lower its contribution. In science and engineering, there will be an overall per-student reduction of $3500. Environmental studies will be among the hardest hit, losing $10,000 a head.

“We are very worried,” says Dianne Gleeson, from the Australian Council of Environmental Deans and Directors. “It’s supporting a whole lot of things around climate change, bushfires. Each university will weigh up … what is going to be viable long term. I’m concerned maybe some of the smaller universities might struggle.”

Over many years, subject-based funding rates for domestic students have not reflected the exact cost of teaching. In some subjects, like nursing, universities made a small surplus. That was used to subsidise subjects that were underfunded, like dentistry, in a “swings and roundabouts” business model. About 10 per cent was left over, which was used to fund staff research.

“They’ve never officially said the [teaching and research funds] were coupled, but they were,” says Merlin Crossley, Deputy Vice-Chancellor (Academic) at the University of NSW. “We’d ensure that the teaching staff were active in research, and that cost both time and resources.”

The government says the new rates reflect the exact cost of teaching for each subject, based on research by Deloitte, although some in the sector wonder.

“One would have to ask, how sure are they about those numbers?” says Crossley. The teaching-only focus also means the bit left over for research will go. “This is a very, very significant change,” says Margaret Gardiner, Vice-Chancellor of Monash University.

Over the past week, universities have been wading through the detail of the proposal, trying to work out what the new measures mean for their bottom lines. If they pass parliament, cross-subsidy business plans will have to be ripped up and new ones urgently drawn up for 2021. Financial officers are still seeking answers on how transition funding will work and whether they will cover a gaping revenue gap that will emerge next year, as fee reductions begin for all existing and new students.

There has already been speculation that class sizes will have to increase. Crossley points out that Australia had five universities among the top 50 in the latest QS international rankings, yet most of those are not in the top 600 for staff-student ratio. “And yet there’s the perception that we can reduce the amount of money given to universities to teach.”

Another uncertainty is the impact of the new fees on student behaviour. Will students balk at $45,000 arts degrees, or be undeterred because they can kick payments a decade down the road thanks to HECS? Will they opt for price over passion?

Many speculate there will be little long-term impact on their decisions, if research done during a debate over fee deregulation is any guide. But that research didn’t factor in a pandemic-driven recession. “I don’t think we’ll know the answer to that definitively until we see two or three years and we see students respond,” says Barney Glover, Vice-Chancellor of Western Sydney University.

Year 12 student Jasmine Buric, 17, was already tossing up between arts and teaching when she heard the news. Even though arts has become more expensive and teaching cheaper, she is still in two minds. “If I’m being honest, I don’t really want to be persuaded by price,” she says. “At the same time, I would rather not pay so much.”

Jasmine Buric is in two minds about an arts degree, which just got more expensive, or a teaching degree, now cheaper.

Jasmine Buric is in two minds about an arts degree, which just got more expensive, or a teaching degree, now cheaper.Credit:Nick Moir

Sector leaders have warned the fee restructure could lead to unintended outcomes, such as universities being tempted to subsidise scientific research by recruiting heavily into humanities, which bring in $14,500 per head in fees, gain just $1100 in government contributions, and cost less.

“It’s the same question on the flip side; if resources are not adequate to deliver engineering or science, will universities put ATAR [Australian Tertiary Admission Ranks] up so there are fewer students? I doubt that will happen,” says Glover. “One thing to watch very carefully is to see the movement in ATARs next year, that’s the biggest indicator if universities are shifting to attract more load.”

Australian National University Vice-Chancellor Brian Schmidt says the increased student fees would be “good for the humanities [departments], not bad. But I wouldn’t be very happy if I was a humanities student.”

A restructure of local student funding would exacerbate another problem; the crisis facing research. Traditionally, but less frequently in recent times, an academic’s workload has been a 40-40-20 split between research, teaching and administration. That research time – historically considered part of teaching, too, as it brings students together with those at the forefront of intellectual discovery – has been subsidised by the unofficial 10 per cent slice of domestic student funding, as well as international student revenue.

Universities have also been relying on international student income to subsidise their research. In Australia, grants only cover about half the cost of a project; an Australian Research Council grant pays for the materials to do the experiment but not the infrastructure. “They’ll pay for the Petri dishes and the test tubes, not for the Bunsen burner,” says Crossley. As technology advances, universities’ costs have risen. “We’ve moved from Bunsen burner to super collider.”

Some argue Australia should adopt a system similar to that in Britain, where research and teaching money is in separate buckets, alongside a few more funds for disadvantaged students and university-business partnerships. Research groups are ranked from one to five, based on their success in their field, and the grants – which cover almost the entire cost of the project – are given to those with the highest rankings.

“The beauty of that model is you end up funding excellence, rather than just funding every institution,” says Professor Paul Wellings, Vice-Chancellor of the University of Wollongong.

Schmidt says Britain’s system makes sense. “Then you don’t have these distortions where we ask humanities students to pay for science research, which is sort of what is going to happen here,” he says. “That would be a bad outcome for students and it’s bad policy.”

Tehan’s proposals last week – restricting domestic student funding to teaching and setting up separate funds for disadvantaged students and industry partnerships – would lay the groundwork for that model. It would cause the demise of some departments – in Britain, it led to a 40 per cent reduction in the number of chemistry schools – and regional and second-tier universities would be most affected. It could hinder emerging researchers. But it would appeal to the Group of Eight universities, who receive the bulk of research funding anyway.

“You can’t have everyone doing everything, and what you tend to do is invest in strengths,” says Crossley. “Most universities have strengths.”

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A casualty is likely to be the 40-40-20 employment model, which is still baked into many contracts and enterprise bargaining agreements. “It’s on its last legs,” says Andrew Norton, an expert in higher education policy at the ANU. “It relies on a link between research funding and student numbers, and without international students and the [current domestic student funding model], that link does not exist any more. This will cause huge industrial [problems] – the staff and union will resist teaching-only positions – but that’s the inevitable logic of the funding arrangement.”

The fee reforms are just the beginning of the upheaval for universities, Norton predicts: “If this package passes [Parliament], we are in for a tumultuous few years in higher education.”

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