Six steps the government can take to pass deregulation

Lack of consultation, lack of information and lack of justification have led to the second failure of Pyne’s higher education bill. AAP

Education Minister Christopher Pyne has vowed he will not give up on his plans to deregulate the university sector in Australia. The plan has met with much opposition, from the public, from Labor and from the crossbenchers who ultimately sealed the bill’s second demise in the Senate.

The voting down of the bill stems from the government’s failure to sell the reforms. Here is a six-step guide to successfully making big changes to higher education.

1. Hold an open public consultation

Australia has not made a substantial change to higher education without a major open public consultation. This tradition was established by Prime Minister Robert Menzies, the founder of the Liberal Party who established the Murray Committee on Australian universities in 1956. That led to continuing Australian government funding and involvement in what were then known as “state” universities.

Menzies became concerned about the fast-increasing cost of university education. So, in 1961, he established the Martin Committee on the Future of Tertiary Education in Australia, which led to the establishment of teaching-only colleges of advanced education.

While it is true the Abbott government’s proposed radical changes to higher education financing have been debated extensively since they were first announced to an unsuspecting public in the 2014 budget, much of that debate has been unfocused. There has been no systematic process for identifying and dealing with key issues.

2. Thoroughly justify your specific goal (if you have one)

The Abbott government’s 2014 budget proposed a 20% cut to university grants, deregulating fees, extending the demand-driven system to private providers and TAFE, extending the demand-driven system to diplomas and associate degrees, charging the government bond rate for student loans, removing student loan borrowing limits, introducing a fee for research degrees, changing the funding rate for each discipline, cutting Australian government support for disadvantaged students, requiring universities to allocate 20% of their increased income to “Commonwealth scholarships” and several other changes.

It has become clear only in the last few weeks that the government’s core goal is deregulating university fees and probably extending the demand-driven system to private providers. Yet this has not been justified in depth, nor have the obvious difficulties and objections been anticipated and dealt with.

As education minister, John Dawkins had a clear plan for higher education, which he set out in his higher education policy discussion paper (the “green paper”) in December 1987. That proposed the dismantling of the divide between universities and colleges of advanced education to establish a unified national system of higher education. It was very controversial then and remains so now.

But the case was made in a thorough argument of 126 pages. While some important proposals such as a Commonwealth takeover of higher-level vocational education did not proceed, Dawkins adapted other proposals in the light of responses to his discussion paper. His core plan was announced in the higher education policy statement (the “white paper”) published in July 1988, again justified and explained extensively in 170 pages.

3. Deal with particularly contentious issues separately

Dawkins’ plan included financing a big expansion of higher education. This was to be done partly from greatly increased student fees, “clawing back” research funding from the pre-1997 universities and redistributing it in block grants allocated by new research performance formulas, and redistributing general institutional grants through a new “relative funding model”.

All these proposals were very contentious. To avoid diverting discussion of the main goal of restructuring the sector, these issues were dealt with in separate processes. This included a major public inquiry on higher education funding chaired by Neville Wran. That led to the introduction of HECS.

4. Inform the debate with data

One of the difficulties with the fees debate is that it has not been well informed about likely fees, student indebtedness, graduates’ incomes, the cost of loans never repaid and the cost of the interest rate subsidy. This has, in turn, led to concerns over potential “$100,000 degrees”, students incurring a lifetime of debt, graduates never being able to afford a mortgage or start a family, and the loan scheme becoming unaffordable.

Some of these issues could have been dealt with by extracting information from standard reports by the Australian Bureau of Statistics, the Department of Education and the Australian Taxation Office. Others could have been informed by publishing special data extractions and analyses by the department and by the National Centre for Social and Economic Modelling.

Indeed, so starved was the discussion of solid information that former senior department official David Phillips and HECS architect Bruce Chapman had to take advantage of their high standing to gain access to data held by the department.

A key issue is by how much universities might increase their fees in the short, medium and long terms. Reportedly, the government did no thorough modelling of fees and therefore the likely impact on the loan scheme. What estimates the government did make were kept secret from the public.

While universities’ future fee setting would always be uncertain, some of the speculation could have been informed by commissioning an expert study of likely fees. This could have reviewed universities’ setting of undergraduate, postgraduate and international student fees; reviewed fees in vocational education; interviewed vice-chancellors about their plans; carefully compared higher education fees in the USA, New Zealand, the UK, Canada and similar countries; and applied standard principles of economics and marketing.

5. Take expert advice

One of the great advantages of a public inquiry is that it mobilises the nation’s expertise on its subject: it is best led by experts, it can commission studies and seek expert advice, and it attracts several informed submissions. But even if another form of public consultation is adopted, expert advice can be gained from a broad group, as Dawkins gained from his “purple circle” of advisers.

Several have offered sympathetic advice on how to deregulate fees, but there doesn’t seem to have been any systematic mechanism for mobilising this expertise.

6. Understand Australians accept inequality, but not unfairness

Many have claimed recently that Australia is no longer receptive to big, painful changes. Some have claimed that Australian higher education is too antagonistic to elitism, and that for both reasons Australia is doomed to slide into genteel mediocrity. But this is blaming the public for botched advocacy of incomplete and flawed policies.

Australia has long accepted Australian and state governments funding elite private schools, which are far better resourced than state schools. There is general acceptance of deregulated fees for private schools and for postgraduate programs. For the level of education in between, there is a general perception that the universities with very high entry scores are better than others, and many would consider it fair for students to pay higher fees for attending reputedly better universities.

So the public is likely to accept the general principle of deregulated fees, as inequitable as it is, if obvious concerns can be allayed about the exploitation of students and the sustainability of the loans scheme. Phillips and Chapman have addressed these concerns with their proposed fees tax and others have vaguely proposed a price regulator or monitor. These and other proposals need to be developed and examined thoroughly and systematically.