The Australian, 08 Apr 2015
By Glyn Davis
The Senate has rejected for a second time the government’s higher education package. Labor, Greens and crossbench senators objected to the principle of deregulation. They were not swayed by last-minute proposals designed to make markets more palatable.
The temptation to do a deal prompted caution last week from Group of Eight chief executive Vicki Thomson.
The commitment to deregulation stands but the Go8 is wary of modifications to deregulation without analysis first.
Though a few commentators argue the status quo works just fine, I struggle to defend a higher education system with average staff-student ratios of 24.6. Who knows, there may be happy institutions with sufficient funding for small classes, generous staffing and secure employment for all.
For everyone else, the chronic underfunding of many courses remains a challenge, particularly when teaching income underwrites research because research grants are inadequate to support funded projects. Both teaching and research are required by law for an Australian university; the larger an institution’s research effort, the more pressing the financial pressure.
The defeat of deregulation in the Senate does not end the need for reform of higher education funding. We will, and must, return to the topic.
In response the sector has offered up numerous proposals, from the tapering of public support suggested by Steven Schwartz, to a cap on loans advocated by Linda Kristjanson and levies championed by Peter Dawkins and Bruce Chapman. All these proposals rest on the same idea: deregulation will be acceptable only if constrained. Whether fees are limited by regulation or held down by complex, subtle mechanisms, universities apparently cannot be trusted with setting prices and must be controlled.
After a year of debate about deregulation, alternative proposals should be tested and debated. Yet the endgame of a protracted parliamentary debate can be dangerous; the desire for closure can override policy logic.
As just one example, before the last Senate vote Education Minister Christopher Pyne wrote to senator David Leyonhjelm — who has voted in favour of the package twice — with a commitment to hold universities accountable for unpaid HECS debt from their students.
Leyonhjelm had suggested a portion of university funding be contingent on meeting financial indicators linked to repayment of HELP debt by graduates. As colleagues have observed, such a proposal raises a difficult question about the purpose of a university education. If success is measured by return to Treasury, what are the consequences for courses in the creative and performing arts? And how can universities be held accountable for repayment when the government has ruled out collecting debt from estates?
Likewise, there are concerns about proposed cap-and-levy mechanisms. These start with the current allocation and funding of commonwealth-supported places and then impose disincentives for further price rises. But what if, as the Go8 contends, the CSP cluster funding system is profoundly inequitable? The current price of degrees, decided by officials in Canberra, has no relationship to the costs of delivery.
As the 2011 Lomax-Smith report made clear, there is no consistent principle guiding public and private contribution to university study. A law or economics student pays about 83 per cent of the cost of their education while students in other disciplines enjoy a much larger public subsidy. This is not fair.
Without prior reform to cluster funding, a cap or levy would lock in present inequities.
As economist Chapman notes, the outcomes of his levy depend on the price parameters set by government.
The concern of the Go8 is that a levy will be imposed over existing irrational arrangements.
The model of deregulation proposed in the present legislation allows universities to deal with the inequities of CSP rates through differential charges and cross-subsidies. A levy would limit this ability while imposing significant new reporting and regulatory monitoring.
Hence the Go8’s support for a review of higher education funding; since deregulation is not acceptable to the Senate, we need a way to evaluate the more complex alternatives on offer. These are schemes, caps and levies not easily captured in legislative amendments. They do not lend themselves to simple statement and implementation. Politicians and the broader community need detail and time to consider the options on offer.
The present policy process has played through to stalemate. It is time to start again the work of public evaluation to agree a new way of funding higher learning in this nation.
Glyn Davis is professor of political science and vice-chancellor at the University of Melbourne.