Budget heralds dramatic change for universities

Thursday, 15 May 2014

Vice-Chancellor Professor Greg Craven

Vice-Chancellor Professor Greg Craven writes about budget reforms to higher education.

With some politicians, it’s hard to imagine them in another job. Not Christopher Pyne.

 You could easily see him as a Shakespearean thespian — shorter characters only, unfortunately — or possibly as a particularly persistent wasp. But his talent for striptease has hitherto gone unnoticed.

Recently, however, Pyne has been gradually unveiling his higher education policy with an almost erotic, gingery coyness. Interestingly, the approach makes political and policy sense.

Pyne’s dance of the 17 veils ­allows him to gauge reaction as he goes. It also permits him to indicate basic policy directions, then refine them as issues emerge. It’s now clear Pyne’s plan is one of the boldest in Australia’s higher education history, and ultimately has four planks.

First, reducing regulation for universities. Second, maintaining the demand-driven system. Third, deregulating the amount students pay. And fourth, extending government support to non-universities.

Fee deregulation is the one that will draw attention, rather like the sudden appearance of Miranda Kerr. There will be outrage at the prospect of “rolled-gold degrees” and mounting student debt.

But even acknowledging these worries, there are two hard reasons a government would consider this course.

First, Australia’s great research universities have to research. Research is expensive. There is no government money. Without fee discretion, how do they even fall behind gracefully?

Second, the government is cutting like a lawnmower on a mission.

Sadly, universities cannot anticipate immunity. If their support declines, they must make it up from somewhere or they — and students — will suffer. This is reality.

Luckily, the vast majority of universities have neither the inclination nor the brand to extract bowel-clenching premiums.

The real political challenge for the government is the so-called elite universities, which may (or may not) have both.

This is where Pyne’s slow strip is clever. As he sketches vision, he fills detail. There are any number of brakes he could develop on sandstone ambition, should the need arise. One would be an undertaking of moderation, and on a trial basis. Or some prices justification mechanism. Or a disgorgement of profits to needy recipients, such as regional universities with Nationals MPs. Or perhaps government support declining over a certain limit, or even entirely.

Pyne has plenty of time to tweak the veil, even post-budget. But he understands: the government will wear the pain of any greed, while the gleaming spires sympathise all the way to the bank.

The other part of the package — extension of support to non-universities — needs just as deft handling.

The challenge lies in the amount of funding. Put simply, universities are required to do a lot of things other providers are not.

If non-universities are funded at the same amount, they will be paid for things they do not do. Their cost base will be correspondingly lower, their profits artificially higher, and universities will be priced out of the market.

Not the sandstones, which can Gucci their way through the market. But the universities that have driven educational opportunity — the Western Sydneys, the Deakins and the James Cooks — have no such brand-tag solution.

Universities usually sell themselves short here, saying their extra costs come from the legal requirement to do research. And it is true every university spends vast sums in a national-interest research race that non-unis do not even enter. But this is only the start. Research demands serious brainpower, and brainpower costs money.

A university’s required workforce is almost as talented as it is sickeningly expensive.

Then there is quality control. Universities drive Brand Australia in our critical overseas education market. Safeguards and protections cost big in universities, the same way as they cost in any other vital industry.

Critically, universities also pour money into programs that will never pay, but just have to happen.

Ruinously uneconomic language courses. Vital but horrifically costly sciences. Health disciplines with laboratories eating a mortgage a day.

And then the really pointy end. Brilliant but uneconomic education programs for the disadvantaged. Entire regional sub-campuses, run at a loss to service communities.

No non-university will shoulder these burdens. And if profit-takers are subsidised to raid viable activities of universities that underpin them, all these programs will be the first to go.

None of which is lost on Christophe La Tease, who is wisely signalling that the whole question of comparative funding is a complex one, to be answered cautiously, and that non-universities should not expect to be funded to the same extent as universities as great engines of national service.

It probably helps that, as Education Minister, he is intensely politically numerate. Just count those seats in western Sydney.


This article was first published in The Australian.

For further information about the changes to higher education visit Budget 2014-2015: Higher Education.