Christopher Pyne's Flip-Flop Folly Around Fee Deregulation

It probably seemed like be a good idea at the time. That appears to be the likely retrospective to emerge from Minister for Education and Training, Christopher Pyne, whose policy of fee deregulation lies in tatters.

Widespread public concern and strong opposition from Senate crossbenchers, as well as the ALP and Greens in the lower house, have pushed the Minister to rethink. According to recent media reports, Pyne is perusing several options, including the threat to plunder various tertiary research budgets; accept a cap on fee increases which, as The Monthly political editor, Russell Mark, points out is hardly fee deregulation at all; and finally, scrapping fee deregulation altogether, as suggested by Andrew Norton from the Grattan Institute.

If the Senate crossbenchers are confused about such flip-flopping, imagine how must prospective students feel when considering likely levels of future debt.

Either way, universities are likely to lose out and university chiefs will continue on the fiscal merry-go-round, desperately searching for much needed funds to bolster existing and future operations. Faced with such challenges our vice chancellors have adopted the role of latter day carpetbaggers, traversing the globe in search of corporate and philanthropic donations, bequests and so forth in order to keep their respective ships afloat.

It’s not an edifying practice but then again, our university bosses did choose to simply roll over when offered the prospect of fee deregulation, believing that by further encumbering students with debt they would obtain the required funds to prop up their ailing institutions.

Only one vice chancellor, the admirable Professor Stephen Parker from the University of Canberra, had the necessary ethical fortitude to argue that universities should fight their corner and not dive headlong into the fee trough.

Parker was particularly damning of Universities Australia, the mouthpiece of Australia’s vice chancellors. “The support that UA is giving them [the proposed reforms]is a strange form of suicide ritual,” he remarked, adding that, “whether it breaks up soon because the tensions are too great, or it survives until the interest group factions have no more use for it and spit it out, UA is doomed because it has lost its moral compass… I personally will not attend a further meeting of an organisation with necrotizing fasciitis; the condition where the body eats its own flesh.”

But according to Minister Pyne, “nobody in the university sector wants the status quo, so it's a high-stakes game." Indeed it is, and there could be any number of losers, depending on the outcome of current policy deliberations.

Given the embarrassment that comes with policy defeat, and the fact that yet another potential saving has been stymied, it’s worth pondering whether more thought was required before wheeling out such controversial reforms.

Let’s face it; these measures were not designed simply to rejuvenate university funding or to create “world class” higher education. They were intended as a budget saving that would also beef up other parts of the tertiary system, mainly private colleges offering “sub-degrees” and the like – all part of the new terrain of open market competition and seamless consumer choice.

But would the economy have benefited through fee deregulation? No. In fact, the very opposite would have occurred. How so? Well, according to economists at the National Centre for Social and Economic Modelling at the University of Canberra, the deregulation of university fees would in the long term have increased inflation and led to more government expenditure, mainly because of increased payments arising from indexed welfare payments.

Principal research fellow at the National Institute, Ben Phillips, was recently quoted in the Fairfax Press as saying that, “only under the most optimistic fee scenarios would it be likely that the proposed package [of higher education reforms]would save the government money in the future”.  Put more simply: “…the fiscal outcome is not likely to be a deficit reduction measure”.

According to Phillips, a 50 per cent fee increase would lead to an increase in the Consumer Price Index (which includes education costs) of 0.7 percentage points which, in turn, would have had the effect of increasing government expenditure by a whopping $1 billion a year – no small sum at a time of “debt and deficit disaster”.

The other unintended consequence of fee hikes is more unpaid student debt. Last year the level of such debt was around 17 per cent. Logic dictates that chunkier fees would lead to even more collective indebtedness. If anyone needed convincing of this scenario, they should look no further than the US (the education minister’s preferred model of higher education) where unpaid student debt hovers around the trillion dollar mark. 

While government policy makers may well have been remiss in thinking through the implications of higher education reforms, the same accusation could be levelled at those who run our universities. Interestingly, while the vast majority of our vice chancellors pushed for fee hikes, many ran for cover once they discovered that fee increases would impact most heavily on the poorest students. Others dug in, claiming (in tones reminiscent of Margaret Thatcher) that there was simply no alternative.

Few vice chancellors, however, seemed to care that under the proposed reforms many of our elite universities would be turned into exclusive bastions; that richer students would benefit through discounts accruing from the upfront payment of fees, and that regional universities would continue to struggle in an even more cutthroat market. This all seems light years away from Glyn Davis’s fabled “republic of learning”.

The easy option for most universities – especially those in the regions – would of course be to further reduce entry standards so as to encourage more enrolments, or to boost the numbers of international students – the most lucrative cash cow of all.

Such eventualities are of course part and parcel of a marketised system in which almost everything can be reduced to the financial imperative. Yet as numerous commentators have noted, it is students, and especially women and those from disadvantaged backgrounds, who will have to bear the worst consequences of increased student fees.

Significantly, soon after the reforms were proposed, the University of Western Australia announced that its fees would rise by 30 per cent to offset government cuts. Other institutions were set to follow.

Mindful of a possible decline in student numbers, the Vice Chancellor of the University of Sydney, Professor Michael Spence, noted that increased fees would enable his own institution to offer more scholarships to disadvantaged students, noting, in passing, that “fees are, for a degree, sort of the price of a family car."

These sorts of arbitrary comparisons – similar to Joe Hockey’s assertion that the proposed medical co-payment was equivalent to “two middies of beers” – reflects a particular world view.

But fee deregulation is more than yet another policy mud-wrestle. It is, above all, an ideologically-driven measure consistent with the neoliberal mantras of small government and privatization.

The aim of deregulation is a wholesale shift from public to private expenditure. According to University of Melbourne higher education researcher, Dr Emmaline Bexley, in shifting the burden for higher education from the state to the consumer, “the public contribution toward a person’s education will shrink, and the private contribution will rise to what the market will bear”. 

Despite assertions by education researchers that fees are not always related to attrition and dropout rates, the fact is that the latter are disporotioanlty made up of those from lower socioeconomic backgrounds – a trend likely to accelerate in what are, as yet, unchartered waters. 

And, perhaps most importantly, increased fees do not mean improved quality. Last week’s media reports which noted numerous problems besetting the burgeoning private college sector should alert us to the short cuts that tempt some institutions who rely on student enrolments as their primary income. Universities are no exception, and the fact that the Federal Government has cut funds to the university regulator, TESQA, is further reason to worry.

Students entering university might also question what they are getting for their money. Recent evidence of bloated classes, lack of adequate support, and often poorly resourced institutions does not auger well, nor does the fact (as noted in numerous surveys) that many students feel lonely, isolated and detached from their institutions. For growing numbers of these students, universities seem more like vocational drive-throughs than genuine centres of higher learning.

Minister Pyne’s faith in the hidden hand of the market is further undermined by evidence that more and more graduates find themselves unable to obtain work in their chosen fields. The lack of planning and over-enrolling of students in courses like law, engineering, teaching, psychology and speech therapy suggests a rather chaotic market-based system. Given this, prospective, students might well ask themselves whether enrollment at an Australian university is really worth it.

Rather than pursuing a US model of higher education, Minster Pyne and the rest of us might be better served by heeding the examples of Germany and Sweden which offer free education to their students without the disastrous consequences often predicted by neoliberal advocates.

Perhaps Minister Pyne could add this insight to his flip-flopping deliberations.