News & Views item - October  2004

 

 

Indexation of Block Funding Considered the Most Critical Issue for Universities. (October 13, 2004)

    In an April 21st, 2004 News and Views Item we wrote,

...universities are becoming increasing windy about the Minister for Education, Science and Training, Brendan Nelson's reticence regarding his promised indexation review. Without that promise the independent Senators would not have voted for his higher education reform bill.
    The author of HECS, Professor Bruce Chapman has told The Australian, "With wages and related benefits making up around two-thirds of university costs, it is clear that for the sector to maintain quality and quantity of their output there would need to be a commensurate change in revenue when wages increase.
    "This means that every year that a university's enterprise bargaining agreement delivers an increase in average remuneration roughly in line with professional or other earnings in the community is also a year the university experiences an effective cut in real government support."

    And just to keep the record straight, the 25% increase in course fees permitted by Dr Nelson's reform bill comes nowhere near making up the difference.

And prior to that (November 2003) Australian Democratic Senator John Cherry determined, "The Nelson reforms  propose an increase in university operating funding of $405m in 2005/6 and $544m in 2006/7. The problem is the wage cost indexation formula introduced by Education Minister, Simon Crean and Finance Minister Kim Beazley in 1995 which under funds salary increases. The failure to fully index grants left universities in 2001 $535 million worse off than in 1995. By 2005, this gap is likely to have widened to more than $700 million."

 

Now the newly installed Chancellor of the University of Technology, Sydney, Professor Vicki Sara, former CEO of the Australian Research Council has joined the almost universal call of Australian Vice-Chancellors to honour his promise to review indexation of university funding. She told The Australian it is a critical issue that ""must be met by the Government".

 

Meanwhile The Australian's Samantha Maiden reports that, "Universities warn that the failure of the Howard Government to index grants to wage increases will force vice-chancellors to seek further increases to fees..." And the ANU's V-C, Ian Chubb says plainly, "Indexation is critically important and it's the issue that wasn't finished last time round. The Government has got the whip hand. There's not much you can do about it, the logic [for indexation] is impeccable and the money's clearly available."

 

On the other hand there are strong suggestions that Brendan Nelson will be shifted out of Education, Science and Training with the current Minister for Minister for Employment and Workplace Relations, Kevin Andrews being mentioned as a possible replacement. In short it is problematic as to whether or not indexation will be reviewed by the government let alone reformulated to the universities' advantage.