Opinion & Commentary
Comrade Nelson v Adam Nelson
That Brendan Nelson was a busy higher education policymaker nobody can doubt, but it is hard to be sure what his legacy will be. He pursued policies that were in tension, if not contradiction, with each other. How his successor, Julie Bishop, resolves these tensions will determine Nelson's long-term impact.
That he had a split policy personality is not a new observation. The economist Max Corden described it most memorably in a speech last year when he said that there were two Nelsons. There was Comrade Nelson, a central planner and micro-manager. And then there was Adam (for Adam Smith) Nelson, who took important steps towards creating markets in higher education.
Adam Nelson financially linked universities with their commonwealth-supported students. His new student contribution amount was paid by the student to the university, unlike HECS, which was paid to the Government.
Up to a maximum of 25 per cent more than the old HECS charges in most courses, universities could set their own student contribution amounts.
In theory, these direct payments will make universities more responsive to student concerns and provide an incentive to offer higher-quality education. Universities are better able to find their market niche if they can set their own prices. The old flat HECS charges benefited established universities with strong reputations. Students paid no extra to receive a degree with high rather than low stature. Newer and regional universities have successfully used price competition to win overseas student market share, and with price flexibility they could do the same domestically.
To date this Adam Nelson reform has not lived up to its promise.
Facing similar cost pressures and real cuts in commonwealth funding, most universities quickly set the highest possible student contribution amount. There wasn't enough extra money to make much of a difference for students, and without price competition less eminent universities suffered a loss of demand in recent applications.
Nelson was not to blame for the 25 per cent increase being too low; it was what he could achieve in a Senate the Government did not control. But Comrade Nelson also did much to undermine the work of Adam Nelson. The voluntary student unionism legislation effectively reduces what universities can charge, partially reversing in 2006 a reform that only took effect in 2005.
By introducing a rigid quota system for distributing commonwealth-supported places, Comrade Nelson made it impossible for universities to respond to student demand without political approval. Comrade Nelson's Learning and Teaching Performance Fund rewards universities on criteria set by the Government, and not by students in the market. Once again, Canberra 's preferences prevail over student choices.
Another Adam Nelson reform is an income-contingent loans scheme for full-fee students at public and private higher education institutions, FEE-HELP. Previously only commonwealth-supported students and postgraduates at selected -- and mostly public -- institutions could borrow from the government.
FEE-HELP has already given private higher education a big boost. For the most part, however, this is in specialist markets of little interest to public universities. In time, however, FEE-HELP is likely to make direct competitors to public universities viable.
The concern here, however, has been that public universities, constrained in every direction by Comrade Nelson, won't be able to respond effectively to the challenge Adam Nelson unleashed through FEE-HELP.
My best guess is that Comrade Nelson's legacy won't last. Vice-chancellors already complain about excessive bureaucracy and their protests will get louder as the flaws of rigid quotas become more evident. Even Nelson worried that universities were being forced to take weak students to fill their quotas. Bishop could make her mark quickly by easing these bureaucratic burdens.
To secure an Adam Nelson legacy, however, Bishop will need to liberalise the student contribution amount. The logic of his system demands it, but selling price increases is not easy for any minister.
Andrew Norton is a research fellow at The Centre for Independent Studies.
