La Trobe and Charles Sturt universities were among those who participated in the Senate hearing into the Higher Education Support Legislation Amendment in Wodonga on Tuesday.

The government wants to increase student fees and reduce university funding by $380 million by applying a 2.5 per cent “efficiency dividend” next year and in 2019.

CSU deputy vice-chancellor Professor Toni Downes said the university would lose about $4 million in 2018 and $8-9 million from 2019.

“The intent of the bill, which is to impose cuts on universities, will have a permanent and disproportional impact on our universities in the regions,” she said. “At times of high unemployment, we can’t disenfranchise (students), they have to be able to see higher education as an opportunity.”

La Trobe University Professor John Dewar said there had already been a 20 per cent drop in demand for regional university places over the past five years and proposed changes could “create a brain drain in the system of students from the regions to the cities”.

He said the higher cost of education would make promoting universities an uphill battle.

“Aspiration to study at university in regional areas can be very fragile and the prospect of increased student contributions and increased student debt I think, and there is evidence to support this, will further deter students from coming to university,” Professor Dewar said.

“My real concern is that we have no real coherent regional higher education policy.

“Instead what we have is the coming together of a series of unintended consequences of existing and these proposed government policies that will see declining demand for regional campuses, higher costs of delivery, reduced aspirations to study and hitting regional campuses harder through the efficiencies dividend.”

La Trobe University regional pro vice chancellor Professor Richard Speed said it was important for universities to be in surplus because the money was used for works such as new buildings.

He said science courses would be revised at Albury-Wodonga from next year, but the university could not realistically replicate Bendigo’s new $20 million engineering building, so it needed to find ways to use it for students across the state.

“Regional campuses have the opportunities to use technology and to use mobility and imagination to find ways to deliver courses that weren’t previously easy to deliver,” Professor Speed said.

Professor Downes said CSU did not have “rivers of gold” in cash, referring to a comment from Education Minister Simon Birmingham earlier this month.

She said the university relied heavily on federal government teaching income and was concerned there was very little information about how the funding levels would be assessed.

Senator Bridget McKenzie questioned why the regional universities assumed they would lose funding under a new performance-based model, despite higher attrition or “drop-out” rates than metropolitan universities.

“I don’t see a performance issue from CSU that would see you needing to assume that you’re actually going to lose money under this,” she said.

Senator McKenzie said there were many acceptable reasons why students dropped out of university.

“I would be very very disappointed if our government and those setting that performance criteria don’t understand the basic research around this issue,” she said.

“I’ll be the first one yelling from the rooftops that they’ve got it wrong, but I’ve actually got confidence that they know this research and won’t be setting those targets.

“I will stand with you, I’m that confident.”

Senator McKenzie has put the heat on universities to find their own savings to counter cuts to federal government funding.

She said many vice chancellors were comfortable to advocate for full student fee deregulation two years ago, but were now complaining about what she called an “efficiency dividend” to government funding.

“There are efficiencies to be gained and I would encourage vice chancellors to be more creative in solving this because what I don’t want to see is caps put back on the system and restriction of access to higher education,” Senator McKenzie said.

But she said vice chancellors at Tuesday’s Senate hearing made fair points that funding criteria for regional universities should be different to those in cities.

“It’s not going to be a one-size-fits-all policy solution because our universities are very, very different,” she said.

“What we need to make sure if government money, which is essentially taxpayer dollars, is being spent in a way that is transparent and accountable, and at the moment it’s not.”