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Double blow could hit postgrad enrolments

16 Jul 2013

The Australian

By Nigel Finch

The federal government's proposal to cap tax deductions for self-education expenses at $2000 threatens to erode the nation's long-term knowledge capabilities and undermine our international competitiveness, writes Dr Nigel Finch.

IN 2012 the World Bank ranked Australia 9th globally in their Knowledge Economy Index, which measures among other things the level of tertiary enrolment. However, the federal government's proposal to cap tax deductions for self-education expenses at $2000 threatens to erode the nation's long-term knowledge capabilities and undermine our international competitiveness.

Former treasurer Wayne Swan claimed that unlimited self-education deductions confer significant private benefits at taxpayers' expense. He assured us that the introduction of a $2000 annual cap would ensure that the system remained fair.

While knowledge acquisition at undergraduate and postgraduate levels does confer significant private benefits via higher starting salaries, accelerated promotion and greater labour mobility within and between firms, the government seems to have forgotten that university education, including that at master's level, also confers a major social and economic benefit through enhanced creativity, innovation and entrepreneurship, leadership capability, and professional acumen, standards and integrity.

So where does this leave the tens of thousands of young professionals undertaking or contemplating undertaking a postgraduate course? Take the case of a middle manager who undertakes an MBA over 2 years, part-time, while working. Depending on the university, total course fees could easily in excess of $50,000 plus textbooks, travel and other out-of-pocket expenses - far more than Swan's $2000 cap.

If you think an MBA degree is an expensive course for a middle manager to undertake, consider the case of a paralegal clerk who is doing a masters program in law. As a domestic full-fee paying student, the total cost of the investment will be around $90,000 plus other costs.

But spare a thought for what will happen from 2015 when another of Labor's reforms to higher education take effect under the Australian Qualifications Framework (AQF) to be policed by the Tertiary Education Quality Standards Agency (TEQSA). The typical length of study for many managerial or professional students enrolled in a masters degree is one year of full-time study or two years part time and in some cases 1.5 years.

Under the new Australian Qualifications Framework rules, some masters programs - namely conversion degrees which are open to graduates from fields other than the one in which the postgraduate degree in based - will be required to move to a minimum of two years full-time study. All else being equal, same discipline masters degrees may move to 1.5 years (or three years part time).

How will universities respond to a requirement to lengthen their programs and increase the number of classrooms and lecturing staff needed to resource it? Rumour has it some institutions have decided to sit out it out until the political landscape becomes more certain. Others, mindful of the potential impact on demand, are reviewing how they define full-time learning. Still others, like my own, are examining ways to afford each student full recognition for prior formal and professional learning. Some universities may be left with no alternative than to increase fees.

So the federal government has delivered a double blow: postgraduate courses become substantially more expensive because of the introduction of the cap and from 2015, the cost of delivering some professionally focused courses may increase because of the AQF changes.

At the very least, course fees should be exempted from the cap on expenses and serious thought should be given to the likely impact of AQF on overall degree costs and cycle times for students.Dr Nigel Finch is an associate professor at the University of Sydney Business School.

First published in The Australian

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