Employers are resisting Government plans to oblige them to contribute more to higher education through increases in a payroll levy.
Earlier this year, Minister for Education Richard Bruton announced a proposal to raise an additional €200 million for the sector through increases in employer's PRSI to the national training fund.
He said the move was needed to help tackle a funding “crisis” facing the higher education sector.
However, employers’ group Ibec has criticised the move to raise funds through a levy as an “inappropriate response” which will undermine Ireland’s competitiveness.
In a submission to the Department of Education seen by The IrishTimes, Ibec describes the proposal as an "an inadequate 'fix' due to the absence of a credible and more sustainable solution."
"Given the challenges posed by Brexit, a slowdown in international trade, anti-globalisation sentiment and political uncertainty in Europe, an increase in employer's PRSI will have an adverse impact on Ireland's competitiveness," it states.
Instead, it says a portion of corporate tax gains should be ringfenced for investing in higher education.
“Given the scale of corporate tax receipts, this is a more viable and sustainable employer investment mechanism,” it states.
Ibec says there are “serious issues” around the governance and use of the training fund, which is “essentially little more than an earmarked tax”.
It notes that the fund has carried large surpluses to help support the general Government balance sheet.
“ Apart from confirming the views of employers who regard the NTF [national training fund] as an additional tax, this is not the purpose for which the fund was established,” it states.
It calls for a detailed cost-benefit analysis of all programmes supported by the fund and says employers should have “a direct input” to decisions on training priorities and funding allocation.
The Small Firms Association has also objected to increases in the training fund levy and pointed to corporate tax receipts as an alternative source which would not place an additional burden on employers.
Mr Bruton and Minister for Public Expenditure Pascal Donohoe met with employers and other higher education partners as part of a consultative forum on Tuesday.
Peter Cassells, the lead author of a report on the future funding of higher education, told the audience of the urgent need to agree a sustainable funding model if Ireland is to deliver a "world-class" higher education system.
Both Government ministers agreed that a proposed increase in the training fund should be considered in relation to meeting the funding needs of both higher and further education.
They have proposed increasing the training levy from 0.7 per cent to 1 per cent over the next three years. This would yield an additional €200 million over 2015 levels.
“Everyone agrees that we have to increase funding of the higher education and further education and training sector, as identified in Peter Cassells’ report last year.
“However, there is less consensus on where that funding should come from. Doing nothing is not an option.”
When asked by reporters if recent allegations over the misuse of funds by universities damaged the argument to provide extra funding, Mr Bruton said it was crucial to “get governance right” in the higher education sector.
Mr Bruton said he was reviewing whether the Higher Education Authority had sufficient powers available to it, but added that universities needed additional investment if they are to fully realise the potential of students.
Mr Donohoe said he “firmly believed” the training fund had a role to play in funding higher and further education, alongside Exchequer investment and student contributions.