What can we expect for higher education in the budget?

The Finance Minister, Mathias Cormann promised on budget eve that the government remains committed to the package of changes to higher education reforms announced by Education Minister Christopher Pyne last budget.

So the budget may produce a few surprises. Or it may not. In the months before the 2014 Commonwealth budget then opposition leader Tony Abbott quietly claimed that “masterly inactivity can be the best contribution that government can make” when he addressed the Universities Australia Higher Education Conference.

We cannot completely rule out moves by the government that may have dramatic implications for Australian higher education.

So what might Pyne and the government decide to do and what could it mean?

The government has not been shy in proclaiming the need for savings, so some form of cuts look to be the order of the night. Pyne has committed to saving the National Collaborative Research Infrastructure Strategy (NCRIS) which could well come at a price for other funding support for research infrastructure and graduate training.

The advantage with cutting from these pools of money is that Pyne can make cuts without having to get the approval of parliament like he does with attempts to deregulate student fees.

While a cut to research block funding might be politically possible, they will have real consequences for research output. Australia will do less research, because the research effort in universities relies heavily on these funds to allow projects to happen and universities already cross subsidise heavily to keep the research effort going.

Of course the government could choose to try for a smaller cut to teaching funds but matched with a capped increase to HECS. This might solve some of the immediate need to prosecute deregulation, but such a proposal would likely make attempts to convince the Senate to ultimately support the Pyne plan even less likely, if key crossbenchers didn’t just dismiss the idea outright.

The lesson from previous increases in fees caps is that all universities, even if it takes them a year or two, go to the top of the cap. After all, a cap set by the government sends a strong signal as to what the state suggests students should pay for a high quality education.

Fears that deregulation will see significant price rises across the board could be all the more plausible if it is introduced when students are paying more than they do now following an increase in the HECS cap. Then the government could, as some have suggested, run a “pilot” for its plans for deregulating undergraduate universities fees.

To do this it could allow some universities to take deregulation matched with a significant cut, while keeping the others within the present rules.

This would be a brave move for Australian higher education, and could see two quite different types of institution in the higher education landscape.

One type of university that delivers teaching funded by what the government deems to be the appropriate top level of fees to be paid.

Such an institution is just acting in line with the rules, following government signals as to the cost, and some would argue the value, of a degree.

And another type of university that can charge what it likes but must justify the higher fees it charges. And higher they must be, to make up for the cuts if nothing else. There is not the same guiding rule for these institutions, having chosen to be judged by the market.

Deregulation, whether implemented as proposed or by a lesser degree, will likely have implications for Australian higher education that go beyond what a student pays.

Universities are clear on the value they place on autonomy, as the often vocal call to protect “academic freedom” shows. A deregulated system as proposed by Pyne, asking universities to set prices, could further their autonomy as they become more independent of government.

But equally, it asks universities to work much harder to continue being truly public institutions, part of broader civil society but answering to their staff, student communities, and ultimately to the nation.

This year’s budget may not bring the fireworks of last year, but it may bring some surprises.