Stone the crows! Vice chancellors really should have been careful what they wished for.

For decades, university leaders lamented they were under-resourced, over-regulated and politically ignored, despite education being the surest way to expand the economy, improve society and enrich individuals. As University of Melbourne Vice Chancellor Glyn Davis put it in April; “Put bluntly, the electorate believes university students do well after graduation, earning more than most. The case for investing more on higher education makes compelling sense to students and staff but rarely moves the wider community.” [i]

The pessimists were right. Ministers came and went, all agreeing that post school education was important but none game to bet their political, and the country’s, future on empowering universities.

Until Christopher Pyne. You would now know it, from the student protests and complaints, that the minister is doing too much too soon but Mr Pyne has drunk the campus cool aid: “Education policy is, in many ways, economic policy. It affects productivity, participation, the standard of living and the vital parts of our society both in its physical health and intellectual sophistication,” he said in a London speech just before the budget.[ii]

Now Pyne is intent on giving universities what they have long asked for – more resources and the independence to use them as they choose.

And he is determined to give every young Australian the opportunity of an education. Every young Australian. The minister claims his reforms will create places in various forms of higher education for 80,000 extra people.[iii]

In Opposition, Christopher Pyne voted for the Labor government’s breakthrough policy of demand driven funding [iv] This was a very big deal indeed; replacing rationed government funded undergraduate places with a commitment to pay universities to teach every student they believe has the necessary ability.[v]

In government Pyne has gone further. He has expanded demand driven funding to cover sub-degree programs, courses for kids who need help to reach their potential for university study. And he has ended the public sector monopoly on government-funded education by allowing private providers to compete for publicly funded students.[vi] This is the source of the “no corporate universities” protest slogan.

In essence, Pyne is the greatest advocate for universities since Gough Whitlam (a comparison he avoids by arguing Menzies was the founder of mass higher education).[vii]

But don’t expect anybody other the Crows to claim it, because the way Pyne is funding his education expansion will cost people money, specifically future graduates who will be burdened with bigger debts for decades than exist now.  And, by creating a competitive market, where private and public providers can charge what they choose, he has infuriated those who believe the profit motive is antithetical to higher education. As peak lobby group Universities Australia puts it, very carefully: “UA is not opposed to greater competition … The relative funding of universities compared with non-university higher education providers should take account of the obligation of universities to invest in research, public good and community engagement activities.”[viii]

All the opposition to reform is focused on student fees. The Budget transfers an average of 20 per cent from what Canberra pays per undergraduate place to student loan accounts. Pyne also wants universities to charge whatever extra they like on top of this increased amount to spend on whatever they like – in most cases research. And he wants to slug graduates with a higher interest rate on student debt, switching from CPI now to the Commonwealth bond rate capped at 6 per cent. [ix]

Pessimists suggest that universities will charge up to what they slug international students, which is where all the warnings of $120,000 degrees come from. Of course, this assumes that universities will all charge pretty much the same – and that students will not be price makers. Which they will, as one parent of an aspiring law student put it on the weekend: “As long as (she) gets the paper. It doesn’t matter what name is on it.”[x]

No one, including universities, knows what they will charge. They have to work out the complex income changes required by the Commonwealth cuts before they start thinking about competitive pricing in the domestic market. However Geoff Sharrock provides a balanced best guess;

We can expect fees to rise more steeply in degrees with high private benefits and strong international demand, such as law and commerce. In high cost fields, with lower private benefits and lower international demand, such as nursing, this seems less likely. … in some universities deregulated fees may double or even triple in some fields, not suddenly but over time. In others, fee rises may be modest, particularly in fields where credible online and non-university providers compete on price for students and subsidies.[xi]

If there are any optimists they will suggest that competition, especially from lower cost private providers (no research and cheaper teaching workforces) will keep prices down. While critics complain that the Group of Eight institutions will be the preserve of the rich, more fool the people who pay top dollar to attend – the Eight’s great advantage over the 30 or so other universities is in research, not teaching.

In any case, Pyne is certainly trying to see the market works like a market with consumers having enough information to assess universities on employment outcomes, student satisfaction and course quality – comparative data across all institutions universities have always opposed making available.[xii]

As to price, he argues that because graduates make much over working lives than everybody else they should pay more of the cost of their education, that at 6 per cent student loans are fair: “The current system, which is the CPI rate, sees the tax payer losing money every year, because we are – the government – is paying, or the tax payer is paying a higher interest rate than the students are repaying. So, setting the government bond rate with a cap of 6 per cent for HELP loans is simply recovering the funds the Commonwealth is currently spending on behalf of students, so I don’t think that is an unfair measure.”[xiii]

Christopher Pyne’s economics made more sense than his politics. By Friday night, the Group of Eight vice chancellors, the people with most to gain from deregulation, were split four each over the interest rate rise.[xiv] Indeed, over the weekend Pyne was signalling he was prepared to talk about the interest rate if it would help get his package through the Senate.[xv]

As for reducing funding for Commonwealth Supported Places and the fee hikes it generates, this is a great deal more complicated than it looks and the universities argue that a 2016 start date (effecting students enrolling now) gives them no time to work out what their new fees need be. Universities Australia chair Sandra Harding says it cannot be done by then and the minister needs to delay.[xvi]

Professor Harding has a point, only it is not one the minister should listen to. Delay will give the various lobbies and interest groups time for special pleading and side deals. Already the regional university lobby wants to pool revenue from the 20 per cent of university charged fees, which will be required to go to scholarships, which the Group of Eight opposes.[xvii]

This is why I suspect the Minister presented his package as a coup de main and why he only has one shot at adoption. If he fails in the face of university opposition and rejection in the Senate, the existing system will stumble on pretty much as is, leaving us stuck with a status quo in teaching and a research base ill-prepared to compete with our expanding Asian neighbours.

Whatever you think of his proposals to fund growth and create price-based competition for students, there is no denying this is a once in a generation chance for change.

Stephen Matchett writes daily on higher education in Campus Morning Mail.

[i] Stephen Matchett, “Davis shapes the debate,” Campus Morning Mail, April 29 @ recovered on May 25

[ii] Christopher Pyne, “Education: our competitive challenge,” Policy Exchange, April 28 recovered on May 25

[iii] ABC TV, Lateline, “Christopher Pyne discusses proposed changes to education funding,” @ recovered on May 25

[iv] Parliament of Australia, Higher Education Support Amendment (Demand Driven Funding System and other Measures) Bill 2011 @ recovered on May 25

[v] Department of Industry, “Demand driven funding for undergraduate places,” nd @ recovered on May 25

[vi] Australian Government, Budget 2014-15: Higher education @ recovered on May 25

[vii] Christopher Pyne, “Embracing the new freedom: classical values and new freedoms for Australia’s universities,” February 26 @ recovered on May 25

[viii] Universities Australia, “Position on higher education reform,” May 6 @ recovered on May 25

[ix] Budget, ibid

[x] Heath Gilmore and Matthew Knott, “Degrees of doubt,” Sydney Morning Herald, May 24

[xi] Geoff Sharrock, “How much student debt will you be facing post budget,” The Conversation, May 15 @ recovered on May 25

[xii] Christopher Pyne, “Speech to Australian Council for Private Education and Training,” Pyneonline May 22 @ recovered on May 25

[xiii] Louise Yaxley, “Christopher Pyne defends deregulation of university fees,” ABC Radio, PM, May 22 @ recovered on May 25

[xiv] Campus Morning Mail, May 26 ibid

[xv] ABC News, May 24 @ recovered on May 25

[xvi] Universities Australia, “Universities urge fee deregulation delay,” May 21 @ recovered on May 25

[xvii] Andrew Trounson, “Regional universities push for pool of equity scholarships,” The Australian, May 21