In a game changing move, the 2017 Federal Budget has slashed funding to higher education Credit: Francisco Osorio, Flickr

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In a controversial bid to salvage the debt ravished economy, the Coalition on Tuesday evening announced higher education will once again draw the short straw, with sweeping cuts set to shake up the sector in the 2017 budget.

The cuts mark the end of a long campaign and swathe of reforms that affect students, including a welfare crackdown and housing affordability crisis. The shakeup has prompted nationwide protests and reached tipping point last week when the education Minister, Simon Birmingham, responded complacently to protests against the cuts at the Canberra National Press Club, deeming the uproar a “rite of passage.” Sophie Johnston, President of the National Union of Students (NUS) said the cuts will see students paying more for worse education.

“These proposed changes would make it harder for young people to access higher education and that is terrifying for the nation’s future. This budget is a war on young people,” she said.

The changes will see the compulsory payment income threshold decline from $55,000 to $42,000, at a payment rate subject to each person’s income. Minister Birmingham said last week that the shakeup would shift the onus back to students to pay back their HELP debt by increasing the percentage of payments made by students from 42% to 46% and saving the economy $2.8 billion over four years.

But some fear the cuts are effectively further privatising higher education by stealth. Chris Nash is the Foundation Professor of Journalism at Monash University.

“People should not underestimate the extent to which universities are corporations in a highly competitive environment where effectively… they engage with the market and they’re in a deeply competitive situation with each other.”

The news sparked widespread outrage, with fears raised that both the cuts and government’s support of negative gearing stack the odds against young people entering the property market. While the Treasurer Scott Morrison has hinted at a policy to assist first home owners, the details are still shrouded in secrecy and concerns remain that it will only place more debt pressure on the future workforce.

“It is outrageous that the government wants to push an even greater financial burden onto struggling students when the cost of living is already at record highs. This generation will be the first generation priced out of the housing market, we’ve had low-wage growth for decades, underemployment is rife and now, the government wants students to pay even more while they gut the quality of the education sector”, said Ms Johnston.

The cuts will see students paying 1.8% higher university fees as of January 2018, after which they will rise to 7.5% by 2021. Coinciding with the Treasurer’s plans to reach a surplus by 2021. But Minister Birmingham said the changes don’t further disadvantage poor communities.

“The student loan scheme that’s available ensures that nobody, regardless of their economic or social circumstances, has to pay one dollar upfront to go to university,” he said.

But the Australian Council for Private Education argue that the cuts lack equity. CEO of the Australian Council for Private Education and Training (ACPET), Rod Camm said “equity should also be at the heart of the design.”

Others fear the cuts could widen the gender pay gap. The NUS argue that it’s women who will be the worst off given the total earnings nationwide for women is only $52,000 compared with $72,000 for men.

“The fact that in 2017 women are still locked out of the workforce and paid less than men is outrageous and this government budget is only going to perpetuate that disadvantage,” said Ms Johnston.

The cuts will also see a small portion of Commonwealth Grant Scheme funding for universities subject to university retention levels, and performance in key areas. But Ms Johnston says these performance indicators could hurt regional universities, and that the key to a surplus in 2021 isn’t higher education cuts.

“If the government wants to talk about bad debt they should reverse their decision to give big corporate businesses a $50 billion tax break. Education provides massive returns for the Australian economy and should always be seen as an investment, not a debt burden. Australia needs to invest in education if we expect to keep up with the rest of the world.

“This budget is fee-deregulation through the back door; creating a two-tiered education system, cutting government funding and increasing fees, does the government think we are stupid?”

Steve Shepherd is the CEO at TwoPointZero, a career coaching and guidance company. He says the cuts will also add pressure to the poor graduate employment rates.

“Currently, youth unemployment is more than double the national average, at 13.3%, and underemployment amongst this age group is at an all time high. Further exasperating the problem is the stagnation of full-time jobs, particularly for young people, which have decreased by 2,213 per month, on average, over the last five years,” he said.

Professor Nash fears the cuts will only add to the existing pressure on universities and in particular, academics.

“Academic work has been thoroughly industrialised in the worst possible way because academics are totally individual. They’re hanging off a virtual assembly line,” he said.

According to Mr Shepherd, the Government should also be shifting its focus towards generating graduate jobs.

“Instead of looking at claiming back the $52 billion in outstanding student loans, the government should be looking to create sustainable full-time jobs for young people, so they can start their careers. If we can offer young people consistent work, more will be able to repay their debts and in greater quantities.

The move will see Minister Birmingham negotiating with Senate crossbenchers to ensure the cuts will pass both houses. But the position of some of the crossbenchers, such as One Nation Senator Pauline Hanson, is still unclear. While for others, such as Greens Senator Sarah Hanson-Young, the move is to be staunchly opposed. But Ms Johnston says NUS will be lobbying cross-benchers to try to block the cut from passing. Whether the package will swing Senate votes, Professor Nash says, only time will tell.

“It will be interesting, particularly in regional areas, to see how the national party respond to this,” he said.