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higher education at the crossroads « Previous | |Next »
January 8, 2007

A good higher education in Australia now costs students a lot of money. The days of a fully public funded higher education have long gone, replaced by tension between government funding and user-pays. Students leave university with a hugh debt: $50,000---$200,000 depending on the course. It's a heavy burden. How is HECS debt is affecting graduates' career choices, life and family choices? Is higher education becoming more middle-class?

So how much public investment should there be in universities and how much should students contribute, now that the national HECS debt is set to hit $13 billion? The ALP is not pushing this debate. We can, however, turn to Fred Hilmer, who has an op-ed on higher education in the Sydney Morning Herald. He says that though Australian universities are in a good position was built up over half a century of government funding and support, supplemented by student fees, they are not grasping the opportunities created by an increasingly globalised market for education. The warns that Australia is running the risk of a slide into mediocrity, with an underfunded and overregulated higher education sector. Hilmer says:

The Government is at a crossroads in terms of higher education policy. The choice is not between a fully regulated, fully government-funded system and an entirely deregulated, privately funded system. Neither is feasible. But what we have now is the worst of both worlds: increasing government regulation and declining funding.

Hence the key issue: how much public investment should there be in universities and how much should students contribute? Hilmer says that income from local undergraduate students is the largest single source of revenue for universities, and this comes partly from government payments for students - a fee subsidy - and partly from the students, via the Higher Education Contribution Scheme and the 25 per cent premium on HECS universities are permitted by regulation to charge.

Hilmer goes on to say that:

The government portion has been declining in real terms, as it is indexed at below inflation. The amount students can be charged is similarly regulated.The result is declining real income for universities from their biggest source of revenue. Philanthropy, while vital, cannot close the gap. ..... Nor can international students be expected to cross-subsidise an underfunded system. What is needed is a fundamental reappraisal of the funding model, not more regulation and more complex reallocation of inadequate funds. How much will government be prepared to pay, on what basis, and over what period? How much should students be prepared to contribute and how?

Hilmer does say that shifting more of the burden onto students is not the preferred option. In a real market with price competition, a university would be cutting its throat to overcharge for its product. The more likely scenario would be moderate increases with a percentage of students receiving fee waivers or scholarships on the basis of need or ability.

Notice how increased public funding is not even mentioned as a possibility by Hilmer. It is going to be steady increases in the price to be paid for the desired degree. Universities universities will push to make HECS higher because they argue that they are not funded sufficiently by government through indexed grants. That means the universities will push to shift more of the cost burden on to students.

Presumably, more and more struggling students in our capital cities will need to turn to welfare agencies such as the Salvation Army, now that the campus-run interest-free loan scheme, textbook and food subsidies were scrapped or reduced in response to the imposition of voluntary student unionism.

A good opportunity for the Rudd-ALP to come up with some interesting policy ideas now that it is committed to fighting market fundamentalism.

| Posted by Gary Sauer-Thompson at 6:41 AM | | Comments (9)


And so we go on with our return to the fifties.

Degrees for the priviliged and the occasional brilliant poor studnet who can manage to gain a scholarship.

This is probaby the most shameful legacy we will carry forward from Howard's years.

We truly are racing towards the bottom now.

yes that is what Hilmer is proposing. However, it's not a return to the 1950s as that was an elite university system for the few. We now have a mass higher education system thanks to the Hawke-Keating Labor Government.

It is interesting that Hilmer does say the obvious---that increased fees paid for by students is the normal. User-pays plugs the funding gap as the government contribution continues to decline with inflation. The regulations around the student contribution and premium need to be lifted. The market has its own logic--much lighter regulation to allow the universites to charge what the market can bear through steady price increases. From the market's perspective Canberra's regulatory hand is far too heavy to allow this.

This will produce a new divide amongst universities. So what happens to funding the need to educate the working class for a postmodern knowledge nation? What will Ruddll say on this. Has he or Stephen Smith said anything over and above the usual generalities, namely:

there is this Government's underlying belief that education is primarily a private market rather than a public good. This represents a substantial philosophical divide between the Liberals and Labor. In the latest Organisation for Economic Co-operation Development data, Australia is the only one of 30 developed economies in the world that has gone backwards in its public investment in higher education during the past 10 years. Public investment in higher education per student is only 93per cent of what it was in 1995. But this is entirely consistent with the Prime Minister's market fundamentalist view that higher education opportunities should be made more and more captive to market forces rather than made available to all young people based on their ability, not their socioeconomic background.

How is market fundamentalism in education going to be confronted by the ALP in terms of education opportunities being made available to all young people based on their ability?

I think 50,000 or so hecs debt equates to a good investment.
Give a 20 year old $50,000 and send them off to buy a business. Will that business sustain them for life?
Give a kid $50,000 and send them off to buy a degree lets say in accounting. Will that sustain them for life? Most likely.

I guess what Hilmer is saying is that fees are going to increase cos the universities need the cash flow. So there comes a point when it is not rational not to buy an education because there the returns do not justify the investment.

Is this tipping point happening now? Not yet seems to be the judgment, but nobody is sure.That it is being raised by Chancellors of our universities suggests an opportunity for the ALP to do their social democratic thing.

It is normal in any business for prices to increase over time...Universities have a huge infrastructure behind the scenes to feed.
The introduction of the GST made all businesses more expensive to run. This combined with normal yearly operating cost rises has resulted in many seemingly large cost increases in some sectors.
The education system is fortunate in some regards in that they do not have to provide a place inside the campus for every student as many study and learn on line. Thus reducing the the infrastructure costs.
To my way of thinking this is a great advantage for a business. Now all we need is for some to practice what they teach and be good managers within each individual campus grounds.


All that is true but universities are not just a business, are they? They also provide an education for the public good as well.

That public good education used to be called education for citizenship, but that language has fallen out of favour with neo-liberalism. What then is an education for the public good in opposition to neo-liberalism?

It is an education that is more than vocationalism (the old TAFE); a training in cultural literacy so that students can think for themselves. The old name for this valuer is autonomy. Isn't this kind of education what is needed in a a knowledge economy in a global marketplace?

That's the point, higher education delivers a lot more than just economic benefits for the educated.

The multipliers for society as a whole are huge.

One of my biggest problems is that we are building the impression that degrees are for an elite again, rather than a path anyone with some aptitude and persistence can gain.

In any event, why aren't we applying the same logic to TAFE places. There is only partial cost recovery there too, and many of it's students will go on to earn large sums as tradespeople.

I'm not sure what the TAFE situation is in Tasmania but in SA TAFE is required to make a profit. Many of the courses are just too expensive for the kids in the regions who left school early to acquire some some of vocational education.

Many of these step into tourism, as they are on the wrong side of the digital divide. So they cannot even email their job applications in a word document--that is now standard practice.

Interesting story in the goldcoast local news about a boy 13 who had started a mechanics apprenticeship with a local firm as part of his high school when he finishes year 12 he will be a qualified Tradesman.
sounds a good system!