Sarah Hanson-Young says Labor must decide if it is ‘on the side of corporations’ or a fairer society

Australia should follow New Zealand in making three-year university degrees free in response to increasing employer demand for bachelor-level qualifications and to help reduce inequality, the Greens say.

Following the New Zealand prime minister, Jacinda Ardern, pledged to introduce three years of free tertiary education by 2024 as part of her election campaign last year, the Greens’ education spokeswoman Sarah Hanson-Young commissioned modelling to measure the cost of introducing the policy here.

Compiled by the independent Parliamentary Budget Office, the modelling shows the policy would cost the budget $4.8bn across the forward estimates and $27bn over the next decade.

Assuming the policy kicked in from 1 January 2019, the cost would increase from about $600m in 2018-19 to $2.8bn by the end of the forward estimates and to $3.7bn by 2027-28.

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Hanson-Young, said that around the world free higher education was “becoming an important centrepiece to policy”.

“NZ and UK Labour both took free university policies to recent elections and, even in the US, young people have access to free community college,” she said. “Australia is lagging behind. We tell the world we’re an innovative nation, we chase investment from new industries and tech companies, but we don’t back it up with providing our young people with the launchpad they need to take part in the new economy and the future workforce.”

From this year New Zealanders will be able to access fee-free university and vocational education after Ardern pledged to abolish fees. The government has budgeted for a 3% increase in equivalent fulltime students as a result of the policy and has committed to extending it to two years of free study by 2021 and three years by 2024.

Prior to last year’s UK election, the Labour leader, Jeremy Corbyn, also committed his party to legislating to scrap university fees. UK Labour said it would pay for the £9.5bn policy by raising tax on higher earners.

Hanson-Young said the move to fee-free university was a recognition of a growing expectation that job seekers have bachelor-level qualifications when they apply for work.

“We know that the world has changed,” she said. “No longer can you expect to walk out of high school and into a job, and work your way up the corporate ladder to success.

Facebook Twitter Pinterest Sarah Hanson-Young and the Greens leader, Richard Di Natale. Photograph: Mick Tsikas/AAP

“Young people are expected to have a university degree on their CV to even get a foot in the door. We must make it easier for the next generation to be the best they can be.”

Hanson-Young said the Greens were “putting this option on the table” and wanted to “encourage the Labor party to seriously consider whether they’re on the side of corporations, or on a fairer society”.

“Students have borne the brunt of the Liberal government’s cruel cuts to higher education for years, all while spruiking Australia as an innovative and agile nation,” she said.

“If we are to be truly innovative, and prepared for what’s to come, education needs to be considered as an investment in our nation’s future, not a budget burden.”

The PBO said in its forecast that the estimates of the financial implications of the proposal are “subject to uncertainty related to a number of factors” including behavioural responses by Help borrowers affected by the proposal and any shift in projected student numbers as a result of the policy.

The modelling likely understates the overall cost of the policy because it did not take account of part-time study arrangements.

University funding in Australia has skyrocketed in the last decade, in part because of the uncapping of student placements. In December the Mitchell Institute released a report that found university funding grew by more than 50% in the decade to 2015-16.

But after rapid growth since the introduction of demand-driven education funding, university spending had begun to flatline, growing only 1% between 2014-15 and 2015-16.

Last week the institute released modelling predicting the government’s two-year unlegislated freeze on commonwealth supported places would see the proportion of 18 to 64-year-olds enrolled at university staying below 5% by 2031, rather than lifting to above 6% based on previous trends.