Australia’s Universities: Last of the Great Socialist Enterprises?

If we decide to expand access to higher education, then we have to tackle the question of who pays. The current system where some students are subsidised while others are either excluded or must pay the entire cost from their own resources is simply not equitable. A system that gives everyone who can benefit from higher education access to a means-tested entitlement to funding is fairer and will allow more people to attend university. But, this change alone is not sufficient. A workable funding system must put power where it belongs, in the hands of the consumers. I realise that the politics will be tricky, and there will be many details to argue about, but I believe that Australia will eventually wind up with some form of means-tested entitlement system in which students will have considerable influence in a university’s funding.

When this happens, universities can be cut loose from regulation and allowed to teach what they wish and to charge students what they wish. Equity can still be preserved through scholarships, government subsidies, and income-contingent repayments, but in a deregulated environment, there will no longer be any monopolies. Universities, private and public, will compete on an even playing field.

What will happen then? Despite the fears of National Party politicians, the regional universities will probably fare well. They are often the only game in town and command great loyalty. Their costs are lower than those of universities in large cities, so they can compete by recruiting local students as well as city dwellers attracted to residential education at relatively low prices. Some regional universities will also benefit from their unique locations. In any event, in the Internet age location is less of a disadvantage, so some may elect to offer their courses world wide, or to be agents for overseas universities.

The older city-based universities will also benefit from a deregulated system. They will be able to expand in some areas to meet student demand, or they may contract their undergraduate numbers to build up their postgraduate areas.

My guess is that some of our older institutions will combine with other universities to approach the size and strength of their state and provincial counterparts in the USA and Canada (say 35,000 to 50,000 full-time students). Because of their prestige, they will command higher fees, which will translate into higher salaries for their staff.

Because many are already the first choice of most students in their states, the former technical institutes are also likely to do well in a deregulated environment. Their courses are popular with students and most will be able to expand their intake to give them needed economies of scale. I expect that these universities may gradually give up their attempts to offer liberal arts subjects as they will have difficulty competing with the older research universities. Instead, they will grow their strong areas of engineering and technology.

Private universities modelled after the University of Phoenix will do well from deregulation because they will be able to exploit their low cost structures to offer education at low prices in high demand areas such as business and information technology. Private universities that currently do not have full access to government-funded students should also benefit from a deregulated environment because they will be able to compete with public institutions for public funds.

In conclusion, a deregulated environment should lead to a much changed higher education landscape. There will be fewer institutions. Most will be larger, but a few will be smaller. Customers will have greater choice and greater control over what gets taught and when. The country will benefit from having stronger institutions.

Oh yes, and one more thing. Enrolment queues will certainly disappear.