Aussie reforms doomed

July 16, 2004

Australia's higher education reforms are likely to "implode" within four years, a former education bureaucrat said last week.

Michael Gallagher, one-time head of the Federal Education Department's higher education division, said the Government's aim was to create "privileged pathways for the affluent" in an otherwise mass system. He said the Government did not support equal rights or equality of access according to academic merit but rather access and choice according to ability to pay.

Mr Gallagher left the ministry in 2001 and spent two years as chief executive officer of Australian Education International before becoming head of policy and planning at the Australian National University in October 2003. During his ten years as head of the higher education division, he was responsible for the design and development of policy.

Speaking to a seminar at Monash University, Mr Gallagher used Education Department data to highlight the impact of the changes on universities, students and society.

He rejected claims by Brendan Nelson, the Education Minister, that universities would be financially penalised if a Labor Government prohibited them from charging Australian students the full cost of tuition or introduced top-up fees.

Departmental estimates indicated that top-up fees would provide additional revenues of A$828 million (£323 million) over the next three years.

But, beyond that, salary rises and other increasing costs would eliminate further growth.

"Unlike indexation, a once-off lift in the Higher Education Contribution Scheme ceiling has a time-limited effect," he said. "Of course, the Government could agree to increase Hecs rates yet again or... move to a fully price-deregulated system.

"As has been said of the UK experience, in the same way as the fixed fee gave way to the capped fee, the capped fee will soon give way to the uncapped fee. Then we may see wider usage of fee-based access, widening the merit margin of access well in excess of the range we see today."

The Government's decision to increase the charges students must pay was outdated and perverse, Mr Gallagher said. He said that making students pay more was moving in the wrong direction for the future beyond 2011 when the 15-to-24 age cohort would be declining, not growing.

Likewise, the private rate of return for a bachelor degree would be falling. And, instead of the system expanding to meet the demand, young and older Australians would have to be encouraged to enrol, he said.

Mr Gallagher said that the decline was already occurring, with the number of school-leavers going directly to university falling by more than 10,000 over the past decade to the lowest level in ten years.

He said that Australia developed Hecs as a fair way of sharing the costs between general taxpayers and private beneficiaries.

But increasing the costs to new entrants risked serious under-investment in the human capital formation "essential for generating the productivity growth we need to sustain living standards as our population continues to age", Mr Gallagher said.

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