Opinion & Commentary
Unfettered deregulation for varsities
Reserve Bank Governor Ian Macfarlane created headlines recently with his remarks about Australia lacking a university in the world’s top 100. The remedy, he said, ‘will almost certainly involve the overthrow of some long-held conventions that attempt to impose uniformity. It will probably also elicit the old catchcry of elitism’.
The Minister for Education, Dr Brendan Nelson, agrees that the higher education system needs to change. Last Friday he issued the first in a series of discussion papers on possible reforms, Higher education at the crossroads.
The paper shows how hard it is to ‘overthrow long-held conventions'. Every option has practical and political obstacles.
For example, one option is for the Government to choose one or more universities, for elevation to ‘world class research intensity’.
But which university should receive the money? At least five and possibly more are reasonable contenders. It would be a courageous minister who chose one and suffered the wrath of the others.
In any case, the Government is ill equipped to provide more funding itself, and we need to look to more private sources of income.
If universities could set their own fees and HECS-like income contingent loans were available, there would be a chance of reaching world-class status. They could never match a Harvard but they could start rivaling the good US state universities.
The discussion paper mentions the benefits of fee deregulation, but acknowledges the objections this concept raises, concluding that ‘unfettered deregulation is likely to be unacceptable’.
This assessment is probably right: deregulation would stall in the Senate. Labor has already signaled its opposition and the Democrats have opposed fees in the past. But if we do eventually want high level universities in Australia, we need to start countering the arguments against introducing fees.
Some of these arguments sit uneasily with each other. On the one hand, for example, we are told that deregulated universities may increase their prices to a level that would deter students. On other hand, concern is expressed that deregulation would advantage ‘historically well-endowed institutions’, with newer institutions losing market share. So apparently the top universities will deter students and gain market share at the same time!
There are worries about students accumulating ‘disproportionate debts’, but disproportionate to what? The only plausible answer is ability to repay, which in turn depends on likely earnings. By Australian standards, top universities charge astronomical fees—more than $US30,000 ($55,000)
a year—but still turn thousands away. These are not rip-off prices, because graduates of these universities typically earn enough to repay their debts with much to spare.
The debate about fees is conducted as if they were just like HECS—a tax. But the whole point of fees is to invest more in education and improve returns, both individual and national. If we ever are going to have top universities, ‘unfettered’ deregulation is essential to encourage the necessary investment.
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About the Author:
Andrew Norton is a Fellow at The Centre for Independent Studies.
