University funding: drifting to mediocrity?

Andrew Norton from the Grattan Institute says the modest university ‘reforms’ signalled for the budget will entrench the status quo, and will affect universities more than students.

George Morgan says the universities are drifting to mediocrity, and these cuts will not help.

The headline figure is a saving of $2.8 billion over the forward estimates, and a 7.5% increase in student fees over the period. Total Commonwealth Government payments to universities over the next four years amount to of $74bn, so the impact of this $2.8bn reform package is less than 4% of the revenues to universities from taxpayers and students, according to Simon Birmingham.

Moreover, the universities can well afford it, says he, because a Deloitte Access Economics study showed that:

    between 2010 and 2015, the average cost of delivery per student increased by 9.5%, while per student funding grew by 15% (including student contributions and commonwealth grant scheme funding).

The extra cost to students will be between $2000 and $3600 for a four-year degree. Norton says that in most cases the extra charges will add less than a year to student loan repayment periods, and will not fundamentally change the economic appeal of higher education.

Changes are being made to the repayment conditions, including a one per cent levy on earners from $42,000 pa. Debtors now pay at least 4 per cent of their income from $55,000. This is a change Norton recommended.

There are other changes, designed to improve debt repayment. Presently a quarter of the $52 billion owed is not expected to be repaid.

Norton says the central issue is an effective efficiency dividend of almost 5% on the main teaching grant which cannot be offset from other sources. Universities have driven efficiency, however Morgan says:

    what passes for efficiency can often compromise the quality of education. It can mean giving students fewer curriculum choices, increasing class sizes, reducing face-to-face hours, teaching them with casual staff and substituting classroom teaching with “digital delivery”.

I understand that semesters have commonly been reduced from 13 weeks to 12. As much of the teaching is done by sessional lecturers, that constitutes pure savings. Also I understand that they prefer doctoral students over PhDs. Certainly they like to give their own PhD students a slice of the action, but doctoral students are also cheaper.

Norton says that for some universities, the efficiency dividend may not be their main problem.

    In addition, 7.5 per cent of the teaching grant will be paid on a performance basis. In a briefing for universities, government officials played down the financial risk this posed, suggesting that it was unlikely any university would lose the full 7.5 per cent. But significant sums will ride on indicators such as student retention rates and graduate employment levels, over which universities have, at best, partial control.

Another subtle change is that teaching is being decoupled from research. The Dawkins ‘reforms’ of the early 1990s eliminated the colleges of advanced education as teaching only institutions. The requirement to do research is not universal across the OECD, so perhaps no harm is being done.

On the surface, universities have escaped the horror of a 20% cut as per the 2014 budget. However, that cut would have also given them the freedom to set their own fees. The ostensible modesty of the present proposed cuts means that while the Greens and Labor will oppose them, they are likely to pass the cross-bench. Xenophon has made encouraging noises, and there is an anti-intellectual strain in One Nation’s DNA.

This anti-intellectual attitude goes well beyond One Nation in Australia. Universities have already contributed around $4 billion to balancing the budget since 2011.

We should be careful, however. University education is our biggest services export industry, and after the US and the UK attracts the greatest share of full fee-paying Asian students. Our friends across the Tasman are not happy, because they too will have to pay full fees.

Germany in 2014 decided that university education would be free for German and international student from 2016-17. One wonders how long that will last, but in Australia such a decision would be unthinkable.

4 thoughts on “University funding: drifting to mediocrity?”

  1. My first reaction was to seek the devil in the detail, because of my deep distrust of government. It is not beyond government to move the goal post mid-stream either, making further little changes that invariably damage university budgets and send the ripples of uncertainty through the university. You get enough uncertainty and you find it harder to get the best academics.

    I noticed the comment that sessional teachers play an important savings role. But some universities have a policy to reduce sessionals. Maybe that’s to settle the tenured staff who might see those positions as belonging to them. The uni that I know most about makes some distinctions between sessionals and tenured staff. One is that free ‘flu shots are not offered to sessionals. Silly isn’t it? No, because a lot of our internationals are from regions where resistance to ‘flu is low, and ‘flu can be life threatening. For the sake of a few dollars these people are at needless risk. Another issue is that further education of sessionals is not supported. This can range from first aid training but also include academic pursuits. Now if your lecturers are sessional, they should still be as close to the cutting edge as possible. If they are not supported, their academic qualifications are prone to “age” this will be reflected in the courses and graduate quality. There you see two effects of budget cuts.

    Many universities struggle to decide whether they are a teaching institution or a research facility. Both are important, ‘pretty hard to decide which way to go but personally I don’t see how it can be one or another, it needs to be both.
    I have an interest in batteries, particularly big batteries for transport, home and grid. These batteries will play a vital part in our transition to very high levels of renewable energy. Serious world-leading research is being carried out at both Sydney uni and UNSW. And there are post graduate students in the thick of that research. The UNSW work is closely affiliated with redox battery maker Redflow. Sydney universities’ Prof Maschmeyer has attracted millions of dollars funding for his battery concept, and is expecting that his work might be commercial within two years. I don’t mean to labour a point, but the advances being made here are the result of a strong teaching university and a graduate output that attracts and facilitates post graduate culture. Many post grads are exceptional and should be beckoned to or retained by our universities.

    Lastly it irks me to see politicians, themselves beneficiaries (you’d hope) of tertiary qualifications show such a short-sighted attitude to education. Graduates actually pay more in tax revenue over their working life than non graduates. Let’s hope that the loss of graduates does not show a net drop in tax as a result of these cuts.

  2. New Zealand sees the changes as an ‘act of bastardry’:

    The New Zealand prime minister, Bill English, said he was “pretty unhappy” with the changes, and was disappointed with a pattern of “announcements made either without telling us or at short notice”, after being ambushed by recent changes to citizenship pathways that affected New Zealanders.

    The cost of undergraduate degrees for New Zealand students at Australian universities may quadruple under the changes. For a New Zealand student enrolled at the University of Melbourne, an arts degree would jump from $6,349 a year to $29,632 and a science degree from $9,050 to $35,824.
    Australia ‘ripping off’ New Zealand with citizenship changes
    Read more

    New Zealand students would be allowed to defer their payment by accessing student loans, but with a 25% loan fee, to be calculated from the increased price.

  3. Geoff, thanks for your detailed comments. I don’t have enough experience to make proper generalisations. Mark has taught in perhaps a half dozen universities or more in Brisbane and possible the same now in Sydney. Generally in fields he has taught there is a heavy reliance on sessionals, and they are not treated well, even down to being paid on time or at all.

    Different has been the International College of Management at Manly, which I think is post-graduate with Asian students. I understand it is form to wear a tie to work.

    This year he has also been working for La Trobe’s campus off Hyde Park in Sydney. The whole campus is run by a private provider – Navitas – under contract to La Trobe. I’ll be interested in hearing how he gets on.

    My main worry is that the universities have been ‘innovative’ and cut a lot of corners to reduce the cost of delivery, in part to fund research (George Morgan gives details of the other stuff), and the Government has simply come in and stolen much of the profits.

  4. Nick Xenophon and One nation are favourably disposed to the university cuts, while waiting for the final detail.

    Beyond them the the government will only need three more votes in the senate.

    David Leyonhjelm has described the changes as “a step in the right direction”.

    Senator Cory Bernardi is expected to back his former Coalition colleagues and may bring along new Family First-turned-independent Senator Lucy Gichuhi to support the policy.

    Jacqui Lambie, who is probably the only one who understands what living on $42,000 pa is like, is against them. Derryn Hinch is overseas.

    The Business Council of Australia welcomed the higher education package saying that it is the kind of careful redesign of government programs they have been calling for.

    The Group of Eight – representing Australia’s eight leading research universities – expressed frustration at Prime Minister Malcolm Turnbull’s apparent about-face on innovation and an educated workforce.

    “It is at odds with the Prime Minister’s much-welcomed public commitment – less than two years ago – to [build] economic growth through innovation, an educated workforce and research”.

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