The folly of higher education price control, part #3

The Group of Eight’s higher education reform proposal (pdf) proposes a relaxation, but not abolition, of price control.

Instead of the current more-or-less picked out of the air maximum student charges, they propose a Productivity Commission study of the ‘actual and relative teaching costs by broad field of education’. Based on the ‘indicative cost’ determined by the Productivity Commission, universities could set fees up to a maximum of 25% more than that number. The only rationale given is to ‘avoid exploitative pricing’.

This is a rather curious admission. In Australia, the only universities for whom an even remotely plausible argument could be made that they have the power to price in an ‘exploitative’ way are, er, the members of the Group of Eight. Are they saying that they cannot be trusted not to exploit students, and must be constrained by regulation? There aren’t many interest groups that will own up to that.

I would have thought that with the portable scholarship (aka voucher) proposal in the Group of Eight package they already had two systems of price control, ie a market to keep sticker prices down and subsidies to further reduce the effective cost to students – though arguably the subsidies will push up fees as students will know they won’t have to pay the full amount.
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