The federal government could look at cutting research funding from universities, if Parliament blocks it’s planned changes. Photo: Louise Kennerley

The federal government will examine slashing billions of dollars worth of research funding from universities if Parliament blocks its sweeping higher education changes.

University vice-chancellors are alarmed by the “doomsday scenario”, which they say would damage Australia’s $10 billion export market for international university students.

Education Minister Christopher Pyne plans to introduce legislation into the House of Representatives on Thursday to deregulate university fees, cut course funding by an average 20 per cent and increase the interest charged on student loans.

Labor, the Greens and balance of power senators in the Palmer United Party say they are opposed to all these measures.

Fairfax Media understands the government is determined to achieve substantial savings in the higher education portfolio even if the Senate blocks its university package.

The government plans to save $3.2 billion over four years by pegging student debts to the government bond rate and lowering the HECS repayment threshold. The cuts to course funding would save an estimated $1.1 billion over three years.

While these changes require legislative approval, cuts to research block grants, training schemes and other measures can be passed in appropriations bills which typically sail through Parliament unopposed.

The government has identified cuts to research funding as a potential bargaining chip as Senate negotiations deepen over coming months.

A senior government source said universities should be wary of “cutting off their nose to spite their face”.

Mr Pyne declined to comment.

Group of Eight Universities chair Ian Young said the prospect of swingeing cuts to research programs was a “doomsday scenario” for universities. “It would be disastrous,” Professor Young said. “As well as decimating research in this country it would put at risk our international market because world rankings are built on research.

“Research grants support our research infrastructure, our IT systems, laboratory technicians, PHD programs. This measure would hit research-intensive universities hard, rather than being spread across the entire sector.”

Labor higher education spokesman Kim Carr said: “The government’s only option is to withdraw this package and start again.

“The whole point of its policy was supposed to be boosting the international standing of Australian universities.

“Perhaps we need research into how to cure foot in mouth from members of this government.”

University vice-chancellors have developed a unified policy position to put to crossbench senators over coming weeks including:

  • support for fee deregulation;
  • a reduction to the 20 per cent funding cut;
  • watering down the plan to increase the interest rate on student HECS debts; and
  • a compensation package for regional universities.

Mr Pyne said last week he was willing to negotiate with the Senate until the end of the year and beyond to pass his reform package.

“These reforms will dramatically change university for the better, they will provide more opportunities for students, they will give our universities the chance to gain the revenue they need to become … some of the best universities in the world,” Mr Pyne said.