Australian universities are missing out while policymakers dither

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When the institutions which stand to gain the most from a reform speak out against it, you know your idea is in big trouble. So it is with the government’s latest higher education reform thought bubble.

The sector is in limbo, has been since the release of the 2014 budget when sweeping funding cuts were mandated and a plan for full fee deregulation was unveiled. That plan, driven by then minister Christopher Pyne, was to give universities the ability to set their own uncapped course fees.

It was pitched as a major contribution to boosting excellence and promoting diversity, the initiative that would transform our higher education sector. It had the side benefit of allowing universities to cover the $2 billion budget cuts.

The package had broad support from the sector. In fact the chief executive of the Group of Eight body representing the eight leading research universities, Vicki Thompson warned that not passing the legislation “will have long-lasting repercussions for students, and the Australian economy.”

But it was also controversial, with concerns about fairness and claims of $100,000 degrees. In spite of the encouragement from the sector and Pyne’s skills as a ‘fixer’ the government couldn’t get the reforms through the Senate (it tried twice), though booking the savings hasn’t been a problem.

So with a new minister in place, Simon Birmingham, we got a new plan in the guise of a consultation paper unveiled in the May 3 budget.

This time around, the preferred option still involves uncapped fees but they are limited to certain ‘flagship’ courses. As the Government’s paper says it’s all part of giving universities “additional flexibility to innovate, differentiate themselves” and “attract additional revenue in courses where they have developed particular expertise.”

And this time around the sector’s support has evaporated.  The Group of Eight has cited increased complexity and warned of the dangers of a “two-tiered system.” Technical universities like UTS and RMIT, through the Australian Technology Network of Universities, foresee “an inequitable drift of those who can afford to pay into certain prestige offerings in self-identified prestige institutions — with a lessening of the perceived value of similar offerings in other universities.” They also warn that disadvantaged groups may be “locked out.”

The government abandoned the plan that was widely supported by the sector, and moved to a new plan which the sector opposes.

Fragile foundation of savings-driven policy

We are at this impasse because we’ve been served up the policy equivalent of a half-way house: the new package doesn’t resolve the central issue of funding certainty, or provide for appropriate additional flexibility, access or transparency.

It’s disappointing but not a surprise. We have a predetermined budget savings target and we’re trying to shoe-horn public policy into that constrained framework.

We’re going about it the wrong way around — when a numerical outcome is the driver, we’re never going to get the policy right. In fact, with such a fragile foundation, the ‘cleverer’ we are with policy workarounds, the more likely it is that whole thing will collapse under the weight of unintended consequences.

And so the vice-chancellors of our universities, some of the most important institutions in our community, are left to contend with stressed budgets. The consequential over-reliance on revenue streams from full-fee paying international students will continue, as will the practice of cross-subsidisation: diverting those funds to prop up broader university activities.

The vulnerability here is that our attractiveness to international students is also under pressure. HSBC recently surveyed more than 4500 parents in 15 locations around the world, finding Australia was the most expensive education destination — higher than other tertiary heavyweights like the United States and the United Kingdom.

At the same time, the ranking of our accounting schools — the most popular discipline for international students — is in decline. While we have seven universities ranked by QS in the top 50 global providers of accounting and finance programs, it’s one fewer than four years ago and for most of them, their ranking is sliding.  The top 10 is now exclusively the domain of US and UK based universities.

Unless either the perceived quality of the Australian educational offer increases and/or the cost comes down, parents and students are likely to question whether they are receiving value for money. While our policymakers dither, the revenue lifeline provided by full-fee paying international students to keep the doors of our universities open is imperilled.