The folly of higher education price control, part #2

The people Bruce Chapman thinks should be allowed to set prices for full-fee students put their latest effort into the Government Gazette today.

Today’s announcement – not unexpected, given the Budget numbers last week – was that the price universities will take for Commonwealth-supported students, which includes the Commonwealth and the student contributions, will be indexed by 2%. This comes a couple of days after the ABS labour price index showed public sector education labour costs increased by 4.3% in the year to March 2007. Labour costs are well over half of the total expenses of universities.

2% is also below the general inflation rate. How many people know that the Coalition actually cuts higher education charges to students in real terms most years? Cuts in 1996, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2006, 2007 and for 2008, increases in 1997 and 2005 (yes, students are paying more, but not as much more in real terms as they may think).

Only the 2005 increase was actually passed on to universities, but all the cuts were (via the operating grant) so overall universities are worse off and still going backwards. This is the reality of higher education price control – not protecting students from being ripped off, but preventing them from being able to buy better facilities and teachers.