Interview on ABC RN Breakfast with Hamish Macdonald
Topics: Higher education changes; South Australian Newspoll results

Hamish Macdonald: Universities across the country have criticised the Federal Government’s plan to claw back money from the sector. The Government’s mid-year Budget update includes a two-year freeze on the Commonwealth Grant Scheme payments to universities and a cap on funding for student places. The measures will result in $2.1 billion in savings, but universities say they’ll be forced to limit the number of prospective students. Shadow Treasurer Chris Bowen was talking to me a few moments ago; he’s criticised the move.


Chris Bowen: This is just a backdoor road of doing what the Government has attempted to do since 2014 – it’s been blocked in the Parliament – of cutting university funding. The implication of that is it affects particular people from lower socioeconomic backgrounds who have had university open to them more and more in previous years, and that is something again which we are extremely unhappy about.

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Hamish Macdonald: That’s the Shadow Treasurer, Chris Bowen, speaking on our program earlier. The funding freeze does not require legislation and cannot be blocked by the Senate. Simon Birmingham is the Federal Minister for Education. Welcome to Breakfast.

Simon Birmingham: Good morning, Hamish. Great to be with you.

Hamish Macdonald: You heard there the response from Chris Bowen. Is he right, that you are targeting some of those lower socioeconomic groups that might not otherwise get the opportunity to go to university?

Simon Birmingham: Well, absolutely not, Hamish. There are no impacts to student fees. Every single dollar of equity funding for universities is preserved under these changes. What we are seeking to do is ensure that all students, all young Australians, don’t face unreasonable levels of government debt in the future, that we do continue to bring the Budget back into balance. We’re also working to make sure that we improve student outcomes. That we make universities, who’ve enjoyed phenomenal growth in revenue over the last few years, twice the rate of economic growth since 2009, some 71 per cent lift in their income stream, making sure that they take stock with huge increase in revenue and huge increase in student numbers to make sure that they are also delivering a quality student experience and really focus on student outcomes which- we’ve seen that increase in growth in recent years. We have sadly seen an increase in non-completions and a decrease in short-term employment outcomes for students, which really isn’t good enough.

Hamish Macdonald: How is it possible that if you’re not putting more money into the university sector that it doesn’t affect students?

Simon Birmingham: Well indeed, the university sector – as I just said – has seen twice the rate of funding growth of the economy since 2009, a lift of some 70 per cent. This is a sector that frankly has been awash with extra funding, and you need only have a look at their massive advertising spend, $1.7 billion on advertising over the last few years from universities, to show that there’s plenty of cash being spent in administration, in marketing, that can deliver efficiencies to ensure they can invest in better student outcomes and continue, of course, to provide opportunities for students from all walks of life.

Hamish Macdonald: So, are you saying that universities shouldn’t compete with one another for students, that they shouldn’t engage in marketing and advertising? I mean, is that the position that the Government is taking?

Simon Birmingham: Well, universities should stand on a track record of high quality student outcomes, so not about glossy billboards or slick advertising campaigns. They should be focused very hard on ensuring that every student gets the best possible experience, that they complete their course satisfactorily, that they get value from that course, and that ultimately Australia sees good employment outcomes in graduates. And it’s not reasonable that over the last few years, we’ve seen this huge increase in revenue flowing into the nation’s universities, yet a decrease in student completion rates, a decrease in student and graduate employment outcomes. Now, these are the types of things that we ought to expect unis to lift their game on.

Hamish Macdonald: And do you accept that these sorts of decisions might lead us away from the idea of more students going to university? That in fact the outcome might be that on the margins, there might be students that just don’t go down that path?

Simon Birmingham: Well again, I want to reinforce to students that there are no changes to student fees, that all the support that was there should continue to be there, and that by putting in place some performance payment arrangements for universities we hope to ensure students get a better outcome in the future, and that universities really focus on ensuring they’re enrolling students in courses where there are employment outcomes and they’re supporting students to physically complete those courses.

Hamish Macdonald: Sure, but that didn’t answer the question.

Simon Birmingham: Well Hamish, in terms of overall student numbers, that will be a choice for universities. As I said before, they’ve got record cash flowing into them at present. Universities can choose to direct funding away from marketing and administration expenses and into areas such as more support for students and indeed more students, if they so choose.

Hamish Macdonald: But why is it just a choice for them? I mean, you appear to be sending them a pretty strong signal?

Simon Birmingham: Well, I am sending them a signal. We expect universities, like every other area of taxpayer funded activity, to be as efficient as possible in their operation, to make sure they get the best possible outcome. And so the message is very clear; better outcomes for students, best use of taxpayer dollars.

Hamish Macdonald: As we’ve said from 2020, growth in university funding will be based on performance. What would be the criteria that would make a university eligible, then, for more funding after that date?

Simon Birmingham: Well, indeed. So, we’re budgeting from 2020 to have growth that will reflect the growth in the population to make sure that- and there’s absolutely enough money to continue to have huge, vast access to university as we have at present, and indeed then to make sure that that growth in the overall budget is distributed in a way reflective of performance. And the types of performance metrics you want to look at are the quality of student experiences, measured by attrition rates, completion rates, student satisfaction surveys, and ultimately graduate employment outcomes.

Hamish Macdonald: We are already hearing that universities will be forced to cap the number of regional students, that regional campuses will abandon growth plans. Universities say that they’ll struggle with inflation. Can you assure us that that’s not going to be the outcome here?

Simon Birmingham: Well, the growth in university revenue over the last few years is the envy indeed, I suspect, of many other areas of the economy. We’ve seen such significant growth in their capacity. Now, we’re only freezing for two years, one funding stream into universities. Others, such as research funding and indeed the student contributions supported by the HECS or HELP scheme will continue to grow and grow quite significantly. So, unis absolutely have the capacity, whether they be city unis or regional universities, to take that continued growth in overall funding and continue to support student numbers, and indeed student growth, as they so wish.

Hamish Macdonald: Sure, but again, I don’t really think you’ve given us an answer to the question that I asked you, which related to regional students, regional campuses, and whether you could give us an assurance that that won’t be the outcome. I note that you haven’t given us that assurance.

Simon Birmingham: Hamish, as I just outlined very clearly, there’s continued funding growth across a range of streams, which applies to regional campuses as much as the city campuses. Those universities have to make their decisions, then, about whether they’re going to put students first or whether they’re going to put university administration first.

Hamish Macdonald: You sought this morning to speak directly to students. You said that you want to assure them that things won’t really change, but one thing that will change is that they’ll have to start paying back their loans on HECS when they earn $45,000 a year, which is $10,000 less than the current threshold of $55,000. You must acknowledge that’d make a pretty big difference to some young people?

Simon Birmingham: Well Hamish, that’s around $8 or $9 a week that we will be asking people to start paying back their student loans. We have about $50 billion worth of student debt on the books at present and without some changes to the way the HECS-HELP scheme works, it’s estimated that around one-quarter of that may not be repaid. So, making sure that that student loan scheme is sustainable for the future is absolutely essential because that’s, of course, what underpins the ability of students, from any background, to access university in Australia without paying one dollar upfront, and so our HECS-HELP scheme is the great central element of university in Australia and we want to make sure that people can continue to go to uni without paying a dollar upfront, and in doing so, that means you have to ensure student loans are repaid, which is why there’s very modest changes proposed that ensures, as they say, an adjustment with a new lower repayment rate of 1 per cent being applied at a new threshold of $45,000, which equates to just $8 to $9 per week to repay a student’s debt.

Hamish Macdonald: Alright. Hey, it’s probably the last time we’ll speak to you before Christmas. I put the same question to Chris Bowen earlier, presumably you’ll get a bit of a break over this period. As you consider the year ahead, what might you do differently? We hear every day how angry Australian voters are with our political class. What can you promise us will be done better and more brilliantly next year to elevate the political conversation?

Simon Birmingham: Well Hamish, I think that’s a responsibility we all have to take and I guess, for me, my focus for the new year will be on ensuring that we get the best outcomes for Australian students and engaging with Australians of all walks of life, I try to make sure I stick to the issues, avoid the political argy-bargy too much and I think all of us, and certainly our focus in government is to make sure that it’s about making Australians’ lives better as best we can, and that still requires difficult decisions when you look to the long-term of things like balancing the Budget.

Hamish Macdonald: And just before we let you go. I know you’re from South Australia as well. We’ve been talking a bit about these polls out of South Australia showing that Nick Xenophon’s SA-BEST Party could, in fact, be in a position to form government after the state election there. Why do you think South Australians are so willing to turn away from the major parties?

Simon Birmingham: Look, I guess some of that goes to your prior question about general dissatisfaction with politics, but what I’d urge voters, and particularly voters in South Australia to do, is just ask themselves what do they know about each of the different parties? Jay Weatherill and the Labor Party have an energy policy. I disagree with parts of it, but I acknowledge they have an energy policy. Steven Marshall and the Liberal Party have an energy policy. Nick Xenophon doesn’t and South Australians really need to think carefully before next year’s state election about the three choices that appear to be on offer and of temptation to voters, and indeed assess whether they really know enough about that it is that that third choice is actually offering, because I think in terms policy position, it’s manifestly unclear at present.

Hamish Macdonald: Alright. Simon Birmingham, Merry Christmas to you. Thanks for your time this morning.

Simon Birmingham: And to you and your listeners, Hamish. All the best.

Hamish Macdonald: Simon Birmingham is the Federal Minister for Education, a Senator from South Australia.