Some REALLY big ideas for higher education reform

Are the government’s changes to higher education opening up the door to complete privatisation, and other radical measures? Shutterstock

The changes to higher education in last month’s budget are controversial, to say the least, and to my mind not very well thought out. They’ve been justified as attempts to boost the rankings of Australian universities and “set them free” from government regulation. But once set free, the lid is opened for free thinking generally. Without necessarily advocating the ideas below, here are some reminders of the adage to be careful what you wish for.

We could see Australia’s eight elite institutions, the Group of Eight, merged into one university called (say) The Australian National University. The combined outputs would rocket it up the international rankings, almost certainly into the top 20 (and if not, why not?), and seven vice-chancellor salaries would be saved.

Public universities could be fully privatised. It seems quite possible that fee deregulation is a first phase towards this anyway.

Perhaps the journey will turn out similar to that of public utilities where the existing regimes were initially encouraged to be “commercial” and “competitive”. Then they were actually pitted against private providers. Then they were privatised themselves, and often required a complete replacement of their management teams and business model.

University of Canberra Vice-Chancellor Stephen Parker says these reforms could lead to other radical changes. Supplied

All universities could be converted into companies with boards of directors or trustees. There are numerous arguments for this, but a principal one in the current context is to allow mergers and amalgamations. Most industries restructure every 25 years or so.

What holds the university sector back is the fact that most are incorporated by Acts of state or territory legislatures. Add in some inter-state rivalry and it becomes impossible to contemplate structural solutions that might actually meet the needs of the market.

We could remove Commonwealth funding for student places at Group of Eight universities. The Group of Eight openly called for fee deregulation, so why should they receive any Commonwealth money for domestic students? They have already had decades of taxpayer funding to build reputations and facilities which will attract the fee-payers, so why shouldn’t the taxpayer now support the younger, aspirant universities? If a university such as a Group of Eight wants this level of “freedom”, at the expense of students, why should the taxpayer give them another cent?

Higher education could be made free to the student. A muddled debate is under way about public good and private benefit. We could take a different path altogether. We could make higher education free to the student, in the expectation they will pay higher taxes across their lifetime under a progressive income tax system and thus they will repay their “private gain”.

Employers who benefit from well-educated graduates could give back to the system via a levy on graduates with salaries above a certain threshold. This money could contribute to the public good benefits of higher education; that is the benefits to society that don’t translate into higher incomes.

A levy of this sort would probably depress graduate salaries, but the proposed changes to HECS are going to reduce the net income of graduates anyway, possibly for much of their working life, so graduates may be no worse off in net terms. Then we would force employers to identify the particular knowledge and qualities they want and whether they are available only from graduates. It would keep us all on our toes.

University funding could be linked to the success of their graduates. There is no compelling evidence that graduates of elite universities have better employment prospects than graduates of other universities, although urban context and course of choice do make a difference. Why not force universities to have a vested interest in their graduates’ success?

Student loans could be apportioned to the balance sheets of universities rather than the Commonwealth. This means the universities will bear the risk of default or non-repayment as a result of graduates’ failure to reach the earnings threshold. Alternatively, make the university take out the loan rather than the student. The collection mechanism could remain the same but the debt burden is not on the shoulders of young people who might also want to start a family and buy a home.

What baffles me is why certain ideas have suddenly seen the light of day - ones that conveniently benefit the Group of Eight’s immediate interests - but other, interesting but possibly equally problematic ones haven’t. Could the answer lie in theories about elites and government capture?

Or is there a simpler explanation? Perhaps the government got an idea into its head and didn’t contemplate the myriad issues until after the announcement was made. Perhaps if consultations had been made beforehand, a wider range of possibilities might have been uncovered.

PS: I think the existing system works well and does not need fixing.