Nothing to Fear From Reform

One ironic feature of the higher education debate is that clear thinking, the very thing universities ought to be instilling in their students, is hard to find.

Dr Kemp’s plans to reform the higher education system, leaked by the Opposition last October and subsequently dumped by Cabinet, were the subject of hysterical and ill-informed protest.

What Dr Kemp proposed was letting government subsidies follow the student with universities being given the power to charge top-up fees, and students able to defer the cost through income-contingent loans.

We’d expect that student groups such as the National Union of Students, who still think the general taxpayer should fund the huge investment in their future earning potential that is higher education, would be opposed to this measure.

But we would expect better of serious commentators. Unfortunately, these expectations, with a couple of exceptions, are likely to be disappointed. A case in point was Gavin Moodie’s regular column in The Australian of 26 January.

Moodie launched an attack on small private providers of higher education, who generally support Dr Kemp’s proposal, claiming that their position would lead to bad education, social policy, economics and politics.

Moodie’s belief that this change would be bad for education rests on the claim that most of those lobbying for change are small institutions, which do not offer a range of courses and cannot achieve economies of scale to support high quality teaching and learning.

It is true that many private institutions are small and don’t offer a large range of courses, but this is irrelevant as most aim to fill small niches in the educational market. Many of the colleges in question are religious, and offer a kind of education simply not available elsewhere. To satisfy diverse student demand what is needed is system-wide range, not necessarily range within one institution.

Size does not seem critical to achieving good outcomes for students. Avondale College is an example. It has around 600 students, about a third of which are currently eligible for subsidised places (Avondale is among those campaigning for change, to eliminate this inconsistency). According to The Good Universities Guide, Avondale receives its top five star rating in graduate assessment of their courses, staff-student ratios, getting a job and starting salaries.

Take by contrast a much larger institution, Victoria University of Technology, where Mr Moodie works. It has around 17,000 students. It gets four stars for graduate assessment of their courses, three stars for staff-student ratios, and only one star each for getting jobs and starting salaries. There are reasons for VUT’s poor performance, but this contrast highlights that size neither guarantees nor is necessary for good performance.

Moodie’s bad social policy argument relies on the view that if universities were able to set their own fees on top of the public subsidy this would disadvantage people from low socio-economic backgrounds, because they are more averse than wealthy people to incurring high levels of debt for higher education.

It isn’t clear that this debt aversion is a major problem. The introduction of higher HECS rates from 1997 has not had an obvious effect on the socio-economic composition of the universities. The proportion of low SES young people studying courses in courses allocated to the most expensive band actually increased in 1997 despite a large price increase, before dropping in 1998 to a point 0.1% below the 1996 level. These appear to be normal fluctuations, with a price of more than $5,000 a year having no effect on behaviour.