Confusing ends and means

The Australian’s Higher Education Supplement asked me to write a short piece on the issue of university efficiency, which appears here.

People who read this blog will already know my views on trends in administration costs. But in the HES version I pick up on this report on ABC radio on Monday:

Ms Bishop says the university sector should be more deregulated, but first the universities must show that they are efficient and productive.

I presume that’s a reference to the Group of Eight’s plans to replace the current system of allocating student places from Canberra with a ‘portable scholarship’ (aka voucher) system. The context of the discussion was ‘the funding model the Group of Eight wants’.

The Minister is confusing means and ends. A more competitive system is not a reward for becoming more ‘efficient and productive’. It is a way of pressuring universities to become more ‘efficient and productive’.

While I don’t disagree that universities can be more efficient than they are, history suggests that they are quite capable of responding to market forces if given the chance. Who would have believed in the late 1980s, when the international student market was deregulated, that the public universities could create one of the nation’s biggest export industries, and in less than 20 years?

The problems in the higher education sector are overwhelmingly due to chronically poor policymaking in Canberra. Alas, neither party is offering us anything better.

11 thoughts on “Confusing ends and means

  1. The problems in the higher education sector are overwhelmingly due to chronically poor policymaking in Canberra.

    I’m always happy to blame the government, but universities don’t help themselves either. The Melbourne Uni initiative showed that. If universties have a good idea and push it, they get places. Most universities just don’t have any good ideas and so get manipulated from Canberra.


  2. A charitable interpretation: Maybe she wants to start by limiting the G8’s funds to make them cost efficient (productive efficiency) before allowing them to gain extra funds by responding to student preferences following deregulation (allocative/dynamic efficiency). I’m not sure why you’d want to do this, other than perhaps to create some kind of cost benchmark that could be used to ‘talk down’ fees under deregulation. More likely, governments are probably terrified that universities will reduce their offerings of ‘worthy’ courses that lack qualified demand.


  3. Rajat – Far too charitable. Markets are a better way to achieve both productive and allocative efficiency. Insofar as the government’s preference for the current system makes any sense, it is to prevent campuses closing, especially in regional areas where some exist more for political rather than educational reasons.


  4. Thats a nice way to call Julie Bishop a moron — its funny how the government thinks it is blameless for the mess it has made.


  5. Conrad – It’s always hard to know whether politicians are saying what they really think or the best thing they can think of at the time, given the circumstances they are in. Personally I doubt Bishop believes in the current level of regulation, and I don’t think she is a moron.

    She has the task of neutralising higher ed as an issue for the campaign. She could not agree with the Group of Eight suggestions, because she does not have the authority to announce a major reform, or to spend more money. So she tries to deflect blame back onto the sector (and for their ideological folly and political incompetence there is some justice in that).

    My task is to make the case for higher ed reform, so I focus on the flaws in her public case.

    Given neither party has anything worthwhile to offer in higher education, the issue is a neutral one from my perspective.


  6. Universities today are so incredibly inefficient, especially in administration. I have a feeling that if universities do the following, they will be more efficient:
    1. Get rid of the 9 day fortnight. Make workers work for 40 hours a week instead of 35.
    2. Fire people for incompetence; I have seen incredibly inefficient workers get promoted or sidelined forever that would not last long in industry.
    3. Stop giving out petrol cards to staff – it is a waste of money and abuse is rife
    4. Why are company cars sold after 2 years/40,000 km? I would extend that to 4 years and 40,000 km, Cars are very reliable now.
    5. Most council members are “fuddy duddy” types that are adverse to making decisions. Make them accountable. This is why Macquarie Uni had its problems with no employment contract for its VC, millions of dollars spent on paintings, etc.
    6. Unis cannot be run by academics from a business viewpoint. They don’t have the acumen or skills.
    Just half a dozen ideas that came to me this morning as I was thinking about my university.


  7. Are you actually talking about increasing the amount of work academics are required to do Andy? If so, then how will the required salary increases be funded? The size of the required salary increase may well vary with the type of any such additional work. Would it be research, teaching or administration?


  8. Here is another academic’s take:

    1. I work on 11-12 hours a day.
    2. Agree. However don’t know how to do this. May end up firing all the best people.
    3. Don’t know what it is.
    4. Don’t know what it is. But sounds reasonable. But I do not think our uni has a lot of cars. Don’t think this is a big part of the budget.
    5. Sounds about right.
    6. I am not sure I agree. I have seen both. People who run this should be good administrators, but they should also understand the issues that emplyees are dealing with. It may be that academics aren’t on average good administrators but I think it is reasonable to think that some may have such gift as well. Berkeley lab is run by a Nobel lauriate.


  9. Damien and Boris – I was referring to Admin staff only. For example, the PA to our DVC (admin) works a 9 day fortnight and we reguarly hire a temp for one day a week – I know this happens university wide. BTW why do all our DVC’s and middle management people each have a PA? What a waste. My wife works for a major industrial company and only the CEO and Chairman have PA’s – the others share resources. I know the secretaries in our Admin are not as stressed as say, the PA to a CEO in industry doing an acquisition or merger.

    Damien – you dismiss people who are very unproductive not the best people. We have a guy in IT who wears slippers and thongs, sleeps UNDER his table and documents nothing. We have a guy in Buildings and Grounds who has wrecked 6 out of our 8 John Deere mowers (he is so bad that he collides with tree stumps and tears the mower decks off the tractors!) – maybe sacking him and sueing him for compensation would be more appropriate – he’d certainly couldn’t behave like that, say being a gardener at Ellerston for the Packers or Hunter Valley for Gerry Harvey. The problem is that it is systemic through our university and indeed any university. We tried to fire a staff member once and was told by HR that disciplinary dismissals have not happened for 2 decades.

    Look at the incompetence of some Chancellors. Take the example where a VC stayed beyond her term, refused to vacate her office, has no employment contract and terms of reference? I think the Chancellor should be taken to task and embarassed. BTW she (the VC) travels most extravagantly (bought $3m worth of paintings) and drinks Penfolds Grange paid for by the Uni at every formal dinner.

    Why does a Victorian University need to have its own 18 hole golf course and then goes ahead and builds a driving range? Why does a VC need to be on $1m plus salary plus house, plus travel, plus bodyguard, plus driver – all with no performance penalties if they fail?? Look at the sheer waste in Singapore with UNSW. No one got fired for this – can you imagine our ASX 200 leaders letting this happen without at least a dismissal or two?

    Boris, my university is run by academics and I have seen first hand how out of touch they are in everything from returning phone calls to getting out maneuvered by suppliers during negotiations. They are not skilled in that. They may be great mathematicians – but put the dollar sign in front of an integer and they cease thinking rationally. We do nothing but hire consultants for every decision that they make – primarily in my opinion to protect their self interest and reputation? BTW we pay KPMG $5000 per day for their senior consultant and he has just about camped out on our campus.

    I don’t want to comment on the academic side – but in admin, I bet we could save tens of millions by merely making people accountable and having the right to dismiss incompetent staff – not by giving them one year paid leave whilst we do an investigation or 2 years of counselling, etc.

    And lastly – the petrol card makes a difference. We have staff on vacation driving from the East Coast to Perth and Geraldton using our cards!


  10. “BTW why do all our DVC’s and middle management people each have a PA? What a waste. My wife works for a major industrial company and only the CEO and Chairman have PA’s – the others share resources. ”

    I know this. Technical staff in companies like Shell (with large salaries) spend considerable portion of their time doing admin work due to shortage of admin staff. Don’t see how it could be reasonable though.


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