The Government’s mid-year Budget backdoor cuts to university funding will cost the nation up to $12 billion in the decades to come.
That’s the key finding of economic modelling commissioned by Universities Australia and released in the lead up to Budget 2018.
The Cadence Economics analysis finds the graduate-cutting funding freeze will harm both Australia’s economy and the Government’s tax take.
It reveals that fewer graduates, due to the freeze, will cut federal tax revenues by between $2.2 billion and $3.9 billion, and cost the national economy between $6.9 billion and $12.3 billion over the next 20 years.
For every Australian who misses out on a university qualification due to the Government’s funding freeze, the cost to GDP is $471,000 and $152,000 in lost tax revenue.
The figures clearly show that the university funding cuts are a false economy.
Less university funding means fewer skilled graduates, a hit to labour market productivity and less tax revenue for government.
It also shows that a short-term Budget saving will create unnecessary long-term economic pain by eating into future tax revenue and productivity.
There is also no justification for persisting with the economy-curbing freeze.
A report from Deloitte Access Economics shows the Budget is $7 billion stronger than forecast in December — when the university funding freeze was inflicted.
Reversing the university funding freeze would therefore avoid an economic own goal.
Education and research are critical infrastructure that will generate Australia’s long-term economic growth.
Long-term investment in this infrastructure will enable us to compete with our economic rivals who are investing heavily in these areas.
We should make the investment now to prepare Australians for an economic future that will demand higher skills and education for more of our population.