"Leaked modelling forecasts massive windfalls for top unis"
An article published in the paper this morning (27th August 2014) was based on modelling work conducted for the LH Martin Institute’s Fee Deregulation workshop held in Melbourne from 31st July – 1st August 2014. This workshop was publicised well in advance of being held and was not confidential. Attendees included representatives from universities, government and the private sector. The objective of the workshop was to determine possible impacts on universities of the proposed Government changes to university funding and deregulation.
The results of the models were shared with workshop participants with the important disclaimer that they were based on demonstration models and the results were indicative only. They should not be relied upon for any management decisions. Each institution will need to consider their own unique set of circumstances.
As part of the workshop extreme scenarios were explored and this seemed to be the focus of the article. The more realistic scenarios were not reported on, outside of a brief mention of the one scenario where fees were set to $10,000.
The Group of Eight models did have a number of scenarios where the fees were set to International On-Shore rates which resulted in very large margins. What was not reported was the significant scholarship amounts calculated that need to be deducted from the calculated margin, in the most extreme scenario this resulted in a scholarship amount of $91 million. These scenarios were explored simply to understand a possible ceiling level, not something that would realistically be considered by the Group of Eight. A more realistic scenario that was not reported on was reducing Government funding, leaving HECS fees exactly the same as they are but recover the loss by slightly increasing Domestic Fee Paying rates and International rates by 5% and then increasing the amount allocated to research to further strengthen the Group of Eight's reputation. This scenario resulted in a reduction of margin from the reported status quo amount of $67.5 million to $32.8 million.
The statement that Metropolitan Universities end up losing money in almost every scenario is completely false. Every scenario explored at the workshop resulted in a positive margin with five of the eight scenarios returning a margin close to the starting margin prior to the Government changes.
The statement that Regional Universities lose money or break even under all scenarios except for the International Fees scenario is completely false. Every scenario explored resulted in a positive margin, with eight of the nine scenarios (excluding International Fee scenarios) returning a similar or greater margin than the starting margin prior to the Government changes.
The HECS figures quoted were the high level figures only. Some scenarios actually had a slight reduction in HECS against some courses.
It’s disappointing that the reporter has only selectively chosen the most sensational numbers and not reported on the more realistic scenarios or the broader message from the workshop that options exist for universities. There is not the requirement to drastically increase fees or undertake large cost cuts. The modelling has shown that with careful management and balancing the university mission with their financial responsibilities, universities can survive in this new deregulated environment without “massive windfalls” for top unis.