The education minister is making the running on the university funding debate
He won week one
On Friday Treasurer Joe Hockey addressed 1200 corporate types at a Peter Costello chaired breakfast in Melbourne. Two students from posh private schools (are there any other in the seat of Kooyong?) were invited to ask questions and according to an observer launched “Q&A style rants” against student fees. Meanwhile a reported ten students from South Australian universities sang “Solidarity Forever” as Education Minister Christopher Minister Pyne spoke at the University of Adelaide later that day. The minister paused briefly during his address, probably waiting for Tony Jones to appear and throw to a different song. That afternoon the original Q&A activists mobbed Foreign Minister Julie Bishop at the University of Sydney (where pray was campus security?) – which Mr Pyne condemned at a Saturday doorstop.
So who won budget week? I’m giving the politics to Mr Pyne who hammered away at his themes, nobody, pays up front and graduates earn more than everybody else. “The taxpayers of Australia pay 60 per cent of the tuition fees of a student and yet less than 40 per cent of Australians have a higher education qualification. These students will be able to borrow every single dollar from those self-same taxpayers and pay it back at the lowest rates of interest for a loan that they will ever have in their lives. It is a great deal. What these students are saying is that they want less students like them to have the opportunity to go to university,” he said on Saturday.
While unpopular on campuses it’s a politically saleable strategy – especially when faced with criticism like the front page of the weekend SMH, where two students from an elite private school complained it would be the government’s fault if they decided not to take a gap year.
You can sense the way the debate is running with Clive Palmer making positive-ish noises over the government’s plans for fee hikes, suggesting he was looking for a “win-win” for students and the country.
I’m guessing the win he has in mind for Australia and for students is having his staff, sorry colleagues, in the Senate, vote for the government’s package – with one amendment, dropping the real interest rate Mr Pyne wants to charge on HELP debt. This would be a win for students. The proposal to change the HELP interest rate from the CPI to a figure based on the 10 year Commonwealth bond rate (capped at 6 per cent) may make economic sense but the idea of student debt at a real, albeit commercially modest, interest rate compounding every year is biting in the community. Just about everybody with a credit card or a home loan understands what compound interest does to debt and how small sums can become scarey over not long. A government concession on interest rates would reduce the impact of the overall campaign and be – at least in the short term, a small-ish price to pay for passage of the Pyne package.
More of Pyne’s plan
Another day another part of Mr Pyne’s grand plan is presented. On Friday the Education Minister mentioned an imminent research inquiry, which nobody much in his Adelaide audience picked up on. Just about everybody (me included) had already missed the reference to it, which was attached to the budget commitment of $150m for the National Collaborative Research Infrastructure Strategy. The decision is in response to the Commission of Audit’s warning that, “without ongoing funding, established facilities will not deliver their maximum benefit to the research community and much of the value of the initial investment will be lost. …” and call for “a commitment to ongoing funding for critical research infrastructure in Australia … informed by a review of existing research infrastructure provision and requirements.” According to the minister, the review “would commence in the near future” but his office is not releasing details yet. Given the CoA emphasised applied research the terms of reference and membership will be fascinating. I wonder if he will ask Chief Scientist Ian Chubb to do it? Perhaps not, given Professor Chubb mentioned in The Australian on Saturday that like Joe Hockey, Richard Nixon once promised a bucket of money to cure cancer. It’s a comparison the Treasurer might not have welcomed.
Pay to publish
While figures from the Council of Australian University Librarians show universities pay $203m for journal subscriptions, nobody collects data on how much they and research institutes pay prestige journals in publishing charges. Surely a well-designed survey could find out just how much taxpayers pay publishers for including Australian authors.
TINA time for Pyne
Chris Pyne was at home addressing the Committee for Economic Development of Australia in Adelaide on Friday in a speech that summarised his package. It was the minister’s usual professional effort presenting his reforms as the only way to fund a mass system while maintaining quality and competing against those ambitious Asians. As such it was a TINA type speech, with Mr Pyne making it plain that all right thinking people understand there is no other alternative. Which may be why he quoted just about everybody he could rope in as making supportive noises for his policy and its underlying philosophy, including Universities Australia, and ex ANU economist and present Labor MP Andrew Leigh. Hard to tell which of those two will be more uncomfortable.
Another year older and deeper in debt
With open entry expanding, funding for Commonwealth Supported Places decreasing and fee deregulation beginning the feds have hazarded a guess on what it will all cost across the forward estimates (and thanks to the learned reader who pointed me to KPIs for Program 3.4 in the DoE’s portfolio statement). The department estimates average HELP debt will rise from $17,500 in 14-15 to $21,500 in 17-18. Average years to repay will increase from 8.7 per cent to 9.8 per cent across the same period. But, and here’s the scary stuff for deficit hawks, the proportion of new debt not expected to be repaid will increase from 20 per cent to 23 per cent. This is starting to sound like serious money.
Smoke and mirrors or market magic
The National Tertiary Education Union’s Paul Kniest wonders whether price signals will operate as intended when it comes to course costs. “Given their relative unpopularity might I suggest that some universities might consider cutting fees for mathematics and science degrees. If one lead the way then according to Micro Economics 101 competing universities would be forced to match that fee cut or lose students.” The trouble with that assumption, he argues, is that when government discounted fees for maths and science demand did not rise. “So do price cuts only work when they are a function of the market and not government policy?” he asks.
According to Mr Kniest, “the real irony would be, if the changes to cluster funding rates actually saw a rise in government contribution for maths and science degrees, which would allow universities to cut their fees without a reduction in total resourcing (government contribution + student fee).
“So the question is, will students respond more to drop in price as a result of the market, than they would to a drop in price as a result of government policy? Is the price elasticity of demand to change in market prices greater than the price elasticity in demand to regulated prices? If this is the case markets are truly magical, clearly designed by the same folk who put together the universe.”
From Adelaide magazine editor Jim Plouffe reports the Australian Submarine Corporation is sponsoring a competition to encourage school student interest in engineering. The contest involves teams designing a submarine hull. Great idea, they are bound to be better than the Collins and cheaper than German or Swedish designs for the new sub fleet.