The pre-budget announcement of changes to higher education funding made by Education Minister Simon Birmingham last night includes an increase in student fees of 1.8% per year between 2018 and 2021, totalling a 7.5% increase over all.

This will equate to a rise in fees for Australian undergraduates of $2,000 to $3,600 over the course of their degree.

The repayment threshold for Higher Education Contribution Scheme (HECS) will also be lowered.

These increased fees and faster repayment schedules for students will be accompanied by an “efficiency dividend”, which cuts funding for teaching by about 2.8% in 2018 and 2019 (equivalent to a A$380 million reduction in 2019).

What does this mean for students?

For students, this means that they will need to borrow more for an education, and will pay it back sooner. And the education they pay for will be delivered by universities under increased financial stress.

This is straightforward “no winners” austerity politics, common now around the developed world.

The way the proposed changes were introduced to the public was particularly interesting, with the government sending out a press package that included a paper by Deloitte on the cost of teaching (very technical reading) as well as a list of vice chancellors’ pay and links to building projects being undertaken by universities.

Clearly the scene was being set for a reduction in funding on the basis that universities are presently overfunded – yet the fee increases and funding reductions revealed later in the day were modest compared to expectations.

Fee increases starting at 25% had been speculated on across the national media, and the proposed 20% cut to funding had been hanging over the sector since 2014.

What the Deloitte paper reveals

Analysis of the Deloitte paper makes interesting reading. A comparison with the conclusions drawn from it by government is particularly revealing.

For example, the ministerial release asserts that the Deloitte paper shows:

[university] revenue has grown faster than costs – between 2010 and 2015 the average costs of delivery per student have increased by 9.5%, compared to per student funding growth of 15%.“

Deloitte, however, specifically cautions that the cost of teaching figures from their earlier 2010 paper and the new 2015 data,

cannot be compared as direct growth or decline in costs relative to funding over the five years to 2015, given the differences in the sample, and differences in cost collection approaches.

Deloitte also warns:

Similarly, caution should be taken in drawing inferences about the sufficiency of [Commonwealth Grant Scheme] funding directly from these [cost of teaching to funding] ratios.

Yet the government media release accompanying the report was accompanied by talking points including that universities "have been pocketing taxpayer funds beyond the costs of their operations”.

The difficulty here, as Deloitte notes, is that,

while not specifically stated in the Higher Education Support Act 2003, there is a general view that CGS funding is intended to cover some level of base research activity (which may be excluded from the definition of teaching and scholarship costs used in this study), and the cost of such research may vary as a proportion of teaching costs.

Impact on research and teaching

What appears to be happening is that research is being uncoupled from teaching.

At present, universities are legislatively required to undertake research and to offer research higher degrees.

This is not the case universally, and is somewhat of an Australian quirk - a legacy of the Dawkins reforms a quarter of a century ago.

The Dawkins reforms transformed 19 universities and 46 colleges, often unwillingly, into 36 public universities. All were required to undertake research, which caused some angst against teacher-practitioners at the time.

Since then, the connection between higher education teaching and active research has become entrenched in Australian ideas of what a university education is. This is despite the heavy reliance of most universities on research-inactive sessional teaching staff for much of their course delivery.

Since Dawkins, the intensity of research activity had been extremely uneven across the sector, and costly for many institutions to maintain.

By uncoupling the funding for staff research time from expectations around what Commonwealth Grant Scheme funding is intended for, the scene has been set for a possible reconfiguration of the sector.

The discussion package released is also telling.

The final paragraph of the final page before the concluding section foreshadows the potential for the biggest shift in higher education since Dawkins. Announcing a benign sounding “Review of the Higher Education Provider Category Standards”, the paper says that:

The review will include public and stakeholder consultation around options to change provider categories, including the possibility of a teaching-only university category… It is expected that the government will consider the outcome of the review in the 2018–19 Budget context.

So while the changes to fees and funding will be hard on students and universities – more job losses look certain, especially for the many institutions already struggling – the game-changers look set to be deferred until next year’s budget.

Will Dawkins’ large, research-heavy university sector be unpicked? What would teaching-based universities look like? Could the sector manage real institutional differentiation if it was forced to?

And the most important question is what all this might mean for our future students.