While the Senate education and employment committee report on the government’s higher education changes predictably endorsed Christopher Pyne’s plans to cut university funding and deregulate fees, Labor has zeroed in on one of the most significant weak points in the government’s case — its claim that fees will not necessarily rise significantly once deregulated.
Throughout the government’s so-far unsuccessful campaign to attract support for its changes, which will see university funding cut by an average of 20%, heavier loan repayment requirements for graduates and universities allowed to charge what they like for undergraduate courses, it has insisted it is not a given that deregulation will see fees universally rise. “‘Some fees will go up and some will go down’,” Education minister Christopher Pyne has claimed. However, Education department officials have admitted that no modelling was done on the impact of deregulation on fees.
In Labor’s dissenting committee report released yesterday, the opposition highlights the experience of partial deregulation under the Howard government, when then-Education Minister Brendan Nelson allowed universities to lift fees by up to 30%, arguing — in words that uncannily anticipate those of Pyne — that “some course costs would rise, some would drop and others would stay the same”. Once the reforms were introduced in 2006, within two years all universities had lifted fees.
As Ross Gittins explained in May, the experience in the UK has also demonstrated that letting market forces set university fees means fees only ever go up — reflecting that higher education simply doesn’t function effectively as a competitive market, due to the strong position of universities and the hard-to-assess nature of the product students are “buying”. Labor’s report also highlights the New Zealand experience in the 1990s, when deregulation saw skyrocketing fees that were subsequently capped by a Labor government.
The main committee report rejects the comparison with the Nelson reforms, quoting Education department evidence.
“In 2005 the Howard Government introduced a partial deregulation of student fees, such that universities could increase fees by up to 25 per cent. This measure, however, was not comparable to the current reforms, as fees remained capped ‘and the system did not allow for demand-driven enrolments, so that the access of institutions to Commonwealth Grant Scheme subsidies was limited.'”
Note that logic — that the failure of fees to fall under the partial deregulation model established by Nelson was because there was a cap preventing them from going up further than 30%. The issue again prompts the question of why no modelling was done by the government about the impact of fees on deregulation. In practical terms, of course, the answer is obvious: Education Department bureaucrats understood the likely outcome of any vaguely plausible modelling would be to show that fees would tend to rise, and probably rise significantly for Group of 8 institutions.
The attempted defence of deregulation by the University of Sydney’s vice-chancellor Michael Spence has also pointed to the inevitability of universal fee rises, with Spence making the circular argument that the big rise in fee revenue would enable Sydney to provide more scholarships for the courses it would make more expensive to access.
As the Labor report notes, there was no consultation with the sector by the government prior to the announcement of the reforms, except vague allusions by Pyne about coming reform. Between the lack of consultation and the lack of any rigorous basis for its claims about the impact of deregulated fees, the government’s handling of higher education reform has been every bit as inept as the Rudd government’s mining tax debacle — and for a sector far more important to the long-run performance of the Australian economy than mining.
39 thoughts on “Pyne’s higher education campaign echoes Labor’s mining tax debacle”
Chris Hartwell
October 30, 2014 at 5:24 pmA valid point Duncan. A number of folks I went through with would have been better served by TAFE rather than uni. But the government is attempting to cripple the TAFE system as well.
drsmithy
October 30, 2014 at 6:21 pmMy point about “standards” was that maybe increasing entry standards is a way of addressing this wastage (for want of a better term).
That doesn’t really sound like the point you were trying to make the first time. Especially given the follow-up about doctors.
However, it’s a valid consideration. The problem is, as I alluded to above, employers are using degrees as a first-pass filter to deal with the vast number of applications they receive for low-end jobs, and as an excuse not to incorporate employee training and career progression into their organisations. So for the typical punter to have any hope of success in Australia today, they need a degree just to get their foot in the door.
The fundamental problem here is not low entry requirements into Universities. The problem is not enough jobs.
Bohemian
October 30, 2014 at 10:31 pmThere are no market forces – only government interventions on behalf of the men who pay for this charade and the voters in the six months leading to an election.
Capitalism as initially envisaged has not existed for a century or since the railways and oil industry were monopolized in the US and the Federal Reserve came into being in the USA in 1913. Andrew Jackson’s work had succeeded in holding out the European money interests and their central banking warfare model of control since 1836 but ultimately the greatest economy in the world succumbed on a cold December 23rd after most congressman had left for the Christmas holidays.
In a market economy, a number of people called entrepreneurs think they can make a quid out of something and go for it. The government doesn’t step in to make it better or constrain them. Crappy products are shunned and good products supported…the people choose what they think is best. The law is there to punish people who break it. These days regulations keep most entrepreneurs out of business and that is just how the big corporations like it as they are the only ones with a critical mass capable of dealing with the regulation and the rest of the baloney associated with running any business big or small..
Market economy? None I know this side of the New Guinea Highlands and even those folks are probably hamstrung (lol)these days.
As for higher education, I benefited from a Commonwealth Scholarship going through but you had to work for it. I am not sure why universities are not freed up to operate anyway they want to – offering lots of scholarships, no scholarships or whatever model they care to pursue without interference from departments that shouldn’t even exist..I don’t think it is the governments problem to be honest and not everyone needs to go to university or to be made to feel somehow inferior that they didn’t. University is for those with an academic inclination not for those who want to go out in the world and do something physical or practical unless they want to.”Shop Class-Soulcraft” explores this notion beautifully.
Norman Hanscombe
October 31, 2014 at 8:34 amDuncan, what’s important to know is that universities are less concerned about students not completing than they are about the moneys they receive for having enrolled them. Even at post graduate levels students can be given non-taxable grants to enroll, and told they can keep the money even if they don’t finish A student who receives a grant for a year but then drops out or fails to make satisfactory progress receives no more funding but does not have to repay the funding he/she has received. Nor does the university have to repay the money the Government pays the university for the year the student’s tail occupied one of their seats.
I understand some universities run seminars advising students how to present applications which will suffice to ensure they receive grants for irrelevant projects, but have to concede that this would at least show efficiency on their part re raising money.
I’d disagree with you on one point, though, about how you describe what’s happening with drop outs. It’s not as you suggest, “Currently the ambulance is at the bottom of the cliff.” Rather it’s a flock of academic vultures enjoying the bounty.
Chris, re the university students you suggest might have been better suited to TAFE, sadly many of the university students who end up with ‘qualifications’ aren’t up to what good TAFE students can achieve despite the Governments paying more for their education. We’ve reached the absurd point where employers who realise how worthless some degrees can be merely use them to reduce the number of applicants they interview, but take scant notice of the degree and use other means to make their final choices. The losers are talented applicants who aren’t interviewed, but would be far better than the ones obtaining the jobs.
This, by the way isn’t a new phenomenon. In late 1976 when I needed a secretary in the office of a Trade Union, a friend running an employment agency in the same building told me about a girl whom banks and others were ignoring because she didn’t have the HSC. I tested the girl and she was brilliant, but our cash flow prevented me employing her. In the New Year I spoke to the Agency as soon as we had the funds to pay the wages. I assumed the girl would have been snapped up by then and asked if there was anyone else on the books. To my amazement I found the girl had been offered nothing and returned to school. I snapped her up and soon found she was far more competent than many university employees.
Norman Hanscombe
October 31, 2014 at 9:28 amTonyFunnyWalker, an additional problem is that where staff running I.T. correspondence type course courses for overseas students catch them with blatant poor quality plagiarism, the lecturer can be over-ruled by the university so students won’t be deterred and go elsewhere. Anyone who follows education closely should remember the Perth based lecturer who failed Newcastle University Economics Faculty students who were then “passed” and that lecturer was no longer employed by Newcastle.
The mess doesn’t become a scandal because too many have vested interests in the general public remaining unaware and (as with many other problems) most of the loudest voices can always feel ‘noble’ by blaming it on Abbott.
Funds coming to Newcastle University depend significantly on those gathered by the Economics Faculty, but such funds can be used to prop up other jobs on the Campus. Funding has many curious features. For example, there’s the actual amounts of money the Government gives to universities for every undergraduate they keep on a seat until census date. If the HECS cost to the student is only 40% of the actual cost, then the government gives the unis approximately $1400 per Arts student per semester course. I understand students currently pay approximately $600 when and IF they ever get around to paying it; but many (even assuming they’re capable of holding down more demanding jobs)see no reason to actually seek employment, and never get around to repaying ANY of the taxpayer moneys which gave them pleasant relaxed days at “university”.
Chris Hartwell
October 31, 2014 at 11:34 amI’ll not make a comment either way on the numerous arts students around campus Norman – mostly because as an engineer, I’m obliged to dismiss them. But I can assure you, those of us who did graduate worked for every single passing grade. Engineering remains one of the hardest degrees to make it through.
drsmithy
October 31, 2014 at 4:33 pmI understand students currently pay approximately $600 when and IF they ever get around to paying it; but many (even assuming they’re capable of holding down more demanding jobs)see no reason to actually seek employment, and never get around to repaying ANY of the taxpayer moneys which gave them pleasant relaxed days at “university”.
Ah, yes, the “dole bludger” argument. A narcissist’s meat and potatoes. Often made, rarely supported, even less frequently by actual evidence.
The “reason” to seek a job is the same today as it was in the past – being poor sucks.
I challenge anyone who thinks any meaningful proportion of people _choose_ to remain unemployed voluntarily, to spend a few months trying to live in their shoes.
That being said, I actively encourage anyone and everyone under the age of 30 to go to University (preferably studying something useful like Engineering or Science), rack up a HECS debt and then decamp overseas. Because rest assured this country doesn’t care about your future.
Norman Hanscombe
October 31, 2014 at 5:15 pmTrue, Chris, because deaths resulting from a collapsed bridge [or on the operating table in a hospital] can’t be hidden like the incompetence of those with Arts/Social Science/etc. “degrees” where people such as drsmithy are able to avoid acknowledging the sorts of factual data I listed above need to be answered, and instead wander off on tangents which help universities avoid answering for the moneys they receive.
Steve777
October 31, 2014 at 10:07 pmChristopher Pyne claims to be proud of his tertiary education reforms. Surely he would be delighted to share his enthusiam with the electorate. So why were they kept secret before last year’s election? Might he have been afraid that they were electoral poison?
These changes have no mandate and, in my opinion, no merit. No case has been made by the Government to the people to whom it is accountable, the voters. The reforms should therefore be rejected in their entirity until this is done. So, for a start, postpone the start date by 2 years to 1/1/2018 and let the voters have their say.