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Australia cuts state subsidies, removes fee cap

Australia’s Federal Treasurer Joe Hockey announced last week “once-in-a-generation” reforms to the country’s university funding system that will allow Australian universities to “compete with the best in the world”.

Joe Hockey, Australia's Federal Treasurer delivers the 2014 Budget

“We must build an education and training system that becomes the envy of the world"

The reform package presented in the 2014 budget centres around cutting Australia’s contribution towards course fees by on average 20%, saving the country AUS$1.9 billion, and fully de-regulating student fees from January 2016. This means that Australian institutions will have more flexibility in determining the level of their tuition fees from 2016 onwards.

While the move towards a more privatised system won’t directly affect international students who are not recipients of many of the student and youth programmes that were cut from the budget, the Council of International Students Australia (CISA) is concerned that the deregulation will impact on support for foreign students.

Other funding cuts to the country’s medicare system could increase the costs of the insurance provided through the Overseas Student Health Cover scheme which is part of internationals’ visa requirements.

“This budget announcement does put a question mark onto the impact it will generate towards Australia in hosting more international students”

“A number of survey results have shown that cost of living is one of the top factors affecting the experience for international student in Australia and subsequently the choices of study destination,”  said Thomson Ch’ng, National President of CISA.

“This budget announcement does put a question mark onto the impact it will generate towards Australia in hosting more international students.”

Hockey announced the changes in a budget speech in which he proclaimed, “We must build an education and training system that becomes the envy of the world… Australia should have at least one university in the top 20 in the world, and more in the top 100.”

“The higher education sector is being held back and cannot compete with the best in the world. We need to set our sights higher,” he added.

By removing the limits set on tuition fees, Hockey says the government is giving its higher education institutions “greater autonomy” by allowing them to be “free to compete and improve the quality of the courses they offer”.

The government will also extend access to student funding for places at below-Bachelor level and non-university higher education providers. This will result in approximately 80,000 additional students in the system.

“Australia should have at least one university in the top 20 in the world, and more in the top 100″

Organisations representing the university sector have welcomed the reforms, saying the deregulation will allow for more affordable growth.

“These reforms will fundamentally alter the shape of Australian higher education”, said Ms Belinda Robinson, Chief Executive of Universities Australia. “Ongoing budget constraints and the fierce competition for public funds have seen public funding per student fall over time.”

“There has been very little ability for universities to address the shortfall because the fees that universities have been able to charge have been capped. With full fee deregulation, this will no longer be the case,” she explained.

UA however expressed “deep disappointment” over the government’s decision to slash course fee funding by an average of 20% with government payments adjusted to match Australia’s Consumer Price Index.

Other changes announced by Hockey include increasing the repayment threshold for the Higher Education Loans Programme to AUS$50,368 and reduced funding for the Tertiary Education Quality and Standards Agency (TEQSA) by AUS$31.1 million.

Hockey also announced continued funding for mid-career researchers by allocating AUS$140 million for the Future Fellowships Scheme.

“These programs are critical, not only for attracting and retaining the world’s best and brightest researchers, but in providing the infrastructure upon which Australia’s research capability is built,” said Robinson.

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