Universities are furious $2.3 billion is to be cut from higher education to help pay for the Gonski reforms on education spending. But given higher education funding is up 50% since 2007, what are they worried about?

That was the message from Prime Minister Julia Gillard on ABC Radio National this morning ahead of negotiations with the states on Friday. Quizzed on the cuts to universities — particularly in light of Australia’s 25th ranking of 29 advanced economies when it comes to public funding of universities — the PM replied:

“What we are asking unis to do is against a backdrop — where there has been growth in university funding by this government of more than 50%, more than half — we are asking universities to accept a lower growth rate.”

Has the current Labor government — with Gillard serving first as education minister and then PM — actually increased the amount of federal funding universities receive by over 50%? Let’s take a look at the numbers …

First, to clarify the cuts. Higher education will by hit by a 2% efficiency dividend next year, followed by 1.25% the next — saving the government about $900 million. Currently students who pay HECS fees up front receive a 10% discount — that discount will be dumped. The Student Start-up Scholarship — a program that provides disadvantaged university students on welfare around $2000 a year for textbooks and other school expenses — will now have to be repaid once a student starts working. Plus, tax concessions for work-related education expenses will now be capped at $2000.

As the social media backlash against the higher ed cuts began, Gillard’s team quickly published this handy graph on her Facebook page:

“Spending on Higher Education will continue to rise — just slightly more slowly,” it claims, showing total higher education funding of about $8 billion in 2007 rising to nearly $17 billion in 2016. The office of Higher Education Minister Craig Emerson confirmed to Crikey the graph only covers teaching and learning direct grants (the Commonwealth Grant Scheme), the student loan system (FEE-HELP or HECS ) and money for university research.

And those figures on the left are nominal — not adjusted for inflation. If they were, they would look a little more like this (note: this graph was made on a best estimate of the figures and reflects 2012 dollars):

So by Crikey‘s calculations, there’s been around a 40% increase in higher education funding since Labor won in 2007. This compares to the Higher Education Minister’s claim of a 56% increase and the prime minister’s “more than 50%” declaration.

A graph from the Grattan Institute breaks down the funding for the Commonwealth Grant Scheme a little more clearly (and provides it in 2011 dollars, rather than a nominal figure):

The Grattan Institute notes:

“The number of student places is therefore a key driver of total spending, in total and on each eligible higher education provider. Before 2012, the Government capped the number of Commonwealth-supported student places. From 2012, the number of bachelor-degree undergraduate Commonwealthsupported places is largely uncapped (section 5.2.1). This is forecast to have a significant effect on total CGS spending. The DIISRTE budget forward estimates predict a 27 per cent increase between 2011-12 and 2015-16, or about $1.5 billion. These increases represent a substantial reversal of government policy. Between 1997 and 2004 operating grant funding (the CGS predecessor) dropped in real terms almost every year, as seen in figure 15.”

Meaning, while higher education funding is up significantly since Labor took control, the figures are still down in real terms on what universities were getting in 1997 when John Howard first took control.

There’s been a number of major higher education policy changes under Labor, including the Bradley Review in 2008 that resulted in an additional $5.4 billion to support higher education and research over four years. The government also recently responded to the Higher Education Base Funding Review, noting that from 2012-2015 the Gillard government will invest $58.9 billion in higher education and rejecting the review’s recommendations for an increase to the base funding level per university place.

So we’re calling claims of a significant increase mostly true — depending on how you read some rubbery figures.