AUEC President: Government measures will keep Australia in a state of ‘economic purgatory’
Words by Ethan Penglase
The Federal Government has announced today that University funding will be capped at 2017 levels for the next two years beginning 1 January 2018 along with a lowering of the HECS/HELP repayment threshold from 1 July 2018.
In its goal to reduce the federal deficit at all costs, the Government has targeted students for $2.1 billion in savings, announced today in its Mid-Year Economic and Fiscal Outlook.
The two-year freeze on the Commonwealth Grants Scheme to universities is accompanied by a cap on funding for student places, which could force universities to limit their intake of prospective students.
The reduced threshold means that students will be required to start paying back their loans when they earn $45,000 a year — $10,000 less than the current threshold.
These new saving measures are the latest attempt by the Turnbull Government to cut funding to higher education since its $2.7 billion cut originally outlined in the May budget was rejected by the Senate.
Treasurer Scott Morrison said that the freeze will not require Senate support but that other measures will.
Student loans will also be faced with a lifetime limit. Most students will be able to borrow a maximum of $104,000 while medical, dentistry and veterinary students will be allowed up to $150,000.
The changes effectively unwind the demand-driven system introduced by Labor which incentivised universities to enrol as many students as possible.
University of Adelaide SRC President Matthew Boughey says that the demand-driven system “allows students from all backgrounds to access the benefits of higher education” and that lowering the pay-back threshold “will have a disproportionate impact on students from lower-socioeconomic and minority backgrounds, as well as regional students.”
The new system will force universities to compete for funding by meeting “performance targets”. Education Minister Simon Birmingham said the plan will improve graduate employment outcomes. Boughey however accuses the Government of “callous austerity politics” seeking to return Australia to “to an era when the wealthy and privileged were the sole beneficiaries of higher education.”
Adelaide University Economics Club President Aiden Bedford said that the MYEFO indicates a continuation of confused economic management.
“Government data describes an economy characterised by flatlining wage growth, chronically high levels of unemployment and underemployment, high capital underutilisation rates, and a state of perpetually low growth in aggregate output and with outstanding private debt pushing 180% of GDP.
“Amazingly, none of this seems to be of much concern to the current government as the fiscal strategy proposed seems to be made in a vacuum, as if the proposed cuts in nominal spending will have no effect on real output or employment,” Bedford continued.
“So long as the fixation of ‘getting the budget back into surplus’ continues to supplant all actual measures of economic progress and remains to be an end in and of itself, it is likely that we will remain in this state of economic purgatory.”
The National Union of Students has promised to “fight back” against the MYEFO cuts and warned the Government that it will suffer the consequences of going “after working class people” at the next federal election.