When was hecs introduced

Rather, the funding gap was covered by students and their families, through HECS and full cost-recovery fees. As student contributions to education costs have increased, the government has been able to cut its own expenditure on education from just over 1 per cent of GDP national income in to 0. Today, government spending makes up only 40 per cent of total university funding, down from near per cent in the early s. Figures from showed 15 per cent of graduates were still out of work four years after finishing a degree.

Added to this is the prospect of at least three years of poverty while studying, given the hopeless level of student income support. Protests of thousands of students opposed the increases in university fees and funding cuts all the way through. While the student movement has been unable to prevent the introduction of higher fees, activists have succeeded in blunting the neo-liberal agenda. University administration buildings were occupied across the country in protest at university managements who decided to implement the fees.

The opposition to full fees eventually saw Labor repeal them when it came back into government. Attempts by the Coalition under Tony Abbott to deregulate fees in was met by a similar defiance and anger.

Education Minister at the time, Christopher Pyne, planned to deregulate university fees, as well as slash funding by 20 per cent, giving university managements the ability to increase fees as high as they liked. Widespread public opposition, including student protests across all major cities saw the Liberals back down on deregulation, after the proposed changes were defeated in the Senate.

But the corporatisation of universities and their shift away from government funding means that they have become run like businesses in their own right. The corporate education model gives rise to constant cuts to courses and jobs on campus, and reducing the quality of education through slashing face-to-face contact hours and replacing them with labour-saving online content.

University Students can take inspiration from this, and previous struggles around education on campus. We need to channel the inspiration into a renewed fightback for more government funding and better conditions on campus, and ultimately for the free and accessible education that we deserve.

Subscribe to magazine Contents October Download pdf of issue. Save my name, email, and website in this browser for the next time I comment. Sign in. Forgot your password? Get help. Password recovery. Making students pay—30 years since the end of free education. An EFTSU value represents the student load for a unit of study or part of a unit of study or set thereof, expressed as a proportion of the workload for a 'standard student load'.

A student's liability status is calculated on a semester by semester basis from his or her student load and the annual course contributions. Overseas students are those students coming from outside Australia to study at Australian institutions. Students who choose to defer their payment take out a loan with the government and agree to repay that loan when their income reaches the minimum threshold for compulsory repayment.

In general, undergraduate students are HECS-liable while postgraduate students are HECS-exempt and are therefore required to pay up-front fees unless they have a scholarship. This arrangement means that students are not prevented from participating in higher education by an inability to pay up-front. This increase coincided with a large increase in the total number of overseas students from 63, in to , in as well as the introduction of full-fee-paying places for domestic undergraduate students in In , around , students were HECS-liable, increasing to , in The decrease in the proportion of HECS-liable students reflects increasing numbers of overseas students and domestic fee-paying students since the late s - both of these groups are largely HECS-exempt.

Most undergraduate students use the HECS system, either by paying up-front or deferring their payments. In , all students were charged a flat rate irrespective of their course of study.

In the late s, the OECD released reports on the Australian economy calling for the education system to address skill needs and comparatively low participation rates. Furthermore, its introduction led to vocal student protests and there were concerns within the ALP that this fee could deter attendance by students with low financial means Edwards et al. Nevertheless, HEAC was the first chink in the armour of free tuition that had been ALP ideology since Whitlam and provided impetus for the reforms to come.

Dawkins was shadow education minister from to the start of , and his experience in the education portfolio also gave him awareness of its importance to the economy and the need for reform. The ability to manage these portfolios holistically was timely and important given the skills shortages in the labour market and the need for the education system to address these shortages. Dawkins quickly set about driving policy change.

Within a week of taking charge of DEET, he initiated a review of higher education administration. There were no terms of reference and no calls for submissions. By mid-October, he announced that the Commonwealth Tertiary Education Commission—the independent body that administered Commonwealth grants—would be abolished and replaced with a new body, the National Board of Employment, Education and Training, with more restricted functions, which would advise the minister and whose staff would be appointed by DEET Macintyre et al.

By moving administration into DEET, Dawkins gained control of the higher education financing and policy processes with less risk of interference as the government embarked on reform. Dawkins set out the challenges and rationale for reform in September in a paper titled The Challenge for Higher Education in Australia Dawkins b. The paper provided an overview of the shortcomings in the higher education system and made clear that the expansion should not be funded exclusively by taxpayers.

But, unlike Walsh in , Dawkins did not put forward tuition fees as an option, instead remarking that private sources should be considered. The challenges were reiterated in a green paper released in December Dawkins a. As noted by Edwards et al. To achieve this expansion, higher education enrolments would need to increase by up to ,, or over 40 per cent, by The second part set out plans to achieve the needed reforms and establish a unified national higher education system.

Changes would include closure of the binary system that had separated universities from Colleges of Advanced Education. This, and minimum student load requirements, would facilitate consolidation, resulting in fewer and larger institutions and administrative efficiencies. Other changes included course rationalisation and changes to Commonwealth and state responsibilities, institutional management processes and staffing arrangements.

Nevertheless, the green paper estimated that funding would need to increase by 30 to 40 per cent over existing Commonwealth levels to meet the needs for expansion.

It was made clear that public funding for this increase was unlikely and, moreover, traditional sources of non-Commonwealth revenue such as endowments, benefits and donations and commercial activities would not be sufficient. Funding expansion of the sector from the public purse by raising taxes or debt was not seen as a viable option. Increases in student load had already put pressure on the funding levels per student. The macroeconomic and fiscal pressures in the broader economy were substantial and, moreover, as noted by Chapman and Hicks , the Hawke Government would have had a strong incentive to develop an image of competent economic management to distinguish itself from the previous Labor Government of — The daunting challenge was to develop policy so that students would pay a fair share for their education, but in a way that would not harm access for those with limited financial means.

The political barriers appeared intractable given the ALP platform of no fees, but, as noted by those at the coalface of the development of HECS Edwards et al. Critical to the acceptance of HECS were the people appointed to formulate the arguments and assist in the development of the reforms. In what turned out to be a crucial decision, in mid, Dawkins also appointed Chapman to the team.

Dawkins asked Chapman to prepare a report for inclusion in the green paper, outlining the costs and benefits of different user-pays higher education options. Also joining were Meredith Edwards, first assistant secretary from the Department of Social Security, and Bob Gregory, a professor of economics from The Australian National University with expertise in labour economics. Chapman served as a consultant and the committee was supported by an able secretariat, many of whose members were part of the green paper taskforce.

Prior to setting out options for financing, the Wran Report set out arguments for user pays, supported by data collected by Chapman and the committee secretariat. University students came predominantly from middle and upper-class families and, moreover, they benefited from attending university through higher employment rates and higher lifetime earnings.

An inequity existed between those who participated and benefited and those who paid; the current system of no fees amounted to middle-class welfare. The argument for reintroduction of some level of fees was also strengthened by references to research that appeared to indicate little evidence of change in the socioeconomic mix of students following fee abolition in Wran Options set out for raising contributions from individual beneficiaries included vouchers, fee schemes with and without exemptions, fee schemes with commercial or government-financed loans, graduate taxes and income-contingent debt arrangements.

The Wran committee assessed these options on their impact on student demand and on equity by considering whether and how access and capacity to pay would be affected for students with different levels of disadvantage. Important also were the consequences to size and timing of revenue and administrative simplicity and costs.

The last two options considered were a graduate tax and ICLs, both of which involved repayments calculated as a proportion of taxable income. Arrangements by which graduates could use their human capital as equity to fund education were well known, having been first suggested by Friedman A graduate tax in its standard form, however, involves graduates repaying a proportion of their income for the duration of their working lives , with the consequence that the amount repaid would be unrelated to the fees charged.

Furthermore, if only graduates were required to pay the tax, this could provide a disincentive to graduate. Repayments would therefore be not open-ended but limited to tuition fees.

By linking repayments to a proportion of income, and by requiring repayment only once earnings reached a relatively high level, there would be low impact on equity and access. Furthermore, by requiring all students who incurred a debt to repay through an ICL, regardless of whether or not they graduated, all users would contribute.

The compelling features of an ICL ultimately convinced the committee that this scheme was superior to the others considered:. Wran The committee then turned to the task of setting scheme parameters that would be politically acceptable. Rather than a single fee level, however, the committee recommended three levels to reflect broad differences in the costs of course provision.

Thus, most students would start repaying only once they entered the workforce, and the equity advantages were intentionally highlighted; those with little or no capacity to pay would not be required to do so, including those from disadvantaged backgrounds with low incomes and parents taking time off work for childrearing.

For individuals whose income exceeded the threshold, the committee recommended a repayment rate of 2 per cent of income Wran After settling on the ICL as the preferred option, the problem remained that large initial outlays of public funds would be required, yet revenue from repayments would emerge only gradually over many years.

This revenue lag could delay implementation of the reforms. A contentious issue was whether to raise revenue by requiring upfront contributions from students from wealthy families. The line of argument was that affluent families could afford tuition fees and so should be required to pay for their child to attend university. Another perspective—strongly advocated by Edwards et al. Ultimately, rather than compulsory upfront payments, a decision was made to implement a 15 per cent loan discount to encourage upfront payments Wran ; Edwards et al.

The core recommendation of the Wran committee was introduction of this new higher education contribution scheme, to be implemented from 1 January to new and existing students studying after that date. Release of the report was delayed to late April , in part because acceptance of collection by the ATO was not initially forthcoming. Chapman was tasked with initial discussions with the ATO and recalls that, as an academic with little experience in policy implementation, he was naive about the expected response.

The efficiencies of collecting through the ATO were also recognised. The provocative acronym faced criticism from higher education and student unions in a pre-release briefing Chapman and Nicholls , as well as from ALP elder Gough Whitlam Macintyre et al.

The name was soon changed to the Higher Education Contribution Scheme. How HECS progressed so quickly from proposal to commitment to legislation is testament to the strength of the underlying economic arguments and the determination of Dawkins and his supporters.

Following the release of the Wran Report, the government was faced with the task of consulting with and convincing stakeholders and the public of the merits of the proposal. Dawkins and Walsh emphasised these points to gain political and public support for the scheme Chapman and Hicks Nevertheless, once the Wran Report was released, there were various levels of opposition from different quarters.

This is no surprise. The complexity and novelty of the policy led to difficulties in conveying the idea and to a misunderstanding among some opponents and the media. But when reliably worded polls were conducted, it was clear that a majority of the community was supportive of students paying at least part of the cost of their courses Commonwealth of Australia Print media opinion pieces and editorials were also mostly supportive, acknowledging that deferred contingent repayments would not harm access Chapman and Nicholls Nevertheless, national student and staff unions lobbied the ALP Caucus, many members of which shared their strong views on keeping fees out of university Macintyre et al.

It was critical for Dawkins to secure support from the various Labor factions if there was to be hope for the policy. A cross-factional caucus consultative group was established to consider the Wran Report in May , making recommendations to the Cabinet in July on the preferred scheme parameters, including the income threshold and repayment rates Commonwealth of Australia Importantly, Dawkins had the full confidence and support of Hawke and Keating Dawkins , and Keating helped to bring some of the factions into line.

Bringing the ACTU on board was crucial for success. The ACTU acknowledged that the Wran proposal was clearly preferable to other mechanisms for collection of student contributions Commonwealth of Australia The heads of the universities were easier to persuade. Nevertheless, the opposition ultimately voted against the Bill in the upper house. In the years following implementation, the success of HECS in facilitating expansion was apparent.

Funded student places increased by 23 per cent between and Williams , which came on the back of growth in private student contributions. It was perhaps not surprising, then, that by the Liberal Party had changed its opinion, despite opposing the original reforms and in promising to abolish HECS if elected Parliament of Australia , to be replaced with upfront fees accompanied by fee-exempt scholarships.

The Liberal Party had long been in favour of market-oriented fee flexibility and a voucher mechanism to distribute government subsidies and recognised that the income-contingent mechanism of HECS could be used to collect loan repayments. They did, however, put their own mark on the policy, announcing the most wide-reaching changes to HECS since its introduction.

That changes were announced in was not unexpected. But, in , the changes shifted considerably more costs on to students.

The other notable changes were an almost doubling of average tuition charges per full-time year and introduction of differential HECS whereby three charge bands replaced the single flat rate. The bands broadly reflected the cost of course delivery, as was originally proposed in the Wran committee report and supported by the departments of Treasury and finance in Commonwealth of Australia ; however, private returns also figured in the decision, with law courses placed in the highest charge band despite low costs of delivery Higher Education Legislation Amendment Act [Cwlth].

The increased HECS charges and reductions in repayment thresholds were introduced partly in response to a large budget deficit Norton For better or worse, government funding was reduced and universities became more reliant directly on students for revenue.

Between and , the Commonwealth contribution to university income excluding HECS fell from The break in the link between the first repayment threshold and average earnings was partly restored in when the first threshold was increased.

This was coupled with new repayment rates ranging from 4 per cent to 8 per cent. But the significant change in was to the organisational structure and funding arrangements. In the interests of administrative and structural efficiency, an overarching umbrella scheme was introduced, the HELP Ey The policy reforms also included significant changes to the funding arrangement between government and public universities. In , a per-student funding model based on the concept of Commonwealth-supported places was introduced.

Under this arrangement, the level of funding paid through the Commonwealth Grant Scheme to each higher education institution was calculated according to the number of Commonwealth-supported places and the corresponding funding rate for each place, which was set by the government and varied by field of study.

This method of distributing government funding for higher education is still used today. Significantly for HECS, universities were given permission to set their own student contribution levels—albeit up to a maximum set by the Commonwealth—and to retain the fees charged. Although the intention of this change was to promote competition in fees, in practice, universities raised their student contribution level to the maximum permitted—approximately 25 per cent above previous HECS charge amounts.

As noted by Norton and Cherastidtham , this was not surprising given demand for student places greatly exceeded supply. Moreover, as discussed in the final section of this chapter, because price sensitivity is low under an ICL, increasing fees would be expected to have very little effect on deterring enrolments.

In the almost 15 years since the reforms to HECS, changes have been relatively minor—testament to the efficiency and fairness of the original design.