University leaders have cautiously welcomed Labor’s plan to increase public funding for the sector as the Coalition government prepares to rethink its stalled policy to remove limits on student fees.

Two university groups that had previously backed the Coalition’s proposed fee deregulation – Universities Australia and the Group of Eight – voiced support for the opposition’s “student funding guarantee” while emphasising the need for policy stability, adequate revenue and further details.

The Labor leader, Bill Shorten, announced the policy in a speech to Monash University in Victoria, offering his first substantial response to the elevation of Malcolm Turnbull to the Liberal leadership.

“A Shorten Labor government will invest in you, the students of Australia,” he said. “We will put you first. We will help you prepare for the new reality of working life in the 21st century. We will keep downward pressure on the price of university.”

While Turnbull has previously voiced support for the 2014 budget proposal to deregulate fees, he hinted on Monday that the government would have to reconsider the policy in light of the Senate roadblock.

The Coalition’s policy also included a 20% cut to the average public subsidy for bachelor degrees, a move that critics had warned would create pressure for an immediate increase in student fees.

“Clearly we’ve got political realities to deal with in the Senate,” the prime minister said before convening the first meeting of his revamped cabinet.

Labor’s policy would cost the budget $2.5bn in net terms over four years, which includes funding to reverse the Coalition’s proposed cuts, according to an estimate by the parliamentary budget office.

While Labor’s student funding guarantee would cost the budget $3.9bn if done in isolation, the amount would be reduced by abandoning associated Coalition spending measures such as the expansion of the demand-driven system to sub-bachelor degrees and private colleges.

The chief executive of Universities Australia, Belinda Robinson, said she was pleased the opposition had revealed its policy on higher education so long before the election due in 2016.

Robinson said policy stability and adequate funding were “critical for universities to deliver the quality of education expected by students, employers and the broader community”.



“We agree with Mr Shorten’s emphatic statement that university funding is an investment in the future,” she said.

Universities Australia has previously backed fee deregulation but opposed the Coalition’s funding cuts. On Monday the group described Labor’s proposed abolition of the Coalition’s 20% cut and the former Gillard government’s efficiency dividend as, in effect, retaining “the status quo level of funding”.

And Robinson called on Labor to peg any funding increase to the true cost of delivery, rather than adopting the government’s proposal to link it to the consumer price index, otherwise universities “would need to find alternative sources of revenue to avoid eroding the quality of their teaching programs”.

The Group of Eight, which represents the country’s most prestigious universities and is a leading advocate of deregulation, said the policy provided “a solid platform for funding and recognises the importance of universities in equipping Australia for the future through our graduates and our research”.

“In particular, the ALP policy recognises the need for predictable funding for universities,” the group’s chief executive, Vicki Thomson, said.

“We are especially pleased by the commitment to consultation through a green and white paper process. As the Group of Eight has long argued, it is time to sort out funding problems and put the sector on a sustainable footing.”



Another umbrella group, Innovative Research Universities, said it endorsed Labor’s commitment to continue the demand-driven system and to increase government funding per student.

“We look forward to further clarity on the extent of the additional funding per student, the key issue in university funding,” said the executive director, Conor King.

“This proposal puts Labor back on track with the credible alternative that we have been seeking. We need two strong credible policies driving our major parties.”

The former Labor government removed centrally imposed limits on the number of bachelor degree places, moving to a “demand-driven system” that ensured the government contributed funding for as many places as public universities were able to provide. This fuelled a big increase in university participation, but Labor is now emphasising a desire to improve quality within that system.

Shorten said the extra funding was “not a blank cheque” to universities, and Labor wanted to improve course quality and completion rates. Labor’s higher education spokesman, Kim Carr, said the party would focus on quality measures in funding agreements with universities and would create a new commission focused on higher education productivity and performance.

Andrew Norton, the Grattan Institute’s higher education program director who advised the Coalition government on the demand-driven system last year, said Labor’s policy might encourage some universities to be more prudent about who they enrolled.

“But I would not see that as a reversal of the demand-driven system,” he said. “I’d say it is a desirable fine-tuning to ensure it’s working effectively.”

Labor’s policy document said the extra spending would be offset “by existing commitments to reform the taxation of multinational entities and superannuation tax concessions, and the abolition of the emissions reduction fund”.

The new education minister, Simon Birmingham, said he believed Labor’s scheme was “scant and short on details”, although he would study it in more depth in coming days.

When asked about the government’s own policies, Birmingham indicated he would try to reach out to stakeholder groups, build consensus and “take people with us”.

Birmingham said Turnbull was right to point to the Coalition’s political difficulties getting the existing package through the Senate, although the minister was not yet ready to declare an end to the policy.

“We have policies and proposals that remain … until such time as the cabinet chooses to vary them,” Birmingham told the ABC’s Radio National on Monday. He said he would consult the sector before taking any proposals to cabinet and reaching a position that he could “happily talk to the world about”.