Cuts to Australian higher education: deregulation of fees is the only option
Australian and UK higher education policy have a remarkable ability to leap frog each other without learning too much from the experience of the other. Issues such a research assessment exercises, income-contingent loans and financing the ever expanding costs of higher education are good examples.
The present range of reforms put forward by education minister Christopher Pyne represents the most significant changes in memory for the Australian system. Public comments have ranged from: an exciting and overdue response to a system under significant strain through to radical and unnecessary social engineering.
The package is a complex mix: it's a major redesign of the system driven by philosophical views on the role of government in society and the appropriate mix of public and private contributions. It's also underlined by attempts at pragmatic budget savings. For these reasons, different commentators tend to focus on different elements.
At the heart of the package is the proposal that universities, rather than government, should set the price students pay. This is an important principal and, in the view of the Group of Eight which I represent, it is fundamental to driving a diverse system.
If institutions are all funded in the same way they are inevitably driven to delivering education in a very similar form. There is simply very little scope to offer new and different learning styles, particularly when the price set by government is inadequate.
This philosophical deregulation debate is put into stark reality by the fact that the government also intends to cut its contribution by 20%. Therefore, even for those who are not strong supporters of deregulation it is now seen as the only option to address what seems an inevitable reduction in government funding.
In a sense this is where the UK and Australian systems come back together. The UK has just gone through similar government cuts. The response was, in a sense, the same – pass the costs on to students. However, the UK applied a £9,000 cap. Had the UK looked to previous Australian experience they would have known that the outcome would be that almost all institutions would charge the cap.
The existence of the cap ensures there is no price competition. In this case, Pyne has learned the lesson. It may not make the politics easy for him, but the only way to create price competition is by not imposing a cap.
There are those who say this will not happen. They claim that the existence of the income-contingent loan masks price signals and hence all institutions will move in lock step to exorbitant fees. However, this is not the experience at the postgraduate level in Australia where we already have complete price deregulation with an income contingent in place. Prices charged by institutions vary by up to 150%.
The whole concept of deregulation has special challenges in the Australian context. Australia is a Commonwealth of states and equality between states and indeed between metropolitan and rural areas runs deeply through the Australian political psyche.
An outcome that will mean that education offered across our universities may fundamentally differ raises concerns for some. Indeed, these sorts of issues have meant that research assessment exercises in Australia have had far less teeth than in the UK. The notion that there would be greater research concentration in a limited number of institutions does not sit well with egalitarian Australian notions.
For all these reasons, the minister will have significant challenges in navigating this legislation through a Senate where the balance of power is held by popularist cross benchers. This is particularly worrying for the future of Australian higher education as deregulation seems the only "horse in town". Clearly the tax payer has no desire to meet the ever increasing cost of a higher education system which now caters to almost 40% of the our school leavers. The option of doing nothing seems a recipe for a decline into mediocrity as funding per student declines.
From a UK perspective the learning here may be that the next step for you may also be deregulation. I suggest you watch how Australia fares in this new world.
Professor Ian Young AO is vice-chancellor of the Australian National University – follow him on Twitter @young_ir
This blog post is part of our two-week series on the differences and similarities between Australian and UK higher education.
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