The Turnbull government is mounting an argument universities can afford to take a haircut as funding outpaces the cost of educating students.
Education Minister Simon Birmingham later on Monday is expected to outline a package for next week’s federal budget that includes funding cuts and hikes in student fees.
Universities have cried poor, releasing a study a week ago that showed the sector contributing $3.9 billion to the budget bottom line over recent years.
But the government has released its own analysis showing universities have been pocketing taxpayer funds beyond the cost of teaching and research.
The average cost of delivery per student grew 9.5 per cent between 2010 and 2015, a government-commissioned Deloitte report found, while funding per student grew by 15 per cent.
Treasurer Scott Morrison says the lower delivery cost could be down to economies of scale or good management of universities.
“But it also demonstrates that it’s hard to make the argument that somehow universities are falling behind when it comes to a funding question,” he told ABC radio on Monday.
“We have seen that the costs of educating people have not risen as fast as that funding and that presents some obvious issues there to ensure that the taxpayers’ interests are best reflected in how we engage with the sector.”
The government acknowledges funding in some areas – such as dentistry and veterinary studies – doesn’t cover the cost of delivery but says the vast majority of courses could be delivered cheaper.
Universities could be hit with a 2-3 per cent efficiency dividend.
Senator Birmingham has previously indicated he thinks it not unreasonable to rebalance the proportion of student and taxpayer contributions to bring them closer to an even split.
At the moment, students pay about 40 per cent of the cost of their degree.
The minister will address a higher education and business event in Canberra on Monday evening, with the audience expected to include many vice-chancellors eager to learn about the government’s plans.
This is a marked difference from when the coalition took the sector by surprise by revealing plans in its 2014 budget to cut funding by 20 per cent and completely deregulate student fees.
Labor already has resurrected its campaign against “$100,000 degrees”, which ultimately led to the Senate rejecting the previous funding overhaul.
Opposition frontbencher Andrew Leigh acknowledged Labor in government had proposed an efficiency dividend on universities to pay for increased school funding, but said that came on the back of a large rise.
“Is a smaller cut better than a bigger cut? Sure, but that doesn’t make it good policy,” he told Sky News.