Irreconcilable differences

Demand-led funding and growing state regulation may leave the Australian system with the worst of all worlds, says Steven Schwartz

January 27, 2011



Credit: Jason Raish


British universities face severe budget cuts while Australian universities continue to be well funded. There is a catch, however, to which British academics should pay heed. Australian government funds come with significant strings attached.

It is hard to exaggerate how much higher education has changed in Australia. Not long ago, it was the last of the country’s great state-run enterprises. Central planners allocated teaching funds with no regard to costs, prices or quality; they determined how much universities could spend on buildings, what they could build and the salaries of university staff. Institutions were managed within rigid parameters and could be fined if they exceeded their quota of students.

The result was predictable - universities displayed all the vices of state-operated enterprises. Like Soviet cars in the Brezhnev era, they were famously inefficient and, like hapless Soviet drivers, students were expected to accept whatever they were offered. Competition, the main determinant of quality in the rest of the economy, was entirely absent from higher education.

Over the past decade or two, the policy framework changed dramatically. Government controls were weakened and institutions began to use their increasing autonomy to carve out their own niches. The 2008 Review of Australian Higher Education, known as the Bradley Review, suggested that the trend go further with the abolition of student quotas and traditional “block” funding, opting instead for “a funding system which is driven by demand from students”.

Each student would be given what is, in effect, a “voucher” (although no one is allowed to utter this taboo word). Institutions would receive government funding only if they attracted students. By forcing universities to compete, the review hoped to create a more differentiated higher education landscape.

Several times, the Bradley Review reiterated its strong belief that greater competition empowers students by giving them more choices. Although it did not recommend the deregulation of tuition fees, the review acknowledged that its recommendations were designed to create a “market” in which institutions successful in attracting students would receive more funding than less popular ones.

But despite its clearly stated faith in the power of competition, the Bradley Review was reluctant to rely on it. Instead, it recommended the creation of a national regulator to ensure quality.

When it comes into being later this year, the regulator, known as the Tertiary Education Quality and Standards Agency (Teqsa), will police more or less everything: curricula, teaching techniques, assessment methods, outcome standards, staff qualifications and student services. It will also have the authority to coerce institutions into conformity, including the right to fine those that disobey.

Also under consideration is the suggestion that Teqsa set staff qualifications. Think of it - a university that cannot decide on the qualifications required by its own staff and whose curriculum, teaching methods and assessment techniques are all, at least in part, bureaucratically determined.

How will these two diametrically opposed approaches to quality - competition and regulation - be reconciled? For the student demand-based system to work, students must be permitted to gravitate to institutions that offer them the best education, thereby forcing the others to improve their offerings to stay competitive.

Regulation, on the other hand, assumes that public servants will predetermine standards and enforce them. If Teqsa regulations are too detailed, every university will wind up doing the same things in the same ways. Competition would be reduced to attracting students with real or invented institutional prestige, or simply with a more convenient commute to lectures.

Just to complicate matters, the government is also introducing “compacts” - contracts between the state and individual universities describing what subjects the institution will teach, the research it will conduct and the students it will admit. First mooted four years ago, compacts were ignored by the Bradley Review but repeatedly have been resurrected by ministers.

Although compacts are voluntary, all institutions will go along with them because they provide extra funding for reaching government-set targets (enrolling disadvantaged students, for example). As everyone knows, universities will do anything for money.

It is difficult to see how the various policies - Teqsa, compacts, funding following students - will work together. What happens when the constraints imposed by Teqsa and compacts prevent universities from responding to shifts in student demand? How will students benefit when public servants determine what is taught and how learning is assessed?

British universities take note. Lifting quotas and tying funding to students are recommendations you would doubtless welcome, but the government urge to control undermines their rationale. Australian universities may end up with the worst of all possible worlds: micro-regulated, with government-determined missions unable to respond to student demand and no guaranteed funding on which to fall back. Be careful what you wish for.

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