More voucher confusion

The word ‘voucher’ sure has journalists confused. Last week the SMH took Gillard’s spin at face value. And in today’s Australian we are told this:

The system isn’t a voucher system. Students aren’t being issued with a portable amount of money they can just cash in where they like. For all the talk of empowering students with greater choice, it is the universities, and ultimately their vice-chancellors, that will frame that choice, since it is they that will decide what is on offer.

And while universities can be expected to tailor offerings to attract students, not all universities will seek to expand. Offerings will be influenced not just by what students want, but also by the relative cost of delivery.

There are two confusions here. One is the point I made last week about the technology of delivering the subsidy. This is irrelevant to the concept of a voucher, which is that a consumer’s decision, rather than a bureaucrat’s decision, triggers the payment (under the current system, no payment is made unless a student occupies a place first authorised by the bureaucracy).

The second confusion is about the role of suppliers and prices. In this respect, ‘voucher’ system is preferable to Bradley’s language of a ‘demand-driven’ system, since what is delivered in a market or quasi-market system is not whatever consumers want, but the intersection of supply and demand, mediated by prices. So the actions of suppliers and the role of prices are integral to voucher systems, not features that make a voucher system not a voucher system.

2 thoughts on “More voucher confusion

  1. Yes, it’s a bit silly. The mind of a journalist must be an amazing place, where sentences are created in the absence of any real understanding of an issue.

    But I wonder if you’re being a bit unfair in linking the second para to the earlier argument that the proposed policy is not a voucher system. The para following that the second para says:

    “This is why the National Union of Students is wary of a system that claims to be about promoting wider student choice. Markets do develop to meet choice, but they also can limit choice as providers deliver not just what the market wants, but also what gives them the best margin and for universities.”

    The journo (and maybe even the NUS?) seems to understand that supply is as intrinsic to the operation of markets as demand. It’s just that he/they don’t think that supply should have a role in determining market outcomes. I think this is presented as a separate argument to the question of whether the proposed system is a voucher system.


  2. Rajat – I think the idea of supplier influence is in the first paragraph, though not prices, which does not appear until the second paragraph which may not be intended to be still on the voucher definition question.

    From my own experience, sub-editors often have different ideas on paragraphing to authors, adding another complicating factor.

    Of course the terminology is a side-issue to the more important issue of how this would actually work. The journalist here clearly does understand that prices are important, which puts him ahead of the pack.


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