HECS debt and the Grattan Institute Report

The ALP government financed Grattan Institute has released its Mapping Australian higher education report. I eyeballed the report last night and it is a fairly dry report full of graphs and data. There should be little that is controversial. But it is. The author Andrew Norton – a former blogger here at the Cat – is responsible both for the report being good and sensible, despite the Grattan Institute’s otherwise left-wing pedigree, and the controversy.

The biggest, and current, controversy revolves around HECS.* Australia has an income-contingent government loans scheme to finance tertiary education. Right now the outstanding HECS debt is $26.3 billion. But of that amount $6.2 billion is considered to be a ‘bad debt’ – the government will never recover that money.

This is due to [HECS] debtors forecast to die or move overseas before their debt is repaid.

So why is that controversial? Well, Andrew Norton is known to have views of this issue – although they are not articulated in the report. The Australian picks up the story:

In a report to be released today, higher education expert at the Grattan Institute think tank Andrew Norton said the rising long-term cost of the scheme needed to be addressed. He wants the government to crack down on students who live permanently overseas and do not earn income here that would trigger payments on their income contingent loans.

Well – yes he does. But that isn’t in the report. He also wants the government to recover HECS from deceased estates – but that isn’t in the report either.

The government response is somewhat bemusing:

“This proposal comes from an institute that consistently pushes to shift the cost burden to students, which would see a drop in participation and Australia’s future prosperity reduced,” she said.

That depends on the discipline – the report does set out how much (domestic) students pay for Commonwealth supported places (I have summarised it below – from page 52).

So for domestic law and business students they already pay 83% of the Commonwealth cost. But there is another number that isn’t reported that I would love to see: the cross-subsidy from international students to domestic students. The overall number would be great, but by discipline would be fantastic.

So the Grattan Report is controversial for things it does not say.

To my mind the report does report something that should be controversial – the rise of research only staff within Australian Universities.

Despite the large increase in student numbers since the early 1990s, university hiring has emphasised research-only academic staff. Research-only staff made up 21 per cent of the academic workforce in 1992, increasing to 34 per cent by 2012.

I think there is a research-bubble within Australian universities – not that academics shouldn’t do research, but that there is too much emphasis on doing government-funded research. Here is the problem:

The massive growth in research only academics is not matched by a massive growth in government funding. Nor should it be – but universities are taking on large numbers of staff whose jobs can only be financed by subsidy – either from international students or government.

* Yes – i know – it isn’t actually called HECS anymore.

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