Budget cuts to universities were inevitable and deregulation will enable the sector to deal with the fallout, one vice-chancellor says.

Speaking at the Sydney Institute, University of Adelaide Vice-Chancellor and President Professor Warren Bebbington said deregulation had become confused with the cuts, but HECS must be maintained.

He also defended the American university system, saying it trumped the “monochrome” of Australian higher-education in quality and choice.

“Deregulation is now supported by most of the university peak bodies. Blocking the legislation while there are still cuts in the budget would be a disaster,” Professor Bebbington said.

“It would only accelerate the slow starvation of our universities, producing a dire, fiscal famine.

“Our universities have been shackled to regulatory uniformity for two generations, with government regulation of degree types, student numbers, and fees.

“In 2012, caps on student numbers were lifted but without the fee flexibility to keep pace with costs, many universities had no choice but to endlessly expand enrolments.

“Deregulation could have happened without cuts, and if the Senate is not careful cuts may now happen without deregulation,” he said.

The Vice-Chancellor said that comparisons with higher education in the US had distorted the public debate.

“’Americanization’ has become a pejorative term,” said Professor Bebbington.

“By any measure, the American university system is preeminent in the world.

“It offers an array of quality and choice that makes the Australian university landscape monochrome by comparison.”

Figures show public university fees in the US in 2012 averaged $8,240 per annum, while two-thirds of US students receive scholarships, tuition discounts or financial aid, and the average college graduate debt is $28,000.

“The real problem in the US is with dropouts,” Professor Bebbington said.

“They end up in lower-paid work: they suffer hardship and often default on their loans.

“This cannot happen in Australia - thanks to the HECS income threshold.

“No vice-chancellor, indeed no academic, wants to see students burdened unnecessarily.

“Spiralling fees could easily fracture the goodwill that has traditionally existed between universities and their communities... however, the proposed imposition of charging Australian student loans at the variable government bond rate from the commencement of their studies would breach a basic principle of HECS,” he said.

“It would mean many would never be able to fully repay their university debt. Such a policy must absolutely be rethought before it becomes law.”