Funding falls short as degree demand increases

February 4, 2000

MELBOURNE

Australian universities have experienced a surge in demand for places. There have been more than 250,000 applications this year, but at least 50,000 would-be students will miss out because of the limit on government-funded places.

Although institutions are free to offer places to Australians willing to pay the full cost of tuition, only a small minority does so.

In Victoria, four universities made 2,700 offers for full-fee courses - a rise of 323 or 13.5 per cent on 1999. But most students will wait to find out if they have a government-subsidised place before deciding to pay full fees.

The three eastern states of Queensland, New South Wales and Victoria all recorded sharp increases in applications, causing the Labour state premiers to call on the federal government to provide additional funds.

Conservative prime minister John Howard is unlikely to agree. His government's three-year higher education funding allocations, released late last month, mean universities face a further

1 per cent reduction in their operating grants this year - the third successive year of cuts.

Moreover, there will be no growth in federal funding in the following two years. As a result, some universities have been forced to freeze or reduce their enrolments in 2001 and 2002.

Total funding for higher education from all sources is expected to reach Aus$9 billion (Pounds 3.6 million) this year, but the Commonwealth's share will fall to about Aus$4.2 billion - 46 per cent of the total. This is the first time federal funding has dropped below 50 per cent.

For universities, the fastest growing income streams have come from fees and charges and money raised by the higher education contribution scheme (HECS). Under the scheme, students pay between 25 per cent and 35 per cent of their tuition costs, depending on the course. They can defer repayment until they have a job, at which time the debt is collected through a tax surcharge.

HECS revenue is expected to near Aus$2 billion in 2000 - up from Aus$1 billion in just four years. Fees and charges are likely to deliver about Aus$1.5 billion this year, compared with Aus$1.1 billion in 1996. Most money

from HECS is collected by the

Commonwealth, which uses it to offset its higher education investment.

In this way, successive governments, both Labour and Conservative, have steadily shifted higher education costs to the students and the private sector.

But this strategy is creating an increasing divide between the older and the younger institutions. The older, wealthier universities are able to raise money more easily from their alumni, benefactors, and from local students willing to pay full fees.

Another outcome is that the richer institutions are able to award their staff bigger pay rises thereby increasing the salary differential among academics in different universities.

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