The price is wrong

As I feared, the Bradley higher education report undermines its voucher proposal by failing to fix the price signals.

Indeed, it is worse than not deregulating fees, bad as that is. The Bradley committee haven’t even given any serious attention to how public funding could help make a voucher system work. Universities aren’t going to rush to enrol additional students under a voucher scheme if the price isn’t right. Indeed, if the price is wrong their response might be the opposite one: to use the lifting of regulation to shed uneconomic students.

The one study we have on university expenses relative to income for Commonwealth-supported places suggests that in half the disciplines they looked at universities lost money. This study has (acknowledged) data problems, but that finding is consistent with the observed behaviour of universities in trying to cut costs and recruit profitable fee-paying students. And a few of the disciplines in question did get some extra funding in the 2007-08 Budget. However, it suggests that an economically rational university would not be rushing to take extra students across a wide range of fields of study.
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Did Nelson support vouchers?

Much more on the Bradley review of higher education policy to follow, but first a postscript to the story of Brendan Nelson’s seemingly endless capacity to believe contradictory things. According to a report in The Australian,

THE former Opposition leader Brendan Nelson was on the line last week when The Australian broke details of the Bradley review…. [He] liked what he’d read in the morning’s paper.

In fact he was gobsmacked by Denise Bradley’s embrace of a voucher-style demand-driven funding system, which was something both he and a fellow former education minister David Kemp had favoured, and thought the consolidation and merger of regional universities was inevitable.

But if he favoured a voucher scheme, why did he do the exact opposite and introduce unprecedented government control over the distribution of university places? In the case of new places, this was often down to the detail of precise numbers of students in specific courses at designated campuses.

Did Cabinet reject a voucher scheme for a second time??? Or (as I have long suspected) did Nelson just not understand the bureaucratic monster of a reform package that his department created for him?