Plan B

Now that the Senate has rejected Pyne’s university deregulation plan, the obvious question is, what is Plan B? The first, negative answer: there is no acceptable plan that will deliver what the advocates of deregulation wanted, namely a highly stratified system, catering to a smaller minority of the population than at present, and topped by high-status institutions comparable to Yale and Harvard. That’s the US model and, as a system for educating young people, as opposed to generating research and reproducing a tiny elite, it’s been a miserable failure.

The correct way to think about this is to begin with the core objective of the process: to provide young Australians with post-school education that fits them for work in a modern economy and life in a modern society. That leads to two main principles

* A single system encompassing both universities and post-school technical education with easy flow between the two
* Uncapped access with an objective of (near) universal participation in some form of post-school education
* As with school education, the aim should not be stratification by quality, but the provision of a high-quality education for all, with resource allocation based on educational needs, not institutional history or individual wealth

I’ll leave aside, for the moment, the problems of the TAFE sector, though these are, I think, more urgent and difficult than those of the universities.

The big problem with what I’m proposing is that it will require more money for undergraduate education. That’s because the existing system relies on a mixture of student payments (through HECS), government funding and a cross-subsidy from fee-paying overseas students. There’s no substantial scope to get more money from overseas students, so the more domestic students the more thinly that cross-subsidy is spread. Similarly, although more government funding is merited, maintaining existing funding on a per-student basis while expanding numbers is probably too much to hope for. However, a clear focus on the core goal of universal post-school education would help a lot, though it necessarily poses some tough choices.

Broadly speaking, the goal I’m thinking about is to maintain existing teaching resources per student, while expanding access to cover a steadily increasing proportion of the population.

Some ideas are listed below (over the fold)

* Ban advertising and marketing activities directed at domestic students. All Australian universities currently spend large sums on advertising, mainly in their home city markets. The ads are invariably vapid and uninformative, of the kind that is supposed to raise “brand awareness”. All they do is shuffle those students ill-informed enough to be swayed by such nonsense from one institution to another, leaving all with less resources to do the actual job of teaching.

* Separating teaching and research funding, and relying more on teaching-focused positions. The ideal that all university teachers should be active researchers worked well when higher education was confined to an elite, but it’s been problematic ever since the mass expansion of the 1970s and particularly since the end of the binary system (under which the teaching-focused assumption applied at the institutional level).

* Tightening the focus of HECS to its core goals, for example by capping the amount that can be borrowed under HECS-HELP schemes for professional education and limiting access for private providers, where abuse has been common. This would enable the effective subsidy for undergraduate students to be increased.

* Constraining institutions that undermine the cross-subsidy from overseas students (and often act as immigration rackets). The typical example is an inner-city “campus” of a regional university, catering almost entirely to overseas students. I’d suggest a requirement that domestic students in a given course of study should receive at least the same resources per student as are provided in offshoot campuses like this.

* A modest, say 15 per cent, increase in HECS fees. This would still leave fees far below the lowest levels contemplated under deregulation. An increase in fees, as an alternative to capping places, is justified, in my view, because capped access provides an effective subsidy to students who get in at the expense of those who don’t.

Finally, I’ll make some observations about the organizational structure of the university system. The bodies claiming to represent part or all of the university system, notably Universities Australia and the Go8, have performed disastrously badly throughout this exercise. In my view, there is no justification for the existence of a group like the Go8 any more than if a group of public high schools serving relatively wealthy areas formed their own group to lobby for more funding. Even if such a group were justified in principle, the appalling shoddiness of the arguments put up by the leaders of this group provide a self-refutation of its claims to excellence. Obviously, the principle of freedom of association means such groups can’t be stopped from forming, but I’d urge governments to treat them as the rent-seeking lobbyists they are.

As for Universities Australia (the dishonest renaming applied to what used to be the Australian Vice-Chancellors Committee(, this episode has shown the weakness of treating universities as synonymous with their chief executives. The much-repeated claim that “all universities support deregulation” was shown to carry zero political weight when it translated to “39 (later 38, and then even fewer) Vice-Chancellors support deregulation”. The sector would do far better if it was represented by a body that had a claim to speak for the entire university community rather than a handful of senior officials.

62 thoughts on “Plan B

  1. @John Brookes
    I suspect so. My concern is that once outstanding student debt is so high that a future government is compelled to deal with it, they’ll make it survive the debtor’s death, meaning the government can collect it from the estate.

  2. @John Turner
    HECS was a clever way of ensuring acceptance of paying fees for access to tertiary education. As we all know, people’s calculation of a pay now or pay later situation is hyperbolic in time, and so it would take a much larger fee in the pay later scenario to counter the pay now scenario. When I was working at uni, the pay now scenario got you a 25% discount over the deferred option, and even that wasn’t enough to encourage many to opt for pay now. In effect, it gave a steep discount to the already well off, subsidising them at the expense of those who couldn’t afford to pay upfront. It’s clever but hardly progressive—the opposite, in fact. I think John Dawkins especially liked the cleverness of a deferred payment system, as it smoothed the way for his neoliberal reform agenda. I rather doubt that the quality of education and research that this new system would be capable of ever entered his thought processes; the economic philosophy behind it was probably an end in itself. It would be interesting to hear from Dawkins’ own opinion as to what were the drivers for his reform.

  3. What do you think about linking HECS increases (i.e. student contribution) to CPI or inflation? Re-assessed every three years or so. Rather than increasing it less frequently, but by larger amounts.

    Alternatively, have a commission like Productivity to regularly assess the cost of education and direct a new bases cost, which could be split 50-50, with the student covering half increase and the C’wlth the other?

  4. I wasn’t clear in my comment to your blog, sorry. The plan under Rudd was to progressively increase the C’wlth subsidy based on a formula that took into account CPI and the salary levels of academic staff i.e. accounted for the ‘real’ cost of teaching. However the funding model was more or less scotched in the final Labor budget, in the search for savings. Currently it’s more or less CPI – well, hard to tell with the noise associated with the 20% cut proposed under the reform bill.

  5. @Tim Pitman
    Or alternatively scrap HECS altogether and scrap university fees and re-establish a more progressive tax system. Death duties/wealth tax? Scrap negative gearing? Higher tax rates on the higher income groups? Do something about the tax evading, tax avoidance strategies of the international corporations? As someone who worked in one at middle management level I can vouch for the fact that there is plenty of tax revenue available there.

    I would rather a social democratic state Sweden style than move more towards the U.S. Neo-liberalism.

  6. Except for student union and social activity fees, there were no tuition fees at German Universities between 1970 and 1997. Germany seems to have been a little slower than Australia in introducing tuition fees and an associated student loan scheme and a little faster in abolishing tuition fees for everybody. The fees are not determined by individual universities but by the State governments (by law the federal government is not allowed to legislate on tuition fees). The following web-site contains a link to a short English summary of the history of tuition fees by State (“English version of this page”).

    As can be seen from this web-site, several States have abolished general tuition fees after a few years. There are fees for professional degrees, for students who take very long to complete theire studies and for senior people.

    The full German version contains discussions of the pro and anti tuition fee arguments. These are very similar to those presented on this blog site (US model-neo-liberal vs education in a socio-economic framework in the broadest sense). There is one remark I found interesting. It concerns the naming of the tuition fees. In Germany they are called ‘Studienbeitraege’ – education contributions. An alternative name would be ‘Studiengebuehren’ (tuition fees). According to the referenced article, there are two reasons for the choice of name. Firstly ‘contributions’ sound better (marketing). Second, and more importantly, there is a legal reason. The term ‘fee’ (Gebuehr) under German law means that something has to be given in exchange and this causes definitional difficulties in many fields of study because education is not a commodity. (Out go terms like ‘deliverables’).

  7. @John Turner

    Sounds like the right way to go. But isn’t the current right wing mantra that if we tax too much, we’ll be uncompetitive, and we’ll actually end up even worse off? Or is that just one giant con job?

  8. We regard master-craftsmen as superior not merely because they have a grasp of theory and know the reasons for acting as they do. Broadly speaking, what distinguishes the man who knows
    from the ignorant man is an ability to teach, and this is why we hold that art and not experience has the character of genuine knowledge (episteme)-namely, that artists can teach and others (i.e.,
    those who have not acquired an art by study but have merely picked up some skill empirically) cannot. – Aristotle

  9. @Ivor
    Nothing like a Maggie Thatcher. The Iron Lady (no doubt rusting underground) destroyed the UK Economy which has never recovered.

  10. @John Brookes
    A con job definitely. Compare the Scandanavian countries – relatively highly taxed with high levels of social provision or even Germany, with the U.S., I know which path I’d rather tread and it isn’t the one that leads to the U.S. economic and social system.

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