REBECCA LEVINGSTON: Remember the Job-ready Graduates package? It was a program brought in when Scott Morrison was the Prime Minister, and it slashed the government’s contribution of some university degrees while hiking up others. The idea was that it would funnel students into degrees that corresponded with Australia’s skills shortage, and it meant that the cost of a degree in humanities went up by 113 per cent while a degree in agriculture or maths went down by 62 per cent. Catriona Jackson is the Chief Executive of Universities Australia. Catriona, good morning.
CATRIONA JACKSON: G’day Rebecca.
REBECCA LEVINGSTON: Do you think those degree costs and decreases are still relevant in 2023?
CATRIONA JACKSON: This is an incredibly complex package. Listeners may not be aware of it because it got released in the early days of COVID-19 when we were all distracted by something else being a global pandemic. The biggest problem with the package is that it reduces funding per place for every university degree on average. The things that really stand out though, so university funding comes in two bits – students make a contribution, and the taxpayer makes a contribution. When you add up both those contributions, we’ve got some substantial declines in things as important as medical science and environmental science – around 30 per cent less per place for those degrees. Can we think of areas more important to us right now than medical science and environment studies. We have also seen maths go down by 17 per cent, science by 16 per cent, nursing down eight per cent and education down by six per cent. These are reductions we just cannot afford and if the previous government was trying to send a message about which degrees were valuable, I don’t think you can actually send it through the system we’ve got effectively, but those degrees are very valuable, and we should be encouraging people to study them rather than discouraging through some kind of price signal.
REBECCA LEVINGSTON: Do you think the Job-ready scheme should be scrapped?
CATRIONA JACKSON: It needs to be absolutely re-examined from the very top to the very bottom and all of those carbuncles – all those disincentives – taken out. So, yes.
REBECCA LEVINGSTON: Has there been any discussion from the Federal Education Minister or the Treasurer on that front ahead of tonight’s budget?
CATRIONA JACKSON: We’re right in the middle of the biggest opportunity for universities to have a say in their future in decades – a big thing called the Accord process – a great big review. We’re about halfway through it at the moment, so whether this feeds into budget considerations for this budget or not, we’re not sure. But we certainly feel heard on the problems with JRG, but basically the need to have a good look at how you fund student education and student research broadly. I think the government’s ears have been open on the fact that this scheme is problematic. It is, however, quite hard to unpick because there’s been a reduction, an overall reduction of six per cent, and it’s a bit of a pea and thimble trick. No additional money, but apparently 39,000 extra places. We’re not feeling that really hard at the moment because there’s been a significant softening in demand for university for the
very simple reason that there is so many jobs around that people are taking jobs rather than studying. We always see this. The state of the economy mirrors the number of enrolments in universities. The curves sort of match each other perfectly. But there won’t always be stacks of jobs, so we will find demand coming back up and we’ll be in a real pickle.
REBECCA LEVINGSTON: We heard a working example of that, Jen, who is a graduate who called in this morning. I’m going to play you a little bit of her frustration around HECS debt in a moment. Someone immediately texted in saying, “Jen, you shouldn’t have gone to uni. You should have just done a trade and you would’ve got paid more and you wouldn’t have had the debt to go with it.” In terms of university student numbers right now, Catriona, how would you describe them? Are unis full?
CATRIONA JACKSON: They’re not unfull, but certainly there’s been a bit of a softening in demand for that very simple reason. We’re finding some IT students two years through their degree are being offered $150,000 to go and take a job immediately.
REBECCA LEVINGSTON: Wow.
CATRIONA JACKSON: Tempting for a second-year student.
REBECCA LEVINGSTON: It sure is.
CATRIONA JACKSON: That will certainly change and as we see the state of the economy, those really crippling skill shortages back off a little bit, and we’re looking forward to tonight’s budget to see what happens with that, we’ll see demand for university places go back up again. But certainly, a little soft at the moment for that very simple reason that we have really serious skill shortages and people are taking jobs.
REBECCA LEVINGSTON: That IT student scenario that you’re talking about there, someone being second year in information technology and getting offered $150k a year to leave, are those students who take that option finishing off their degrees while working?
CATRIONA JACKSON: We haven’t seen that. Some of them may go part-time, but many of those offers are full-time offers, so we would really hope that those students go back and finish off at a certain point because it’s a very short-term thing to do to pop off with a year or two years of your degree to go and take a job. We’re also seeing a fair bit of part-time at the moment. Again, there are lots and lots of jobs around, so people are slowing their degrees down as well as deferring for a bit.
REBECCA LEVINGSTON: What about what’s happening with international students coming to Australia to study?
CATRIONA JACKSON: The international student situation is terrific. We had those closed borders for years and years, which just meant that students couldn’t physically get into the country. The thing they wanted and the thing their friends on campus wanted the most was to see them back. Conditions have now changed, our borders are open and the borders of other countries that make a contribution – those 144 countries that send their students here – we’re almost back to pre-COVID levels with population numbers on campus. That’s a very welcome development.
REBECCA LEVINGSTON: Which country do most international students come from now?
CATRIONA JACKSON: A mix. China is the biggest country because it has an enormous population of very aspirant middle class. India is next. Then we have a number of countries which are fairly close – places like Nepal, which you wouldn’t immediately think of. As I said, 144 countries choose to send their students here, so there’s a real diversity, but really big population countries in our region, same timeline, relatively close physically make up the bulk.
REBECCA LEVINGSTON: Catriona, we also heard through the pandemic a number of academics were let go, there’s lots of sort of protracted conversations about conditions and pay of educators, of lecturers. Have you got enough staff at universities?
CATRIONA JACKSON: Things have turned around a little bit, but very early on in COVID-19 universities were very concerned that they had to do things to make sure that the books balanced, and they made some really hard decisions about losing staff. Every single one of those staff losses is bad for obviously the individual concerned, but also the community and a matter of real regret to the universities. Those things had to be done as economically responsible managers. We’re seeing a bit of a turnaround now and some shifts and some staff returning to campus, but we can’t pretend we’re completely out of the woods. The impact of COVID has had a diverse effect on the sector. Some universities have come through really strongly, some are still, as you can see from the economic reporting out of universities, lots of universities are reporting a deficit now. There was a quite good return on investment last year, it was a bit of a surprise to be completely honest. This year, things aren’t looking so great for many universities. A university has got to balance the books as well as educating students and conducting research and doing all the really important community work they do. Some of those decisions were very hard to take, but absolutely necessary at the time.
REBECCA LEVINGSTON: You’re listening to Catriona Jackson, the Chief Executive of Universities Australia, who says it’s time to scrap the Job-ready Graduates package. A full re-examination of the cost of degrees is what they would like to see. Whether or not that will pop up in tonight’s budget, we will all see. I’d also be interested to hear from you this morning, if you’re listening, if you have young adults in your family, teenagers who are thinking about end of school plans – are they thinking university? Are they thinking trades? Are they thinking directly to work? Tell me what’s a teenager in Australia in 2023 thinking they’ll do after school? Send me a text, 0467 922 612, I’d love to know if there’s still a hierarchy in terms of high school graduates. There used to be. Well, when I went to school, people wanted to go to university. A trade was almost sort of seen as departing early, but I think that sentiment has well and truly shifted. But you tell me, if you got teenagers in your life, what are they thinking they’ll do after high school? Send me a text, 0467 922 612. Catriona, just while I’ve got you, I had a conversation with Jen this morning – she’s pretty frustrated. She’s got a student debt. On the 1st of July, her HECS debt is going to increase by 7.1 per cent. She’s paying it off, but she feels like she’s going backwards. Here’s Jen.
CALLER: With the current indexation rate, it’ll take me 51 years to pay off my HECS debt with the compulsory payments alone. It’s insane.
REBECCA LEVINGSTON: 51 years?
CALLER: 51 years. Without this indexation it would take me 11 years. So, you can imagine that I’m putting about five and a half thousand dollars through compulsory payments through onto my HECS debt every year, and at this rate it’s taking off about four and a half thousand.
REBECCA LEVINGSTON: So, Jen really feels like she’s going backwards even though she’s ploughing thousands of dollars in there. Catriona Jackson, is the HECS system fit for purpose?
CATRIONA JACKSON: I absolutely hear what Jen is saying. We understand that students are under genuine, like many other members of the community, especially low paid members of community, under incredible cost of living pressure right now. It’s really important to understand though, that though 1 July is a real date, your repayments on a weekly basis will not go up by 7.1 per cent. Jen’s right, her repayment term will get longer. I haven’t done the figuring on hers, that sounded like a really, really long repayment period. Your repayment period gets longer, but you aren’t paying more now. It doesn’t actually impose additional cost of living pressure on you right now.
REBECCA LEVINGSTON: No, but I mean, the repayment, even if the repayments stay the same now, if you just see that debt stretching out further and further and by years, people just feel trapped.
CATRIONA JACKSON: Rebecca, absolutely. We understand entirely that just knowing you’ve got the debt is a bad thing, but it is also really important to understand that it’s not a debt like a mortgage, it’s not a debt like a car loan, it’s not more on your bill this week and next week. We think and our submission to the Universities Accord process said the HECS scheme is really important. It’s a foundational part of the way we fund higher education and the fact that we can offer higher education to a really large number of Australians. Forty per cent of young people now have a university degree, and that’s partly because we have a good funding mechanism. You look overseas and the funding
mechanisms in many cases are catastrophic. Commercial loans, real barriers to entry. We think we need to have a really good look at the HECS system and make sure it’s serving its original end, which is to remove barriers to higher education. It’s been fiddled with, it’s been jigged, it’s been adjusted over the years and it’s really important to make sure that all the settings have that one singular aim to remove barriers to entry so that it’s not providing the sort of, either in your head or in your wallet, disincentive that Jen is talking about. We hear that pain, at the same time there’s quite a bit of confusion around at the moment and I think some people need to really, and I don’t mean students here, I mean others, need to just be very responsible about how they’re describing this because this is not a debt that is going up week by week. Yep – getting longer – but it’s not going up week by week.
REBECCA LEVINGSTON: Yeah, and I understand what you’re saying, but for some people that feels like the same thing. I mean, Jen would like to see a pause or a cap on indexation. There’s another idea from the Greens to abolish indexation and increase the minimum repayment threshold to the median wage. What do you think of that idea?
CATRIONA JACKSON: Certainly when you start repaying and the rate at which you start repaying, they’re two things that we are absolutely in support of examination of. When HECS started, it started at the basic minimum wage repayment. That’s a lot higher than it is, sorry, it was then a lot higher than it is now, so it started much later. At the moment, you start paying off at about $48,000, we would really like the government to have a look at whether that is too early. Those two things, they’re both really important. Getting rid of indexation will cost the taxpayer a very, very large amount of money – $9 billion is our back of the envelope calculation. That’s a very considerable additional subsidy. Government would have to look at that really hard. I think there are probably things that you could invest that in which would be of more value, but certainly working out when you start repaying the debt and the rate at which you start repaying, so do you start repaying at one per cent or two per cent or three per cent, those things really important and considering the economic circumstances of the students is absolutely front and foremost in those considerations and should be for government.
REBECCA LEVINGSTON: How do we ever have free university education in Australia? Just even in my little team having this discussion before we came on air this morning. I went to uni in the late 90s and my HECS debt got paid off – I don’t remember it being that big a deal in my world. I’ve got a younger producer who’s really conscious of it and then I’ve got another producer, I said, “What about your HECS debt?”. And she said, “it was free – I just didn’t pay to go to university.” Can we ever get back to that place, Catriona Jackson?
CATRIONA JACKSON: That place had a lot fewer people getting university education. About half of my degree, I paid under HECS and half of it was in inverted commas, “free”. But think about what free means, it’s not actually free – taxpayers paying for it. It’s just a question of whether you have a taxpayer paying for all of it. If the taxpayer pays for all of it as they did before HECS was introduced, we educated a very small number of people compared to the number we educate now. We presume that a university education has an economic benefit and that’s how HECS works. All the evidence indicates really clearly that it does have an economic benefit. Our modelling says that about $142,000 more during their career is what you can expect, compared to someone who didn’t attend university at all. It’s a balance between taxpayer contribution and the individual student contribution because the individual student will gain through all sorts of ways, but also economically through their life.
REBECCA LEVINGSTON: Just finally, it’s budget night, I hope you’ve got all your best university economists watching Jim Chalmers, the Treasurer, this evening. Anything else on the wish list of Universities Australia when it comes to the budget?
CATRIONA JACKSON: We’ll be in there combing through all the budget papers. We’re hoping very much that we’ll see some measures that relate directly to students, directly to staff, directly to research. At the same time, we also understand the financial pressure the government is under. We’re right in the middle of a big discussion around all the policy settings for universities. We’re hoping to see some cost-of-living relief for people broadly, including students as well.
REBECCA LEVINGSTON: Well, let’s see what emerges. Catriona Jackson, thanks so much for your time this morning. I appreciate it.
CATRIONA JACKSON: Thanks, Bec.