The Tehan redistribution of revenue for student places

By Mark Warburton

Executive Summary

This paper compares the estimated funding of individual universities in 2023 under current policy settings and the government’s proposed Job-ready Graduates changes to higher education funding. No such analysis has previously been made available.

The findings are derived using Departmental estimates of future university revenue. These estimates allow us to look at the revenue that each university’s student places would attract in 2023 with transition funding removed, as it will be in 2024.

The analysis shows that final outcomes from the implementation of the Job-ready Graduates changes are highly uncertain. It indicates that there may be some surprising and potentially unexpected results. It is far from clear that the reforms will produce the benefits for our economy and for rural and regional higher education provision that the Government is claiming.

Given the nature of the changes, it is not surprising that six of the Group of Eight universities appear to incur a combined revenue loss of nearly $60 million a year compared to a continuation of current policy. Slightly more surprising are the revenue losses to be experienced by the universities in Newcastle, Wollongong and Western Sydney which each will lose around $5 million, with Western Sydney University known to be losing a further $5 million in equity funding. These universities largely serve low-SES communities.

A particularly surprising result is that the University of the Sunshine Coast (USC) appears to lose more revenue than any other university – over $31 million a year. The result should be viewed with caution and warrants more detailed examination of the reliability of the data and/or the causes of the result. James Cook University (JCU), another regional university in Queensland, also appears to lose more than $6 million a year.

Revenue to the three South Australian universities is estimated to decline by more than $3 million a year. Within this overall result, Flinders University is estimated to lose over $9 million and the University of South Australia to gain a little under $8.5 million.

Federation University in Victoria is estimated to lose around $5 million a year. Edith Cowan University in WA is estimated to lose more than $2 million a year.

The findings show that some universities will have increased revenue under the changes (see Table 2 on page 5). These universities must be receiving a large share of the estimated 42,000 extra student places the Government is now claiming it will fund in 2023 at the new lower average rate. We have not been told how many student places any university is to receive, but these universities will need to earn their additional revenue by supplying those additional places and they will incur additional costs in doing so.

The findings in this paper highlight the magnitude of the changes that are being proposed.

The Government is seeking an extra-ordinary level of Ministerial discretion to shape the future of Australia’s higher education sector at the same time as it is introducing radical changes to the funding of student places. Members of Parliament and the public have been provided with inadequate information on which to assess the proposed changes and there is little empirical evidence to support the proposals.

Members of Parliament cannot make an informed decision on these changes and should not support them.

Mark Warburton is an Honorary Senior Fellow of the LH Martin Institute at The University of Melbourne.

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Mark Warburton

mwarburton@phillipskpa.com.au

+61 412 783 666