Never mind the students

Dear editor,

Andrew Norton (ABR, May 2004) is right to argue that the legislation governing the Nelson market in Australian universities gives the government too much power. The education minister refused to guarantee academic liberty, imposed a one-size-fits-all template for the structure of the university councils, and can now dictate the mix of courses that are taught. The research funding system, which forces universities to focus on work with direct commercial potential at the expense of free enquiry, is another and more damaging instance of overregulation.

But Norton is wrong to argue that the new funding and fee system, which creates full-fee places for up to thirty-five per cent of undergraduate students, and kick-starts this market with low-cost government-underwritten student loans (FEE-HELP), is ‘a long way from being a functioning market system’ of the kind that he (Norton) wants. Norton focuses on the fact that a shadow of the HECS has survived Nelson, and that there are still caps on the cost of HECS charges, but deftly ignores the full-fee market that is the transformative clement in Nelson. And Norton is absurdly wrong to state that the government’s Thatcher-style centralised market reform ‘resembles old-fashioned socialist planning’. Really? Polemic has got the better of him. Dumbing down the debate is in no one’s interests.

This tension between government power and market power is typical of Hayekian social systems, in which both elements are always active: Hayekian mechanisms are grounded not in laissez-faire but in an economic market engineered by government from above. (I discussed the underlying dynamics in the La Trobe University Essay in the April 2004 issue of ABR.) The Thatcher slogan of ‘free market and strong state’ perfectly captures the recurring Hayekian paradox. The result is that in a Hayekian policy environment, such as Australia today, there are only ever two kinds of official debate about education:

1. between market reform schemes that emphasise the state actions that create and control the market; and market reform schemes that, while using government as the market-creator, place more emphasis on the market mechanism itself;
2. between market reform schemes that go halfway to the Hayekian market; and market-reform schemes that go all the way, with full fees and user pays for all, and not a price cap or a product spec in sight.

With this kind of mainstream agenda, no wonder the debate about the universitites is so barren. (What about culture, personal formation, research quality, equity of access, global futures etc. etc.?) Obviously, we need to talk about something else. Unfortunately, Norton can’t.

It is true that his 1999 proposals for reform, prepared for the then education minister, David Kemp, were less authoritarian than the Nelson package, and took the market-reform process further than Nelson has done. But, far from being polar opposites (Stalin versus Friedman), as he is telling us, the two market-reform schemes are close cousins, and one is transitional to the other. Once the Nelson scheme is in place from 2005 onwards, it is a simple matter for a future government to move from Nelson market to Norton market. Lift the twenty-five per cent ceiling on HECS increases, drop the $50,000 limit on FEE-HELP loans, drop the $2000 extra surcharge paid by full-fee students, and of course drop the thirty-five per cent ceiling on the number of places in a course that can be full-fee places, and there will be no cost difference between a subsidised HECS place and a full-fee place. Hey presto, the full-blown market has arrived, all government subsidies can be shifted from teaching and research grants to the student loans scheme (which becomes the exact Friedman voucher), and, finally, Norton and Treasury will be happy.

Never mind the students. For there are other freedoms at stake than the freedom of sandstone universities to levy high prices on the petite bourgeoisie, such as the freedom of students to study without having to work thirty hours or more a week, freedom to enrol in courses with mind-expanding powers but no immediate market utility- – not to mention the freedom of world-class scholars to research at the cutting edge without waiting for a commercial company (or a govern­ment committee as hypothetical company) to pay for it.

But with policy ever-obsessed with creating a Hayekian market, students and scholars are losing those freedoms and gaining nothing in return. We have had full fees for international and postgraduate students, increasing HECS charges, and vociferous competition between universities for more than a decade. Market and part-market reforms have had a good test run. The outcome? There are record numbers of full-time students working to pay these costs, student-staff ratios have almost doubled, it is harder than ever for poor, bright students to access the top universities, and students are shifting to generic business courses in ever greater numbers because these courses – lightweight though they often are – have vocational cachet. Most emphatically, students are paying more and getting less, in both material and intellectual terms. The Nortons and Nelsons ignore it, but the evidence is sitting there right in front of them. It could not be plainer.

Meanwhile, research is driven downwards by performance indicators and commercialisation, creating a nasty quantity/quality trade-off, and basic research programmes (especially outside the sandstone group) are being displaced, while universities chase commercialisation chimeras. Vice­Chancellors know that strong research applications rest on a platform of strong basic research – and in the long run, weaker basic research means less, not more, economically valuable commercialisation – but the quasi-market research system forces them to forget it.

The private goods have lost value, and the public goods may not survive. These are the glorious legacies of the Treasury’s long love affair with Hayek and markets in education. It has captured the universities, and it has captured Norton. There are none so unfree as those who cannot even see their chains.

Simon Marginson, Clayton, VIC