Australia is following America’s bad example

Christopher Pyne, Australia's Minister for Education, suggested that “We have much to learn from our friends in the Unites States” when he proposed that the government deregulate fees and charge real interest on student loans.

June 29, 2014

For those in Australia who took advantage of the brief moment in the 1970s when the country’s higher education system was free, it was heartwarming to see students in streets demanding that the government reverse its determination to deregulate the HE system. Augmented by those who turn up at any protest, students vented their anger at the prospect of universities becoming deregulated and mimicking patterns that define higher education in the USA. Christopher Pyne, the Minister for Education suggested that “we have much to learn from our friends in the Unites States” when he proposed that the government deregulate fees, lower government subsidies and charge real interest on HELP loans. This, he claims, will make access to HE more fair and equitable. And somehow under all that lies his determination “not to be left behind”, which means that “a few” of this country’s universities ought to be ranked in the top fifty. At the moment we have one or two or three, depending on which tables you consult. Pyle seems inclined to bolster the top end by decimating the bottom end, and if some universities collapse as a consequence, then so be it—that’s the free market.

The ugliness of the free market is that competition requires diverting a huge part of an institution's operating budget to marketing and promotion. One of the cola manufacturers spend about $3 billion annually, the other about $2 billion. That’s close to 40% of their operating budgets! Allocating budget to marketing by a university would eventually undermine what it can do in terms of research, teaching and engagement. Surely they aren’t going to get into that game? Well, truth be told, many are already in it. The University of Phoenix spends about $100 million annually on pushing its brand. Admittedly that’s an anomaly (so far).  Despite intense marketing, the University of Phoenix's parent company, the Apollo Group, has been steadily losing money: revenue of 4.7 billion in 2011 fell to 3.6 billion by 2013, apparently due to declining enrolments. Since the U of P is a private, for-profit HEI  its financial woes don’t pass costs on to the government. That’s the kind of thing the Minister wants for Australia, apparently.

As a best guess, the University of Melbourne already spends between $10 and $20 million annually on marketing, which has no doubt contributed to its success in the international rankings. It’s inevitable that what Margaret Gardner, vice chancellor of RMIT, calls the quasi-market of higher education where universities get some funding from the government but have to compete for substantial income from other funding sources. The biggest alternative funding source is, of course, student fees and the new deal is that from 2016 there will no longer be a cap on how much universities can charge. For the top-ranked universities that may prove to be a promising and profitable development but for the lower-ranked universities it may prove disastrous.

The proposed changes to HE in Australia suggests that the government is willing to sacrifice control over higher education in return for decreasing its financial support. The irony is that the politicians making these decisions received their education during that window when university education was free; this has not escaped the attention of the media. But that was the world then and these days it is no longer feasible — we’ve crossed a line about education being a public good.

The vice chancellor of Melbourne, Glyn Davis, claims that “much public funding will likely be removed from tertiary education.  Universities are invited to make up this gap through higher fees. Initial analysis shows the gap will be momentous indeed— fees would need to rise by 45 per cent to make up lost funding in social science disciplines, by 54 per cent in science, and by 61 per cent in engineering. Students would get no additional benefits for this increased debt. The requirement for additional equity scholarships only applies after price rises mitigate cuts to the Commonwealth Grants Scheme”.  And that’s just the impact predicted for this year!

Stephen Parker, Vice Chancellor of the University of Canberra, sees fee deregulation as the first step to privatization, and with his tongue in his cheek suggests that if ascending in the ranking is the primary aim, then let’s amalgamate the Group of 8 universities, make universities assume responsibility for student loans and link funding to postgraduate success. These suggestions should seem outrageous, but this seems to be where  Pyne is heading and for Australia’s universities, it’s frightening.


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