More promising signs on vouchers

A few weeks ago my hopes were raised that we might be headed for a voucher system in higher education.

Yesterday my hopes were raised again. The Victorian government confirmed that it was introducing a voucher scheme into vocational education, and Julia Gillard confirmed that income-contingent loans would be available to finance the partially deregulated fees accompanying the voucher scheme.

This makes it more difficult for her to reject a voucher scheme for higher education.

There have been the predictable voices against the Victorian innovation, though focused on the cost angle:

Australian Education Union TAFE president Mary Bluett accused the Government of cost-shifting and warned that higher fees, together with the new HECS-style loan scheme, would deter people from taking on training courses.

Sadly, the Victorian Opposition is also taking the populist line on costs (what’s the point of a Liberal Party that does not believe in markets?).

But let me put a prediction on the public record: this reform will increase the number of TAFE students in Victoria. It substantially eases supply constraints, and gives both public and private vocational providers more freedom to innovate and attract students.

Experience around the world suggests that access and ‘affordability’ aren’t always complements, as the left assumes – often they are at least in part opposities. With limited amounts of money available for education there is a choice between increasing supply and keeping prices low for those who do get in.

The Brumby government has sensibly decided to put its money towards easing supply constraints, and dealing with the increased investment per student via student fees with loans. The HECS experience suggests that this will have none of the claimed negative effects.

27 thoughts on “More promising signs on vouchers

  1. It seems odd that Bluett is against something that should expand the size of ‘her’ sector. Is she perhaps fearful of the increased competition and accountability the reform could bring?


  2. ‘What’s the point of a Liberal Party that does not believe in markets?’
    Has the Liberal Party ever believed in markets, except as useful rhetoric? The only time the Liberal Party in government has been serious about market based reforms has been under Alan Stockdale, Richard Court and (possibily) Nick Greiner. But they are the exceptions.


  3. johno – As I have often said, the Liberal Party’s history suggests that is the party of private enterprise rather than free enterprise. But historically it has been *relatively* market friendly. If it loses that title to Labor, it will be just an ideological shell, providing Coke/Pepsi type competition in the political system, but not a genuine political alternative.


  4. “not a genuine political alternative.”

    I’m sure Tony Abbott would disagree. There is plenty of scope for the Liberal Party to exist as the party that supports traditional family values, Anglo culture, lots of spending on defence, Christianity etc.


  5. “the most important issues governments have to deal with”

    It’s seems like only yesterday that Islamism was said to pose a deadly existential threat to Western civilization. So that was a pretty important issue, which had nothing to do free markets. It’s only the AFP’s Inspector Closeau approach to the Haneef affair that has taken it off the radar. But it will be back.

    Incidentally, if you’re looking for evidence of LP crimes against free markets, look no further than Barry O’farrell’s probable opposition to electricity privatisation.


  6. ‘if you’re looking for evidence of LP crimes against free markets, look no further than Barry O’farrell’s probable opposition to electricity privatisation’

    Spiros I would nominate Tony Abbott’s signature on the current Australian Health Care Agreements (AHCA) that contains a clause preventing public hospitals using price signals to respond to their patient’s needs as one of the Liberal Party’s crimes against markets. The Cwth provides the States with $35 billion each year for public hospitals through the AHCA (plus another $7b through other sources) The States chip in another $50b. ( p 418)
    Thanks to Tony Abbott, that’s over $90b per year of taxpayers $$$ that has to be spent without the aid of prices signals. Is it any wonder public hospitals are a mess!!!!


  7. ‘what’s the point of a Liberal Party that does not believe in markets’

    They’re not liberal; they’re conservative. And rather nationalistic.


  8. Sometimes I think the Coalition is like a rugby team that can only get possession from turnovers when the ALP makes mistakes and drops the ball. Like Keating did, and Iemma looks like doing.
    Underpinning that analogy is the fact that the Liberals, especially at the state level, are short of ideas and talent. The talent problem can be attributed, at least in part, to the significant defection of the educated middle class to the ALP as a result of conscription that Menzies introduced during the Vietnam war. That diagnosis does not point to a cure although it is a warning that putting in place anti-liberal policies can hardly be expected to enhance the lustre of the Liberal Party in the eyes of thinking people. It just means that people who want to push the Liberal Party in the direction of classical liberalism will have to engage in the Weberian task of long, slow boring of hard boards.

    The defectors tended to be articulate and hyperactive activists and they ended up in positions of power and influence all over the place, including the media.


  9. Don’t forget the LP’s disgusting opposition to changing the threshold test in the TPA for predatory pricing back to ‘substantial market power’, as opposed to the profoundly misguided ‘substantial market share’ test that idiot-savant Barnaby Joyce managed to get up prior to the last election. Totally divorced from basic economic principles.



  10. Rafe,

    its not just older things that the Liberal party did that led them to have a bunch of talentless hackers in some states — young people that were born after Menzies are not exactly flocking to them either, and I doubt those older issues are especially important to them.


  11. Conrad, the people born after 1965 came into a climate of public debate increasingly dominated by the people who turned against the Coalition over conscription (and related issues). They did not need to know anything about the past to get the message of support for the ALP. This is the full text of my case for the critical role of conscription as the decisive factor in shifting the political orientation of the educated middle class


  12. Spiros – you are right! O’farrell’s backdown over electricity privatisation is up there as one of the Liberal Party’s great crimes against market based policies. Alan Stockdale must be pulling his hair out in frustration.


  13. johno, O’Farrell’s opposition can be explained as the confluence of several forces.

    1. He smells victory at the next election. Privatisation is unpopular. By opposing Iemma he puts distance between himself and that rotting political corpse aka the NSW Premier, and the Freddy Krueger of NSW politics, aka Michael Costa.

    2. The National Party opposes privatisation. O’Farrell doesn’t want to upset the coalition with victory in sight, but not yet secured.

    3. The only things the NSW Liberal Party really cares about anyway are sodomisers and fetuses.

    When it comes down to it, who actually favours privatisation of NSW electricity? A few classical liberal ideologues, investment bankers who would stand to make a quick buck and some Treasury-economist types. And who cares what they think? Not Barry O’Farrell, that’s for sure.


  14. Julia Gillard will go down in history as the pollie who got vouchers up right throughout the education system. She will also succeed in doing a BLF an the AEU. Getting it deregistered. She will have the balls to do all the stuff that Howard wouldn’t. She will make Paul Keating’s “neoliberalism” look like Eva Cox.


  15. actually the problem is that we might be oversubsidising education.

    if i can get an interest free loan for education but nothing else, this distorts me into education at government approved courses rather than education at a job.

    at least it brings a market to higher education which is an improvement over the government directing it.


  16. Yeah, Rafe’s right that conscription for an unpopular war alienated a whole generation from the Libs (I know, I was one). It has certainly left me with an abiding fear of the national security state – hence my deep suspicion of the War on Terror. I reckon you’re still being suckered, Spiros.

    And what Mitch said – the Libs are conservatives. The differences between social democrats and liberals are smaller than the differences between liberals and conservatives. The first two disagree about means to largely common ends, while the second two disagree on the ends.


  17. Spiros – you are right! O’farrell’s backdown over electricity privatisation is up there as one of the Liberal Party’s great crimes against market based policies. Alan Stockdale must be pulling his hair out in frustration.
    Naaa. Not buying that. Spiros is just trying to screw with people’s minds. Lib policy is to privatize, but rightly they don’t want the labor spendthrifts to go wasting the money trying to cement votes in their constituencies. I think Costa is legit, but the rest of the economic trogs in the ALP who support privatization do so as to get their hands on the mullah to go out and spend it.

    O’Farrall is doing the right things here. They will just privatise after the next election and use the money wisely.


  18. conscription for an unpopular war alienated a whole generation from the Libs (I know, I was one).

    DD – you’re not actually opposed to conscription. In the other thread you wrote that teachers should be

    compulsorily posted to disadvantaged schools

    While I hear a lot about how Australians generally oppose conscription, I also note that most Australians support compulsory voting (at least in conversation). To be sure attending a polling booth is not nearly as dangerous as waging war, yet the principle applies just as much.


  19. Err, firstly I didn’t actually say that teachers should be “compulsorily posted”, just that the unions would be agin such a policy. Secondly, there’s a big difference between sacking someone who won’t go teach at a particular school and jailing them if they won’t kill foreigners.

    And Jc, you must have very partisan blinkers to think the Libs would “use the money wisely” rather than “go wasting the money trying to cement votes in their constituencies” like those “labor spendthrifts” (BTW, the big problems in NSW have come from chronic underinvestment in infrastructure – it’s Labor misers rather than spendthrifts who’ve done the damage).


  20. Oh yes the NSW ALP is incompetent. But I don’t think the NSW Libs will be any more competent and, with their obsession with sodomites, blastocysts and laura norder, are likely to prove rather nastier.

    If I lived in NSW I’d be giving my vote to a minor party. Even the Greens would be preferable.


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