Interview on Triple J Hack with Tom Tilley
Topics: Higher education reforms to drive better outcomes for both students and taxpayers
Tom Tilley: Minister Birmingham, great to have you on the show. Thank you for joining us.
Simon Birmingham: Hey, Tom, it’s great to be with you.
Tom Tilley: Now, we’ve just heard a point there from the National Union of Students’ president saying that basically you want to give a $50 billion tax cut, but you’ve so far given a $24 billion tax cut to big companies, and asking young students to pay more for their university degrees. How do you justify that?
Simon Birmingham: Well, Tom, Sophie was there last night at the announcement that I made, along with a number of other representatives of students and universities and others. And I was asked this question last night and I gave a very direct answer, which is that, of course, for people graduating the most important thing at that stage is usually to be able to get a job. And the Turnbull Government’s plans around company tax reform are about making Australia a competitive place for global companies and global capital to be invested to create jobs. We’ve seen company tax cuts in the UK, in New Zealand, they’re promised further in the US.
Many of our competitors for international businesses, to create business and job opportunities in Australia, of course, have been lowering their company tax rates. We have to be competitive as well to make sure that students who become graduates, who are looking for good jobs, have those good jobs available to them, and frankly so that universities who need industry and businesses to partner with in research and in training have those industries and businesses here in Australia too.
Tom Tilley: Okay, but graduate employment rates have actually been dropping in recent years as more graduates hit the market. So how do you explain to a graduate that can’t find a job they should be paying more for their degree?
Simon Birmingham: Well, there’s still a very strong and clear differential between those who have a university degree and those who do not have a university degree and them getting a job. Somebody who has the good fortune and opportunity and skills to be able to go to university in Australia – which charges nobody upfront for access to unis – they, of course, at the end of their degree are more likely to get a job than other Australians, and they’re more likely to spend their lives in a job that pays more than other Australians. So we shouldn’t discount the fact that there’s an advantage, and an enduring advantage, to graduates.
Tom Tilley: But it seems like the relative advantage is coming down, and Carl has experienced this firsthand. Carl from Brisbane, what’s your experience?
Caller Carl: Well, look, what I actually wanted to ask the Minister Birmingham is, well, you say that this is fair, but actually Tony Abbott and Christopher Pyne, they said that fee deregulation is fair and actually the entire Australian public – students, our professors, the entire university sector – said that that was unfair, and we [indistinct] with protests in 2014. So it’s pretty rich that you come on here again and say that this is fair. But actually this Government is giving a huge tax cut – billions and billions of dollars – to corporations so they can make more profit. Someone earlier commented, well, you only have to pay one per cent of your debt every year or whatever. Well, there’s some corporations in this country who don’t even pay one per cent of the corporate tax. Those are the people who should be …
Tom Tilley: [Interrupts] Okay, Carl, a lot of passion there which is much appreciated. You do make an interesting point that in 2014 we had Christopher Pyne, the Minister for Education, saying if we didn’t deregulate our universities we were going to slide into mediocrity – those were his words. Here we are 2.5 years later and you’ve got a completely different policy. What’s going on?
Simon Birmingham: Well, I’m a new Minister; we’ve got a new Prime Minister since then. We’ve listened. We ruled out last year full fee deregulation; we’re ruling out now any form of fee deregulation; we’re ruling out 20 per cent cuts to universities. We’re making it clear, though, that we do need to make sure that our student loans program – one of the most generous in the world – is actually sustainable. We have a $52 billion debt attached to student loans that’s on the Commonwealth Government’s books at present, and on current estimates around one-quarter of that will not be repaid. So some of our reforms are geared towards making that more sustainable, equally making sure, though, that universities are incentivised to do the right thing by students, that we put in place a performance pool for universities so that they are held to account for making sure that students are successfully trained, successfully complete their course, successfully graduate, and successfully go on to get a job. And encouraging universities to look at other forms of courses they can offer, shorter one and two-year diplomas and associate degrees that might be better targeted towards industry needs and that might ensure some students might do a shorter associate degree, have a lower debt burden at the end of that, but also something that is better targeted towards industry needs and employment opportunities.
Tom Tilley: You’re listening to the Minister for Education, Simon Birmingham. Just last night he announced that there’ll be cuts to funding for universities and an increase in student fees. Minister, can you understand why people like Carl are frustrated at your Government given that in 2013 you were saying no cuts, 2014 it was deregulation or sliding into mediocrity, and now just after commissioning a report you can say, oh, universities are so fine we can actually take money away? Can you understand that that inconsistency is frustrating?
Simon Birmingham: Look, I understand peoples’ frustrations, but equally I’d say look at my track record. Last year’s Budget, at this time, we released a discussion paper that very clearly canvassed the fact that savings had to be met. We’ve actually brought in a proposal that meets less of the savings target than we outlined last year. Last year we said $3.5 billion; this is a savings package in the end of $2.8 billion. We canvassed all of the different options, some of which have been taken up in this proposal. I think we’ve been very transparent, very upfront, but ultimately we’ve also tried to make sure that these are measures that are limited in their scope, they’re modest, they have a very carefully targeted impact to make sure that they shouldn’t discourage people from university, but that they should, in the long run, ensure our student loans scheme and our demand-driven access to university places are actually sustainable for this and future governments to maintain, rather than under threat of being broken under a huge burden of debt.
Tom Tilley: Alright, you’re listening to the Minister for Education. And we actually tested his announcement on the streets of a university in Sydney today to see how it’s going down. Check this out.
Vox pops: Hi, I’m Mitch. I’m 18 and I’m studying biomedical science.
Question: And how do you feel about the changes where originally you had to pay back the money at 55,000, but now it’s potentially once you start earning 42,000 you’ll have to pay it back?
Vox pops: Yeah, I feel like if they reduce it it’s going to be a bit hard for everyone.
Vox pops: I just think it’s unreasonable to start paying their HECS at 42,000 a year. Everything’s just so out of reach with the costs, et cetera.
Vox pops: I think that the pitch of the $8 a week, it makes it look really affordable, but it all adds up surprisingly quick and at the end of the pay-check there’s not heaps there.
Vox pops: Dear Simon. Probably just consider what new students- how they are going to be affected by this before you just look at the numbers as well.
[End of excerpt]
Tom Tilley: Yeah, some pretty critical responses from university students there. And Minister Birmingham, you talked about the $2.8 billion in savings that you’ll make from cutting university funding – what will that mean for research? Because we’re moving into a knowledge-based economy; your Government’s pitch is jobs and growth. How do you know that this funding cut won’t impact on the research our universities can do?
Simon Birmingham: Firstly, Tom, because it’s not applying at all to the research funding that universities receive. It applies to …
Tom Tilley: But often the surplus from the tuition goes to that research funding.
Simon Birmingham: It applies to one stream of funding. Now, we’ve done analysis in terms of how university finances have fared over recent years, and that analysis does show that universities have had strong growth in terms of their revenue of about 15 per cent since 2009, but their cost base, in terms of teaching students, has grown by only about 9.5 per cent. So believe that you can effectively achieve this efficiency dividend without impacting on university operations, that they’ve demonstrated they can achieve greater economies of scale, achieve greater efficiency, and that this is a reasonable measure in terms of how it is that we can best meet the budget targets that we have, address the surplus, whilst doing so in a very cautious and responsible way.
Tom Tilley: Ferny from Bowen, what’s your perspective?
Caller Ferny: Hi. I’m a midwifery student at Southern Cross Uni on the Gold Coast, and I just wanted to say that I think this is really disheartening for students, especially those of us who are working in the public sector or looking at getting jobs in the public sector when we graduate. We’re not going to benefit from these companies getting tax breaks. We are people who are serving Australians. We’re everyday Australians working in the health sector and as teachers. We’ve already been hit with penalty cut rates, which are affecting us now as we’re trying to do our degrees and complete our degrees, and then to have that employment threshold lowered of when we’ll be paying back our degrees and increases in fees, it’s really disheartening for people who are in jobs not for the money. Because a teacher’s wage and midwife’s wage isn’t that great, it’s kind of average, but we’re doing this because we have a real passion for it, and it just feels like a real kick in the teeth.
Tom Tilley: Minister, what do you say to the caller there?
Simon Birmingham: I understand. Nobody likes being asked to contribute a bit more necessarily. I’d say a few things. In terms of do those working in the public sector benefit from company tax cuts and businesses growing, well, ultimately we only fund hospitals, nursing services, schools, teachers, universities, by actually having a strong economy and by having people who pay taxes, by having jobs created for people who pay taxes. And there’s plenty of evidence that’s shown in a number of countries, in terms of adjustments to company tax, that you actually do maintain, if not grow, your tax rate into the future because you actually see other increased economic activity.
But in terms of nursing students in particular, let’s reflect on the fact that taxpayers will still continue to pay the vast majority of a nursing student’s degree. For a nursing student, around $55,700 of their fees will be paid by taxpayers, not by the student. Over that four years, that student will pay less than half that amount that taxpayers contribute, because we do value nursing. We do recognise that there’s a public benefit attached to that, not just a private income benefit to those nursing students, and that’s why we expect the taxpayer and will support ongoing government support far greater than any fees students face.
Tom Tilley: Alright Minister, thanks for responding Ferny’s call, and Ferny thank you so much for calling in. It’s been fascinating to finally hear this announcement after waiting for your response to last year’s discussion paper. Thanks so much for joining us on the show today.
Simon Birmingham: Thank you, Tom. An absolute pleasure.