NATIONAL UNIVERSITY OF SINGAPORE AND NANYANG TECHNOLOGICAL UNIVERSITY (Approved tuition fee increases)

Column No : 474

NATIONAL UNIVERSITY OF SINGAPORE AND NANYANG TECHNOLOGICAL UNIVERSITY:

(Approved tuition fee increases): 2.

Mr Steve Chia Kiah Hong asked the Minister for Education (a) if he will provide a list of all approved tuition fee increases for the National University of Singapore and Nanyang Technological University since 1990; (b) how much have tuition fees gone up now, compared to the fees payable in 1990; and (c) whether the jump in the tuition fees payable since 1990 has been higher than the annual rate of inflation.

The Minister for Education (Mr Tharman Shanmugaratnam): Mr Speaker, Sir, undergraduate fees at NUS and NTU have been increased regularly since 1990. The exceptions, where fees were kept unchanged, were during two periods. These were the two periods that followed years in which the economy was going through a decline, namely, 1999-2000 and 2002-2004. With the exception of these two periods, we have had fee increases each year. I am circulating a table in response to Mr Steve Chia's request.

Undergraduate fees in the two universities increased by an average, if I take the averages over that period of years, of 8% per year in the 1990s, and an average of slightly less than 2% per year since 2000, in other words, 2000-2006, including the forthcoming academic year. For the period as a whole, if one takes 1990 up to this forthcoming academic year of 2006, fees have increased by an average of 5% per year. This includes, as you can see from the table, a large increase of 45% in 1991. After 1991, fee increases have averaged 3% per year.

Mr Chia has asked how this compares with the rate of inflation. The most relevant benchmark of inflation or cost pressures for a university is wage inflation. This is because universities are essentially human enterprises, with 70% of their costs, at least, coming from manpower.

From 1990 to 2005, wages went up nationally by an average of 5% per year. As we know, wage increases for professionals are under greater pressure. They are increasing faster, not just in Singapore, but globally.

In short, fees have been increased regularly in our universities. These fee increases have allowed the universities to meet cost pressures while improving on the quality of education they provide. However, the fees at our universities remain competitively priced, compared to overseas universities of equivalent quality, such as in Australia, the United Kingdom and the United States.

The Government remains committed to substantially funding the costs of undergraduate education. The universities will continue to exercise prudence in their expenditures and keep costs in check. Together, the Government and the universities will work to ensure that university education remains affordable and that Singapore students who are admitted to our universities can enjoy a top-quality education.

Mr Steve Chia Kiah Hong: I thank the Minister for his reply. Looking at the figures, the average was 5% fee increase a year. That actually is a lot for the HDB heartlanders who are mostly earning below $3,400 (60% earning below $3,400). That is a lot of money. Can the Minister comment whether this constant university fee increase is spiralling out of control, out of reach of our HDB heartlanders? Is this spiralling also due to the universities' heavy dependency on expatriates? Sixty percent of the teaching population are expatriates with their families. Is it because of that, that our costs are escalating out of control?

Mr Tharman Shanmugaratnam: First, let me say that tertiary fee increases all over the world exceed the rate of inflation as reflected in the consumer price inflation. Our fee increases in Singapore have, in fact, been modest, compared to comparable countries. Just to give you a feel, if you take year 2000 up to now, where we have increased by slightly less than 2%, in the United States, if you take public universities, and I am not even talking about private universities, the increase has been about 9.5% per year or cumulative increase of 57%, seven times the increase that we have seen in Singapore. In Australia, the increase has been about 4% per year, or cumulative increase of 24%, three times the increase we have seen in Singapore over that period. It is a global phenomenon.

Maybe to help Mr Steve Chia understand it, because I think his question is genuine and he may not understand the way in which universities function, they are fundamentally different from normal business enterprises. In a normal business enterprise you can have a wage increase for your workers but you try and offset it through some technological or productivity improvement - produce more output for the same input so that your price does not need to go up so much,

not as much as your wage increase. That is why, nationally, we find wage increases are always higher than CPI and price increases.

But in the universities, it is different, because we do not want to compensate for faculty wage increases by increasing the number of students per faculty. In fact, on the contrary, we want, over time, to reduce the number of students per faculty, so as to be able to improve quality. Universities are in the business of producing quality graduates. Students must leave the university better educated, better prepared for the workforce, high income profile over time and, hopefully, better citizens.

Universities have to compete for faculty. They have to pay market rates in order to deliver quality students. When they think of the facilities they want, they have to provide high quality facilities, so as to ensure that students benefit from access to the latest technology. They are not in lecture rooms that are overcrowded, so that they are able to spend quality time with lecturers and even with the assistants of lecturers. This is the way to go if we want to deliver an affordable but top-quality education to Singaporeans.

If we look at the models out there, there are basically two models. One is the European model. It is highly affordable - very heavily subsidised - but it is affordable low-quality education, overcrowded lecture rooms and a consistent brain drain year after year in the Sciences and Engineering, even in the Humanities, from Europe to the United States, and Britain benefiting to a minor extent from the brain drain from Europe.

That is not the system we want. Providing affordable low-quality education will be a disaster for Singapore and for our economic strategies. What we want to do is to provide an affordable top-quality education. It is also what the Americans, the British and the Australians are trying to do. But where we differ from them is that we have a substantially higher public subsidy for our universities. And that is why the Australian universities have increased fees by three times more than Singapore universities in the last six years. That is also why the American public universities have increased fees by seven times more than Singapore in the last six years, because we have retained a very high commitment of public funding for our universities. As we discussed it extensively in last year's COS debate, and as I mentioned very explicitly, over the medium term, we want to move towards the Government funding 75% of the total cost of undergraduate education. Currently, we are still funding a little more than 75%. We do not intend to move there immediately but we will move there gradually. But that is still substantially higher public funding than any comparable country that is seeking to provide an affordable top-quality education, not an affordable low-quality education.

I think it is also the most equitable system to address Mr Chia's concern. If we want to subsidise universities more, where do we get the money from? I do not think we want to raise taxes. So it means taking it from the polytechnics, ITEs and schools. I do not think that is right for two reasons. The main reason is that university graduates in Singapore, as is the case all over the world, will earn a premium over graduates from other institutions of education. That is well known. We all know that. It is obvious the starting salaries and expected life-time earnings are higher. So it is not equitable to subsidise them more and more, not just keep a high level of subsidy but increase their share of the educational subsidy. It is just inequitable.

Even at current levels of subsidy, we are subsidising university students substantially more than ITE students. So I think we have got to maintain a sense of perspective about this. First, how can we deliver top-quality education? I have explained that. We do not want the European model and we can do a better job than the Americans, the Australians and the British.

Second, what is equitable? I think what is equitable is that we put that extra dollar into our polytechnics, ITEs and schools where there is the Opportunity Fund or extra technology, improving the quality of our ITEs so that they can become centres of excellence in technical education, not increasing the share of subsidy going to our universities. So this is sensible from the point of view of human capital development, and it is also sensible from the point of view of being equitable.

Mr Speaker: One supplementary question, Prof. Ong.

Assoc. Prof. Ong Soh Khim (Nominated Member): Sir, I would like to raise a supplementary question and I have to first declare my interest. I am an academic at the National University of Singapore.

I agree with the Minister that the graduates earn a premium when they start to go out to work. The increase in the starting salary of a fresh graduate did not increase at an average of 3% a year. I would like to ask the Ministry to consider increasing the gross income ceiling for applications for financial assistance scheme for the students, so that they can apply for a financial scheme to help them with their loans.

Mr Speaker: I must remind Members that we only have half-an-hour today for Questions.

Mr Tharman Shanmugaratnam: Indeed, Mr Speaker, Sir, NUS, NTU and SMU have revised their financial assistance schemes. They revised it in two ways. First, they have substantially jacked up the total amount of funding that will be available for financial assistance - more than 50% increase. Second, they have also revised their criteria so that more students can benefit. If I can simplify, I would say that a median student, who comes from a family that is around the 50th percentile of income, does not have to come out with any cash to get a university education in Singapore. Through a combination of a loan or bursary, the median student does not have to come out with any cash for the duration of his university education.

Mr Steve Chia Kiah Hong: Last supplementary question, Sir.

Mr Speaker: No, we only have half-an-hour today. Prof. Ong, your next Question, please.