Trickle up: only the elite will benefit from fee deregulation

Group of Eight universities will benefit from fee deregulation, but what about everybody else? AAP

Professor Ian Young, the Chair of the Group of Eight Universities, has argued that fee deregulation will have a positive effect on all universities. The Group of Eight universities will take the opportunity to “downsize”, to teach fewer students whilst increasing the amount spent upon each student.

As they enrol fewer students, those who might otherwise have enrolled or aspired to a Group of Eight university will be available to “lower tier” institutions and we will have a system in which everybody wins.

The “trickle-down” effect

Young, who is also the Vice Chancellor of ANU, has referred to this as the “trickle-down or flow across effect”. However, trickle-down economics doesn’t have a particularly good reputation – either among economists or the wider community.

Rather than distributing wealth and opportunity across the community, it is recognised as concentrating wealth and opportunity in the already privileged segments of society and hence is regressive rather than progressive.

In the same way, trickle-down or flow across in Australian Higher Education will strengthen the Group of Eight at the expense of Australia’s Higher Education sector as a whole.

The proposals for deregulation which Professor Young is boosting, are presented as freeing Australian Higher Education institutions to respond creatively and innovatively both in research and teaching, and to the changing external environment. We are assured that deregulation will enable the Australian Higher Education system to become nimble, diverse, innovative and creative. There will be multiple numbers of Australian Universities ranked among the top 100 in the world – evidence that, finally, we have a successful Australian Higher Education system.

In reality of course, the diversity and differentiation that both Education Minister Christopher Pyne and Professor Young advocate is a hierarchy of institutions. This new hierarchy of institutions will benefit some more than others – that is the very nature of competition. There is no such thing as a competition in which every player wins. There will be winners and losers. Some institutions will be winners – the Group of Eight will cement their assumed-to-be rightful position at the top of the tree, middle tier and regional universities will have access to capable students (that is, those culled from the Group of Eight aspirants), and all will be well in this best of all possible worlds.

I am reminded of a verse from the old hymn All Things Bright and Beautiful:

The rich man in his castle, The poor man at his gate, God made them high and lowly, And ordered their estate.

And what about the students?

Most students will be losers – not perhaps those happy few who will be able to enrol at Group of Eight universities – but most. And I doubt anyone needs a higher degree in sociology to predict that those who will be able to access our elite institutions will most likely be from higher socioeconomic groups. But most students will be losers – not only financially but also in terms of opportunity.

But don’t worry - there will be Commonwealth Scholarships for students from disadvantaged backgrounds and regional areas – we are assured by the Minister that these will ensure that our smartest students can receive a world-class education no matter what their background might be or where they are from.

Again the reality is more complex. It will be the student body as a whole who will be funding these scholarships - 20% of an institution’s additional fee revenue will go towards Commonwealth scholarships. And again it is likely to be the Group of Eight who will benefit most – with a greater capacity to charge higher fees they will be able to offer either more scholarships should they choose to do so, or more generous scholarships. Regional and rural universities - and regional and rural areas - are likely to lose their best and brightest.

Minister Pyne argues that when competition increases, the winners are students. However it is beyond dispute that the cost of a degree will increase, substantially, and commensurately to the cost to students.

Similarly student debt will rise – Universities Australia data suggests increased debt levels of between 50% and 200%. Ironically in the US where student debt exceeds US$1 trillion, there are nascent calls for fee free higher education.

Letting the market rip in higher education

The Minister believes that universities will be responsible in setting their fees under the new Higher Education arrangements. Well, he would say that wouldn’t he? If Higher Education institutions are to be freed to compete, then elite institutions will charge what the market will bear – that’s the principle of supply and demand. If demand exceeds supply then prices rise.

The Group of Eight institutions have cachet – no doubt they offer and will continue to offer quality courses and degrees, but that is not what they will be charging for – they’ll be charging for the name on the testamur. Of course this may well be the form of responsibility the Minister expects and respects. However for the community – and even perhaps for the common good or the national interest - responsibility would most probably be equated with reasonable affordability.

‘Doing it for the students’, or for the rankings?

The focus on “downsizing” the size of the student cohort at Group of Eight institutions is less about teaching or providing a world class education for students than it is about securing and furthering the research capacity of the Group of Eight. Professor Young in his National Press Club address adversely contrasted the size of Australian research universities to those of Stanford, Cambridge and Caltech (which has only 2200 students). In his view this is bad for the quality of research.

So for the Group of Eight it’s fewer students and more research – and higher rankings in the prestigious international university rankings - whilst teaching is concentrated elsewhere, in the non Group of Eight universities, some of which over time will be pressured by circumstances to become teaching only institutions.

The proposed Pyne reforms are the most substantial since the creation of the Unified National System under the then Minister John Dawkins in the mid 1980s. Such significant changes need to be argued, debated and contested – thoroughly, diligently and rigorously. And unfortunately what Minister Pyne and Professor Young have offered will benefit only the elite few.