Drawing positives from negatives: looking back at the higher education reforms

The increase in cost to the taxpayer of amendments to the higher education ‘reforms’ showed the package was purely ideological. AAP

Following months of uncertainty, the Senate has rejected for a second time a package of higher education reforms that were first announced like a bolt from the blue on budget night last May.

Respected columnist Paul Bongiorno captured it well when he wrote:

The whole saga from the moment [Christopher Pyne] shocked the nation with a massive broken promise in last year’s budget has been marked by bluster and bravado.

During the entire fiasco, the package was amended in ways which would make the proposed system more expensive to the taxpayer than the current system. This revealed that, at their core, the measures were about ideology and not budget savings. They were about strengthening competition and private markets in higher education.

Also, the higher education sector saw unworthy tactics, such as threats to cut research infrastructure funding and Future Fellowships, if a package mainly about teaching was not passed.

However, the sector needs to try to extract positives from experiences like these in order to chart a way forward.

The public has become more alerted to the importance of universities and fair access to higher education in the last ten months than it has in the previous ten years. This means that any way forward has to be through a debate in which the public is able to participate.

There is also now a greater understanding of the way that HECS really works. Fundamentally, it is incompatible with the uncapping and deregulation of fees.

If Australian universities are really to delimit domestic fees, something would have to change about HECS. If not, young people will take on debts which will last for more than half their working lives; the taxpayer will fund it all upfront by borrowing money at a higher rate than it is charging back to students; and the Consumer Price Index will increase with unknown effects on other government outlays.

Another curious positive from the last ten months is at least a side-debate over whether there is even a problem. If one starts from the premise that vice-chancellors have a conditioned reflex to say that they need more money (and according to one former vice-chancellor they have been saying this since 1947), we are now alerted to the need to greet with suspicion claims that arrangements are not “sustainable”.

A fair examination of the evidence would show that overall investment in Australian universities is around the OECD average.

The latest data about Australia’s public investment in higher education as a percentage of GDP compared with other OECD countries is from 2011. At that point, the Australian public contributed well below the OECD average (30th out of 31 nations) but students contributed among the highest proportion. This is after allowing for an implied public contribution inherent in the way that Australia’s HECS system works.

Since 2011, uncapped places have led to significant extra amounts being paid by the government. This might have increased the Australian public investment by around 21.5% relative to GDP growth – but this would still leave Australia below the OECD average.

A good faith estimate of the gap yet to be filled is 8.6%. If that gap were now filled on top of existing student contribution levels, it would be a significant boost to university funding without the unpredictable effects of fee deregulation for students and for society.

Step back from this for a moment. The existing funding system has enabled more Australian universities to enter world rankings in the last decade. Scaled for population size and GDP, Australia already has one of the very best systems in the world. And if the public investment were to rise even to the OECD average while student contributions remain the same, Australia could inject a further 8.6% into the system.

Put this way, possibly the Australian public would be receptive to the need to fund universities better through taxes if they saw that we would still only be reaching the OECD average of public investment.

Coming back to earth for a moment, I would now support a higher education funding commission – as exists in England and some other jurisdictions – to take the day-to-day financing of universities out of the hands of politicians.

I did not imagine I would ever support the re-introduction of another layer of bureaucracy into the sector. But given the instability we have just experienced, it might be the lesser of two evils.

Australia needs a sensible debate on higher education financing based on evidence and careful analysis – not scare-mongering. This debate now has the clear air to take place. If there are alternative visions for higher education between political parties then those can be put to the electorate.

If Education Minister Christopher Pyne is so unwise to see it as a potential double dissolution trigger and re-present the same bill, this could be sooner rather than later.