The major losers in the debate on voluntary student unionism will be the students themselves. Self-interest and ideology on all sides of the debate have clouded the issue to the point at which major damage stands to be done.
What is not being asked is: what services are actually necessary and who should have to pay for them? It is an oversimplification to say that services which are necessary and value for money will thrive under VSU. While some services should cease and others thrive under a user pays system, there are some services that simply can not be sold as member benefits or products. Infrastructure development, insurance, printing, support services, student development and in some cases even ID cards have been cost shifted from universities leaving these services - and more - on the VSU chopping block.
The legislation promises a very painful transition for regional student organisations in particular. Regional campuses will be harder hit by the change due to their youth, size, location, history and ability to diversify. The smaller markets they operate in dictate that they will struggle more to be financially sustainable and will likely be forced to cut service levels. Quite simply, smaller student numbers mean fewer opportunities for member funding, and less of a market for commercial ventures.
Proponents argue that the apocalyptic VSU scenarios put forward by student organisations and universities are untrue. It is argued that regional campuses oppose VSU to protect their monopolistic position on campus. It is also argued that the closer links between regional campuses and their communities will allow student organisations to flourish post VSU. Those student organisations that can adapt to a voluntary system are also said to flourish.
Unfortunately the reality of the situation is much more complicated than this. Student organisations became the monopoly suppliers of services on campus because no one else would supply them. The smaller sized campus and the absence of students for almost half the year and often provides returns too low to entice outside operators onto campus.
Even when operations are successfully outsourced returns can be very low, in some instances barely cost neutral. In others universities have contracts which require rent waivers and even subsidies if operators do not meet their target revenues. To run commercial operations profitably on small campuses requires a tight control of costs, leaving little efficiencies to be extracted post VSU. The harsh operating environment has lead regional student organisations to be better money managers, simply because there was less fee money to spread around. Most regional student organisations have already targeted the wider community in the aggressive pursuit of additional income.
While commercial operations can be run successfully, those on regional campuses are less lucrative and will not prove the salvation of student organisations. The youth and smaller size of these unions leaves little cash available to diversify on campus.
Similarly small student populations restrict the opportunity for attracting members. While student organisations should be able to continue to operate on a member basis, fixed costs of operation and the fixed costs of many services will be difficult to meet. The economy of scale achievable at a campus with 30,000 students is not available on one with 3,000. A service which is viable on a large campus may prove just too expensive for their smaller cousins.
Developing any sporting or recreational infrastructure will be too expensive for regional student organisations to do. If universities want major sport, recreation facilities and other services they will need to provide it themselves. Each university will have to look at it in terms of what product they wish to offer. Some soul searching will be needed on the part of these institutions to decide just what role they should have in the provision of these services.
The upkeep of existing sporting facilities will also prove beyond the means of most student organisations. The capital upkeep on recreation facilities in regional areas usually exceeds their income generating capacity. The only way they can be run profitably is to forgo expensive maintenance such as repainting, resurfacing playing surfaces and the replacement of equipment.
The choice these organisations will have to face is one of turning facilities over to their universities or to consciously run down the facility over the course of the next decade. Even if outsourced the same problems arise. What sane commercial operator will choose to stick around when the floor or pool needs replacing at a cost of over $1 million ten years from now?
There are four different options for regional campuses to deal with the legislation. The first one is to run down their reserves keeping services at current levels hedging their bets on a change of government. The second will be to transfer services to their universities or secure SOS funding from their university. The third it to shrink substantially to a commercial and member funding core with only a handful of staff for service provision. The final is liquidation, a very real possibility for some organisations.
Regardless of the path taken there are some definite outcomes. No regional student organisation can afford to build new facilities post VSU. A large number of current services will be lost. Universities will have to pick up the tab for some current services such as student insurance. Jobs will be lost in regional areas. The current level of university sport will decline. Simply put the current level of service provided is above the market equilibrium, and the adjustment downwards will be significant and painful.
The $80 million adjustment fund provided by the government, the details of the purpose of which are unclear, has the potential to cause some pain itself. If allocated on a financial needs basis it could reward some organisations for bad management. The largest problem however is that it could distort decision making as all universities and student organisations compete for a slice of the pie. The best way the fund could be used is to provide transitional advice and qualified financial assistance with the changes. Anything else could encourage some very poor decision making at a very crucial time.
Each university must now answer the question that was not asked in the debate: what do their students require, and who should pay for it?
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