Opinion & Commentary
Funding system is broken
The annual release of the Good Universities Guide, with its estimates of how much each full-fee course costs, is becoming a political event so predictable that we can note it in our calendars. Each year, Labor finds the most expensive courses - including several over $200,000 for 2007 - and turns them into symbols of unfairness.
"No Australian should have to put up with a US-style system where money talks louder than merit," Opposition education spokeswoman Jenny Macklin said.
It didn't matter that one of these courses had a single full-fee student and another none, or that the average full-fee course was priced at about $12,000 a year, or that only 3 per cent of all Australian undergraduates are full-fee. The shock value of $200,000 degrees gave this story prominent coverage throughout the media.
The Government's argument that full-fee places are preferable to the previous status quo has always been strong. They add to the total number of university places, let more people enrol in their first-preference course and help cash-starved universities.
But full-fee places run counter to intuitive ideas about merit and this has been the source of the Government's political grief. Resentment about money over merit, however, obscures an injustice being done to the full-fee students as well.
Often there is no genuine merit-based distinction between full-fee students and HECS students. For example, this year a student with an ENTER of 99 could have enrolled in arts/law at Monash University in a HECS place. A student with an ENTER of 98 would miss out, unless he or she was prepared to take a full-fee place.
Both are more than capable of completing the course and becoming lawyers, as are students with lower marks from other universities. There is no reason to believe that an applicant with 99 is inherently brighter than one with 98. Slight variations in school quality and exam preparation could just as well explain the different results. In practice, school results are only moderately good guides to university performance.
But these trivial differences in ENTER scores translate into a massive financial penalty for the person on 98 who takes a full-fee place. For the law component of their course, they would pay 140 per cent more each year than the person on 99. Because full-fee students cross-subsidise HECS students, student with ENTERs of 98 effectively hand second subsidies to students with ENTERs of 99, on top of the subsidy they already get from the Commonwealth Government.
This hardly seems fair. It's not as if one is likely to be more financially needy than the other. Indeed, given the ability of expensive private schools to coach their pupils to higher marks, the student with 99 may be less needy. True, a full-fee student chooses to pay but his or her choice is not due to an inherent constraint on the number of law-school places. Rather, it is because the Federal Government only supports a limited number of law places at Monash, even though the university can take many more.
There is a way of both satisfying intuitive ideas about merit and removing the unfair second-subsidy burden from full-fee students. This is to abolish the quotas that create the need for two types of student.
Labor's recently announced higher-education policy goes some way towards achieving that goal. It proposes giving universities much more flexibility in student enrolments. Within agreed ranges, universities would be able to vary their student numbers.
Within their total funding, universities would be able to move student places between disciplines. So depending on the total number of places and amount of funding they are given, universities may be able to offer additional places without full-fee students.
The sticking point for universities will be money. In a properly designed system, there should be no need for one group of students to cross-subsidise another for an arbitrary reason like small differences in school results. But while we have the current system, no university with full-fee students is likely to want to give them up.
Fortunately, there are signs of understanding that the funding system is broken, if not yet detailed plans to fix it, from both major political parties. Education Minister Julie Bishop recently acknowledged that funding levels need revising and Labor did the same in its policy white paper.
What we need from both parties is a commitment to every Commonwealth-supported student place being fully funded without cross-subsidy.
There can be legitimate arguments about how much taxpayers should contribute and how much students themselves should pay. But until this principle is put into practice, universities cannot reasonably be denied the power to raise funds wherever they can, including from full-fee students.
Andrew Norton is a research fellow at The Centre for Independent Studies.
