The Albanese government is under mounting pressure to dump a Morrison-era tertiary education policy that has drastically cut university funding, saddled many students with debts they will never be able to repay and driven many more away from higher education altogether.
Despite Labor having opposed the so-called Job-ready Graduates (JRG) scheme since its beginning, and despite overwhelming evidence of its failure, Education Minister Jason Clare has deferred action on it, likely until at least 2027 and possibly even further into the future.
Multiple reports into the scheme, including from the Productivity Commission in February 2023 and a year later from the Universities Accord – established by the Albanese government soon after it came to power – have damned the JRG. Yet Clare has pushed the issue off for further study by another nascent body, the Australian Tertiary Education Commission.
Clare has offered no timeline for when the new body might report. The commission is not even formally established yet. A spokesman for the minister said legislation to set it up will be introduced before the end of the year.
As the independent MP Dr Monique Ryan told parliament last week, the government knows full well the failings of JRG.
“Job-ready Graduates did not align with national priorities or with projected skills shortages,” she said.
“It left students with debts which were vastly disproportionate to their future earning potential. The PBO [the independent Parliamentary Budget Office] has estimated that it’s already increased student debt by more than $10 billion and that is going to continue to increase massively until it is reversed … The minister could do that tomorrow.”
Senator David Pocock shares the frustration.
“This is something that Labor were very vocal about in opposition,” he tells The Saturday Paper. “Now they’re in their fourth year of government and have, rather than dealing with it, kicked it to another body.”
A growing number of Labor members are also impatient – privately so far – with the apparent slow-walking of reform.
As for the reason, one vice-chancellor texted The Saturday Paper, “the short answer is $$$”.
Undoing the mess made by the Morrison government will be expensive. The chief executive of Universities Australia, Luke Sheehy, told the National Press Club in February the JRG funding model had resulted in a loss to universities of about $1 billion a year, “the equivalent of around 33,000 student places”.
He called on the Albanese government to act urgently to “correct this madness”.
The backstory to the JRG begins more than five years ago. On June 19, 2020, in a speech to the National Press Club, the Liberal then education minister Dan Tehan announced sweeping changes to the pricing of university degrees. He promised the overhaul would “incentivise” students to make what he called “more job-relevant choices”.
The premise was simple. The government, said Tehan, would jack up the cost of studying certain subjects and cut the cost of those courses the government deemed more worthy.
“The suggestion was that humanities [graduates] were less employable, but there was never any data for it, never any evidence that they weren’t literally jobs-ready. The employment rates for humanities graduates are and have been consistently high.”
Someone studying maths or agriculture, for example, would pay 62 per cent less for their degree. But a humanities student would see fees increase by 113 per cent.
Thus the government would herd students into what Tehan reckoned to be “the jobs of the future”.
The policy, says Professor George Williams, vice-chancellor of Western Sydney University, “was based on the flawed idea that a market mechanism, a pricing signal, would affect student choice – that a student would, say, give up on their dream of being a historian and instead choose a lower-priced degree such as agriculture.”
Students, unsurprisingly, proved overwhelmingly unwilling to be deterred from their chosen studies. Fewer than one in 50 changed their choice based on the pricing of different courses, says Williams.
As the Productivity Commission reported: “Students appear to make good choices of their own volition. They have the best information about their own abilities and interests, making them well placed to make decisions about what they will enjoy – and benefit from – studying,” it said.
Rather than incentivising potential students to undertake courses in what the Morrison government deemed priority areas, says Williams, “it’s actually meant that students, in many cases, have chosen not to go to university at all.” He says poorer students, or those of low socioeconomic status, have been priced out of the system.
“We’ve seen a reduction in low SES and first-in-family students over recent years applying to go to university. It’s about a 15 per cent fall,” says Williams.
In fact, the number of enrolments was falling even before the JRG changes, but the doubling of the cost of humanities degrees exacerbated the problem.
“The arts degree … is the degree of choice, typically, for low SES people, poor people, Indigenous people, women,” he says.
Before Tehan’s changes, there was a rough correlation between the cost of a degree and the future earnings of a graduate. Thus to study medicine, for example, was expensive, but a doctor could look forward to a high income that would enable them to pay off that cost. Arts students paid less for their degrees but also still could afford to pay off their student loan debt, despite generally lower earnings.
The JRG changes, says Williams, “broke the link between the price of that degree and graduate earnings. And so the people who did persist in going to the degree often have ended up with a debt until death.
“They’ll never pay it off.”
This will remain the case, despite the government’s minor changes to the rate at which student debt is indexed, and despite its big election promise, which passed parliament last week, cutting existing debts by 20 per cent and lifting the minimum income threshold at which debtors must make repayments to $67,000.
As Monique Ryan pointed out in her speech to the House, the changes to the debt repayment regime that passed last week could make things worse, because “more graduates will find themselves repaying less than the annual indexation on their HECS balance. As a result, their debt will increase each year.
“The Parliamentary Budget Office has calculated that, for those starting careers with incomes below the repayment thresholds, particularly women, repayment could take 40 years or more. Some young students are signing on for what is effectively a lifetime of debt and they don’t understand that when they take on those degrees.”
Such are the consequences, as David Pocock puts it, of trying to address the symptoms of a failed policy but not the cause.
So long as the system charges exorbitant amounts for degrees that confer relatively low earning potential – humanities degrees – future students will continue to rack up unsustainable debts.
“Every year this goes on,” says Professor Andrew Norton, a higher education expert in the Monash Business School at Monash University, “it’s another group of people who will accumulate a $50,000 debt just to get a three-year bachelor’s degree. And while the people who are enrolled now will benefit from the 20 per cent cut that was legislated last week, the people enrolling from now on will get none of that.”
Even if the government is intent on waiting for the Tertiary Education Commission to come up with a comprehensive reform package for the whole tertiary sector, there is a strong case for at least moving to cut the cost of humanities degrees.
“I have been calling for an interim measure which looks at arts only, to stop these people accumulating pointless debts which won’t be recovered anyway,” Norton says.
Given the government would not recover the debt, the real cost of the reform would “not be that great”, he says.
Underlying the Morrison government’s restructuring of the relative costs of different university courses was a judgement about the relative merits of such qualifications. An ignorant judgement, in the view of John Quiggin, professor of economics at the University of Queensland.
The JRG scheme, according to Norton, was “typical of the anti-intellectualism you’d expect from the Morrison government and Dan Tehan”.
“It reflected a rather naive view that what the country needs is lots more engineers and many fewer literary people,” he says.
He is by no means alone in that judgement. One senior university administrator – speaking on background so as to be more frank – describes the Tehan policy as being based more on prejudice than evidence.
“The suggestion was that humanities [graduates] were less employable, but there was never any data for it, never any evidence that they weren’t literally jobs-ready. The employment rates for humanities graduates are and have been consistently high.
“If you’ve got a degree that gives you critical and analytical skills, there are many jobs you can go into. People with qualifications in international relations, political science, history, all those kinds of degrees, they’re the people who you employ, because they can think and write critically.
“It was essentially a hate on arts degrees. It was always based on a lie.”
So, they say, was Tehan’s claim, made in that press club address, and subsequently repeated, that a goal of the changes to course fees was undertaken to ensure they “actually [equal] the cost of teaching that degree”.
In reality, says the administrator, humanities are “pretty cheap to teach – what we call chalk and talk”.
Many of the courses whose costs were cut, in contrast, are quite expensive.
The perverse outcome of the change was “that amount that we get to teach for most subjects, most degrees, is now less than the actual cost to teach”.
Net result, universities are in dire financial straits, cancelling various humanities programs because of declining numbers and/or increasing class sizes.
Meanwhile, those vocational degrees Tehan hoped to encourage have not prospered. Tehan emphasised the need for more teachers and nurses, for example. But, as Luke Sheehy noted: “In 2023, after Job-ready Graduates, there were fewer students studying teaching and nursing than in 2020.”
George Williams is less harsh in his expression than others but broadly in agreement, both in relation to the value of humanities and to the costs for both students and institutions.
“JRG sent a very clear signal that, as a nation, we don’t value the humanities. Yet, I think they have never been more important,” he says. He warns also that pushing people into more narrow vocational degrees, given the rapid rate of change in the jobs market, is likely to require greater adaptability.
“AI is changing the world. I think, in fact, interpreting the world, creativity, those human skills are really important. And, of course, [the high cost of humanities degrees] impacts things like entering the housing market, starting a family. All of these things become harder because of the debt.
“What [the JRG scheme] also did was reduce the level of funding that universities receive per student across the board, which actually means universities are forced always to do more with less, and that’s putting enormous pressure on student numbers.
“Unis have made that up through international student enrolments. But that’s now capped and, sadly, it’s a key reason why there are so many job losses across the sector.”
Fronting the media last week to trumpet the government’s achievement in reducing student debt, Jason Clare sounded more than a little like former United States president George W. Bush in 2003 declaring “mission accomplished” in Iraq – the war dragged on for eight more years.
Said Clare: “We promised it and we’ve delivered … they voted for it in their millions. And we’re repaying now the trust that these young Australians have placed in us.”
The mission of fixing the mess that the Morrison government made of higher education is far from done. It won’t be over until the misbegotten JRG scheme is dismantled. On current indications, that mission won’t even be embarked upon for years.
And all the while, the costs will keep piling up.
This article was first published in the print edition of The Saturday Paper on
August 9, 2025 as “Why Labor is stalling on real universities funding reform”.
For almost a decade, The Saturday Paper has published Australia’s leading writers and thinkers.
We have pursued stories that are ignored elsewhere, covering them with sensitivity and depth.
We have done this on refugee policy, on government integrity, on robo-debt, on aged care,
on climate change, on the pandemic.
All our journalism is fiercely independent. It relies on the support of readers.
By subscribing to The Saturday Paper, you are ensuring that we can continue to produce essential,
issue-defining coverage, to dig out stories that take time, to doggedly hold to account
politicians and the political class.
There are very few titles that have the freedom and the space to produce journalism like this.
In a country with a concentration of media ownership unlike anything else in the world,
it is vitally important. Your subscription helps make it possible.
Send this article to a friend for free.
Share this subscriber exclusive article with a friend or family member using share credits.
Used 1 of … credits
use share credits to share this article with friend or family.
You’ve shared all of your credits for this month. They will refresh on September 1. If you would like to share more, you can buy a gift subscription for a friend.
SHARE WITH A FRIEND
? CREDITS REMAIN
SHARE WITH A SUBSCRIBER
UNLIMITED
Loading…
News
‘Mind-boggling stupidity’: The consultancy that captured universities
Rick Morton
Nous Group has slowly taken over the university sector, filling VCs’ offices with ex-staff and buying ‘incredibly sensitive’ data that is sold back for benchmarking.