Sky News, PM Agenda with David Speers

MONDAY, 26 MAY 2014

SUBJECT/S: Higher education package; Labor’s response; Increased fees and competition.

DAVID SPEERS:  Kim Carr, thank you for your time. The Minister Christopher Pyne has signalled a willingness to negotiate on some aspects of these higher education reforms. Are you willing to negotiate on any?

KIM CARR, SHADOW MINISTER FOR HIGHER EDUCATION, RESEARCH, INNOVATION AND INDUSTRY:  The Minister’s not serious. The Minister said last week that he could see that the numbers were there for most of what he wanted to achieve. He's now signalled to some people that he’s prepared to tinker at the edges of this appalling scheme that he’s come up with. Now this is a Government that went to the last election saying that there would be no change to university funding arrangements – what they’ve said in their seminal policy documents. They also said on repeated occasions there’d be no cuts to education, yet there are $5 billion worth of cuts to higher education.

SPEERS: Well, let’s look at what you say are tinkering suggestions that he’s made, one being the interest rate at which student loans have to be repaid. At the moment it’s about 2.9 per cent, it could go up under these changes to 3.8 per cent – the Government 10-Year Bond Rate – with a maximum of 6 per cent interest rate. Is that something you’re willing to consider at all?

CARR: Well, it’s one of the fundamentals of the HECS scheme was that there be effectively no real rate of interest, that it be on the CPI, that’s one of the basic principles.  The other was the basic principle that you had to be actually earning reasonable sums of money. He’s reduced the amount of money that you’ll be required to pay back your loans, so he’s increased the amounts of loans, he’s increased the actual rate at which you have to repay and the circumstances under which you have to pay.

SPEERS: But are you willing to look at the interest rate at all?

CARR: Well, no, look what we’re looking at is the scheme as it is at the moment. We want to defend HECS because we think that the HECS scheme is fundamentally good policy. It’s world-leading policy, it was introduced by a Labor Government, it’s served the test of time and it has allowed the massive expansion of higher education in Australia.

SPEERS: So, OK, you’re not willing to look at the interest rate or the repayment threshold?

CARR: That’s right, because what we’ve said is that we do not want to support cuts to higher education or to the support mechanisms for students to be able to enjoy a quality education in this country.

SPEERS: But why shouldn’t students, who as the Government havde been pointing out repeatedly, do stand to earn about a $1 million more over the course of their lifetime having secured a degree, why shouldn’t they pay more?

CARR: Well, they do pay more – at the moment they pay about 40 per cent which we think is the right level. This is a scheme that has been amended twice before under the Howard Government, we saw increases in the amount of money under Howard that students had to pay. But not only do students earn more, most students not all, but most, but also they pay higher taxes, so it’s essentially a progressive scheme and we want to keep it that way.

SPEERS: Sure, but it is those who don’t go to university who are subsidising them.

CARR: Just as they subsidise everything else in the country. I mean why would you pick out this particular matter and say, well, those don’t go to university don’t enjoy the benefit of a more productive economy, don’t enjoy the benefit of high-skilled jobs that flow from –

SPEERS: Sure, but where else do low-income earners who don’t go to university subsidise high income earners who do?

CARR: But low income earners pay a much lower level of tax than high income earners, and you get the high income earners by getting the quality jobs, we want this country to have high-quality jobs, and we want people from low-income families to have access to high-quality jobs. Under this scheme you’re going to see a return to privilege – that is, if you’ve got money, you get a good education, and you entrench privilege. This is what this Government’s about – they want to copy the worst aspects of the American system, the worst aspects of the United Kingdom system, and of course they want to return us to a Menzies-ite idea of what higher education is about, that is, for the privileged to protect their privilege.

SPEERS: Well, let’s look at the deregulation side of this, allowing universities to charge what they want for course fees. Some vice-chancellors think this will be a good idea –

CARR: Less and less of that number –

SPEERS: Perhaps – you’re opposed to this, why?

CARR: Because essentially what they’re doing is using this as a Budget measure, to save money from the Budget. This actually is a program that saves the Government $1.1 billion. They’re expanding the system by 80,000 people and they’re providing $1.9 billion less money. Yes, they are spending a little bit more but the net effect is $1.1 billion that comes out of the Budget.

SPEERS: Sure, but this from a Government who cut more than $2 billion, and in your own estimate, when you were the Minister, that it was over $3 billion from higher education.

CARR: What I said was we were providing money for schools, for education.

SPEERS: But taking it out of higher education.

CARR: We were taking money for schools. Now, the point is we said when the Government changed that position and refused to spend the money on the schools we are not supporting that.

SPEERS: But the point is Labor thought at one point it was OK to take $3 billion out of higher education.

CARR: For schools, for education.

SPEERS: Sure, but out of higher education.

CARR: And we’ve said that we’re not supporting those measures now because the money wasn’t going to the school system.

SPEERS: Back on deregulation though, isn’t part of this also about allowing Australia’s best universities to compete internationally and get into those top rankings?

CARR: Well, the reality is different. What we find is the top rankings are actually measured by research. This is a scheme to actually subsidise the research program more. What this means is that countries around the world which measure their universities on research effort won’t necessarily be caught up by Australia, because those governments around the world are spending a great deal more money than Australia is. They are advancing their investment, not retreating like we are in Australia. This is a scheme that essentially favours the most affluent universities, the most privileged universities, at the expense of rural and regional universities. So it actually won’t advance the interest of this country because the Government is withdrawing support from higher education.

SPEERS: But couldn’t some of those rural universities offer cheaper courses under this sort of change?

CARR: The question is, why would you necessarily want to go to a second-tier system, why would you have a second-tier system in Australia, which is what this scheme inevitably involves.

SPEERS: Couldn’t they become more competitive, attract more kids from the cities to go and study at some of the universities with a cheaper course?

CARR: That’s a romantic vision, David.

SPEERS: Isn’t that how the market works?

CARR:No, see it’s a quasi-market in education, it is not quite the same in any textbook economics model. This is actually about people’s real lives, people in this country who don’t move very far to achieve an education, it’s not like America in that regard.

SPEERS:  But if we did have a deregulated system, couldn’t a university in Bathurst or Wagga offer a competitively priced course and attract students from the cities?

CARR: Well, that’s not going to happen.

SPEERS: How do you know?

CARR: Because that’s not the history of this country.

SPEERS: We haven’t had a deregulated system.

CARR: No, but we have had a pretty stringent set of arrangements in place at the moment, which are the most prestigious universities they will charge higher fees. Those from lesser institutions, the ones less highly regarded, are going to have to charge lower fees to get on, but they won’t necessarily find that that marketplace is not competitive in itself because smaller private providers will also be there. There will also be, I might say, under this scheme the possibility of the very large providers like Yale, like Harvard, like Singapore, who may also be attracted to this country so you may find –

SPEERS:  To set up here?

CARR: Yes, exactly. Why wouldn’t you? The Government subsidy, a low-risk environment, they could run a Liberal arts degree and have a –

SPEERS: What’s wrong with that?

CARR: Well, I’m just saying to you, the competition model may not work the way the Government is trying to sell this. It may be much a more complicated system. On top of that, the regulator’s budget has been cut in half under these measures – $31 million. So, I’m concerned about two things; one, the actual regulation that the Government is proposing, we haven’t seen any detail on that, we haven’t seen what their proposals are.

SPEERS: Senator Kim Carr, thank you.

CARR:  Thank you.


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