Glyn Davis: why I support the deregulation of higher education

Over recent weeks, some staff have written to vice-chancellors, urging them to reject the university deregulation measures advocated by federal Education Minister Christopher Pyne. Public universities, they argue, should not be left to the “vagaries of the market”. I disagree and would like to explain why.

Declining levels of Commonwealth support

The idea of a public university is worth defending. The term suggests commitment to merit-based and equitable entry. A public university means a curriculum that emphasises intellectual inquiry regardless of the course chosen. It indicates staff, facilities and services to support student learning, and campus life to encourage exploration and growth. A public university is home to academic freedom in thought, teaching and research, with governance that ensures academic oversight of academic matters.

Australian public universities meet these tests. What they lack is adequate public funding.

A generation ago, public universities received almost all their income from Canberra. This changed from 1989. Within a decade, public universities were raising most of their income. Today, direct Commonwealth recurrent funds cover just 23% of the running costs of the University of Melbourne.

Like other Australian public universities, the University of Melbourne relies on student fees, competitive research grants, commercial activity and philanthropy to pay its staff, keep open the libraries and support student life.

So, if majority Commonwealth funding is a defining characteristic, there is no “public” university in Australia.

Australia shares this trend with other nations. Direct public funding at Oxford in 2013-14 met just 16% of running costs. The University of California, Berkeley, receives less than 15% of its income from base funding. Yet Oxford and Berkeley retain the goals, ethos and culture of public universities – as do their Australian counterparts.

As overall enrolments in tertiary education rise, governments invest less per student. For Australia the high point of university funding, measured as government spending on each student, was 1975-76. A 40-year decline has followed, with two recent federal reports confirming Australian public universities are underfunded for key teaching responsibilities.

This change reflects the reality of participation. When Australia supported free tertiary places – from 1974 to 1989 – only a small percentage of young people went to university. This changed in the 1980s as school completion rates rose and more jobs required tertiary qualifications. Faced with continued budget increases to fund tertiary expansion, the Hawke government introduced student contributions, encouraged fee-paying international students and began the reductions in per student funding that continue 25 years later.

This decline in funding was not inevitable, but stronger demand for places has made governments less willing to fund the full costs. Creating new places is expensive. Recent regulatory impact statement figures suggest projected student growth in Australia will cost an additional A$7.6 billion in the next few years. It is disappointing, but perhaps not surprising, that governments baulk when facing such sums.

For those who see tertiary education as central to personal opportunity and community well-being, tax increases to fund system expansion are more than justified. A great public purpose requires adequate public funding. Alas, not all share this view.

In response to a question to the National Press Club, I once argued for higher taxes on people like me so more Australians could access a quality university education. The reaction was immediate, hostile, personal and visceral. The experience made me appreciate why politicians who argue for higher taxes remain rare.

The difficulties of changing public perceptions

Some who are against fee deregulation propose a broad community debate about the nature and funding of Australia’s public universities. It is a worthy aspiration, but the record is not encouraging.

I have watched many intelligent and committed vice-chancellors, along with generations of talented student leaders, present the case for national investment in higher education. There is little evidence that all those speeches and media appearances, reviews and debates, detailed presentations and tearful pleas made much difference. Like student leaders, vice-chancellors work hard for policy influence but prove marginal to the big political choices.

Politicians don’t necessarily disagree with the need to fund universities, in public or private. Almost all are graduates who recall with affection their days on campus. But when they go out in the electorate, the plight of universities is on no-one’s lips.

Politicians are skilled in reading the public mood. They know the electorate is focused on other issues. People rarely rate tertiary funding as a pressing issue compared with hospitals, schools or border security.

Let me offer an example. During my term as chair of Universities Australia from 2011, vice-chancellors around the nation agreed to fund a sustained professional campaign for increased public funding. We began by commissioning research to understand public attitudes. This confirmed that Australians value access to tertiary education – nearly 90% of parents hope their children will consider university study.

Yet focus groups suggested little willingness to consider tax increases. Many felt that university funding was already reasonable, or even too high. Some believe that tertiary students hold a ticket to privilege and higher salaries. In their view, universities and their students hold little claim on further public contribution. The research revealed what politicians already knew.

Undaunted, Universities Australia carefully framed the planned campaign, employing one of the nation’s most skilled political advertising firms to hone the message. The tone was positive – Australia’s public universities do a great job, but national investment is too modest for the nation to remain competitive. Across the country, vice-chancellors reinforced the campaign with local messages, explaining to city and regional audiences the importance of vibrant tertiary education – promoting exactly the broad public debate you recommend.

We soon learnt a tough political lesson. Despite the campaign promoting the contribution of universities, the Commonwealth government announced two swift cuts to the sector – to research investment in the 2012-13 MYEFO statement, and then more broadly to student and university funding in April 2013.

Even as Universities Australia ran advertisements and promoted public meetings, the then-tertiary education minister, Craig Emerson, announced reductions to university funding so the government could finance the schools package recommended by David Gonski. Emerson’s decision made clear that schools have political salience but universities do not.

It is an old message. At different times, all recent governments have cut university funding per student in real terms. There is no evidence that any paid a political price for doing so.

When challenged, governments point to growing overall public expenditure on tertiary education. Few point out that enrolments grow even faster, so the resources available to support each student decline. Markets have vagaries, but so does reliance on government.

The public perception remains that public universities are adequately funded. Australia spends proportionally less public money on universities than most OECD countries, yet few outside the sector argue for international standards of investment.

The current settings are unsustainable

This leads, inevitably, to the question of why vice-chancellors support aspects of an unpopular deregulation agenda.

Start with the status quo. As everyone who works on a campus knows, classes are at times too large; teaching contact hours too few; opportunities limited for extended engagement with industry and community. Fluctuating sources of income mean that universities rely on a large array of casual staff with insecure employment.

The sector has been marked by large-scale redundancies, particularly for professional staff. Research funds are tightening, with less than one grant application in five attracting support from major funding schemes.

The status quo presents similar challenges for students. Student support is insufficient, yet was cut in 2013. HECS remains a vital equity measure, but staying alive through years of study can be hard.

There are few cheaper university alternatives. Since current regulation imposes uniform fees (with some marginal discretion, nowhere exercised), it costs the same to go to any public university in Australia.

This is the unhappy reality of relying on government to fund higher education. These are not the elements of a sustainable system. And if no policy settings change, some or all of the additional $7.6 billion required to accommodate new students will come from further cuts to universities.

What are the alternatives?

We might see a future government keen to improve funding for universities. Occasionally higher education ministers buck the trend. Brendan Nelson and Kim Carr each delivered major additional investment in research funding. Julia Gillard expanded enrolments for young Australians, as did John Dawkins a generation earlier. David Kemp and now Christopher Pyne sought to change fundamental policy settings.

The political process can matter, and we should not give up on lobbying, marches and canvassing.

Yet to achieve OCED standards of public investment in higher education, Australia would need an unprecedented boost in outlays. This implies a major shift in public opinion and a willingness by government to contemplate higher taxes. It would run counter to the trend of the past 40 years, and against trends in comparable nations.

Improved investment is worth a campaign – as people have done for decades – but experience cautions against pinning all hope on a shift in community sentiment.

Alternatively, a future government could hold present funding rates but limit further enrolments to reduce demands on Treasury. This raises immediate equity problems and runs counter to the stated policy of both the Coalition and Labor. Yet it will become part of the conversation.

Assuming no further public funding is made available, universities will need to lift international enrolments. This seems inevitable, but is it reasonable to ask the families of our region to fund Australian universities because Australian taxpayers will not?

More radically, we could change the nature of Australian higher education and create (or convert) institutions that only teach. This would hold down costs for students. It is an old solution – Australia funded an early period of enrolment growth by directing many students into colleges of advanced education, which were not eligible for research support.

Not surprisingly, this solution attracts little support from most vice-chancellors. We argue that every tertiary student should have access to research-informed teaching on a campus where research is part of the infrastructure and culture. Nonetheless, we will hear more of this argument, particularly as private providers seek access to the title of “university” and a bigger share of the tertiary market.

Those against fee deregulation oppose further fees for students. They point rightly to the risks of higher debt. That concern must be weighed against the most likely alternative – further cuts to funding per student.

Graduates are the primary beneficiaries of tertiary education, and HECS ensures only those who earn a return on their degree pay back some of the cost. Current funding rates mean the tertiary education offered to Australians at times falls short of global practice. In the absence of public appetite to invest in public education, a measure of fee deregulation is the only way left to fund education quality to a reasonable standard.

It has been a long and difficult journey for Australian university leaders to reach this conclusion. Many, including me, were the beneficiaries of more generously subsidised places on campus. Years in the classroom makes vice-chancellors deeply committed to the importance of a quality education for as many young Australians as possible. It is hard, nonetheless, to ignore the stark realities of current funding policy.

For many, the federal funding cuts of 2012 and 2013 finally tipped the scales, turning idealists into reluctant pragmatists. Colleagues who long opposed higher student fees (and still find them deeply unpalatable) now face the consequences of chronic underfunding. They know a poor education is no bargain, whatever the price.

Glyn Davis is Vice-Chancellor of the University of Melbourne.