AUSTRALIA’S most powerful block of universities has thrown down the gauntlet to the major parties to introduce a radical new model for higher education underpinned by student vouchers and price deregulation. ….The centrepiece of the Group of Eight plan … is a system of portable government-funded scholarships that would shift control of demand for university places away from the commonwealth. (emphasis added)
Is there a difference between ‘vouchers’ and ‘scholarships’? Politically, they have different connotations. Vouchers have long been associated with plans to end central control of public education, and the very word triggers knee-jerk negative reactions from some leftists. Scholarships, by contrast, are generally associated with reducing the cost of education to people judged academically able or financially needy. Most people intuitively think that is a good thing. It is no surprise that the Group of Eight chose the term ‘scholarships’ over ‘vouchers’.
Conceptually, however, what the Group of Eight is proposing is closer to vouchers. Both vouchers and scholarships are subsidies aimed at individuals, as opposed to the block grants used to finance Australian universities before 2005. Scholarships are usually awarded to individuals to attend a particular school or university. The key idea behind vouchers, by contrast, is that the beneficiary of the subsidy also gets to choose where it is spent. The ‘scholarships’ suggested by the Group of Eight could be redeemed for any accredited higher education course in Australia. Just like vouchers, they are aimed at creating a publicly-subsidised market.
Yet there is also one aspect of the Group of Eight policy that picks up on an idea more commonly associated with scholarships than vouchers. The Group of Eight scholarships are to be awarded by the federal government on academic merit, the same basis as many of the existing university scholarships.
Voucher schemes generally avoid centralised selection criteria. In part, this is due to their political history. Voucher proposals were an attempt to find more efficient ways of distributing a universal entitlement to schooling. But the market thinking behind vouchers would also suggest that centralised selection criteria be kept as minimal as possible, on the grounds that the relevant knowledge is more likely be found at the level of producer and consumer than in the bureaucracy.
I have reservations about the Group of Eight scheme on just these grounds. Academic ‘merit’ is difficult to define, and I don’t think it can easily be reduced to the tertiary entrance ranks that the Group of Eight suggests. Year 12 results have predictive value, with the published studies suggesting overall correlations of 0.3 to 0.5 between school results and first-year university results. But many students do better or worse than their Year 12 rank would suggest.
At the margins, this ranking scheme would produce arbitrary results, with some students getting subsidies and others having to pay full fees based on differences in admission scores that in fact do not reliably predict differences in subsequent performance. In this respect, the Group of Eight proposal would replicate one of the faults of the current system.
The bigger issue is whether we should be so concerned with academic merit at all. From an egalitarian perspective, it disadvantages the poor, whose children’s school performance is below average. Because there is evidence that the school results of people who have been to non-selective government schools under-predict their subsequent academic peformance, universities routinely let in low SES students on lower marks than other students. That practice may have to be curtailed under the Group of Eight policy.
From a workplace perspective – relevant to virtually all students – attributes other than school results might be more important to selection. Admittedly, this would only be relevant at the margins. Beyond the government’s cut-off point, universities could still apply other selection criteria. But it again highlights the arbitrary nature of any cut-off point the Commonwealth may set.
In my view, the Group of Eight should have gone for a full voucher scheme, with students and higher education institutions left to make the final decision about who should and should not be admitted. On my calculations, it would not cost much more than what the Group of Eight is proposing anyway, and it would avoid the problems its ‘scholarship’ package would create.