Aussie unis at half the price

April 9, 1999

More than half the money allocated to Australian universities by the federal and state governments is returned to them in taxes.

Research by two senior academics at the University of New South Wales reveals that the actual cost of universities to the Australian taxpayer is far less than the supposed Aus$6 billion (Pounds 2.3 billion) the federal government claims it spends each year.

Patrick Gallagher and Binh Tran-Nam used data supplied by of Australia's 38 public universities to calculate the amounts of tax paid by universities and their staff. A report of the investigation says the tax repayments apply roughly equally to all universities, irrespective of their region or size.

"As taxpayer and tax generator, the university sector in Australia contributes significant amounts of tax revenue to the Commonwealth and state governments," the researchers said. "The overall tax payback as a percentage of the public funding received by the university sector in 1997 was 53 per cent."

The research was based on very conservative estimates, said the academics.

They said that before the analysis, vice-chancellors and university supporters referred to the longer term and less tangible benefits which accrued to society and the economy from higher education.

The president of the Australian Vice-chancellors' Committee, John Niland, said: "This new study gives us the added benefit of being able to point to the fact that, even using a short-term accounting perspective, the price we are paying is much less than it might seem."

The researchers noted that universities contribute to federal and state revenues through a variety of taxes. These include income tax on staff salaries, fringe-benefits tax, petrol and diesel excise duty, payroll tax and motor vehicle tax.

Universities also generated tax revenue through contract service payments, research commercialisation and the economic activities of overseas students, who are estimated to add Aus$3.6 billion to the Australian economy each year.

The researchers noted that about 82 per cent of the tax payback made by universities is returned to the federal government while 18 per cent goes to the states and territories. But their report says the states appear to be effectively making a profit from universities.

Total state taxes paid by the universities involved in the study was Aus$185 million in 1997 yet payments to the institutions by the states was just Aus$126 million - a net benefit to the states of about Aus$60 million. The amount is equal to almost 50 per cent of the states' contribution to the university sector.

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