Fact check: Did Labor cut $6.6 billion from higher education?

Updated

As Education Minister Christopher Pyne urges cross-bench senators to support the Government's proposed shake up of higher education, he says change is needed because of the actions of the former Labor government.

At his first media conference of 2015, Mr Pyne said: "The reason we have to do this reform of universities is because Labor cut $6.6 billion from universities over the course of their government".

This is not the first time he has used this figure. In December, announcing a new version of the legislation, Mr Pyne also said the former government had cut $6.6 billion from the sector.

The claim: Christopher Pyne says Labor stripped $6.6 billion from higher education funding.

Christopher Pyne says Labor stripped $6.6 billion from higher education funding. The verdict: Of the $6.6 billion in Mr Pyne's table, at least $2.3 billion relates to measures that have not been implemented. Almost two thirds relates to funding for students, not universities and the $6.6 billion also takes into account forward estimates for the years to 2016-17, which does not fall into "the course of [Labor's] government". Mr Pyne is incorrect.

"Labor stripped $6.6 billion from higher education and gave the universities no capacity to replace that revenue with new revenue," he said.

ABC Fact Check takes a look at higher education funding under the previous Labor government.

The numbers

The first budget from the Rudd Labor Government was delivered in May 2008. In it, an additional $500 million was allocated for a higher education building fund in the 2007-08 financial year.

The budget papers during Labor's two terms of government, between 2007-08 and 2013-14, show that higher education spending increased from $6.85 billion to $8.97 billion.

Financial Year Actual spend 2007-08 $6.85 billion 2008-09 $7.01 billion 2009-10 $7.75 billion 2010-11 $7.72 billion 2011-12 $8.53 billion 2012-13 $8.71 billion 2013-14 $8.97 billion

Source: Final Budget Outcome: 2007-08 to 2013-14

According to the Department of Finance, the higher education "sub-function" in the budget consists of "administration, inspection, support, and operation of education programs leading to a university first degree, post-graduate degree or other higher qualifications". But as the federal Department of Education explains on its website, there is other Commonwealth spending in addition to this.

The department says the Australian Government was to provide over $14 billion to higher education in 2014. When the federal budget was handed down on May 13, Mr Pyne issued a media release saying the Commonwealth would provide around $15.6 billion to universities in 2014-15.

In a report on higher education published in October 2014, the Grattan Institute put total spending in 2013-14 at $14.1 billion, comprising direct grants to institutions, student loans, student income support payments and research grants to institutions.

Sorry, this video has expired Video: Watch John Barron present the facts (ABC News)

Fact Check asked the department for the total amount spent each year on higher education by the Commonwealth between 2007-08 and 2013-14. A spokesman said he could not provide the information. No reason was given for refusing to provide information on public finances.

The Government's reasoning

Fact Check asked Mr Pyne's office for details of how he arrived at the $6.6 billion figure. His spokesman provided the following table, saying it sets out "the previous government's announced savings measures to higher education grants and student support, totalling $6.66 billion from 2011-12 to 2016-17".

Year Measures Amount ($mil) 2011-12 Reinstate Band 2 student contributions for mathematics, statistics and science units 1,030.9 Reduction in reward funding 487.8 Reduction in HECS-HELP discount and voluntary repayment bonus 607.7 2012-13 General interest charge on student income support debt 7.5 Student start up scholarships (pause indexation) 103.6 Sustainable research excellence – sustainable growth (changes to the rate of funding for the sustainable research excellence program) 563.7 Delay by a further three years the extension of student income support to all coursework masters program students 199.9 Cessation of facilitation funding (conditional funding to encourage universities to agree to the inclusion of performance targets in their mission-based compacts) 384.6 Removal of eligibility to CSPs and HELP for overseas students 41.9 Increased student contributions for maths and science students 324.9 Participation component of Higher Education Participation and Partnerships Program (HEPPP) lowered 26.5 2013-14 Efficiency dividend of two per cent in 2014 and 1.25 per cent in 2015 applying to most grants to universities 902.7 Removal of the 10 per cent HECS HELP upfront discount and the five per cent HELP repayment bonus from 1 January 2014 276.7 Conversion of "Student Start-up" scholarships to student loans 1,182.5 Cap on tax deductibility of self-education expenses 520

Labor cuts?

The Parliamentary Library's Budget Review of Labor's final budget in 2013-14 says total investment in higher education "continues to grow, just at a slower rate than the sector was hoping for".

The "slower rate than the sector was hoping for" is a reference to the changes to higher education funding announced in the May 2013 Budget.

Faced with a growing deficit and looking for ways to fund the proposed Gonski school reforms, Labor announced an "efficiency dividend" for universities, moved to end the discounts applied for paying fees upfront and for the voluntary repayment of fees, and converted lump sum payments for students to income contingent loans.

The then minister for tertiary education, Craig Emerson, said the proposed changes would save $2.3 billion over the forward estimates, but did not represent a cut to funding overall. They are included in Mr Pyne's calculations.

Fact Check has previously considered how politicians from both sides use the terms "cuts" and "savings" in hospitals and schools.

The chart attached to the then Labor government's 2013 announcement of the planned changes showed that in the years since Labor came to office overall spending on higher education had increased from around $8 billion in 2007-08 to around $14 billion in 2013-14, and projected it would rise further to around $17 billion over the forward estimates.

But Labor never introduced the legislation required to make these changes, failing to do so before losing office in September 2013.

In December 2013, Labor's higher education spokesman Kim Carr announced Labor would no longer support its own proposal, so that $2.3 billion in savings has not been implemented.

"Labor will not support the Coalition's cynical move to go ahead with $2.3 billion in savings from higher education when they have abandoned the six-year [Gonski school funding] plan they were designed to fund," Senator Carr said at the time.

Fact Check asked Senator Carr's office about the changes Mr Pyne said made up the $6.6 billion cut.

A spokesman disputed the figure. "It should be noted that of the alleged $6.6 billion in savings, only $2.4 billion directly impacted on university revenue and, of this $1.5 billion was implemented," he said.

"The other alleged "saving measures" related to changes in student contributions, and student payments. Of these (amounting to $4.2 billion), only $2.2 billion has been implemented."

What does the sector say?

Andrew Norton, director of the Grattan Institute's higher education program, told Fact Check he couldn't see where the $6.6 billion was coming from.

"Labor did propose cuts in 2013, but not at that level," he said.

"Did higher education spending increase during the Labor years? Yes it did, by a significant amount, mainly due to increased student numbers. Did Labor try to curb this spending? Yes it did, mainly in its final Budget. However, most of the proposed cuts were never implemented."

Mr Norton, a former adviser to the Howard government on higher education, conducted the Abbott Government's review of the demand driven system of higher education. That review, published in April 2014, called for, among other things, an expansion of system to below bachelor-degree level, and was the impetus for Mr Pyne's proposed reforms to the current system.

That review also deals with Labor's changes to student and university funding. It says:

Did Labor try to curb this spending? Yes it did, mainly in its final Budget. However, most of the proposed cuts were never implemented. Andrew Norton

"A variety of savings measures were announced by the previous government. These included the reduction of payments to universities as well as measures affecting loans and scholarships, and other benefits for students.

"The largest single saving affecting universities was the placing of an efficiency dividend on grants provided under the Higher Education Support Act 2003 as from January 2014 ($902.7 million over 2013–2014 to 2016–17).

"The largest saving affecting students was the conversion of Student Start-Up Scholarships to income contingent loans for new students from 1 January 2014 ($1.2 billion over 2013–2014 to 2016‑17).

"It was estimated that these and other measures would, if implemented, provide savings of over $6.4 billion over 2011-12 to 2016-17, offsetting much of the expected future additional cost of the demand driven system over the coming years.

"However, the major savings measures have to date not received Parliamentary approval."

David Phillips, an education consultant and former adviser to Labor education Minister John Dawkins, told Fact Check that Mr Pyne's numbers involved "measures that are savings against the forward estimates, rather than funding reductions that have taken place".

He also said: "Quite a lot of the measures in the table are also changes that affect students but have no impact on funding to higher education institutions".

Fact Check asked Universities Australia, the peak body for Australia's universities, whether Mr Pyne's numbers were an accurate assesment of the funding situation, but a spokesman did not respond before deadline.

The verdict

The budget papers and the Parliamentary Library's budget review show an increase in higher education spending over the life of the previous Labor government. Savings measures announced by Labor did not reduce overall funding to the sector.

Of the $6.6 billion in Mr Pyne's table, $2.3 billion relates to measures that have not been implemented and Labor is now opposing those savings in the Senate.

More than half relates to funding for students, not for universities, as Mr Pyne stated.

What's more, the $6.6 billion takes into account forward estimates for the years to 2016-17, which does not fall into "the course of [Labor's] government", as Mr Pyne said.

He is incorrect.

Sources

Topics: government-and-politics, university-and-further-education, liberals, australia

First posted