Dr Brendan Nelson's university policy prescription: panacea, placebo or poison? Day 4

Havachats are week-long email dialogues between two prominent advocates on an issue of the day. To vote on the issue and make your view count, click here.

Day 1 . 2 . 3 . 4 .

Andrew goes first. Carolyn responds.

From: Andrew Norton
Sent: Saturday, September 27, 2003 5:26 PM
To: Carolyn Allport
Subject: Winding up

Dear Carolyn

Perhaps we can end our exchange with a few areas of partial agreement.

Though I don't think we need more graduates, like you I don't think limiting subsidised places is necessarily the right policy either. I prefer my decentralised solution, the use of brokers to limit bad choices by prospective students and to curtail universities irresponsibly enrolling students because they want the money, to the centralised alternative of picking a target number.

Prices play a part in my policy. The fact that some prospective students are deterred by the cost of going to university isn't in itself a bad thing. A function of prices in a market system is to help measure trade-offs. If someone makes a well-informed assessment that $21,000 for a commerce degree, plus the time out of work to complete it, isn't likely to lead to benefits that exceed that, then not doing the degree is the right decision, not some failure of policy.

This scenario is very unlikely for school leaver university applicants with the intellectual ability to do the course and who are able and willing to work. But for someone who is likely to fail, or who for some reason won't be able to secure sufficient years of good employment, it is a scenario they should be aware of and act on. It is the role of the brokers to guide people in these decisions. This, rather than slashing prices for everyone, is the solution to irrational debt aversion.

I don't especially like the full-fee places, not so much because they are full fee or because of the debt, but because they mean that some students pay two or three times as much as HECS-liable students for an essentially arbitrary reason, that their Year 12 score puts them on the wrong side of a government-set quota.

Yet within the inherent constraints of the quota system they are an improvement. Nearly 10,000 people this year are doing their first rather than lower preference course because they could pay full fees. Since almost all of them could have taken a HECS place, they have freed up those HECS places for others. The full-fee places leave many people better off and nobody worse off, even if improved policies could leave even more people better off.

I agree with you that the government should withdraw its workplace relations requirements. This is not a reflection on the content of all the requirements. There could well be a case for some of them, such as making it easier to retrench staff and cutting off de facto subsidies to the NTEU. I have no ideological objection to AWAs, though I suspect they would create more administrative hassles than they are worth.

I oppose the workplace relations requirements for the same reason I support universities setting their own fees. These are decisions best made not in Canberra, but by the immediate parties to the transaction. These are the people with the most information and the strongest incentives to make the right decisions.