‘Grandfather of HECS’ recognised

Bruce Chapman

5 minute read

Earlier this month, the architect of Australia's higher education contribution scheme (HECS), Professor Bruce Chapman AO from the ANU College of Business and Economics (CBE), was named an Officer of the Order of Australia (AO) – the second most prestigious of the Queen's Birthday Honours.

The award recognises Bruce’s “distinguished service to higher education, particularly in the field of economics and public policy, and to professional societies”.

I feel quite privileged by the recognition; I guess I have always thought that I am fortunate. It is pleasing to see that my involvement with HECS has helped education in Australia and student loan reforms in other countries. However, there is still a lot to do internationally,” Bruce reflects on his recent award.

It is not the first time he has been acknowledged for his contribution to higher education – in 2001, Bruce became a Member of the Order of Australia (AM). In 2017, he won the Australian Financial Review's Higher Education Lifetime Achievement Award and in 2012 he was named The Australian newspaper's most influential person in higher education, among many other accolades.

“I feel quite privileged by the recognition. It is pleasing to see that my involvement with HECS has helped education in Australia and student loan reforms in other countries.

In 1988, he crafted the country’s HECS system, an income-contingent loan scheme that allows students to defer their university payments until they are earning enough to pay back their fees through the tax system.

Since then, within the media and in academic circles, Bruce is widely referred to as the “Father of HECS”. However, he light-heartedly points out that “Grandfather of HECS” is a more appropriate moniker.

Over the years he has convened conferences and written extensively about the application of income-contingent loans to a host of social and economic-reform issues, such as with respect to drought relief, low-level criminal fines, elite-athlete training, paid parental leave, white-collar crime, community-based investment projects, solar panels for poor people, Indigenous business investment and taxing the brain drain.

In the backdrop of the pandemic, Federal Education Minister Dan Tehan announced fees for humanities, law and commerce university courses would increase while fees for health, teaching, science and other related fields would drop in a bid to 'incentivise' students to study them.

Bruce believes that because “there is no evidence that HECS changes affect preference” there should be no reason to presume the recent announcement of fee increases would alter preferences of incoming university students.

“I am not qualified to comment on the politics of this announcement or the clear expression of labour market preferences implicit in the new fees. However, I can say with some confidence that even very significant changes to HECS prices have not in the past changed students' behaviour.

HECS was in fact designed to mute price effects by removing financial barriers, having no up-front fees and moving all payment issues well into a student's future. From a lot of research, we are yet to find any evidence at all that HECS changes affect preferences, and there is no reason to believe that things will be different this time," Bruce asserts.

With many different colleagues, Bruce has modelled a plethora of scenarios that could potentially benefit from HECS-style loans. In the backdrop of the COVID-19 pandemic, Bruce believes the Australian Government needs to have a plan to transition from JobKeeper in a way that supports fragile businesses but will not continue to incur huge costs to the budget.

“A way to do this would be the use of revenue-contingent loans. My colleague, Professor John Piggott from the University of New South Wales, and I explain how this would work, and have modelled the financial flows in the working paper available in Transitioning from JobKeeper. We are confident that this would work and incur close to no costs for the government's budget. It is an idea that could also be used to help universities get through the terrible short-term financial trauma we are now in,” he explains.

The senior academic is currently working on two different yet related areas: the first is his on-going research and policy engagement with respect to student-loan reform outside of Australia. “I have been very actively involved in student-loan research and policy debate in many countries on the verge of adopting HECS-style approaches to higher-education financing. Change is in the air, but who knows when?” says Bruce.

The other is the adoption of contingent-debt instruments for various social and economic policy reforms. He continues to enjoy collaborating on a variety of joint projects, and has most recently been working with ANU Sustainable Farms on the use of revenue-contingent loans for the financing of environmentally sustainable farm investments. “We have a way to go but so far things look very promising,” Bruce shares.

In a recent article in The Australian, Bruce believes a letter from cricketer Sir Donald Bradman may have led him to his choose a career in academia. Click here to read more.