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Tuesday, 2 September 2014
Page: 9458


Mr WATTS (Gellibrand) (18:39): The bill under consideration before us today, the Higher Education and Research Reform Amendment Bill 2014, is one of the most insidious attacks of the Abbott government on the Australian way of life. It is an ideological attack on the values that underpin our society, motivated by a commitment to elitism and exclusivity and a contempt for egalitarianism and equality of opportunity.

On the ABC's Insiders program, the education minister, Christopher Pyne, told Australians that 'Students will always be the winners' from the changes in this bill. If that is the case, if students will always be the winners, I have a simple question for the minister: 'Why didn't he tell students about these changes before the last election?' Why, before the last election, did the coalition tell the Australian public, in their Real Solutions policy pamphlet:

We will ensure the continuation of the current arrangements of university funding.

When asked last November if he was considering raising university fees, why did Christopher Pyne, again, at that point say:

… I am not even considering it because we promised that we wouldn't and Tony Abbott made it very clear before the election that we would keep our promises.

In the bill under consideration before us today we see these promises broken. We see funding for Commonwealth supported places for undergraduate degrees slashed by an average of 20 per cent. For some courses, this rises to almost 40 per cent. We see fees introduced for PhDs. We see the HECS indexation rate moved from CPI to a real rate of interest—the 10-year bond rate, capped at six per cent. This is a promise broken not only to current students but to all former students who have a HECS debt.

Finally, we see changes to the indexation of university funding, from 2016, which will result in a $2.5 billion shortfall in university funding in 10 years time, according to the Parliamentary Budget Office—a shocking surprise for the Australian public from a government that promised no surprises, no excuses.

After also calamitously and infamously breaking his promise to run a 'unity ticket' on schools funding, this minister has not a shred of political credibility left to his name. He is very lucky to have the environment minister in cabinet with him, to share his political bankruptcy.

Regardless of the merits of the legislation, and I will come to them shortly, this is no way to undertake major reform. There has been much discussion recently about the 'end of the reform era' in Australia and about how a new turbo-charged media cycle, powerful vested interests and hyperpartisanship is derailing reform in this country. There has been less discussion about how reform processes have been managed by our political leaders.

In this instance, it is not the media, the internet, the unions or the opposition which have torpedoed the prospects of this reform. It is the minister himself, who has delivered one of the most ham-fisted displays of reform management in living memory by breaking an election promise by dropping plans for the biggest changes to the higher education sector in this country for 40 years as just a couple of lines in a budget speech. No green paper; no white paper; no inquiries; no reviews; no round table; no summit; no electoral mandate; no attempt to engage with stakeholders to build a consensus on the need for reform; and no attempt to seek input and canvass options or potential alternatives. From an opposition that promised to govern like adults, this is kindergarten stuff.

When parliament recoils and it seems as though the education minister will not be able to get his way, instead of dropping these poisonous reforms and listening to the Australian people, instead of seeking compromise or consensus in this parliament, he throws a tantrum like a child, threatening to cut research funding if he does not get his way. The Australian people do not buy this. They only become angrier at the fact that their representatives are now subject to threats and blackmail from the education minister. Process aside, this broken promise is also bad policy.

It is going to hurt students and their families and make Australia a less prosperous and less fair society. These reforms will, over time, have the effect of making higher education something for the few, not the many, and an institution for the narrow elite, not the egalitarian many. As the architect of the HECS scheme, Professor Bruce Chapman, recently noted:

Past changes to HECS didn't deter students, but now that there will be a real rate of interest on the debt we are in uncharted waters.

It is worth contrasting the shambles before the House with the Dawkins revolution ushered in by the Hawke-Keating government. The Labor approach to reform of our higher education system has always been the result of careful, detailed public consultation. But, most importantly, it embedded the values of equality and fairness in everything that the government did. These values are stamped all over the Dawkins reforms. Twenty years ago, when John Dawkins was introducing the last major reforms of our university sector, at that point our university sector faced significant challenges, including the spiralling costs of the university sector in an era of tight budgets and global economic instability. The then Labor government was in the process of successfully increasing the high school retention rate in this country, from three in 10 students to seven in 10 students, dramatically increasing the pool of potential university students.

Our university sector required significant reform to tackle this challenge and produce the highly skilled graduates needed to power Australia's future in a newly globalised, competitive world. But John Dawkins ensured that these reforms were tackled in a way that did not offend Labor's guiding principles of equality of opportunity and fairness. Labor chose to fund a massive expansion of university places by instituting a groundbreaking deferred payment, income-contingent student loan scheme—our HECS scheme.

The indexation of HECS loans, the 'real interest' subsidy, was a key part of ensuring this equality was preserved throughout the system. The architect of the HECS policy, Professor Bruce Chapman, has talked about the real interest subsidy. He said:

The interest rate subsidy is there for protection.

A lot of people, particularly women, will spend time out of the labour force, child-rearing, or people will have accidents and have bad luck and end up in poor jobs.

When you think Hecs you've got to think about insurance all the time. That's what it is - it insures you against bad luck. Once you put a real interest rate on that, that's gone.

In this way, while an enormous source of new university funding was tapped by the Hawke-Keating government, this was not at the price of disadvantaged students who dreamed of studying at university. This approach resulted in a system which has been described by Nobel Laureate Joseph Stiglitz as 'the envy of the world. It is why every student in Australia can dream of being a scientist, an engineer, a doctor or a lawyer without worrying about a lack of means trumping their merit.

On the other hand, the reforms contained in the bill under consideration are about exclusivity, not equality; elitism, not opportunity. The bill is focused exclusively at the top without any regard for the needs of the vast majority of Australians. It is a system designed to increase the quality of our most elite institutions at the cost of all other stakeholders in the higher education system. It is a system designed to make our universities even more elite, where universities will be encouraged to maximise prices for students to protect the exclusivity of their brand. We have seen this occur in the United Kingdom where fees were deregulated in 2012—while I was studying in that country—but a cap was placed on increases in fees at 9,000 pounds.

Once the reforms were introduced, we saw what economists call 'signalling'. Universities who initially charged less than the 9,000 pounds were considered to be inferior based not on their quality but on their price. In order to avoid students making this ignominious judgement, in the 2015-16 academic year only two universities out of 123 had fees that were below this 9,000-pound cap. This price signalling can even be seen in Australia's higher education system today. The Howard government introduced partially deregulated university fees in 2003. They allowed universities to charge anything up to the current maximum rate of student contribution. The Howard government boasted that this would create more options for our students. The then education minister Brendan Nelson said, 'Some course costs would rise, some would drop and others would stay the same, according to demand.' Yet, once the reforms were introduced, every university increased its fees to the maximum student contribution, and this was without the 20 per cent cut in funding that we are currently seeing from the Abbott government.

What does this mean for university students? What is beyond dispute by anyone except 'Pollyanna Pyne', the education minister, is that university fees will go up and they will go up significantly. As Bruce Chapman put it:

The idea fees will go down anywhere is frankly fantasy land …

Thanks to the cuts to CSP funding, universities will be forced to raise fees just to cover costs. This will lead to a rise in fees by at least 30 per cent and, in some cases, up to 60 per cent—a pain that will not be shared equally. Universities Australia estimates that courses needed to build Australia's future, such as engineering and science, will rise by 58 per cent, just to make up for the cuts to funding. We will see nursing degrees go up by at least 24 per cent, education degrees by at least 20 per cent, agriculture degrees by at least 43 per cent, and environmental studies fees will be forced to increase by 110 per cent. Not even Charlie Sheen would be addled enough to think that these students were 'winning'.

When these increases in fees are combined with the rise in interest for HECS debt, the result will cripple our graduates for a longer period of time. Modelling suggests that our graduates will be burdened by larger amounts of debt for longer periods. It is particularly seen in the work of Universities Australia, tracking the increased costs of engineering and nursing degrees under this deregulated system. Universities Australia modelling found that, taking a conservative prediction of a medium increase in fees and a four per cent interest rate, engineering graduates would face a HECS debt of between $98,000 and $113,000—an increase of over $50,000 to what they could expect today. This would take them an extra seven years to repay the current cost of a degree—a period of up to 25 years. The cost of these debts will be borne by families and will force them to choose between study and a mortgage or study and children. Nursing graduates will see their fees double from $25,000 to $50,000, taking them over 20 years to pay off the HECS debt.

It is absurd to think that these massive increases in fees will not have an impact on the decisions of potential students looking to undertake higher education. That is why these higher education changes have been condemned so widely, not only by the students forced to pay the increased fees but also by the experts who know how to best run the higher education system. Bruce Chapman, the architect of HECS, has been bleak in his assessment, noting: 'Fees will go up and they will go up quite significantly.' Universities Australia has been frank about the increase in fees that university students will be facing. Even the leaders of our universities, those who would benefit most from the ability to increase fees, have voiced grave concerns about the proposed reforms. Peter Dawkins, Vice-Chancellor of Victoria University in my electorate, has stated:

Unless there are some changes to the plan as outlined in the budget, these risks look too high.

Vice-Chancellor of the University of Adelaide, Professor Warren Bebbington, has suggested that the student debt burden in Australia could be 'worse than the United States'. For the benefit of the House, I inform those present that, in the United States, student debt is currently larger than credit card debt. Speaking of these inflated debt levels, Professor Warren Bebbington noted, 'No-one here wanted that.'

The area that the university leaders show most concern for is the bright students from disadvantaged families looking to undertake further study. It is these students, the first in their families to consider higher education, whom this government seems to have forgotten. There is a special pride in being the first member of your family to attend university. It is an emotion I see often in my electorate when talking to families in Melbourne's west. Under the new system, however, these students will be unable to separate their future study options from the exorbitant price tag attached to them—a price tag that says to them that a university degree is a luxury only for those who can afford it. Students who do not have the freedom to take on these large debts and study the course will be the students who are turned away from improving themselves. Australia, along with them, will pay the true price of these university reforms. It is a concern that has been echoed by Vice-Chancellor Dawkins from Victoria University, a university that sees many students attending their university as the first in their family to receive a degree. He recently noted:

It is the likely equity effects of the reforms that are most concerning and while these policies are aimed at expanding tertiary education, they would be counter‐productive if they discourage disadvantaged students from participating in their preferred course of study … This is a real risk.

What these reforms then lead to is a society where university is for the rich, not the smart. We have seen this sort of unequal society flow from a broken higher education system before, in the United States. It is an observation pointed out by Joseph Stiglitz, the Nobel laureate I mentioned earlier, who noted:

America's failed financial model for higher education is one of the reasons that, among the advanced countries, America now has the least equality of opportunity, with the life prospects of a young American even more dependent on his or her parents' income and education than in other advanced countries.

In the words of Joseph Stiglitz, it would be 'a crime for Australia to follow the United States towards a higher education system that breeds exclusivity and discourages the brightest of our students from succeeding'. It would be a crime to pass the reforms of a man who shrugs off legitimate criticism of his botched reform package with derisive comments such as: 'It's not like we're asking someone for their left kidney.'

Replacing equality of opportunity with purchasing power is anathema to the Australian way of life. It is against everything that Labor stands for. The Leader of the Opposition, Bill Shorten, in his budget-in-reply speech, could not have been clearer on this—and I fully endorse his views. He stated:

Only through education will Australia fully develop our economic potential, our scientific potential, our artistic potential—our people's potential. Labor will vote against these cuts to university funding and student support. Labor will not support a system of higher fees, bigger student debt, reduced access and greater inequality. We will never tell Australians that the quality of their education depends on their capacity to pay.

Labor will never stop fighting the efforts that threaten this fundamental tenet of Australian life. We oppose this bill and all efforts by this government to threaten the bright futures of students and their families around the country. The Australian people did not vote for these reforms and they do not want them. The Australian Labor Party will fight these reforms in this chamber, in the other place and in communities across our country. We will fight them until this government is defeated.