Opinion & Commentary
Showcasing Unis when price is right
Many critics of universities complain that commerce is put ahead of education. To them, generalist degrees are being replaced with vocational courses, full-fee students are preferred to those receiving Commonwealth subsidies, and too much research is about benefits for business instead of the disinterested pursuit of knowledge.
Yet universities and their leaders remain a long way from fully welcoming the market. Swinburne University vice-chancellor Ian Young is a case in point. In Education recently, he complained that another university - Melbourne - was planning to charge higher fees than other universities. If "elite universities" go ahead with this, Young argued, it "will result in a greater spread of inequality across Australia's universities than exists at present".
If Professor Young was a businessman, he would be pleased by other universities charging higher fees. After all, his competitors take a commercial risk if they change their services and increase their prices. Their risk is his opportunity, since Swinburne's courses could end up looking like better value for money. In the international student market, where universities already set their own prices, part of Swinburne's attraction is its comparatively low cost.
The less "elite" universities have long been disadvantaged by the flat price structure for Commonwealth-supported students. As Professor Young suggests, some universities have reputational advantages formed "through 100 years or more of public funding". If students pay the same amount wherever they study, they may as well choose a prestigious university, if they can get in. They then acquire reputational benefits for no added charge. The courses may be much the same wherever students enrol. But at the older universities, graduates end up with a more valuable credential.
Because this option is attractive to prospective students, some experts attribute recent falling demand for places at regional universities partly to students preferring strong brand-name institutions in the capital cities. There is little regional or newer universities can do in the short term about inequalities of prestige. They can't compete on that.
What they could compete on is price - if the Federal Government would let them. Instead, the Commonwealth tightly constrains price competition. It has set a maximum price for Commonwealth-supported students so low that universities need the maximum-allowed amount to cover costs. Most charge identical fees for Commonwealth-supported students.
In effect, regulation forces newer universities to offer less value for money. Their degrees cost the same, but because of reputational weakness offer lower prospects of high salaries after graduation. It isn't surprising that those with an ENTER score sufficient to go to a more prestigious university will.
When overall demand softens, as it has over the past two years, the effects on newer universities are more serious. Around Australia, at least three universities this year won't be able to fill all the student places allocated to them by the Federal Government, while other universities in the same states turn applicants away.
Cost isn't the only factor affecting enrolment levels, but lower prices could have made these three universities more competitive than they were. As it is, they will be left not only with unfilled places but millions of dollars less in government and student money than they had been anticipating.
This shows that Professor Young gives us only half the story when he says that fee deregulation will allow top universities to benefit "at the expense of the whole sector". A lack of deregulation also allows top universities to benefit at the expense of other institutions. Their prestige keeps them attractive, while regulation stops other universities from competing on price. Why does Professor Young support a system that disadvantages his university and others?
The main reason he offers is an egalitarian one. Disadvantaged students tend to under-perform at school and are therefore less likely to be admitted to the "elite" institutions. He likes the current system because, after unequal education at school, the relatively uniform university system offers similar quality courses that even out educational inequality. If universities set their own fees, Professor Young worries that disadvantaged students will be consigned to an "impoverished second tier".
What's more worrying, however, is that the current price-capping regime consigns every student to a single impoverished tier. This affects disadvantaged students the most, since on Professor Young's analysis they rely on university to make up for what they missed earlier in life. Yet he thinks their funding levels should be trusted to the Federal Government, which has let university per student funding slide for 30 years.
Professor Young combines worthy sentiments with unsound strategies. In a market, competition between universities trying to fill all their places would help keep prices down. But total per student income need not go so low as to affect quality, as it does now.
Andrew Norton is a research fellow for the Centre for Independent Studies. He also works part-time for the University of Melbourne.
