The Australian government subsidises higher education programmes directly and indirectly. Direct subsidies are grants to public universities for each equivalent full-time student they enrol, ranging from A$2,089 (£1,200) per student in law and business studies to A$22,809 for students in dentistry, medicine, veterinary science and agriculture.
Universities may charge directly subsidised students a fee up to a limit set by the government. This ranges from A$6,349 for students enrolled, for instance, on humanities, education or nursing courses up to A$10,596 for those in dentistry, medicine, veterinary science or law and business studies. Some 60 per cent of all Australian higher education students are financed this way, almost all of them undergraduates.
Fees for most of the other 40 per cent are not capped, but Australian students enrolled in unsubsidised programmes are eligible for an income-contingent loan to pay them (a kind of indirect public subsidy of higher education), and 7 per cent of all higher education students have taken that option.
The Australian government relaxed caps on the number of bachelor’s enrolments that it subsidised directly in public universities from 2010 and removed them from 2012. While this policy has been a great, although contested, success, it has caused problems at the interfaces where the government still caps directly subsidised places: taught postgraduates (currently 7 per cent of all students) and sub-bachelor’s students (0.8 per cent).
The government currently allocates directly subsidised places with capped fees only to taught postgraduate programmes that lead to occupational recognition, such as teacher education and nursing. It allows universities to charge uncapped fees for all other taught postgraduate programmes. No government has seen fit to directly subsidise MBAs, for example, and universities would strenuously resist the accompanying fee cap. Neither has any government proposed uncapping the number of directly subsidised postgraduate places, presumably fearing their extension to subjects currently financed by full fees.
Until now, governments have allocated subsidised places for taught postgraduate programmes in what is widely acknowledged to be a piecemeal and inconsistent way. In its 2017-18 budget, the government proposes instead to allocate scholarships to students. But there is no obvious mechanism for a national government to allocate to students directly subsidised places in taught postgraduate programmes, so it is unclear whether this will be an improvement.
It is much easier to assess the government’s proposal to remove the cap on the number of subsidised sub-bachelor’s places in public universities. Under the current arrangements, universities are tempted to enrol in bachelor’s programmes students who are probably more suited to or interested in sub-bachelor’s diplomas and associate degrees, resulting in a modest reduction in pass and retention rates. Universities are also less encouraged to develop new programmes at that level to reflect changing employment needs and student interest.
However, removing caps from sub-bachelor’s programmes at universities will exacerbate problems at the interface with Australia’s technical and further education sector, whose upper levels include diplomas and advanced diplomas that overlap in entry level, student interest and graduate destinations with higher education diplomas and associate degrees. These have been attractive to students because of their stronger vocational orientation and much lower fees. But, since 2012, those fees have risen sharply owing to the government’s decision to offer students on such courses income-contingent loans. The states, which are responsible for most vocational education, responded by reducing their subsidies and lifting – or, in many cases, removing entirely – fee caps.
As a result, fees for many diplomas offered by vocational institutions are substantially higher than the still-capped fees for diplomas and associate degrees offered by universities. It seems likely that removing the enrolment caps on university sub-bachelor’s programmes will lead to higher recruitment into them, particularly by universities with lower student demand and by Australia’s six “dual-sector” universities, which already have at least 20 per cent of their enrolments in vocational education.
This is likely to decapitate vocational education – again. It will also, by default, move the substantial interface between vocational and higher education lower in the qualifications hierarchy. But the substantial inconsistencies between the two sectors’ fees, curricula, pedagogy, accreditation, quality assurance and government oversight will keep that interface as difficult as ever to negotiate for students, teachers, institutions and employers.