CLAIMS that universities are poorly funded and could slide into debt are ''alarmist and inaccurate'', Tertiary Education Minister Chris Evans says.
Mr Evans warned that increasing university fees would push higher education beyond the reach of students from poor backgrounds and those in regional Australia.
His comments come after the leader of an elite group of universities urged the government to allow institutes to set their own student fees. Group of Eight chairman Fred Hilmer said some universities could lose up to $100 million unless they received more funding.
But Mr Evans said student debt would balloon if universities set their own fees.
''What we know about deregulation of fees is that we see a vast increased cost to the student and we don't see any real competition on price,'' he said. ''We believe we are now funding universities adequately by increasing their income by 50 per cent since we came to office. That allows them a capacity to properly educate Australian students.''
He said it was crucial to Australia's economic growth that 40 per cent of young people completed a degree. ''I don't believe and the Labor Party doesn't believe that making education prohibitively expensive … is the answer.''
The federal government caps university fees under the current system. But Professor Hilmer said the current model should be scrapped.
The Group of Eight includes Australia's most prestigious institutes including Monash and Melbourne universities.
Professor Hilmer, who is the University of NSW's vice-chancellor, has previously said universities should be free to determine fees. He said his university faced a $100 million deficit over the next three years if international student numbers and federal funding remained steady.
''It's unlikely UNSW is alone in this situation given that all universities are funded broadly in the same way and are facing the same uncertainty around the revenue stream from international students,'' he told The Age.
The National Union of Students has rejected his push. Union president Donherra Walmsley said students would pay more for education if universities set fees.
Universities Australia chief executive Belinda Robinson said the funding model needed to be examined after major changes to the sector, including declining revenue from international students. She said Canberra's decision to remove caps on undergraduate enrolments from this year had also presented challenges.