Deans of Australian business schools and faculties have expressed dismay with reduced Commonwealth funding for business programs that will threaten the quality of business education in Australia and further impact critical skills shortages in business related areas.
Professor Tim Brailsford, President of the Australian Business Deans Council (ABDC) and Head of the UQ Business School at The University of Queensland labelled the change a “real budget nasty”.
“The reduction in funding represents a significant challenge to maintain the quality of education in business programs in Australia,” Professor Brailsford said.
“The potential of increased program costs being passed on to students also acts as a significant disincentive for students to choose business programs at a time when industry and professional associations are screaming out for business graduates in areas like accounting, finance, HRM and marketing.”
The 2007 Budget contains a revision to the disciplinary bands which moves the business disciplines down to a lower level of Commonwealth support. In effect, universities will receive a reduction in Commonwealth funding for business programs of $1,030 per full-time student per annum, which represents a decline of almost 40%. The Business band is the only one to suffer a reduction while many others have been substantially increased.
Under current funding arrangements, universities receive funding for undergraduate places from two streams: one stream being the student contribution which is paid through the HECS mechanism, and the other a payment from the Commonwealth based on enrolled student numbers. The latter stream is allocated on the basis of disciplinary bands where perceived higher cost programs receive more funding per student place.
Professor Brailsford said the rationale of the Minister for Education Science and Training the Hon Julie Bishop – that the budget changes reflect the higher salaries business graduates receive over a lifetime and the competitive nature of the labour market for their skills – was flawed.
“There is a myth that business graduates end up as merchant bankers on Wall Street: only a very small percentage of our graduates ever make it to these positions,” Professor Brailsford said.
“Many of our graduates earn average salaries working in the non-profit sector, the public service and small businesses. The Minister’s arguments fail to recognise the diversity of graduate outcomes in business.
“It is also difficult to reconcile this when areas such as medicine and dentistry, where graduate salaries are very high, have had the Commonwealth contribution substantially increased.”
Under the changes, universities will be forced to find alternative sources to replace the funding shortfall.
Professor Brailsford said while some disciplines including mathematics and the allied health areas have received a funding boost, it is unlikely universities could use these funds to cover the shortfall in business programs.
“These areas themselves are under funding pressure and the relatively low numbers of students in these areas would be insufficient to cover the aggregate reductions in business programs which have much larger enrolments,” Professor Brailsford said.
With business schools among the most efficient within the higher education sector, it is unlikely that cost savings can be made. Universities will therefore be forced to either increase the number of full fee-paying places or pass on the funding shortfall to students through increased HECS charges.
“I cannot see how the government can equitably argue that business students should pay relatively more in HECS, which will not only result in a decline in business student numbers but ultimately further impact the skills shortage felt in business related areas.”
The reality that business is suffering from white collar skills shortages was reflected in a November 2006 report commissioned by CPA Australia that found the number of places in Australian universities for undergraduate domestic accounting students is well short of the level required by Australian employers, a fact acknowledged by the Australian Government that classified accounting as an occupation in shortage.
If the funding shortfall is passed onto students, HECS will rise by over $3,000 over the course of a standard business degree.
While universities could opt to increase full fee-paying places, demand for these places is still soft, especially in regional areas. While the budget changes have removed the cap on full fee-paying places, students are unlikely to choose this option when cheaper HECS places are available elsewhere.
Professor Robin Woellner of James Cook University and current Vice President of the ABDC said the Australian culture is not yet at a stage where students generally will accept expensive full-fee places for a public university degree.
“This is especially so in regional areas where demand for full-fee places is lower than in capital cities and the reality is that funding shortfalls from the Commonwealth cannot be substituted wholly by tuition fees.”
Changes do not affect currently enrolled students but will come into effect from 2008.
While the full impact will not be felt for several years, Professor Woellner said decisions will need to be made this year for planning purposes.
“A strong and well-managed business sector led by high-quality managers is critical to Australia’s economic well-being and future,” Professor Woellner said.
“These changes will hit business schools hard and will make it more difficult for business schools to continue providing a world-class business education for Australian students.
“Business students already pay a higher percentage of their total tuition costs (around 70% of the program cost with the government contribution at 30%) than do other disciplines such as medicine (where students pay around 30% of the cost, with the government contributing the other 70%), and this decision will only increase this inequity.”
Professor Brailsford said the government has missed an opportunity.
“With the Commonwealth awash with cash and massive budget surpluses, we cannot see the sense in this decision,” Professor Brailsford said.
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Media enquiries:
Professor Tim Brailsford, President ABDC – 0402 891 614
Professor Robin Woellner, Vice President ABDC – 0409 778 318
Ms Karissa Douglass, Secretariat ABDC – 0410 642 027
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