Universities have been forced onto a “morphine drip” of international student revenue to survive decades of declining public funding, former Labor leader Bill Shorten has warned, as he proposed a new sovereign wealth education fund to help stabilise the sector.
In a speech calling for a major reset of Australia’s higher education model, the University of Canberra vice chancellor said a 1 per cent levy on company profits could raise about $5.2 billion a year to fund universities and reduce pressure on students.
Delivering the annual Aitkin Lecture on Wednesday night, Shorten said the current funding model had pushed universities to rely heavily on overseas enrolments while shifting more of the cost of tertiary education onto graduates through the HECS loan system.
“That ignores the economic signal that successive governments have sent tertiary institutions … that if universities want more funding to replace what they expect to receive from government, they should rely on the morphine drip of international student revenue to dull the funding pain of declining investment,” he said.
The warning comes as universities face growing political scrutiny over migration levels and international student numbers, one of Australia’s largest export industries.
Shorten said international student fees had quietly become the financial backbone of the sector, subsidising domestic teaching and research.
“To maintain the quality of education provided, fund innovation and produce high-quality research, universities have had to rely on income from international students,” he said, adding international student fees were effectively cross-subsidising the education of Australian students.
But he warned the model was increasingly fragile as governments turned international student numbers into a lever of migration policy.
At the same time, the burden of funding higher education had shifted steadily onto students through the HECS loan system.
Introduced in 1989, the income-contingent scheme was originally designed so that graduates paid about 20 per cent of the cost of their education. That balance has shifted dramatically, Shorten said.
“The underwriting of the higher education system has moved from a situation in 1990 where the government would pay 90 per cent of a student’s course to now, on average, below 50 per cent.”
The result has been rising student debts and growing pressure on universities.
“Some student debts are ballooning simply because of the interest being accrued,” he said.
Shorten said the burden fell particularly heavily on women who spent time out of the workforce caring for children, slowing repayments while interest continued to accumulate.
He argued Australia was trying to run a modern university system with a funding model designed four decades ago, even as student demographics and study patterns had changed dramatically.
His proposed new fund would be jointly managed by government, industry and universities and directed toward national priorities such as research capability and critical skills.
“We could do this here in Australia with one prerequisite – that the left and the right meet in the middle. Where we get big thinking from big thinkers who care about Australia and not partisanship,” Shorten said.
He added that if universities request changes in the funding model, then the sector must address the efficiency and quality of how it educates.
Education Minister Jason Clare said in a major speech last year that it was “critical to break down the invisible barrier” that made Australians feel like university was “somewhere else for someone else”.
He argued that 80 per cent of jobs would require a TAFE qualification or a university degree by 2050, compared to 60 per cent today.
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Rob Harris is the national correspondent for The Sydney Morning Herald and The Age based in Canberra. He is a former Europe correspondent.Connect via email.