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In the media: Pyne push “is chronically unfair”

The Australian, 08 Apr 2015

By Julie Hare

Political desperation to do a deal on university fee deregulation combined with systemically flawed funding arrangements would result in a chronically unfair situation of some students massively subsidising others, leading vice-chancellors say.

Those students would also be saddled with subsidising the country’s chronically underfunded research efforts. “The current policy process has played through to stalemate (in the Senate). It leaves unresolved the big questions about higher education and its funding,” writes Glyn Davis, head of the University of Melbourne, in The Australian today.

The government’s higher education reform package has twice been rejected by the Senate. Education Minister Christopher Pyne has repeatedly said universities would be free to use additional revenues from fee deregulation in any way they saw fit, including funding research activity, but Professor Davis argues that existing funding arrangements for teaching subsidies, known as cluster funding, are irrational after years of policy tweaking.

He also argues that attempts to redress the independent senators’ concerns over excessive fee hikes would exacerbate the “irrationality” of the current situation.

“Since deregulation in its current form is not acceptable to the Senate, we need a way to evaluate the more complex alternatives on offer,” he writes.

The government is understood to be considering proposals by economists Bruce Chapman and David Phillips and another proposal by Victoria University head Peter Dawkins to progressively remove government teaching subsidies, or impose a sliding tax or levy, the higher fees rise.

This would limit the extent of fee rises but disproportionately affect Group of 8 universities that need higher fees to cross-subsidise their research efforts. Peter Hoj, head of the University of Queensland, said proposals such as Chapman’s would be “unfair” to students who chose Go8 universities who would find themselves not just funding more of the nation’s research efforts via their fees but also students at other universities. “It looks totally unfair to me. What signal are we sending to some of the country’s best students,” Professor Hoj said.

Yesterday, Mr Pyne’s office confirmed the Chapman proposal was under consideration.

David Phillips, who along with Professor Chapman devised the sliding tax, said the levy was only ever meant to be a “tweak” to what he believes was a flawed package overall. “It was only ever intended to address problems in one part of the package. It was never of itself a comprehensive reform. It was an improvement to a package that in my view was still flawed,” he said.

Mr Phillips said while a levy could address concerns about the potential for excessive prices in a deregulated market, the market design of the package remained flawed. Professor Chapman said it made sense to allow different universities to charge different fees but he strongly believed that unfettered fee deregulation was a recipe for disaster. “I’ve always thought it is unreasonable to give these quasi-private institutions because that’s what universities are if they have the power to charge whatever price they like the luxury of HECS, which would make considerable price rises inevitable.” Professor Davis argues that that underlying assumption is wrong. “These proposals rest on the same idea; deregulation will only be acceptable if constrained.

Whether fees are limited by regulation or held down by complex, subtle mechanisms, universities apparently cannot be trusted with setting prices,” he writes.

Source: The Australian

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