The government’s higher education reform package faces its second defeat in the Senate this week. Over the last week controversy has focused on the government’s threat to not renew $150 million in funding to the National Collaborative Research Infrastructure Strategy (NCRIS). This is being denounced today as reckless and bullying.

While threatening not to fund NCRIS looks like a tactic to pressure the Senate to pass fee deregulation, it also reflects the narrowing of options to achieve another important goal of the Pyne package, which is to control total spending on higher education. This has increased rapidly in recent times, with the main teaching subsidy program up 40 per cent in just five years. The previous government tried to introduce cuts, the current government is trying, and the next government will try. With big Budget deficits forecast, higher education cannot escape attention.

In my view the issue is not whether higher education will be cut, but how to do it in ways that cause least harm to public policy objectives in teaching and research. The situation we are in now is that programs are going to be cut according to whether or not the measures need parliamentary approval, not whether the affected programs are low priority or could be funded in other ways.

NCRIS is vulnerable because unlike most other university programs it is funded via the annual Budget appropriations bill. All the government has to do is not include its funding in the bill and the money is saved. The Parliament will not get to consider a bill on NCRIS. I think the demand driven system is also vulnerable in the medium term. From 2017 funding agreements between the government and universities could be used to freeze funding (which is all the government is trying to do; the 20 per cent cut proposed to per student funding is what is needed to control spending while student numbers grow). The Parliament has no power over funding agreements, so they are an obvious way to save money.

The minister doesn’t want to pursue either of these options. He has made much of securing conditional support for NCRIS, which Labor had left out of the forward estimates. He likes the demand driven system so much that he wants to extend it. But with internal government requirements to deliver savings, these programs are among the few feasible options if the Parliament won’t co-operate.

The multi-purpose bill higher education bill currently before the Parliament – with Budget measures, the demand driven reforms and fee deregulation – is complicating efforts to get a good outcome. If Senators are opposed to any of it, they will vote against all of it. Fee deregulation faces the strongest opposition, so leaving it in the bill is an obstacle to achieving the bill’s other two objectives.

In a couple of Senate inquiry submissions I have explained the different sources of the Pyne package and suggested proceeding with them separately.

I think we need three bills: Budget measures, demand driven reform, and student funding rates. One of my submissions suggests reforms to HELP that are not in the current bill but which would save money, lessening the need for big cuts to per student subsidies. While it would still be difficult to get a higher education savings bill through the Senate, it would have a better chance than one that includes fee deregulation. It would also give the government a better political position on NCRIS – indeed, it could include a special appropriation for NCRIS so that it is clear that this is just a Budget issue, and not a tactic around fee deregulation.

So far as I know, none of the cross-bench Senators opposes the demand driven reforms. If there were offsetting savings in the Budget legislation, the government could bring a separate demand driven bill forward and expect it to pass the Senate.

Fee deregulation as it stands will almost certainly fail to pass the Senate. As there is no consensus on alternatives, we need more time to work through the issues. The universities want the extra revenue deregulation would bring, but I don’t think this is urgent for 2016. While the government has invested a lot of political capital in fee deregulation as the big idea of the reform package, a sequenced legislative strategy would maximise their chances of achieving something in higher education in this parliamentary term.