Topics: Higher education changes announced in MYEFO; Cabinet reshuffle.
Samantha Maiden: And joining me now live is the Education Minister, Simon Birmingham. You’ve just outlined these major reforms to universities, but let’s start with the Cabinet reshuffle. Why is the Prime Minister taking so long to ring everybody? He’s rung most ministers. You’re obviously staying put, no call from the Prime Minister?
Simon Birmingham: Look, I would anticipate that I’m staying put, but in the end Cabinet arrangements and ministerial arrangements are entirely the gift of the Prime Minister, working of course in a coalition government in consultation with the Deputy Prime Minister in Barnaby Joyce. All will be revealed when and if the PM decides to make any changes.
Samantha Maiden: Okay, because there has been speculation in newspapers that the Prime Minister canvassed moving you because of the disagreements that you’d had with the Catholic sector. Did the Prime Minister discuss that with you at all?
Simon Birmingham: Well, Sam, I’m not going to go into my conversations with the Prime Minister, but you can’t always believe what you read in the newspapers.
Samantha Maiden: Fair enough. Now, we’re also told that Darren Chester has been dumped from Cabinet, not because of any sort of poor performance, but just a brutal numbers game where you can only fit so many Nationals in. They’ve got to put Bridget in. Do you think that’s a bit of a tough call, turfing Darren Chester out?
Simon Birmingham: Well, I’m not about to pre-empt what may or may not be in a reshuffle, the context of which I don’t know those changes. As I said before, it’s the gift of the Prime Minister working in a coalition government with the leader of the National Party and Deputy Prime Minister in Barnaby Joyce. There are always difficult decisions that have to be made in reshuffles to make sure that you put forward the best team for the Government, for the country, and balance a whole range of competing interests, and if there are to be changes, well, I’m sure the Prime Minister and Barnaby will have juggled and considered all of those matters.
Samantha Maiden: Are you sad to see George Brandis go?
Simon Birmingham: Well, it’s kind of the same answer there, Sam. I’m not about to pre-empt what may or may not be happening. George is a great friend of mine, a wonderful Liberal, an intellectual and thought leader across the party. He’s given much over the years and I have no doubt that he has still much to give to public life one way or another.
Samantha Maiden: One way or another. What do you think will be his greatest achievement if he is appointed, as expected, as the next High Commissioner to London?
Simon Birmingham: Well, George has overseen a lot of changes in terms of the strengthening of our national security laws. I know he’s of course very proud – rightly so – of the role he has played in terms of our marriage equality changes. He also has put the country on a path in terms of a very considered and thoughtful process around aspects of family law reform and management of the court system. So there’s a lot, indeed, that George Brandis has accomplished, as I said. There’s a lot more that he can still do one way or another.
Samantha Maiden: Alright. Well, hopefully we’ll find out in a short period of time. Let’s go to your higher education reforms – $2.2 billion or so of savings. Now, it is- still the Budget will be $500 million worse off than it would’ve otherwise been, but the beauty of these changes from a political perspective is the majority don’t require legislation.
Simon Birmingham: Well, I guess, Sam, you highlight a point there that since 2014- indeed, earlier than that. Since 2013, under the Labor Government, there have been savings around higher education factored into the Federal Budget, and the reason that Labor chose to do it – and it’s the same reason that both the Abbott and Turnbull governments have followed Labor’s lead – is a recognition that funding into Australia’s universities surged following the implementation of the demand-driven system, overall some growth of 71 per cent since 2009 in terms of revenue streams to unis. That’s twice the rate of economic growth, so well above any other reasonable measure, and something that most businesses or other taxpayer institutions would be envious of.
Samantha Maiden: Can I be honest about universities? You spend a lot of time talking to vice-chancellors; they squeal when you cut their funding. Do you think there’s a lot of fat cats out there, when you look at how much they’re spending on vice-chancellor salaries, on jetting them around the world to look at other universities? Do you think that they’re spending too much?
Simon Birmingham: Well, Sam, I absolutely think that there are efficiencies to be found in universities. The marketing budgets of unis over the last few years, we’ve seen about $1.7 billion in expenditure, so huge growth in spending there by Australia’s universities on advertising, sponsorships, marketing, all of which ought to be looked at in terms of value for money for students and for taxpayers. Now, what we’ve brought down now is something that is a much-reduced level of savings compared to what we had previously budgeted for, or indeed compared to the efficiency dividends and proposals of Labor when they were finishing their time in office. It’s a reasonable, measured approach that unis ought to be able to adjust their spending profile.
Samantha Maiden: Well, it’s not that much smaller. I mean, it’s about 20 per cent lower.
Simon Birmingham: Well, it’s $1.3 billion lower than what it was before the Budget this year, so that’s a fair …
Samantha Maiden: Alright. So let’s go through the changes, just so I understand. As I understand it, the two that do require legislation is in relation to the cap on how much students can borrow in terms of the scheme. So it would be 150,000 if you were studying medicine and $100,000 for a general degree. Are there degrees in Australia right now for medicine that cost students more than 150,000?
Simon Birmingham: No, Sam. All students should be able to complete their degrees well and truly within those arrangements.
Samantha Maiden: Are you sure? Because I thought a couple of years ago Melbourne University had a degree that was a $200,000 degree that was not a full fee-paying degree.
Simon Birmingham: Well, Sam, my understanding is that in terms of the HECS-HELP program, which are the university degrees that attract government subsidies as well as then a student component supported by our student loan scheme, that all can complete within those caps. And in fact, only 0.5 per cent of debtors in the HELP scheme have debts in excess of $100,000, so it’s a very, very tiny fraction. A good number of those would be med students between 100,000 and 150,000, but these figures have been set very mindful that a student should comfortably, by far and away, be able to complete their degrees within those caps, usually with room to complete a couple of undergraduate degrees, if that’s their choice, and still have headroom.
Samantha Maiden: Medicine’s probably the example, though, that’s going to come close to that cap. Can you now guarantee today that all students would be able to meet the cost of their degree through that loan scheme, that they won’t have to go out and take out a personal loan, some other source of money?
Simon Birmingham: Absolutely, Sam. The Government’s intention is not to, in any way, impede students from being able to complete their degree, their undergraduate degree, with no upfront fees at all, to be able to put that fully on our generous student loans scheme.
Samantha Maiden: Right. So, you’re guaranteeing that no student would be forced to go outside of that HELP student loan fund to complete their undergraduate degree?
Simon Birmingham: If it’s their first undergraduate degree, then there is absolutely no reason why, and the Government’s …
Samantha Maiden: But will you guarantee …
Simon Birmingham: Absolutely, Sam. I am very happy …
Samantha Maiden: Will that be indexed, that figure, 100 to 150?
Simon Birmingham: Yes, yeah, absolutely, yes.
Samantha Maiden: Okay, alright. So, how much is that change worth?
Simon Birmingham: Well, that particular change, you have to look at those changes integrated with some of the other HELP changes. Now, off hand that’s a few hundred million dollars in an integrated package under forward estimates.
Samantha Maiden: Yeah, because I’m just trying to think, of the 2.1 billion, how much of that 2.1 billion save is made up of measures that actually require legislation? The other bit that requires legislation is obviously the cap – or the new income threshold – on when you have to pay back your HELP loan. It’s $45,000. Are they the only two elements that require legislation?
Simon Birmingham: That’s right.
Samantha Maiden: And how much are they worth?
Simon Birmingham: As I said, all up that’s a few hundred million dollars.
Samantha Maiden: Okay. So, you’d probably be able to get pretty close to $2 billion without any legislation?
Simon Birmingham: Well, Sam, we think this is a sensible approach, as I said before, in terms of both addressing the increase in cost to the nation that university funding had become, while still ensuring that there are incentives for unis to do the right things by students – enrolling them, getting improved student outcomes. We think this is a fair approach that does end the uncertainty as well. So, even from 2013 onwards, we’ve had governments banking on different savings; it’s time to just make sure they’re locked in so everyone can get on with the future. That’s what this does.
Samantha Maiden: Okay. Fair enough. With the $45,000, that would be a bit close to the poverty line, wouldn’t it, that you have to pay back your degree?
Simon Birmingham: No, look, it is clearly some 20-odd per cent above the …
Samantha Maiden: Yeah, but I’m thinking that if you were earning $45,000- just say for example you’re a single mum, you had responsibility for a child, $45,000 a year is not a lot in a place like Sydney or Melbourne, particularly if you’ve got kids. Does this new measure take into account any issue of having dependents?
Simon Birmingham: Well, Sam, no. The HELP repayment arrangements will remain exactly as they are but with adjusted, smoothed out repayment thresholds. At present, there are a number of lump sum.
Samantha Maiden: Okay. So, if you are a single mum going back to uni to retrain, who’s got two or three kids, and you hit $45,000 a year, you’ve got to start paying 1 per cent of your income back. It’s a bit tough, isn’t it?
Simon Birmingham: Less than $9 a week, which I know in those circumstances is challenging. That is, of course, why elsewhere within Government support, such as Family Tax Benefit payments and so on, additional support is provided, and also why elsewhere in my own portfolio we’re making sure that there’s extra support for families in those sorts of circumstances.
Samantha Maiden: Okay, but graduates earning over $130,000 a year – not many people would weep for a graduate that’s hitting a salary of $130,000 a year, I accept that – but they’ll have to pay back 10 per cent of their income. Is that post-tax or pre-tax?
Simon Birmingham: Well, that’s part of their gross income. That’s the way in which the HELP scheme works. But of course, that will ensure they pay back their debts faster.
Samantha Maiden: So, they’ve got to pay- so, if you’re a graduate who is earning $130,000 a year, you’ve got to pay 10 per cent of your post-tax income or pre-tax?
Simon Birmingham: That’s the gross income. That’s considered as part of the overall …
Samantha Maiden: Right. So, it’s almost like double that then, really?
Simon Birmingham: Well, no. No, Sam. I mean, it is continuing exactly the way the HELP scheme has always worked. Yes, we’re saying that in terms of those who graduate and enjoy higher incomes that we’re going to get them to pay back a bit faster …
Samantha Maiden: Yeah. So, you have to pay back $1300 a year if you are earning over $130,000 a year?
Simon Birmingham: So, in those cases individuals will pay back a bit faster. That will ensure that their debt is paid back faster at less cost to taxpayers, but also enable them to then get on with the rest of their lives.
Samantha Maiden: And just finally, in relation to the freeze on essentially per student funding, why is that not a cap on student numbers? Surely that would reduce the number of numbers universities can take?
Simon Birmingham: Well, this comes to the heart of it. Our view is universities should look at this as an efficiency dividend instilled by other means, that unis have seen their revenue stream grow by some 15 per cent per student, compared to their expenses growing by only around 9 per cent per student according to work we had Deloitte undertake over the last 12 months. So, that’s a clear basis upon which unis can take decisions to make savings in their marketing budgets, to make savings in their administrative budgets, and from that to be able to keep enrolling students, increase numbers of students. We’ve also guaranteed that the regional student loading stays in place and keeps growing, that the equity payments to support disadvantaged students stay in place, that research funding stays in place and keeps growing. So, unis will see continued growth streams in their revenue, as well as, indeed, the opportunity to keep determining themselves what disciplines they enrol students in and how many students they enrol.
Samantha Maiden: Okay, Simon Birmingham, thanks a lot for your time today, we’re going to have to leave it there. We’ve got to talk to Stacey Lee about another drowning in your home town of Adelaide, in Glenelg. It’s a terrible story, but thank you very much for your time today.
Simon Birmingham: Thank you, Sam.
Samantha Maiden: Thanks, Simon.