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Facing the hard questions on university funding

University of Melbourne Vice-Chancellor Glyn Davis. AAP

A public university owes a wide debt to society. Among our obligations is to ensure the wisest use of public funding for education. So the subject of Commonwealth university policy demands attention. Inevitably the issue is more than fees.

Yet the question of fees is very important. A petition from the University of Melbourne Student Union, signed by hundreds of students in recent weeks, puts the issue frankly.

Vice-Chancellors should be standing with the student body to demand greater public funding. The report you submitted to the federal government on university fees pushed policies that were detrimental to the student body, in particular students from disadvantaged backgrounds.

Everyone on campus, staff and student alike, has a history with the question of who pays for tertiary education. For me, this began in 1978 as one first-year arts student among many, marching in protest against cuts to higher education imposed by the Fraser government. We could not know that funding per student had already peaked, and would fall steadily for the next three decades despite all the marches, demonstrations, campaigns and political lobbying ahead.

Now Malcolm Fraser is protesting against cuts to higher education expenditure. As the former prime minister told graduates at Macquarie University recently, “education is the best and most important investment that this country can make”.

Fraser noted the long, slow decline in public funding per student. Those who lead universities make the same point often. During my term as Chair of Universities Australia, vice-chancellors pressed the case for more public investment through print, electronic and social media. You may recall the television advertisements, which were filmed next to the Old Quad at the University of Melbourne.

The campaign drew welcome support from the sector, but ominous silence from politicians. Before the year was out, Labor education minister Craig Emerson announced funding reductions amounting to $3.2 billion for university and student support over the next four years. Present Liberal minister Christopher Pyne later introduced legislation to enact the cuts, confirming an unhappy bipartisanship on public funding for universities.

How do politicians defend this record? They cite a different measure of investment: access to the higher education system. Funding per student may have fallen, they agree, but expansion of entry has been more important.

Once, a handful of students found places on campus; in 1970 around 3% of the adult population held a bachelor degree. Now, nearly 40% of young adult Australians possess a bachelor qualification. This growth in enrolments, they suggest, has required huge additional public investment, and a necessary trade between quality and quantity.

There is also a tougher message politicians pass on only in private, using the language of electoral calculus – and that message is simple: however passionately those in higher education feel about the sector, the issue does not rate in polling about public concerns. Australians worry about the health system and school education, about jobs, transport and the cost of living. They are not inclined to pay more taxes.

Put bluntly, the electorate believes university students do well after graduation, earning more than most. The case for investing more in higher education makes compelling sense to students and staff but rarely moves the wider community.

This perception follows a simple calculation. The average Australian graduate has less than $20,000 in higher education loan debt, which is paid back through the taxation system in around eight years. On one recent estimate, graduates earn an additional $1.2 million during their working lifetime. There are few other investments with such sustained returns.

The UMSU petition argues that higher fees are detrimental to students, in particular those from disadvantaged backgrounds. Price increases are always unpopular and debt is never welcome.

I am less sure higher fees affect equity. With HECS, students face no entry costs to study and make no repayments if their income does not reach the tax threshold. As the government demonstrated in 2005, lifting the cost of higher education does not alter participation, even among the disadvantaged.

Nonetheless, there are vital social returns from public investment in higher education. Most taxpayers may not attend university but they profit from the skills of graduates – those nurses, teachers, engineers and art historians who make this a better community. Our society benefits too from research done at universities, and from the large flow of international students who choose Australian universities as their destination, and so enrich our culture and our economy.

The UMSU petition calls for students and vice-chancellors to stand side by side in demanding greater public funding. Agreed, but what happens when governments decline that call? When we’ve marched in the streets, run advertising campaigns, made public statements to no avail, what then?

Do public universities walk away from all other options because students will not like the alternatives? The quality of an institution depends on money to hire brilliant academics, build teaching laboratories, support a well-stocked library, ensure the amenities to support study and student life, and support scholarships to help those with financial challenges. As a non-profit public enterprise, this is how the University of Melbourne spends income earned from student fees. As we face the possibility of yet further cuts in public funding, the issue of student contribution is hard to avoid.

The UMSU petition opposes not just higher fees but other policy changes:

Reverse your position on fee increases and deregulation and, in future, consider students’ welfare before taking a position on fees.

Yet the scale of student contribution is part of a bigger policy picture. The University of Melbourne has indeed argued for deregulation, citing examples where duplicated reporting regimes, inflexible rules and unnecessary government impositions burn up money better spent on teaching and research.

The current national funding system contains significant internal unfairness. Tertiary students do not make an equal contribution to their education. For studies in dentistry, medicine or veterinary science, the taxpayer covers around two-thirds of the course cost. But for law, accounting, commerce, economics or administration, the taxpayer provides around a fifth of the cost. The situation is more challenging for international students who pay significantly more on average for the same course than their domestic counterparts.

How does this square with concern for student welfare? If we are serious about equitable contributions by students, the status quo should be unacceptable.

Moreover, the current funding system privileges some areas of study, but makes others financially difficult for universities. For example, the cost of offering a place in the Masters of Teaching is around $5,000 a year more than the total public subsidy and the maximum charge allowed by the Commonwealth. This gap reflects the expense of delivering within working schools, using master teachers and a clinical model – the essential features of the program, and the basis of the internationally acclaimed success of the Melbourne Graduate School of Education.

It is only possible to offer such financially unviable programs by taking money from other courses – an inequity built into the system. Equally unfair is the cross-subsidy from international students to locals; one student’s benefit comes at the cost of another.

So, when the University of Melbourne argues for deregulation, it addresses more than student fees. It seeks a system in which fees are linked to the courses a student chooses to study, and where the burden of charges is shared more equitably.

As the 2011 Base Funding Review report noted, a consistent rate of student contribution would see some course costs rise and others fall. As at present, there would be no up-front fees thanks to the Higher Education Contribution Scheme.

The Coalition government has signalled an intention to cut public spending. Assuming a further reduction to outlays for universities, the government may contemplate allowing institutions to raise fees to cover yet another fall in public spending per student. The UMSU position, as expressed in the petition, suggests the University of Melbourne should not take up this flexibility should it be presented. This will win the sympathy of many in the short term, but will have serious implications for future generations.

The dilemma for the university is distressing but straightforward: do we accept a fall in quality as the public subsidy diminishes yet again, or seek flexibility to match the student contribution to the real cost of delivering tertiary education and address inadequacies in the current system? This question is bigger than fee levels, since it goes to a status quo already riddled with inequitable distribution of available public funding.

Students and staff alike hold dear the importance of universities to the nation, and the overriding importance of adequate public funding. Those running our universities feel likewise the responsibility of ensuring the highest-quality university possible.

It is not in students’ interests to reduce the quality of their education to avoid unpopular fee rises. This is a choice no one welcomes, but a question we cannot avoid.

The University of Melbourne is a public-spirited university committed to excellence in research, teaching and learning and engagement. In the best of all possible worlds, that mission would be proudly and unstintingly supported by the nation. Our reality, alas, makes for harder choices.

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