Australia’s student loan ‘tax’ backed by key committee

Australian universities face being forced to help cover the government’s expenses in administering student loans, even though the universities themselves handle much of this administrative workload.

A Senate committee has recommended passage of legislation that would force each university to pay a levy of around A$100,000 (£56,000) a year to help the department meet its costs in fielding enquiries and other loan-related activities.

While the three committee members from the governing Liberal party were expected to support the legislation, the three Labor MPs could have sided with the sole Green member to recommend the legislation’s rejection.

Labor has the numbers to block laws in the senate, in combination with crossbench MPs. It indicated that it would take its lead on the levy proposal from its members on the committee.

In additional comments inserted in the committee report, the three opposition MPs said that Labor “won’t oppose these bills because of the very small impact they will have on the sector, especially in the context of our policies to properly fund the sector”.

The legislation is scheduled to face a vote in the House of Representatives, where the government has a majority, on 27 November. While its passage there was always likely, universities’ hopes that it would be blocked in the Senate have now been torpedoed.

Universities Australia said that the government and the Senate should have a “serious rethink” about the proposal. “Universities are now being asked to pick up the tab for day-to-day administrative costs that are the normal responsibilities of government,” said chief executive Catriona Jackson.

“This legislation also empowers the minister to ratchet up the tax at any time and to broaden the activities it applies to, without needing to seek permission from the parliament.”

The Innovative Research Universities mission group said that the levy is structured in a way that would disproportionately affect universities with high numbers of part-time students. IRU executive director Conor King said that these institutions tend to cater to people from disadvantaged backgrounds.

“When you weigh up all the costs of coming up with this scheme, working out the charges and collecting the money, it is hard to believe the whole thing is worthwhile,” he said.

Mr King said that the levy would divert resources away from students at a time when universities were already having their budgets squeezed. But the Labor committee members signalled that universities would not be able to recoup the money by billing students.

“Labor will seek assurances that the new scheme must ensure there is not a negative impact on students,” the report says. “It is simply not fair for any of these small additional charges to flow through to students or undermine equity in Australia’s university system.”

In a dissenting report, Greens senator Mehreen Faruqi said that there had been inadequate consultation on the levy. “This is part of an ongoing pattern of the commonwealth shirking its responsibility to fund the delivery and administration of higher education,” Ms Faruqi said.

Committee chair Slade Brockman acknowledged that the proposal had “provoked a mixed response, most notably due to the lack of detail on the charge, and also due to concerns about the potential impact on providers and students”.

But the proposal is “an appropriate option” to help recoup taxpayers’ costs in administering the loan scheme, he said.

john.ross@timeshighereducation.com