‘Robin Hood’ tax to share the spoils

A major review has suggested Australia’s public universities contribute some of their income as a ‘tax’ to finance the infrastructure needed to accommodate a doubling in student enrolments by 2050.

The recommendation is among 47 in a 400-page report that is the culmination of a year-long inquiry aimed at building a better and fairer higher education system.

Recommendation 43 of the Australian Universities Accord details the rationale for the establishment of a Higher Education Futures Fund (HEFF), with a projected growth of $10 billion in assets over time.

The HEFF, initially co-funded by universities and the Commonwealth and managed by an independent board, would serve as an ongoing source of funding for the higher education sector’s infrastructure needs, including student housing.

The report recommends: “University contributions could be based on a proportion of their untied own-source, non-government revenue with contributions matched by government” and that “co-contributions should be required until the independent board considers the HEFF’s annual returns are sufficient to fund the intended projects”.

“Untied” revenues include international student and postgraduate fees, investment income, royalties and returns from trademarks and licences.

The accord’s interim report, released last June, had proposed a levy on international students to support priorities in the higher education sector.

But following the international education industry’s concerns that such a levy could deter overseas students, the final report instead recommended the HEFF based on broader revenue indicators.

A recommendation only at this stage, the HEFF would redistribute resources from wealthier universities with more untied revenue to those with less.

While many have embraced the creation of a structure like the HEFF as key to financing the construction and upkeep of educational facilities, there is concern not everyone will get to share in the potential benefits.

The accord’s final report says: “The design of the sector contribution should account for universities’ capacity to contribute; those universities with the financial means to pay a higher proportion should be expected to do so.”

The report notes that higher education experts have long drawn attention to the fact “Australia’s oldest universities enjoy the benefits of many decades of taxpayer support and the best geographical locations, leading to greater prestige and reputation and hence more ability to raise revenue from diverse sources.”

On that basis, “those institutions have much greater capacity to contribute to such a fund than do smaller and newer institutions”, the report concludes.

The fact the HEFF might force a number of universities to contribute at a higher level than others has prompted some university leaders to label the recommendation a Robin Hood tax.

Older and more established universities will be ‘robbed’ by institutions that are newer, more financially challenged, or regional.

The full extent to which older and more established universities could be required to support their counterparts was revealed by analysis of university finances published by the Australian Financial Review.

The AFR modelling was based on universities paying a tax or levy of 3.4 per cent of untied revenue annually.

The analysis found six institutions nationwide – University of Sydney, University of Melbourne, Monash University, University of NSW, University of Queensland and RMIT University – would account for half of the total annual contributions to the fund.

The University of Sydney is projected to contribute $70 million annually for a decade to support the HEFF, whereas The University of Western Australia, for example, is expected to pay only $13 million each year.

Despite the imbalances, some in the sector support the establishment of a future-focused fund.

They believe it would be wise to allocate a portion of the current surge in international student income to create a sustainable revenue stream for the future.

And joint efforts across the sector could offer a more impactful and unified approach to building and sustaining Australia’s higher education infrastructure than isolated actions by individual institutions.

Even if the HEFF is introduced, it will not happen in a hurry.

The accord review panel recommended delaying its creation until the complete implementation of a proposed new needs-based funding model for universities, which will require thorough and detailed discussions and negotiations well into the future.

• Professor Gary Martin is chief executive officer of the Australian Institute of Management WA