Government finds $2.2bn other cuts to unis

The Turnbull government is hoping third time will be lucky as it continues to pursue funding cuts to universities.

Its mid-year budget update, released on Monday, includes a plan to freeze per-student funding at 2017 levels for two years, use performance targets to decide whether universities will get increased funding after that, cut the HELP student loan repayment threshold to $45,000, and impose a lifetime limit on government loans students can access for vocational and tertiary study.

This third version of overhauling university funding is expected to save the budget bottom line $2.2 billion over the next four years – about $700 million less than included in May’s budget.

But its passage seems more certain than the previous package – which has been stymied in the Senate – with the bulk of the savings attached to the funding freeze, which the government says doesn’t need legislation and can’t be overturned by parliament.

“Of course, we would prefer to have … some longer-term structural reform in the sector,” Treasurer Scott Morrison told reporters in Canberra.

“That has been once again frustrated by the Labor Party. So if you can’t get to the out-point that you’re seeking to get to one way, you have to go another.”

Education Minister Simon Birmingham insists the freeze, which accounts for about $2 billion of the total savings, is not a cap on student numbers.

Universities will be able to enrol as many students as they like but for any more than the number of commonwealth-supported places they can only collect the student contribution – which covers on average 46 per cent of course costs.

From 2020, funding will be linked to population growth and performance measures, likely to include targets for completion rates and how quickly graduates find jobs.

Senate approval will be needed for other measures, including cutting the loan repayment threshold from the existing $55,000 – although the new package is an easing of the proposal in May to make people start payments once they earn $42,000.

Parliament will also have to agree to impose a lifetime cap of $104,440 on loans students can get from the government for combined university and vocational study (or $150,000 for those dong medicine, dentistry and veterinary science courses).

Senator Birmingham says universities have benefited from rapid funding growth and achieved economies of scale that means teaching costs have dropped.

“Collectively, these measures maintain widespread access to higher education and generous funding for universities while being more affordable for taxpayers by stopping universities from effectively writing their own cheque,” he said.