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Thursday, 29 May 2003
Page: 15451


Mr ANDREN (1:23 PM) —I rise to speak on the Appropriation Bill (No. 1) 2003-2004. I want to concentrate this reply to the budget on the higher education reforms. The Labor platform in 1973 could afford to say that all education should be free. But by introducing HECS the Hawke government recognised that, in fact, free education was subsidising the better off. Professor Bruce Chapman, the architect of HECS, says frankly that free tertiary education was regressive and unfair. He says that, before HECS, there was a clear relationship between enrolment in higher education and measures of family wealth.

When I entered tertiary education in 1964, 20 to 25 per cent of students paid fees, but the vast majority had teachers college or Commonwealth scholarships. However, by the early 1980s, with more and more seeking university education, a funding crisis was looming. The Hawke government introduced the Higher Education Contributions Scheme in 1989 with an $1,800 fee for all undergraduates across all courses. In 1996 the cost of a HECS education increased by 20 per cent as the coalition government introduced a three-tier fee structure, based on not only the cost of the course but the income expectations from high-HECS courses like law.

The HECS scheme is supposed to be a balance between the private benefit that accrues to university graduates and the public benefit of training doctors, nurses, teachers, engineers, scientists and—some might say `unfortunately'—lawyers. Until the changes introduced in this budget, the evidence from Professor Bruce Chapman shows that HECS has had no or a negligible impact on the demand for higher education or access by the poor. I agree. At the moment the balance between student contribution and taxpayer contribution is just about right. The affordability is just about right. The need for a fair input to pay for the privilege of a university degree and later opportunities that accrue is just about right.

With the emergence of a growing user-pay-policy, there has been a steep and steady decline in federal funding to universities over the past 20 years. The struggle of universities to make ends meet despite HECS is stark. There has been a 25 per cent decline in professorial and lecturer salaries since the early 1980s, corresponding with diminished government support. With more and more research skewed to market outcomes, there has been a loss of truly academic study and pursuit of learning. One uni cut out literature and another removed languages, while humanities departments have been downgraded or gutted. With salaries at 75 per cent of university costs, government operating grants by 2001 were half a billion dollars behind the growth in average earnings. Staff-student ratios have increased dramatically over the past decade.

Enter the Nelson reforms as manifested in the budget. They came after a thorough consultation process, for which the minister must be commended. The big universities—based in the capital cities and close to the pool of prospective students and the high incomes of full fee paying locals or foreign students—were always likely to be the winners in this reform. The regional universities, like Charles Sturt, Bathurst, Wagga and Albury, were the ones likely to miss out—by dint of their distance from their student pool and the comparative advantage of size and prestige embodied in the big eight campuses which had been established on the back of so much public funding over the many years.

By allowing universities to increase their HECS charges by 30 per cent, the government, I believe, is laying the groundwork for a two-tier university system. But it can be rectified. Universities say they will not be automatically increasing fees and, in CSU's case, after discussing it with them I can understand their wish to constrain fees in the interests of their students' socioeconomic profile and hope that it will be met. But one would have to be a supreme optimist to believe that there will not be an inexorable per cent by per cent increase in fees over the next five to 10 years, heading towards that 30 per cent. It is a bit like the Medicare reforms we are seeing.

Some universities, recognising their dominance in high-demand courses, will not worry about the niceties of gradual increases. Universities will apply a surcharge equal to what the market will bear. The law school at Melbourne University or vet science at Sydney could, if they choose, push their charge to the maximum rate overnight, such is the demand for their degrees. Indeed, recognising this inevitability, the Vice-Chancellor of Melbourne University, Alan Gilbert, this morning is calling for not only a lift in the threshold of average earnings at which students repay their HECS but also an increase in the loans cap and 15,000 more Commonwealth scholarships. He also believes that there needs to be a variation in HECS fees within a course for poorer students. I would suggest more liberal guidelines for independent youth allowance would be a greater help than lower repayments after a degree and a salary have been obtained.

For a student, doing uni study and surviving is the greatest financial challenge, particularly for students from relatively poorer rural communities who have to go away to study. While it is good to see Melbourne's vice-chancellor talking about equity issues in this package, this system will allow high-status sandstone universities to pay higher salaries and attract better staff. That may be all very well, but I cannot see any outcome other than a two-tier system developing. I would suggest that the regional loadings on offer for places like Charles Sturt are just not enough. This area of the package needs serious review, with at least a 10 per cent loading needed instead of the current 2½ per cent to five per cent on offer.

Despite a new grants scheme, the government is largely transferring the problem of indexing grants from the Commonwealth to the student. Let us not forget that, for all the talk about a $6 billion injection of government money into the university sector, when you transfer more of the cost of education to the student, the taxpayer is going to get it back in the long run through the tax system as students repay their HECS and their loans. So, really, it is a clever cost-shift and not a long-term investment in infrastructure, particularly of our tertiary education sector.

The doubling of the full-fee payer cap from 25 to 50 per cent and the introduction of the loans scheme are designed both to increase revenue for universities and to broaden access to lower-income background students. But they also increase the number of students there by dint of capacity to pay rather than pure academic merit. Is this an investment in excellence? The loans scheme might be seen as an improvement in equity of access for those failing to gain HECS places and wanting to do degrees in the lower fee range, but there are major problems with the high-fee courses. How can a person from a disadvantaged background hope to do law or medicine by accessing a $50,000 loan when the full fee is around $140,000? Will these loans be enlarged or extended and at what ultimate cost to the repayer? The loans scheme for this classification of student—the poorer ones seeking a higher income outcome—is a Clayton's option for those from low-income backgrounds trying to access the more expensive degrees and unable to get a HECS place. They are faced with the full fee less the loan. How do they fund the $94,000 which is the difference? They simply will not be able to afford it. Those who are able to pay under the current circumstances can also get a loan, it seems. The scheme seems to me to be a handy source of windfall funding for the well-off, but it offers little or no advantage to the poorer to afford a meal ticket to a high-paid career.

While poorer students may be able to lower their income sights and do an arts degree covered by loan, it looks like the high-paying careers will be reserved in the main for the higher paying students from affluent backgrounds—apart, of course, from those recipients of HECS places. The question remains: why are we allowing universities to trade off half their places to full fee payers—whether they pay for it up front or by loan? The simple answer is: the system needs the bucks. But is it fair and equitable and in the best long-term interests of this nation? There is certainly more money in the system at the end of the day, but are the right people in the classes? Have we maximised our intellectual and creative capital? I think not. Do we risk a tick and flick environment, such as noted economist Clive Hamilton reports, where 11 out of 13 students receive first-class honours in economics at one campus when you would be lucky to find one student deserving enough 20 years ago?

The Nelson package has offered a carrot of $404 million dollars in additional Commonwealth course contributions from 2005, perhaps in recognition of the half-a-billion-dollar funding black hole that has developed since 1995. However, in typical style, it is tied to the provision that a university must adhere to the new national governance protocols and comply with Commonwealth workplace relations policy, including the specification that enterprise agreements between staff and the university do not preclude Australian workplace agreements—individual agreements between the employer and employee determining wages and conditions. The National Tertiary Education Union said in March that any measures to force or even encourage AWAs would be strongly opposed. Having spoken with people in the sector, it seems to me to be an unnecessary battle that common-law contracts could avoid. It seems more like it is the Abbott ideological injection into the education reform process. I am informed by what I believe are objective university contacts that an AWA is an unwieldy instrument—particularly, for example, where a revision of an agreement is sought by either party—in contrast to what can be achieved through the common-law contract route.

I believe this package is going to need adjustments along the lines I have outlined if it is to be acceptable to universities, students, families and the taxpaying public. While some countries still do place a high value on universal free university education, I think we have other funding crises and, therefore, priorities in this country—like TAFE, our public school system and health care. These changes—extreme as they have been painted in some quarters—will in fact mean students pay only about a third of the cost of their education. I believe there must be a balance between user pays and public pays in education, but I believe this package shifts the pendulum too far to the user, with the major beneficiaries the sandstone unis and the well-off. As a sign of true commitment to our education future, the government—and, indeed, the alternative one—should build a system of taxation allowances into its policy to encourage and reward long-term savings by families for their children's education.

Public funding for higher education in this country accounts for just 0.6 percent of GDP. That is down from 0.9 per cent in 1996, and the budget papers show it will actually fall to 0.5 per cent in 2004-05. Only three OECD countries are behind us in terms of public spending on higher education. What is the point of having one Australian university in the world's top 100—whatever that means—if many of the other 36, particularly regional universities, might well be struggling to attract top teachers and top students while locked into a discount price degree competition with other smaller universities? The danger—or one of them—in this package is not the underlying fund generation process but the incentives within it that favour the large over the small and the failure to properly recognise the disadvantage of rural campuses and their need for significantly more capital funding.

The big loser in tertiary education in this budget is TAFE. There is no recognition by way of significantly increased funding for the sector that it is more and more taking on the job of training young Australians. There has been an increase of 68.5 per cent in the number of vocational education and training students since 1992. There are half a million TAFE students in NSW alone, with 36,000 at the Western Institute of TAFE based in Orange. With a far greater proportion of students attending TAFE than university, TAFE receives about one-third of the funding received by universities per equivalent full-time student.

At the very least the government, when negotiating the new ANTA agreement with the states, should ensure the 16 per cent cut in funds to TAFE during its period of 20 per cent growth over the past five years is restored and that pre-apprenticeship training is reintroduced. If the argument is used that the GST revenues should be used to fill in those gaps, let us have the explanation why and let us have the states step up to the mark to ensure that that growth gap and those pre-apprenticeship training options are reintroduced in a spirit of federation cooperation. It is no good talking of a synergy between high school, TAFE and university if these, too, remain grossly under-funded poor cousins.

Before leaving education let me comment on anomalies in the scholarship system. While Commonwealth learning, education cost and accommodation scholarships are welcome, there is a real problem in their treatment as income. They are regarded as income for independent youth allowance but are not regarded as income for the purposes of establishing independent status to qualify for youth allowance. That situation is a nonsense and should be attended to.

As well, the budget papers acknowledge the significant burden for parents of accommodation charges and point out around 10,000 students from rural and isolated areas—many from low socioeconomic backgrounds—move away from home each year for higher education. While welcome, 1,500 scholarships will not go far to overcome the enormous disadvantages rural students face compared with those living at home in the city.

While it is possible to amend this education package to make it fairer—for rural campuses in particular—I do not see any salvation for Medicare under the proposed reforms planned in this budget. The carrot of almost a billion dollars worth of incentives to encourage bulk-billing of the poorest and concession card holders is really a slush fund to dismantle Medicare as we know it. The Productivity Commission says $50 is a reasonable charge for a GP consultation. Instead of subsidising private health cover and offering tax cuts to the well off, this largesse could be used to encourage bulk-billing across the board.

Everywhere I have gone in my electorate in recent weeks people ask me why the government or the opposition do not suggest an increase in the Medicare levy. We want universal health cover for the most basic of health services—a visit to the doctor—so we need to find the resources to pay for it. That is not me speaking; that is what people are saying to me. They do not believe people on $30,000 to $50,000—in particular, many single income families with two or three or more kids—should now be faced with the certainty of a $25 dollar upfront fee for seeing a doctor, whether it happens tomorrow or the week after next.

They know their GP is not ripping them off; they know some specialists are. But they know if the Medicare rebate offered to doctors was increased to about $33—that seems to be a fee that both doctors and the public recognise when they stop and think about it—then doctors could afford to bulk-bill and would not be forced to seek the full $25 differential between the current rebate and the Productivity Commission's $50 figure. And, quite frankly, the Labor Party's suggestion of $3 has been treated with near contempt out there as far as I can see. Families earning this $30,000 to $50,000 range stand to gain just $208 from tax breaks but this will be eaten up by eight family visits to the doctor.

These changes will cost shift more and more medical care from the Commonwealth to the states as those lower income families seek assistance at state hospitals. This is user-pays ideology gone mad. People will pay: with their health. Like the mean-minded abolition of dental health funding, the system will somewhere have to carry the cost of a sicker society down the track.

I have conducted an informal survey of doctors in my electorate on the Medicare changes. The overwhelming majority want a public inquiry into Medicare. Only two of the doctors believe the incentives on offer would help cover the costs of bulk-billing. Most saw it as a transfer of administration from Medicare offices straight to the doctor's surgery.

Dr Michel Guerin from Molong says it will cost him twice as much a year to administer the changes as he will receive for the privilege of helping to run Medicare. With 60 per cent of his patients concession card holders he will be forced to opt into this scheme; he will have no choice. He also offers bulk-billing to some farmers, farm workers and others affected by the drought for instance. `What happens to them now?' he asks. They will have to cop the extra $15 now and probably $20 to $25 down the track. Dr Guerin says its good to see the budget incentives to try and attract doctors to the bush, but why would they come to Molong when they can earn a far more comfortable life in the city?

Three-quarters of those surveyed said they expect low and middle-income earners to now seek basic health care at a hospital. Only one doctor seemed to back the philosophy that I believe is behind the government's long-term agenda. `Bulk-billing and the Medicare system,' he says, `should be done away with in its entirety.' I will reserve my other comments on the other portfolios until the committee discussion stages.