View from The Hill

ACEL Address: Opportunities and Risks in the Education Market Place

Tony Abbott has made international education high on his agenda in his early days as prime minister. AAP/Mast Irham

Before the election, I asked Tony Abbott how he saw the prime role of higher education – as a contributor to boosting Australia’s productivity, or as education for its own sake?

I had rather expected him to mouth the mantra of productivity, which has become the usual one from politicians recently. His answer surprised me:

He said: “Well I’m pretty old fashioned. Obviously the higher education sector is a contributor to GDP, and it is important for our economy, but in the end universities are there to pursue learning, they’re there to be the guardians of truth, they’re there to push the boundaries of knowledge.

"And while there are all sorts of economic spin offs as a result of that, my conservative old-fashioned view says these things are worthy in and of themselves, not just as a means to an end.”

An attitude, he said, that he took from reading Cardinal Newman. It’s also the sort of view held by a former Liberal prime minister, Robert Menzies.

At one level Abbott’s view is reassuring. But I don’t think it is the way most people are regarding education these days. It seems to me that it is increasingly being viewed in highly commercial terms, as a commodity, and operating in a marketplace.

Indeed this is much more so now than when I was tutoring at a university in the 1960s and early ‘70s. It is a quite modern phenomenon. And we may only be at the start of a more dramatic process.

The new view has consequences for what is taught, how it is taught, where it it is taught, and the relationship between teachers and students. Students don’t, in the old romantic notion, sit (figuratively speaking) at the professor’s knee; they rate the professors and demand value for money.

And so do governments.

So in thinking about education and its place in the future political landscape we need to look at its several faces, each with its own purposes and demands. The faces are inter-related and sometimes interdependent but can be conflicting.

Before we explore these faces, let’s briefly reprise how big political decisions have transformed Australian education. I’ll mention here some of the major changes at both tertiary and secondary level.

Going right back to the late 1950s and the 1960s, Menzies took important decisions on both tertiary and schools education.

Incidentally, I don’t think Menzies ever called himself the “education prime minister” but he actually was.


His prime ministership started the dramatic expansion of Australia’s universities. His funding for science blocks moved the Commonwealth into schools policy, a state area, and took on and politically exploited the state aid issue.

Menzies regarded his role in growing, fostering and funding the university system with special pride. He wrote later that he had had a strong feeling that the Commonwealth must be “the saviour of the universities”.

He also, incidentally, was a pioneer in getting Australia into international education - although in a very different way from what’s happening today.

The Colombo plan that was started in Menzies’ time brought students from the region to study in Australia. It was part of a wider aid program - the drivers were diplomatic as well as centred on the needs of recipient countries. The legacy has been manifold – generations of Asian leaders and movers and shakers had a great deal more exposure to Australia than they otherwise would have. This was a very special educational “export”.

The next big landmark was the move by the Whitlam government in the early ‘70s to make university education free. Such a decision is inconceivable today, when money is very tight (it should have been tighter under Whitlam but that’s another story) and the principle is user pays.

AAP/Dean Lewins

But that change was transformational for many people, especially those from disadvantaged backgrounds and mature-age women who had not had the opportunity for university.

Whitlam in 1973 described it as “the greatest thing we have done so far… Even if our government was to disappear from the scene within the next few months this is an enduring legacy. This will mean that every Australian will have a better opportunity in life than he would normally have had. This has been a great breakthrough.”

It also highlights the different way higher education was viewed, compared with now. It was seen as a right to which people were entitled, a opener of opportunities, which also involved the opportunity to earn a better income. There was not the belief that having gained something that would lead to better earning power, one should be obliged to pay for it.

In the 1980s, under another Labor government, we saw the trend in the other direction, with the advent of the HECs scheme, which contributed (perhaps not intentionally on Labor’s part) to the idea of education as “product”.

The chill winds of financial strictures were blowing. That caused the imposition of HECs but the notion of the market was starting to intrude. It was not just a matter of people who benefitted from education repaying their general debt to society; there was a feeling that those who had received a personal gold card, as it were, should pay it off when they reached a certain income.

Former education minister and now interim Labor leader Chris Bowen writes in his book Hearts and Minds that he was among the first university graduates to pay HECs for his whole course and recalls the debate among students and in Young Labor.

“I supported it because I could see the inherent logic: our incomes would be higher because we had been to university. By paying for part of our degree as our income increased, we could make a contribution to improved opportunities for so many other people who had previously been denied that opportunity. … Those opposed to HECs argued that a university education was a right that should not be paid for”.

In a ground breaking development, the 1980s also saw universities opened up to full fee paying students from overseas.

At the same time there was a revolution in the structure of the tertiary sector with the abolition of the wall between universities and colleges of advanced education – the changes brought in by Labor minister John Dawkins.

The Howard government made an important change at the schools level, giving encouragement to the setting up of small, low fee schools at a time when parents were wanting to move outside the state system.

AAP/Dan Himbrechts

Parents liked these schools in part because of the problems in some of the state schools, in terms of learning but also other aspects such as discipline.

Philosophically, the move to the low fee independent schools fitted with the Howard government’s thinking – chiming in with the notions of choice and diversity and moving away from state systems, where teacher unionism was entrenched.

Education was front and centre for the former Rudd-Gillard Labor government’s agenda. At a tertiary level, it made a big change by removing the cap on university places – deregulating the system - and setting a goal of 40 per cent of 25 to 34 years olds having a university degree by 2025. It also set a 2020 target of having 20 per cent of undergraduates from a low socio economic background.

At the schools level, that government brought major change too. Julia Gillard’s My School website, an initiative when she was education minister, enabled parents to be much more informed, discerning, and demanding about the schools their children were attending.

This introduced greater transparency; we can also see it as an element of market forces being brought to bear.

AAP/Dan Himbrechts

As PM, Gillard’s contribution was the Gonski report on school funding, which proposed directing more money towards schools with greater numbers of students who are disadvantaged, according to a range of measurements.

I referred before to the various “faces” of education; let’s consider some of these.

The most obvious face is education to prepare young people for life and, at a higher level, education for the advancement of knowledge. Education can also be seen as a cultural instrument; a social instrument; and an economic instrument. It can be regarded as a tradable commodity, and as an industry.

These various aspects affect how political decision makers view education and what demands the education sectors can and will make on politicians.

The basic starting point is that education’s function is to prepare the young for their future lives as individuals, workers and citizens. This is the core business of the schools system.

We are in a period of transition and uncertainty here. While there was much praise for the Gonski report and its model, which framed funding on a general per pupil entitlement with various add ons for a range of needs – based around socio-economic status, disability, indigenous background, remoteness, English language proficiency, school size - the planned implementation of Gonski has been progressively “de-Gonskied”.

Firstly, the Labor government did not have the money to fully fund the proposals on the original timetable and also, for political reasons, had to make sure that all schools were winners. So the offer the Gillard government made to states was Gonski on a diet.

Secondly, only some states signed up to the plan. So we had a hybrid situation.

Thirdly, the then opposition, now the government, disputed some of the Gonski plan and preferred the old model, which based funding on the socio economic areas from which students came.

But then, for reasons entirely of political expediency – it did not want education to be a major election issue – the Coalition capitulated and said it would take over the government’s program. But it would only do so for four years of the six year Gillard blueprint (when the major funding was to come in the two years after that).

The Coalition also has different priorities, believing that the main problem is not a major funding gap but the need for better teaching (which does of course cost more money) and the content of teaching.

AAP/Julian Smith

Christopher Pyne has said in one of his early interviews as education minister: “We have an obsession with school funding in Australia when we should have an obsession with standards. The issue in education is not a lack of money, the issue in education is a lack of a fighting spirit about a rigorous curriculum, engaging parents in their children’s education. The argument around teaching shouldn’t be about industrial relations, it should be around, 'Are our teachers as high a standard as they possibly could be, and if they aren’t, how do we get them to that point?’”

So how the implementation of the partial Gonski scheme will work out over this term of an Abbott government is not entirely clear, while what would happen if that government had a six or nine year period of office is absolutely a question mark.

Whatever one thinks should be done on schools, clearly Australia has some serious problems at this fundamental foundational level of the education system.

We are not doing as well as we should in the basics. There was a report the other day that 50 per cent of Tasmanians were functionally illiterate. And we are not performing as strongly as we should on some international benchmarks.

On the other hand, getting the basics right is a necessary but not a sufficient condition for a first rate schools system.

Incidentally, I think you can have a very good system and still not be number one, or even in the top five (as was Labor’s aim by 2025) in world terms in PISA (the Program for International Student Assessment) results. At present the top five in reading are Shanghai, South Korea, Finland, Hong Kong and Singapore. Three of those five are cities, which are not comparable to our diverse country. Australia comes ninth in reading, tenth in science and fifteenth in maths (based on 2009 PISA).

We certainly need to be in the leading cohort, however you want to define that, but this doesn’t necessarily have to mean right at the top.

There is one school of thought that claims that too much emphasis on crude measurement brings the danger of squeezing creativity out of the system, a risk that goes right up to the higher education level.

British educationalist Sir Ken Robinson argues that the current education approach stifles rather than develops natural talent through a combination of factors which he says include “an obsessive culture of standardised testing and tight financial pressure to teach to the tests”.

At university level, delivering the fundamentals involves basic questions of standards of entry, affordability, quality, and the priority given to teaching vis-a-vis research. These have been and are contested areas, especially with a change of government.

Politicians often view education as a cultural instrument. It is at the centre of the “culture wars”. The school curriculum becomes a matter of political dispute, frequently centred on what is taught in history. In the Howard period this was greatly debated with Howard critical of too much emphasis on the “black armband” aspect of history.

AAP/Made Nagi

The Liberals are once again not happy with the present curriculum. Tony Abbott said during the election campaign there was a “lack of references to our heritage, other than an indigenous heritage, too great a focus on issues which are the predominant concern of one side of politics. I think the unions are mentioned far more than business. I think there are a couple of Labor prime ministers who get a mention, from memory, not a single Coalition prime minister.” He added that he would leave it to the educational experts but the message was clear.

On the Labor side, education is an obvious instrument for pursuing social goals such as promoting equity. This was the aim of the Labor government, behind changes such as demand driven university places system and the targets I mentioned.

Now we are seeing a debate about whether the deregulated system is compromising quality. This is not just being raised by the new government. Labor’s last higher education minister Kim Carr also warned about the risk.

AAP/Lukas Coch

The concerns are that some universities have lowered their entrance levels, and that the rate of drop out is too high. The overall undergraduate dropout rate hovers at around 20 per cent, but this is significantly higher for school-leavers with ATARs under 60, who have a 30 per cent rate. Clearly if these students are to get through, they need greater support during their courses.

The counter argument is that universities don’t have to compromise their entry standards. The choice lies with them on whether to meet the demand. But anyway, the argument goes, the issue is not about those taken in but those produced as graduates, and some of the low entry students do as well as people with higher entry scores.

Maybe some might believe that a modest compromise of quality is worth it if it promotes equity. But that clashes with the needs of the other faces of education.

One of these is education as a driver of productivity. The clever country is the successful country; but also, in this globalised world, a country like Australia has to be clever just to keep up, and that will become harder as regional neighbours improve their performances.

As the old industries wither, we have to hitch our fortunes to the new innovative ones, which has particular relevance for the research side of education. We require not just the basic research breakthroughs – and we have punched well above our weight in this regard – but also the skills to commercialise that research.

Increasingly, as we put various commercial dimensions on education, it is turned into a commodity, which has a range of consequences.

One can be that politicians and as a result the educational institutions come to give priority on the sort of education and research that has a utilitarian value.

It must be linked to what employers want and need, the argument goes. This can work against the humanities, it can mean that the value of a liberal education is overlooked, and it can produce a backlash against research projects that are not seen as “useful”.

AAP/Alan Porritt

In the election campaign the opposition spokesman on government waste Jamie Briggs said a Coalition government would look to retargeting elsewhere “ridiculous” research grants.

“Taxpayer dollars have been wasted on projects that do little, if anything, to advance Australians’ research needs,” he said. He pointed to four projects, including one titled “The God of Hegel’s Post-Kantian idealism”.

The approach is concerning for a couple of reasons. One is the idea of politicians trying to directly meddle in these decisions, which properly should belong to the Australian Research Council.

The second concern is that some projects in the humanities are written off as “ridiculous” in a pretty arbitrary manner.

While I must admit the $443,000 for the Hegel project did sound a lot, the idea that that sort of research is ridiculous shows an unfortunately narrow view of scholarship.

Education taking on the aspect of commodity means students at universities have become “customers”; the teachers and the institutions are the “providers”.

If the customers are not always right in this environment, they will often insist that that they are. They are paying fees, wracking up debt. They want value for money. Not necessarily to sit in lecture theatres. Education provision becomes more of an off-the-shelf environment. Just put the lecture notes on the internet please. On if they have to listen to lectures, the lecturer must be a good performer. A lecturer I once had on Soviet politics, a dour communist who nevertheless tried to be scrupulously objective, with his expositions full of the most tedious detail, wouldn’t cut the mustard.

And when it comes to quality, many of these students will be the guardians. They want their pieces of paper to have a recognisable value with potential employers, and other institutions.

Sometimes maintaining the standards can clash with education as an industry. As an Australian export, education comes fourth behind iron ore, coal and gold and ahead of tourism. The wool industry is modest by comparison.

More than 500,000 foreign student enrolments last year earned $15 billion.

Universities are businesses in a way they never were before. Their vice chancellors are out and about in Asia, selling their wares. The full fee paying students from abroad cross subsidise the domestic students.

In this context also, the issue of standards can become vexed. There is no doubt that there have been and will be pressures to make sure that not too many of the foreign students fail. On the other hand, in a globalised market it is essential that the students from Australian institutions have qualifications that can be relied upon.

A few years ago what was dubbed “Brand Australia” suffered when fly by night colleges teaching vocational skills were discredited and in some cases collapsed. A major reason had been that these courses had simply become a route to settlement in Australia. After a couple of inquiries the integrity of both the educational export sector and the migration system was restored but in the meantime the industry had taken a dent.

As in any other market, you can’t risk the good name of your product or your brand being compromised.

Education is one of the core features of the modern globalised world. With the ability now for it to be spread cheaply, we will see its impact being greater than ever before.

Looking to the future political landscape, what are key factors of changes that will affect Australia’s education policy? They include:

FIRST and most dramatically: unpredictable, innovative and disruptive developments in information technology. These have already had enormous consequences. Most recently we have seen the phenomenon of MOOCs. These Massive Open Online Courses, available from some of the world’s most prestigious universities, have the potential to transform the learning experience for individuals, but also, on the most extreme view, to make and break universities.

The second factor is Australia’s involvement in the Asian century. As Australia further integrates itself in the Asian regional economy it will want to build on the markets it has developed there for selling educational services. But as other countries in the region lift their performances, Australia will face more competition. It is not just a matter of what we do, but what others do.

AAP/Joe Castro

New trade minister Andrew Robb has said that there is no reason why Australian educators could not be teaching 10 million international students within a decade.

This market however, is likely to become tougher for Australia. We have some first mover advantages. But consider the trends that Melbourne University’s Simon Marginson pointed to in a paper “Globalisation and the challenge for higher education leaders” delivered earlier this year. These are: global rankings of universities, dating from 2003, MOOCs, which started in 2011, and “the rise of higher education and science in East Asia and Singapore changing the global balance of power”.

One would think that none of these would be competitively advantageous to Australia. Yes we have some well ranked universities, yes we can do MOOCs. But we are going to be outranked and out-MOOCed. And where students from the region have looked to Australia, they will in some cases be able to get the same education at home, and in others, to go to competing education providers, which are geographically closer.

Of course there is one competitive advantage that Australia has. That is the possibility of study followed by permanent residency. Many people come in the hope of transforming from student to migrant.

The third factor shaping the future is Australia’s economic and budgetary situation, which has already led to cuts and may lead to more. Nothing is sacred. Under Labor Peter (in the form of the university sector) was robbed to pay Paul (the school sector). Our research is talked about as up with the world’s best but has been raided. New minister Pyne has warned: “We don’t want the universities to be mendicant on the federal government and if we can find any ways for them to raise revenue that are sensible and appropriate – and international education is clearly one of those – that is something we will pursue.”

It may be that in an increasingly market dominated environment the ability of government to influence the university system becomes relatively less. Contrast the various historical changes I outlined earlier. Governments were operating in conditions where the market had not become so central in the world of education.

AAP/Michelle McAulay

Stephen Parker, vice chancellor of the University of Canberra, predicts that the multiple changes we are seeing could transform Australian universities in a sweeping fashion.

Here is his glimpse of the future for universities.

… Delivery of basic content would be mainly online, developed in house or bought in and “curated”, with face to face content being through tutorials.

… Assessment of student learning would be externally moderated.

… The education provided would be post secondary but only a few institutions would survive by offering purely “higher education”. There would be a new curriculum mix, drawing on vocational and higher education.

… Campuses would be like shop fronts with much of the institution’s business done elsewhere or in the cloud.

… Research and research training would no longer be an essential property of a university.

… There would be an exit from disciplines in which universities cannot be excellent- which they cannot persuade the market to buy,

… Universities would have to run true operating surpluses. Credit ratings would be needed because government capital grants would have dried up, “and the discipline of the financial markets will be brought to bear”.

This picture may excite you or appall you.

Meanwhile, let me finish where I began, with the new prime minister’s thoughts on education.

In one of his signature policies Abbott is trying to marry something of the old and the new faces of education. His idea of a new Colombo plan would send best and brightest young Australians for short stints to Asia.

He said in a speech during his visit to Indonesia, “Operating at different levels and for different periods of time, and often with a business internship component, this new Colombo Plan could provide us with a new and more contemporary version of Rhodes scholars and Fulbright fellow, this time with a strong Asia-Pacific orientation”.

Abbott is of course a former Rhodes Scholar. And Oxford made a big impression on him. Maybe his future grandchildren could get Oxford degrees via MOOCs.

  • This was an address to the Australian Council for Educational Leaders conference, October 3.

  • Thanks to Pera Wells for assistance in preparing this speech.