Opinion & Commentary
Blind to their Best Option
In the voluntary student unionism (VSU) controversy, every student union in the country is passionately advocating a completely deregulated, upfront fee, imposed without regard for a student's capacity to pay the amenities fee. Only last year these same student unions were passionately opposing the strictly regulated student contribution amount for tuition, which students won't have to pay at all unless their income exceeds $36,000 a year.
This contradiction is worse than just looking bad. Student unions' long-term hostility towards increased tuition charges blinds them to what is now their best option - a higher student contribution amount as an alternative to the existing amenities fee. As they largely do now, universities would collect and distribute all the money for both academic and non-academic services, but students would pay one higher fee rather than two smaller fees.
Importantly, they could defer paying it all through the HECS-HELP loans scheme, abolishing all upfront fees.
Why hasn't this been done before? Until January 1, 2005 , it was not a legal possibility for most students. From 1974 to 2004, no Commonwealth-supported student paid a university for his or her education. HECS was introduced in 1989, but this was a payment to the government, not to the universities. The Commonwealth paid universities with operating grants that permitted spending on teaching, but not on non-academic services. Universities levied the one fee they could, the amenities fee, to finance non-academic services.
On January 1, 2005 , a new funding system came into force. HECS, set by the Government and going to the Government, was replaced by student contribution amounts set by the university, up to a maximum of 25 per cent more than 2004 HECS, and going to the university.
In principle, universities could have bundled their amenities fee into the student contribution amount for 2005 and funded all services out of the one income stream. The new funding regulations do not directly control how student money, or even the Commonwealth's own money, is to be spent. Instead, they specify the outcomes the Federal Government wants, such as set numbers of students in particular disciplines. Universities must comply with output rather than input requirements.
In practice, this bundling of fees did not occur. The reason is quite simple. For universities, the amenities fee now operates as a de facto increase in the maximum student contribution amount. By keeping all charges within the low Government-set maximum student contribution amount, universities would be giving up revenue that could be put into cash-starved academic activities. After years of cutbacks, that wasn't an option, and so the upfront amenities fee had to stay.
The long-term logic of the funding system has, however, changed. It doesn't make a lot of sense for students to pay two separate charges for what is, in effect, one bundle of services, some of which are academic, and others of which are non-academic. Two charges would make sense only if amenities were an optional extra; universities insist they are not.
Rather than fighting against the logic of the new system, student unions should use it to their advantage. The Liberals would find it hard to reject an increase in the student contribution amount if they had political support for change. After all, in the original proposal for the current funding system, Education Minister Brendan Nelson called for a higher maximum student contribution amount than the Senate agreed to in December 2003. The Government already lets universities charge any fee they like for full-fee paying students, and encourages students to take full-fee places through FEE-HELP.
Though the Liberals have been lampooned for pursuing 30-year-old student political agendas, we should not forget that the VSU bill will have destructive force only through its interaction with another 30-year-old political agenda - federal control of university tuition charges. One of the great ironies of this debate is that student unions' long advocacy of such control will make them agents of their own demise. Giving up cherished beliefs is always tough. But that's what student unions need to do now to ensure the survival of student services.
Andrew Norton's paper, ‘The Free Market Case against Voluntary Student Unionism’, will be published by The C entre for Independent Studies on Wednesday.
