What might at any other time have made headlines for weeks is now little more than a sidebar. Australian universities were thrown a lifeline when federal Education Minister Dan Tehan announced the government’s higher education relief package.
It provides a financial floor for universities, a guarantee of future income under the funding formula for domestic students even if numbers drop.
It has a potentially huge future financial impact, although a precise number is hard to calculate, as we don’t know how student numbers will pan out.
There is an immediate cost to government of some $100 million through waiving fees charged by regulators. This is potentially minor in comparison to the cost to government of its guarantees to universities. In essence the Commonwealth is taking on the universities’ financial risk.
That raises a policy concern: moral hazard. It is a concept from economics that has nothing to do with morals, everything to do with risk. If a government (or insurer) steps in with subsidies when risks arise, people will be encouraged not to look after themselves. The classic case is flood relief: if people are fully compensated for losses in a flood they will continue to build houses on flood plains rather than higher ground.
That’s not an argument for government to be hands off — clearly it has to help in current times. Nobody could have been expected to plan for the scale of disruption we now face.
It is however an argument to be careful about bailouts of particular companies or industries. The problem with bailouts is, along with helping those who are struggling, they give handouts to those who have barely lifted a finger to help themselves.
They also have a perverse and unintended consequence of stifling innovation, providing equal assistance to the innovative and the backward. They encourage industries to put their effort into lobbying for bailouts rather than thinking of innovative solutions.
We do have innovation in our higher education system — examples include the “Melbourne model”, the recent decision by the ANU to allow entry based on year 11 results, the University of New England’s leadership in distance learning. Innovation should attract commensurate rewards.
There would be an easy policy fix if we had the British/European university system, where universities were in effect part of government (Cambridge and Oxford are, for legacy reasons, exceptions). In that system, government to a large extent already bears the risk, and can institute reform in collaboration with the universities.
Or if we had the US system where leading private universities genuinely compete, we could rely on market-based solutions, expecting them to self-insure or obtain commercial finance. US public universities are generally state owned and thus reliant on each state’s COVID-19 responses.
Unfortunately as with so many other institutions in Australia universities combine features of both sides of the Atlantic. In the circumstances, Tehan has done a pretty good job of achieving a balance.
Predictably, though, the first reaction from Universities Australia was to ask for more — they called this package “an important first step”. No matter how much they get, universities always ask for more.
Universities often cry poor. Their claims should be considered carefully. While some are doing it tough, others — especially those in city centres like Sydney, Melbourne, Adelaide, RMIT, or UTS — are sitting on literally billions of dollars worth of real estate: if they were companies, they would be among Australia’s richest. They can do more to help themselves.
Bernard Keane saw it as a missed opportunity for fundamental reform. While true for this package, there will be plenty more opportunities. Reform of the higher education sector is unavoidable. International students are never likely to return to Australia in pre-COVID-19 numbers. That’s no bad thing.
Over the past 20 years, according to the Grattan Institute, university revenues more than doubled, from less than $15 billion to more than $30 billion. Growth this rapid in any industry often proves unsustainable over the longer term.
Australian universities have been warned about the risks of excessive reliance on international students, particularly Chinese, for a decade or more, under both Coalition and Labor governments. Although as ANU vice-chancellor Brian Schmidt has observed, governments have not been averse to the income. Schmidt describes it as an “unwritten pact”.
Whatever unwritten pact might have existed, it is no more. The package does not address loss of international student revenue — for which the government makes no apology. Encouraging Australian universities to concentrate on Australia rather than focusing overseas is clearly part of the intent.
Change like this represents a huge challenge for policy. It will require serious effort from both government and universities if it is to succeed.
What isn’t clear from the author is what reforms he has in mind. I think the comparison of a university with real estate to a company is the giveaway. Reform is code for reduced, course offerings, reduce workplace entitlements and charge more. Brilliant. More Neoliberial nonsense Crikey. Seems that Keane isn’t enough.
Actually precisely the reverse – what the article is saying is that chasing the dollar at all costs has been to the detriment of universities and education. get rich quick – as has been promoted over recent decades – was always fools gold. What has been neglected, and what we now have an opportunity to rediscover, is teaching and research of relevance to Australia and Australian students. Really hard to see how this constitutes a neoliberal agenda. Have already pointed out in the article some of the innovations that are working, at places like Melbourne University, ANU and UNE.
So much bollocks in this that I truly don’t know where to start.
“It is however an argument to be careful about bailouts of particular companies or industries.”
That’s the problem, right there. Education should never have been forced to become an industry. And having forced it to become such, criticising universities for seeking profits above all else in the way that most industries do, is the height of hypocrisy.
Yes, utter tripe by this author, who clearly has no interest in the idea of education – only bean counting. It’s as though universities were just base money guzzling entities, in it only for their own advancement – nothing to do with educating our youth, investing in social capital, building the nation and the rest.
Our higher ed institutions have become dependent on international student funds because governments have wanted it that way – starting with so-called Dawkins reforms, and then turbo charged by Howard Government in 2000s – adding the offer of PR to these students in the marketing pitch.
In Australia, it seems its just too much to think of Higher Ed system fundamentally as an investment in the future, and funded principally through taxation – as is the case in civilised countries (Scandinavian). Instead, universities have been forced to act as white shoe brigades spruiking their wares throughout Asia, especially China.
The consequences in so many areas – academic standards, the treatment of these students when they are here, the proliferation of marketing crap in our institutions – have been disastrous and arguably immoral. And the house of card upon which it has all been built is now collapsing in the current crisis – but one could think of a whole lot of other ways this could have happened (Chinese Gov turning off the tap, for example).
Thirty years on it’s the Dawkins neo-liberal chickens all coming home to roost. The precious resource that are our universities now face a very grave threat.
I agree that this piece has several flaws, including basic factual mistakes.
Australian higher education’s dependence on international student fees originated before Dawkins, with his predecessor Susan Ryan.
The Australian Government established 2 committees of inquiry in 1984. ‘In a report titled Mutual advantage, the Goldring committee (1984) recommended that overseas students continue to be valued for contributing to foreign aid and mutual understanding. However, the Government followed the recommendation of the Jackson committee that education be considered ‘an export industry in which institutions are encouraged to compete for students and funds’ (Jackson, 1984). Universities were permitted to charge international students full tuition fees from 1986 and the Australian Government required universities to charge international students full tuition fees at least above a minimum set by the Government from 1990.’
Moodie, Gavin (2008) Australia: twenty years of higher education expansion, Journal of Access, Policy and Practice, volume 5, number 2, pages 153-179.
I thought your name was familiar. Thanks for the input.
You would know best, but I think international students started with the Colombo Plan, purely aid, a brilliant and far sighted way to help developing countries and to engender strong ties between us. Of course, they went back to enrich their home countries. It wasn’t a pathway to PR.
By 1904 the Australian Government had made student exchange agreements with a number of Asian countries which permitted their citizens to study in Australian universities by paying the same tuition fees as Australian students. However, the number of international students rarely exceeded 500 each year before 1938. The Colombo Plan signed in 1950 increased Australia’s international students from about 1,000 in 1950 to about 5,000 per annum in 1965 (Harman, 2002: 6).
Harman, Grant (2002, September 5-7) Australia as a major higher education exporter, Consortium of higher education researchers 15th annual conference, 5-7 September, Vienna, Austria.
I’m not sure that the local student guarantee goes that far so as to be a great impost. My reading was that they would cover existing local student fees. No detail as usual, but that just means they would cover any student fees were they to drop out, as they are obliged to provide standard arrangements for those who continue under existing funding agreements.
But then there are two, or three census dates per year, one each semester or trimester, and I’m not sure that the guarantee covers the full academic year, the full course which may be 3 or 4 more years, or just this semester. Slippery words. If a student completes the first semester and defers after that for a year or two, is the government paying for students deferring as well?
I doubt it somehow.
Yes, the universities have themselves to blame, turning students into revenue commodities and paying huge executive salaries, but there is no question that govt policy actively directed them this way.
A return to the publicly funded, public good of tertiary education for local students, for learning sake, would be a great outcome. Better still, turn their direction to broadening students minds. Concentrate on STEM and arts, insist on philosophy being a requirement of every degree, and perhaps hive off vocational training to a second tier institutions, so business, law, architecture would be outside the University sector.
All this most cogently espoused by John Ralston Saul in The Unconscious Civilisation.
thanks DB for the intelligent and constructive comment. You are absolutely correct that the detail on then package is absent (something Andrew Norton has also commented on publicly). Remains to be seen.
You are also right to identify that both universities and governments have been walking hand in hand down the road of commercialisation. I like your framing: universities have themselves to blame but were encouraged by government policy.
The degree to which universities chase foreign student income is always a choice (with the notable exception of students supported by aid, as in the Colombo plan you mentioned earlier). The data shows extraordinary growth. While Gavin Moodie drew attention in an earlier comment to historical origins (the Jackson committee was undoubtedly important in influencing policy thinking) the numbers show revenue growth from foreign students really taking off in the 1990s and beyond. The question is, was the growth either desirable or sustainable?
This was not something imposed on an unwillling university system. Most embraced the income and promoted the growth. Universities themselves, and their peak bodies, frequently referred to the sector as export industries or promoted the level of foreign income earned in arguments for the value of universities.
At ANU the VC Brian Schmidt has actively tried to change tack (well before the stresses of Covid-19), with a vision of a smaller and better university not so dependent on overseas income. Not a fully realised vision, but progress has been made. This has meant ANU is now better placed to weather the storm than many other large universities.
Some might be interested in exploring the scale of the three decade disaster of Australian HE in a growing list of monographs on the subject. These have the common theme of the ever-expanding corporatisation that has gone on – including the international student dimension of things – driven at root by federal government policy and general attitude to the sector.
Tony Coady, C. A. (ed.) (2000). Why universities matter: A conversation about values, means and directions. Allen & Unwin: Melbourne. (Early warning bells rung by UniMelb philosopher, Tony Coady and colleagues – as if this question needed to be asked in the first place).
Richard Hil, (2012). Whackademia: An insider’s account of the troubled university. NewSouth: Sydney. (A gallows humour approach to the subject by a teaching academic who gave up in despair).
Raewyn Connell (2019) The Good University: What Universities actually do and why it’s time for radical change Monash University Publishing: Melbourne (Eminent retired sociologist, Connell searches desperately for glimmers of hope in an otherwise depressing landscape).
Dog’s Breakfast vision I suspect would be endorsed by all – a focus on genuine deep learning, as opposed to the largely shallow, instrumentalist kind that goes on now, based on a version of the future that is looking increasingly irrelevant.
PS A different type of study is:
Simon Marginson & Mark Considine (2000). The Enterprise University: Power, Governance and
Reinvention in Australia. Cambridge: Cambridge University Press. (This is a very muted – some might say compromised – critique, by two significant figures who have prevailed pretty well in the system; the work though charts how rapidly these changes occurred in late 1980s-1990’s – the overlap period of Hawke/Keating and Howard Governments, where there was a sense more of continuity than any major shift).
‘books’ not ‘monographs’!