Opinion & Commentary
Outdated laws create problems for universities
Gloom and Australia's universities are longtime companions. The National Library's catalogue records half a dozen publications on the 'crisis' in universities, published in 1952, 1965, 1970, 1980, 1994, and 2001. An Australian database of magazines and journals finds seven articles on university crises since 1986, along with various declines, dumbings, demises and deaths.
Most higher education interest groups think the answer is more public money for universities. But it is a mistake to think that the universities' problems have purely financial causes. Australia's universities are also chained down by outdated, inconsistent, and often crippling legislation.
Indeed, if lawmakers had been asked to design a problem-plagued higher education system they would get first class honours for the public policy mess they created.
Take, for example, the comparative treatment of universities' two main functions, teaching and research. Under the higher education funding legislation, universities get financial rewards only for research performance. Teaching funding is the same whether the quality is good, bad or mediocre. With this incentive structure, it is hardly surprising that student surveys show considerable dissatisfaction with important aspects of the learning experience.
For relatively good universities which attract lots of students the situation is particularly perverse. They may want to enrol those students, but if they take more than their government quota of HECS students they receive only $2,600 each, much less than the average cost of even the cheapest course. Their reward for success is making a loss on each extra student. They have little choice but to turn most of them away, and so many students end up doing their second or third preference course.
And then we wonder why so many students drop out or try to switch courses.
Students often complain about overcrowded lecture theatres, outdated equipment and scarce staff. In any almost any other industry, you could pay more and get a better service. But under our higher education funding legislation, universities can only accept money from their HECS-liable undergraduates for non-academic services. These students can invest in anything but their most important asset, their own human capital.
Over the last fifteen years some students have at least partially escaped this constraint. Overseas students can be charged fees set by the universities, as can postgraduate coursework students and a small number of Australian undergraduates. In another anomaly, though, postgraduates can get government loans for their fees, while fee-paying undergraduates cannot, even though postgraduates are more likely to have savings from previous paid jobs or assets to secure bank loans.
Together, fee-payers now make up around one in five students. Unfortunately for the universities, 20% income deregulation has been accompanied by 100% cost deregulation. Since enterprise bargaining was introduced in the 1990s the National Tertiary Education Union has extracted regular pay rises from the universities, yet the government has offered no more than safety-net indexation for the students it subsidises. It will neither pay the costs of these students nor let the universities charge them.
In many industries, innovation comes from new entrants to the markets. While there are a few dozen small private higher education providers in Australia, we go out of our way to make life difficult for them. There are no criteria for access to student loans or subsidies except history and political clout. So students at some private institutions get full or partial access to government assistance, while students at other very similar institutions do not.
To make matters worse, the legal definition of a 'university' has recently been tightened to make research mandatory, even though many existing universities have only a tiny research output. Certainly we need research universities, but we don't need every university to be research-intensive. The research requirement inflates costs to prohibitive levels and stymies entrepreneurial education.
Yet things are not hopeless. Serious as universities' problems are, they are largely the creation of bad policies, not deep-seated social or economic malaise. It isn't difficult to find reforms that could produce significant improvements in relatively short periods of time.
Letting new universities start on equal terms to existing universities, allowing universities to take as many or as few students as they like, and giving universities subsidies where necessary but setting fees in the market would all transform both the finances and the incentive structures of universities, to the long-term benefit of students and Australia.
Reportedly, Dr Nelson is soon to take proposed university reforms to Cabinet. We can only hope that they will be enough to make 2001 last time the National Library has to catalogue yet another book about universities in crisis.
Andrew Norton is Director of Liberalising Learning Programme at The Centre for Independent Studies. His book The Unchained University, was released today by the Centre.
