Education Minister Christopher Pyne says cutting university research funding will be the "worst-case scenario" if the government's higher education reforms fail to pass the Senate.
The education minister says he is hopeful the Senate will pass his package to rein in higher education costs and research cuts are a "worst-case scenario".
But he has refused to rule out research cuts to make up a shortfall in funds potentially made by reducing the commonwealth grant scheme by 20 per cent.
The worst-case scenario would be research cuts without reform, Mr Pyne said on Sunday.
"I have absolutely no desire at all to see research funding (cut)," he told Network Ten.
"What I want to see is the reduction in the commonwealth grant scheme - but if that doesn't happen, then universities will be able to ... say the fact they have stopped that cut, they'll be able to use that money for research."
He said protesters had exaggerated the impact of the proposed budget measures.
"They really don’t have the kinds of problems that they are protesting about that deserve the burning of effigies.
"We’re asking students to pay 50% of the cost of their education...We’re not asking for their left kidney to be donated. I think they need to get some perspective and proportion," he said.
Labor has blasted that prospect as an attempt to blackmail the Senate.
"(It's) a disgrace," opposition education spokesman Kim Carr said in a statement.
Mr Pyne will on Thursday introduce to the lower house the government's budget changes that deregulate university fees, cut per-student funding, and raise the interest rate on HELP (higher education loan program) debts.
Negotiations with senators hostile to the package will start "in earnest" once the bill passes the lower house.
Mr Pyne is so confident the momentum is on the government's side, he will also hold talks with the Australian Greens.
The Greens, however, say they won't give in to "blackmail".
"If (Prime Minister) Tony Abbott threatens cuts to research funding, he will be met with the mother of all protests," deputy leader Adam Bandt said.
Mr Pyne said students who burnt effigies of him on Wednesday during national protests against the government's higher education changes had lost perspective.
The government was simply asking them to pay half their education costs.
"We're not asking for their left kidney to be donated," the minister said.
Mr Pyne made a tongue-in-cheek jibe at students who failed to properly set alight a plastic cut-out of him during one protest.
He has offered to film a YouTube clip teaching them a lesson on how to burn his own effigy: use cardboard, not corflute.
"Because everyone knows you need more cardboard and rag than ... corflutes," he said.
Mr Pyne said the protest was another example of a failed attempt by students to get their message across.
"It speaks volumes when they hung their banner (on ABC television's Q&A program), they hung it upside down."
