Will Australia learn from NZ’s mistakes in higher education?

When contemplating our fee deregulation gamble, we should look no further than New Zealand, where it was tried and failed. The.Rohit/Flickr, CC BY-SA

Since 1990 New Zealand has introduced many dramatic “reforms” into its higher education system, many of them well in advance of Australia. A number of these “reforms” have been unwound after nasty, unintended consequences were discovered. As a recently new Aussie – and an ex-Kiwi – I often wonder why Australia can’t learn from observing New Zealand’s lessons, rather than learning the hard way.

These include market-rate interest on student loans, uncapped places, unfettered private provider student access to government loans, and fees for higher degree research students. Some New Zealand “reforms” are still well in advance of Australia’s – ex-TAFEs granting Bachelor and even Masters and PhD degrees, substantive research funding allocated by performance-based research funds, and full cost-funded research.

Some of these one might not ever wish Australia to try; others perhaps. But it’s interesting to look at some of New Zealand’s experiments, their consequences and – in some cases – their reversals.

Fees, loans, interest rates and caps

The New Zealand Labour government introduced fees for domestic students in 1989. These were quickly ramped up by the new National government in the early 1990s, with uncapped student fees and a HECS-style pay-back-as-you-earn loan arrangement. After some tinkering the interest rate was raised to something akin to market rates.

Of course, loans ballooned, students fled offshore (often to Australia) and defaults skyrocketed.

In 2001 Labour introduced fee-increase caps and interest-free loans while the recipient studied, with below-market rates while in the workforce and repaying the loan. Since 2006 all borrowers resident in New Zealand have been exempted from interest on their loans. Punitive interest rates still apply for off-shore students, complete with increasingly aggressive loan-chasers.

Uncapped places, recapped places

Caps off. Caps on. Shutterstock

In the early 1990s the National government also introduced uncapped places – or bums-on-seats funding – similar to the Rudd government’s contestable funding in Australia. This was done for vaguely similar reasons: widening access to higher education, giving greater choice to students and responding to the need for more graduates in the knowledge economy.

Again, perhaps unsurprisingly, participation rates soared, expenses blew out and concerns grew over graduate and course quality.

Ironically, as I moved to work in higher education in Australia (2010), New Zealand began capping places again, in a similar manner to the old approach in Australia. Universities (and other providers) have very strict windows to work within for student recruitment in different fields of education. Conditions are agreed with the government funder, the Tertiary Education Commission. Increasingly, places in many courses are voluntarily capped.

Private providers, open-slather to caps

Linked with place uncapping in the 1990s was access to government funding for both vocational and higher education funding for polytechnics and private providers. Again perhaps unsurprisingly, places in sub-degree and degree-level courses soared, quality concerns dramatically increased and some dodgy qualifications and poor outcomes proliferated.

This was due in part to lack of non-university regulation. New Zealand universities are self-regulating via the Committee on University Academic Programmes, a somewhat surprisingly effective quality ensuring and enhancing body co-operatively run by the eight New Zealand universities.

Back came the caps on places, much stronger regulatory oversight of non-university providers via the New Zealand Qualifications Authority, and weeding out of many dubious – and some downright fraudulent and exploitative - private provider offerings. I should emphasise that most private providers offer excellent qualifications and education, complementing university and polytechnic offerings.

Fees for Masters by Research, PhDs

Should PhD students have to pay given the contribution they make to research? Romana Klee/Flickr, CC BY

Some other New Zealand “reforms” that Australia plans to follow are of arguably dubious value. One example is fees for domestic higher degree students (I paid a small fee during the last year of my PhD degree in New Zealand in 1993).

These are relatively modest compared to the current taught bachelor and masters degree fees for domestic students in Australia. General opinion in the academic community is a Research Training Scheme-style fee-free research Masters and PhD would be better still, but this has not (yet) been reversed in New Zealand.

Non-university higher education degrees

As alluded to above, since 1990 New Zealand polytechnics and some private providers offer bachelor and masters degrees. Some even offer PhDs.

We haven’t gone that far in Australia. Whether this is good or bad is open to some debate. New Zealand hasn’t unwound this “reform”, so perhaps it’s worth a try in Australia too.

Research component to Performance-Based Research Fund

The New Zealand Performance-Based Research Fund (PBRF) is the loose equivalent of the ERA (Excellence in Research for Australia), which evaluates the quality of research in Australia. Since 2006 a very substantial portion of university (and some minor polytechic) income is derived from the PBRF, unlike with ERA.

The Group of Eight would almost certainly love to see this “reform” on the Australian agenda, given these elite universities have the most scope to conduct research. Essentially, the better the PBRF grade, number of areas assessed, completing PhDs and research income, the bigger the income. Given the very different goals and methodology of ERA, however, I think this would be a poor outcome for Australia.

Full-cost funded research

Unlike Australia, New Zealand full-cost funds research – a grant will bring in a portion of an investigator’s salary, real overheads on salaries, and depreciation on equipment.

Compared with Australia, where we “donate” researcher time to the funding agency, partially cover real costs of research and have various partial block-grants, the New Zealand full-cost funding approach produces a highly transparent, targeted and more effective system.

This is one reform where Australia should follow New Zealand’s lead. As for the others, Australia should learn from New Zealand’s mistakes rather than be doomed to repeat them.