Reforms in the Australian Education Sector

Question: Discuss about theReforms in the Australian Education Sector. Answer: The education sector is one of the most important and fundamental industries in the Australian economy. Primarily, it is one of the most valuable sectors in the country and is regarded with high esteem. Mainly, this is due to the fact that Australian culture values education at all levels. In this regard, any reforms in the sector stir up significant reactions and commentaries from the public as it affects the overall economy. In the same view, Julie Hare and David Uren (2017) provide a commentary on the recent reforms in the education sector. According to their article, budget to lift fees for university students, scrap funding cuts; Hare and Uren narrate the adverse implications that the reform will have on higher education. It is imperative to note that university students in Australia will have to pay higher fees due to a reduction in funding by the government. More precisely, the government has introduced a new funding formula that will result in an increase in the payable fees by approximately 25 percent (Hare Uren, 2017). In addition, the new plan will also increase the share of university costs to be paid by students. Notably, this share will increase from the initial 40 percent. To make matters worse, the reform necessitates that students will have to start repaying their higher education loans earlier. Primarily, this would be achieved through the lowering of salary threshold for repayments to commence. Furthermore, the reform proposes that students will be charged a loan fee at the beginning of the studies. Fundamentally, the government justifies these changes and decisions by highlighting the fact that higher education guarantees students a significant private benefit in the form of higher salaries after graduation. In this rationale, the high tuition fees for a college education is seen as investments by students whose returns will be realized in the form of high paying jobs (Jeffrey, 2017). However, this concept is strongly opposed by the fact that the Australian economy experiences significant levels of unemployment each year. According to recent data from the Australian Bureau of Statistics, about 4.1 percent of recent university graduates remain unemployed as at the beginning of this year (Hare Uren, 2017). Moreover, the degree premium has been eroding in the recent past. More precisely, although the private returns associated with higher education are still positive, they have diminished significantly over the years (Hare Uren, 2017). For this reason, one may argue that the ris e in higher education fees may be unjustified. It is also imperative to note that the hike in university fees will result in significant declines in the number of students who enroll for higher education. Particularly, this concurs with the law of demand (Yaxley, 2015). Essentially, an increase in the price of a product or service results in a decrease in the demand for the product. Although the price elasticity of demand for higher education is relatively inelastic, the number of students who enroll in universities may drop over time (Yaxley, 2015). Notably, a similar increase in university fees in England in 2012 brought about a decline in the number of university applications by around 15, 000 (Vasagar, 2012). Indeed, an increase in the price of higher education will significantly affect the demand for the service as many students find it too expensive. Predominantly, this reform will adversely affect university students in Australia. As it is, university education is already expensive. Therefore, reducing the level of government support and raising the level of tuition fees and initiating strict schedules for higher education loan repayments exerts excessive burdens to the students (Farrell Hurst, 2014). It is unfortunate that the government withdraws funding from one of the most fundamental sectors of the economy, instead of increasing funding to enhance the level of higher education applications in the country. Fundamentally, an increase in the number of university graduates translates into an increase in the number of skilled labor force, and hence an increase in labor participation and productivity. Consequently, this will bring about an increase in the level of economic growth. It is only rational for one to argue that the government should reconsider the implementation of these reforms in the country. As such, the adverse nature of the effects associated with the decision will affect university students negatively (Hare Uren, 2017). Instead of cutting the level of funding to college students, the government should increase or maintain the initial level of funding (Farrell Hurst, 2014). By doing so, it will make university education more affordable to students from all backgrounds. In turn, an affordable college education will lead to an increase in the level of demand for the service (Pash, 2014). Subsequently, this will bring about an increase in the number of university graduates in the country. Imperatively, the Australian labor force will be equipped with the necessary skills to enhance and increase overall productivity and facilitate substantial economic growth and development. All in all, all factors considered, the education sector is a fundamental component of the Australian economy. By and large, it is the backbone of the economy, and all other sectors and industries are based on its success. In this regard, the recent reforms to increase the tuition fees for university education is bound to affect all sectors of the economy adversely. According to Hare and Uren (2017), the government intends to initiate cuts in its funding to the tertiary education sector and increase tuition fees payable by university students. In correspondence with the law of demand, the proposed fee hike will bring about significant declines in the number of college applications and may also increase the number of college dropouts (Education, n.d.). In turn, this will adversely affect the education sector. For this reason, it is imperative that the government should put on hold the proposed reforms and maintain or increase its funding to the sector. Instead, the government may redu ce its expenditure on other less important sectors of the economy that do not contribute largely to the growth of the economy. This way, higher education will remain affordable for Australian students. References Education costs in Australia. [Online] Austrade. Available at: https://www.studyinaustralia.gov.au/global/australian-education/education-costs [Accessed 28 Apr. 2017] Farrell, P., and Hurst, D. (2014). University fee changes explained: how will Australian students be affected? [Online] The Guardian. Available at: https://www.theguardian.com/world/2014/jun/02/university-fee-changes-explained#img-1 [Accessed 28 Apr. 2017]. Hare, J., and Uren, D. (2017). Budget to lift fees for university students, scrap funding cuts. [Online] The Weekend Australia. Available at: https://www.theaustralian.com.au/national-affairs/education/budget-to-lift-fees-for-university-students-scrap-funding-cuts/news-story/5725169a6df0dfbe5ed0b699b5408be7 [Accessed 28 Apr. 2017] How will an increase in tuition fees affect student participation and choice of course in the UK? [Online] Shift Learning. Available at: https://www.shift-learning.co.uk/sites/default/files/White%20Paper%20How%20will%20an%20increase%20in%20tuition%20fees%20affect%20student%20participation%20and%20choice%20of%20course%20in%20the%20UK_0.pdf [Accessed 28 Apr. 2017] Jeffrey, C. (2017). Why Australia and India Should Collaborate on Higher Education [Online] The Wire. Available at: https://thewire.in/123097/why-right-time-australia-india-higher-education/ [Accessed 28 Apr. 2017] Pash, C. (2017). The Cost Of Getting A University Degree In Australia Is About To Change: Here's What You Need To Know. [Online] Business Insider. Available at: https://www.businessinsider.com.au/the-cost-of-getting-a-university-degree-in-australia-is-about-to-change-heres-what-you-need-to-know-2014-6 [Accessed 28 Apr. 2017] Vasagar, J. (2012). Tuition fees increase led to 15,000 fewer applicants [Online] The Guardian. Available at: https://www.theguardian.com/education/2012/aug/09/tuition-fees-increase-15000-less-applicants [Accessed 28 Apr. 2017] Yaxley, L. (2015). University fee deregulation: Government discusses new proposal with crossbench senators [Online] ABC. Available at: https://www.abc.net.au/news/2015-03-04/higher-education-new-univerity-fee-deregulation-proposal-offered/6280124 [Accessed 28 Apr. 2017]