It is tempting to put the $249 million phasing out of full-fee domestic undergraduate places at public universities, some details of which were announced yesterday and reported this morning, in the same category as the $562 million wasted in a futile attempt to boost maths and science. Putting the two policies together, $811 million will be spent to add not one extra student place and to actually reduce the total funding universities receive. Even by the very low standards of Australian higher education policymaking, that is pretty spectacular.
The full-fee domestic undergraduate places were always a case of 2nd-best policymaking. The quotas and price controls (the 3rd best policy) crippling the Commonwealth-supported higher education system created artificial shortages of university places in high-demand courses. Allowing universities to offer additional places – or more accurately, allowing univerisites to offer those places to Australians rather than overseas students – alleviated these shortages.
The common criticism was that this breached the merit principle of university admission. I never found this argument to be persuasive, because I don’t see a hierarchy of school results to be an inherently superior method of choosing students. But the policy did create some absurd price discrimination, with students paying massively different fees for no reason other than falling on different sides of an ENTER rank that was purely the result of the intersection of demand and a semi-arbitrarily set level of supply.
In a proper student-demand system (the 1st best policy), this problem would go away, and all students would be treated equally. So this gives us one way to find a redeeming feature in Labor’s otherwise misguided policy of phasing out full-fee domestic undergraduate places. In the short-term, it will reduce flexibility, choice and university revenue. But looking at it in the longer term, if the Bradley higher education review committee recommended a demand-driven system with fee flexibility the full-fee places could be removed without loss or controversy anyway. Being very charitable to Labor, we can classify the $249 million as a downpayment on proper reforms, rather than categorising it with the cuts to HECS for science and maths as pure waste.