Message from the Vice-Chancellor: update on the federal budget

21 May 2014

I am writing to update you on the University's response to last week's federal government budget. As you will be aware, the government has proposed some major changes to higher education funding that will have significant implications for universities.

The planned full deregulation of undergraduate student fees means that government funding for each Commonwealth-supported student will be cut by an average of 20 percent, and universities will be free to decide their own fees for all undergraduate courses. In return, they will have to commit one dollar in every five of the fee increases to a new scholarship fund that will support disadvantaged students. While the current HELP loan scheme will continue to be available to all Commonwealth-supported students, the government has also proposed reducing the income level at which students must start to repay their loans, changing when they must start to make repayments, and adjusting the basis for calculating interest on their loans. The government has also proposed expanding the demand-driven funding system, allowing universities to take in as many students as they like into undergraduate courses.

While the budget papers provided few details about how the government intends these proposals to work in practice, and we can expect robust debate of the proposals in the federal Senate, in their current form they present significant challenges to the University of Sydney. In short, we will receive less federal government funding for our teaching. For example, the Faculty of Arts and Social Sciences estimate that they could face reduced government revenue of around $10.3 million each year, if fees remain unchanged and we choose not to enrol more students.

The University has not yet determined our final position on these changes, including whether or not to increase student fees generally or in specific courses, but I wanted to share with you my own position and some principles that I intend to guide our decision-making in coming months.

First, the University is committed to providing a world-class education to all of its students. If we are to honour this commitment, we will need to find ways to make up the funding shortfalls that these government proposals will impose upon us. This must include the possibility of greater contributions to the cost of their education from students who can afford to make them.

Second, a University of Sydney education should be attainable for the most promising students, whatever their social or cultural background. While the government's proposed scholarship regime is a partial response to this imperative, I remain concerned about the impact of any changes on low-income and, indeed, middle-income families. I am also concerned about the disproportionate impact on some of our academic disciplines: for example our initial modelling shows that we would face cuts of more than $5000 per student per year in engineering, environmental sciences, communications, and science courses.

These are some of the considerations we will need to take into account as the policy environment becomes clearer. We will continue to engage with and monitor the legislative process over the coming months and I will keep you informed of the University's response and any changes we propose to make as a result of the government's plans.

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