A Submission on Financing Issues to the Department of Education Science and Training Inquiry into Higher Education

At the end of 2002 or thereabouts the Commonwealth Government will be announcing changes to the financing of Australian higher education. The paper addresses the major issues, beginning with a brief history of university funding arrangements. This is followed by an conceptual analysis of financing models, on which it is demonstrated that the best way to manage student charges is with an income contingent loan, such as HECS. The paper explores some aspects of current university conditions. It is shown that over the past twenty years or so there has been a significant decrease in the relative salary levels of academics, and that over the last few years staff/student ratios have fallen significantly. Some part of the deterioration in conditions can be traced to the implementation of an inadequate indexation arrangement for government grants, instituted in 1995. That is, with respect to allowing the maintenance of earnings matching average Australian wage increases, public sector outlays have been falling. These falls are above and beyond what has occurred with the justifiable switch in financial contributions from taxpayers to students. Those arguing for some restoration of government support have a point.