University ‘reforms’ are a looming disaster

The Canberra Times     |     23 July 2014


Stephen ParkerThe prospect of university fee deregulation, as proposed in the Budget, has divided the university sector.  The Group of Eight is strongly in favour, with ANU vice-chancellor and Go8 chair Ian Young saying that, in an environment of declining public funding, without fee deregulation, the university sector is unsustainable.  The Australian Technology Network universities “reluctantly”  agrees and the peak body, Universities Australia is not opposed. But number of individual vice -chancellors have been strongly critical of the proposal, with  University of Canberra vice-chancellor Stephen Parker recently describing proposed reforms, with fee deregulation as the centrepiece, as ” a potentially calamitous package” .

The whole “reform” package emanating from the budget spells disaster for students and the country. It is true that some aspects are more palatable than others, but the reforms are not being presented to us as a menu from which we choose. They come as a package with minimal give and take at the edges.

We cannot get away from the fact that 20%  is being removed from government funding for university places. To make up the shortfall, universities will be able to charge students more, and then go further than what is required to restore the funding.

True, students will be able to add the increased contributions to their HECS debt, but HECS repayments will also be going up, and real and compounding interest will be applied, and most graduates will take longer to pay off their debt, thus affecting their ability to start a family, open a small business, buy a house and so on.

So if I have to choose, I oppose the lot.

These measures might benefit a few elite universities, but they will damage the university system as a whole.  They might also benefit some private providers of higher education, including overseas ones that move into Australia, because these will now have access to taxpayer subsidies as well.

The Group of Eight research-intensive universities, chaired by Professor Young, asked for fee deregulation, and brought down on our heads a potentially calamitous package. 

We cannot justify these measures on the grounds that a degree increases a graduate’s earnings potential. We already have a progressive income tax system, and so if a graduate earns more they will pay more tax across their working life.  If anything, I would increase tax rates for the wealthy, to ensure that we can support our education system over the long-term.

According to the US Federal Reserve, total student loans moved from $US731 billion in 2008 to $US1.214 trillion in 2013; a 66% increase in less than five years.  Student debt is larger than credit card debt in the US, and it is distorting individual incentives and the economy as a whole.

Ironically, it was the ANU that invited US economist and Nobel Prize winner Joseph Stiglitz to come to Canberra earlier this month to speak at a forum. Professor Stiglitz warned Australia in the strongest terms not to go down this road.

quote marksAmerica’s failed financial model for higher education is one of the reasons that, among the advanced countries, America now has the least equality of opportunity, with the life prospects of a young American more dependent on his or her parents’ income and education than in other advanced countries.


We will go the same way if these reforms are passed in Australia.  In five years’ time we will all bemoan the situation and there will be nothing we can afford to do about it.

Professor Ian Young (ANU vice-chancellor and chair of the Group of 8)  argues that the status quo is not sustainable.  It will be, in my view, if the public maintains its current level of contribution and universities work hard to bring down their cost base.  We could also free up resources through careful planning of the system rather than letting market forces rip (but one isn’t allowed to say this kind of thing today).

The best gloss I can put on it all is that there has been a colossal misreading by the government and the Group of Eight of the consequences of these measures, and the latent public antagonism to them.   Whether that latent antagonism is activated and translates electorally is not my business.   That will or will not flow from the political process, but a poll commissioned by the National Tertiary Education Union suggests that pressing on with them could spell electoral disaster for the government and for minister Pyne in his own seat.

Bearing in mind that the Coalition gave no inkling of these changes at the last election – on the contrary, Tony Abbott gave a speech to universities in February 2013 with the message that there would not be fundamental change – it is hard to argue that punishment at the next election would be unjustified.

Professor Stephen Parker is Vice-Chancellor of the University of Canberra.

This opinion  piece was originally published in The Canberra Times on 23 July 2014.

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