Labor has given Malcolm Turnbull an immediate policy fight – releasing a new higher education policy to counter the Coalition’s long-stalled “reforms” even before the government’s new ministry has been sworn in.



The policy promises a $2.5bn net increase to higher education funding – more than reversing the Coalition’s proposed 20% cut to the average federal funding for a bachelor degree, a saving that has been factored into the current budget even though the measure has not passed the Senate.

Labor will abandon the Coalition’s controversial plan to deregulate university fees, allowing them to charge more.

It will retain the Gillard government’s 2012 decision to remove previous limits on bachelor degree student numbers, but will ditch plans to extend this demand-driven system to diplomas and associate degrees from non-university providers, like private colleges.

And it will impose new restrictions on universities to ensure higher rates of completion.

The release of the long-awaited Labor higher education plan is a strategic response to Malcolm Turnbull’s elevation as prime minister and his vow that the political debate would return to policy, setting up the policy contest as the parties prepare for an election year.

It targets a portfolio where government’s reforms have been stalled in the Senate since its 2014 budget and appear to have little chance of passing and which is being taken over by a new minister, senator Simon Birmingham.

Labor argues more students are leaving university with a debt, but no degree, because of attrition rates of over 20% and rising – as universities concentrate on enrolments rather than completions because of the design of the current funding system. The dropout rate is even higher among regional students (26.3%), lower socioeconomic groups (27.3%) and Indigenous students (45.8%).

Labor will set a goal of increasing the number of students finishing their degrees by 20,000 a year from 2020, building completion rates into the “financial incentives” set in new “performance and accountability charters” and new funding agreements with each tertiary institution. It will try to make sure universities do not meet the new completion targets by simply making it easier for students to pass by beefing up the Tertiary Education Quality Standards regulator and giving it another $31m.

The opposition leader, Bill Shorten, was to use a speech on Monday to promise that by 2018 a Labor government would pay on average $11,800 per year per undergraduate student – 27% more per student than the Liberals’ as-yet-unlegislated plan.

He was to say this increase would mean that on average, over the next decade, a Labor government would invest an additional $9,000 in each student’s education for a typical three-year degree.

The increased federal funding should reduce the costs borne by students compared to estimated costs under the government’s now-stalled scheme. Labor says its plan would reduce the cost of a five year medicine degree from $125,155 to $52,615 and the cost of a four year law degree from $86,024 to $42,092.

The Gillard government removed limits on domestic bachelor-degree student numbers at public universities in 2012, moving to a system where funding was provided to support as many people as institutions enrolled. That saw a 22% increase in student numbers between 2009 and 2013, according to a review commissioned by the Coalition, while the total cost of the commonwealth grant scheme increased from $4.1bn to $6.1bn over the same period.

Under Labor’s plan costs are reined in by dropping the expansion of the demand-driven system beyond universities, and by the new degree-completion incentives which could deter universities from enrolling students unlikely to be able to pass.

The $2.5bn cost over four years is a net cost. The additional per-student funding will actually cost an extra $3.86bn over four years, but the decision to dump the extension of the demand-driven system will save $1.21bn and a $100m scheme to help rural universities to adapt to the Coalition reforms will also be scrapped.