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Go8: The empire strikes back

September 15th, 2014

Michael Gallagher of the Go8 has put out a press release in reaction to my piece in The Conversation on higher education reform, accusing me of “an attack on a straw man”. It’s a fine example of John Holbo’s two-step of terrific triviality. Gallagher backs away from his previous advocacy of deregulation as a positive benefit to the much weaker position I mentioned in the article that it is “unpalatable but necessary response to cuts in funding”, or, in Gallagher’s words that “the status quo is not an option”.

Gallagher starts by denying my claim that the Go8 “sees for-profit institutions like the University of Phoenix as the way of the future” or that it advocates privatisation, similar to what we have already seen (with disastrous results) In Victorain TAFE. Here’s what he actually wrote in the piece I linked

Transnational corporates are also expanding. … Apollo Education Group Inc., through it s subsidiaries the University of Phoenix, Apollo Global, Institute for Professional Development, Western International University and College for Financial Planning, is one of the world’s largest private education providers. Much of its focus is on upgrad ing the qualifications of working adults. The Apollo Global network includes BPP , a provider of education and training to professionals in the legal and finance industries in the UK and Europe; Bridge School of Management , an Indian business school in joi nt venture with HT Media Ltd.; Milpark Education, a management education provider in South Africa; Open Colleges Australia comprising: Open Colleges; Integrated Care & Management Training; and College of Fashion Design ; UNIACC , a university of arts & communication in Chile; Universidad Latinoamericana, a communications, business, and medical university in Mexico.

Clearly such enterprises involve risks. Kaplan, for instance, has had difficulties with US accreditation. The University of Phoenix has run into difficulties regarding student dropout and graduate employment outcomes. These difficulties hit the bottom line quickly and require prompt responses from providers and regulators alike, as in all industries. The important policy point is not about individual providers but about the directions of change that pioneering providers indicate for the future through their successes and failures. The thing about the US enterprise culture, unlike Australia’s, is a willingness to accept learning from failure as a step to success. (emphasis added)

Readers can judge for themselves whether my summary was fair.

Gallagher objects to my characterization of the past twenty years as a period when governments have encouraged competition between universities, instead asserting that the uniformity we now observe has been driven by government edict. He was singing a different song back in 2001, when he wrote

In searching for alternatives to the common forms of government influence predominantly through regulation, … it could be fruitful to rely more on competition, diverse sources of funding, consumer power, serving different constituencies and public information on quality.
Such a new structure of incentives is now being put in place within the Australian higher education system.(emphasis added)

Notably, Gallagher does not respond to my observation that the result of deregulation will be a reduction in student numbers or to my prediction that all universities will greatly increase fees. Nor does he defend the US model proposed by the Go* against my evidence of its failure in its home country

In fact, he makes no positive claims for deregulation at all. Instead, he resorts to his own straw man, saying

No Australian government has yet been prepared to meet the full costs of a mass system, and no Australian government could do it, without greatly increased taxes.

Meeting the full costs of the system would mean replacing the HECS system with free access, something which I obviously did not advocate.

It’s certainly true that governments have seen the higher education sector as a convenient target for cuts, and that, if the cuts proposed in the Budget are carried through, but fees are held fixed, universities will be in an unsustainable position. But when a peak lobby group like the Go8 is actively supporting cuts in return for deregulation, it’s scarcely surprising that the government should think it will be easy to push such a package through.

Properly funding the current post-secondary education system, including TAFE and vocational educational as well as universities will require governments to refrain from further cuts to funding and ideally, to reverse some recent cuts. Expanding the system to the universal access we really need will certainly require additional funding, but not such as to entail “greatly increased taxes”. There is plenty of public support for this, and if bodies like the Go8 were doing their job, it could be mobilised.

The pathetic weakness of the Go8 (and of Universities Australia) was shown under the previous government, when the schools sector successfully pushed for the Gonski reforms, partly funded by cuts to higher education funding.

Gallagher complains that I identify problems, but not solutions, so I’ll propose a first step. Ineffectual committees of vice-chancellors like the Go8 and Universities Australia should dissolve themselves and make room for a body that would represent the entire sector (students and academics as well as management) and would put up a fight for higher education in the same way as do other representative groups.

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  1. Henry George
    September 15th, 2014 at 16:12 | #1

    The Government has argued that higher education leads to higher incomes and therefore graduates should pay higher fees. But higher incomes lead to higher taxes. Therefore what is the return to the Government on its capital expenditure via university funding which produces such taxes? I don’t know and I haven’t seen any articles that address this question. Any ideas anybody?

    While I’m on the net a totally different matter. Since the Government seems unable to raise income taxes on mining companies why not charge export taxes/levies? I realize that this may not be optimal from a strictly economic theory point of view but as Solow once said “the wheel is crooked but its the only game in town”.

  2. Ikonoclast
    September 15th, 2014 at 16:47 | #2

    When I went to University it was fee free and there was tertiary assistance (TEAS) at least for mature age students (21 plus) who had previously supported themselves. Now that Australia is richer than ever before we can’t afford these programs of yesteryear. Gee that makes sense… NOT!

  3. kevin1
    September 15th, 2014 at 18:04 | #3

    The Go8 press release heading arrogantly says a serious policy dilemma requires serious contributions (clearly JQ is the target). Not surprising that the Go8 prefers the bully pulpit of a PR rather than debating the issue in the comments section of The Conversation article. Down from your thrones God Professors!

  4. September 15th, 2014 at 18:10 | #4

    I was in your era, Ikon. It was free because we were a rich country that could afford it. Mind you, we were a rich country with houses that are a lot smaller than they are now, and generally housed more people too. We were a rich country when overseas holidays were rare. We were a rich country when most kids cycled to school. We were a rich country, even though we used twin tub washing machines, used wood to heat our water, and didn’t have air conditioning. We were a rich country when you used to get your shoes repaired rather than buy a new pair.

    Of course we used to collect more tax back then – or at least the income tax rate was higher, and I’m led to believe there was less tax engineering then, but I’m not sure. And things were much more expensive then. Today things are really cheap and services (like education) are comparatively expensive.

    I’m interested if Prof Quiggin thinks that we offer too many university courses, or offer them to too many students. Because that is the really big change since the 70’s – many, many more people go to uni, and study courses that sometimes seem slightly dubious to me. In the late 80’s I did a Graduate Diploma in Business Computing at Curtin Uni. I had some industry experience, and recall thinking at the time that much of what was taught only made sense if you had or were working in the field. And if you were working in the field, it was pretty much “trade training”, rather than theory.

  5. Ikonoclast
    September 15th, 2014 at 18:56 | #5

    Can’t means won’t. We can’t fund tertiary education because we won’t. It’s as simple as that. But we have billions to waste on jet fighters that don’t work, submarines that don’t work, bogus terrorist alerts and wasteful wars in the Middle East. Also, we let mining billionaires make windfall billions and fail to tax them properly.

  6. Ernestine Gross
    September 15th, 2014 at 20:28 | #6

    “John Quiggin’s article in this morning’s Conversation (‘Three misguided beliefs of the Group of Eight universities’) is an attack on a straw man. It is lacking in evidence, consistency or logic. ” [Source: Michael Gallaher’s press release]

    No, on the evidence provided, it is Gallaher and not JQ who has a problem (a whole set of problems).

    We shouldn’t be surprised for a professional academic, like JQ, to win this one easily. How else would academic qualities manifest themselves?

  7. Ikonoclast
    September 15th, 2014 at 21:04 | #7

    @Ernestine Gross

    Even when the Canberra-installed mangerialists are wrong they are still right. Good academics are almost universally ignored in this country.

  8. conrad
    September 16th, 2014 at 07:57 | #8

    Gallagher starts by denying my claim that the Go8 “sees for-profit institutions like the University of Phoenix as the way of the future”

    Actually, when I read this, I got a different message from the next line: “That model may be one among many potential offerings in a more open and diverse system”.

    This entirely fits in with a story like the GO8 (and everyone else) offering poor quality undergraduate education (and whatever else they can do as cheaply as possible), and offering expensive things for which they can get the money for.

  9. derrida derider
    September 21st, 2014 at 19:26 | #9

    @Henry George
    Henry George is of course correct about how progressive taxation recovers the cost to government of tertiary education.

    Here’s a back-of-the envelope (actually top-of-the-head) calculation. The lifetime effective marginal tax rate on a high income earner is well over 50 per cent (you’ve got to count expenditure taxes like the GST in). Cost of government funds is currently 3.7%, so for the government to make a profit from fully funding tertiary education it needs an average return to individuals of a bit over 7% nominal – say 5% real. Estimates of the real private rate of return to tertiary education are near or over double digits, which suggests free tertiary education is therefore a terrific investment for other taxpayers (as primary and secondary education is).

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