In a rare campaign departure from populism, Opposition education spokesman Christopher Pyne has pledged to re-introduce full-fee places for Australian undergraduates if elected.
”It is absurd that … students from overseas are able to access Australian universities, and pay full fees for doing so, but there’s no percentage of Australian students that are entitled to do the same thing,” Mr Pyne told The Age.
However as Macquarie University VC Steven Schwartz correctly points out in the same Age article, the impending abolition of enrolment caps for Australian undergraduates signficantly undermines the rationale for a separate class of full-fee places. The main justification for the Howard-era policy was that because the number of places was held down by the government (through a mix of not wanting to pay subsidies for more students and not wanting to significantly re-arrange the historical allocation of places between institutions and courses), allowing full-fee places once all the HECS places were taken slightly alleviated mismatches between supply and demand.
In a demand-driven system, the supply argument would need to be that unis cannot afford to offer additional places at government rates, since the previous direct regulatory constraints on place numbers would no longer exist. While I have argued that under-supply is a risk of deregulating places without deregulating prices, it is a more complex and less compelling argument to make.
Indeed, the behaviour of universities during the partial lifting of enrolment caps this year has undermined my cost-sensitivity analysis. They have rushed to offer more places at sometimes less than the current rates (ie they have blown even the new higher limits, and are therefore receiving only student contributions at the margin). I have examined some possible causes here.
So while cost-related supply constraints may exist at particular universities or in particular courses, overall the system looks like it will be flooded with cheap Commonwealth-supported places. This will put added competitive pressure on the universities that do want to offer full-fee places. Also some major players in the previous full-fee market have shifted popular full-fee courses to the already-deregulated postgraduate market. Combine these two factors and we have a situation in which demand for full-fee courses is unlikely to be high – keeping in mind that the courses will still be the same mass-produced stuff given to Commonwealth-supported students, just at a higher price.
Even under the Howard-era scheme full-fee undergraduate numbers were only 12,000 full-time equivalents in 2008, or about 3% of public university Australian undergraduate enrolments. So I would predict that a revived Abbott-era scheme would produce low aggregate benefits, and not be worth the political price the Coalition would pay for them.
The time for piecemeal patch-ups is over. The problems of the entire Australian undergraduate cohort cannot be fixed by charging high fees to a minority of students. The whole price mechanism needs to be fundamentally reformed, and that must include fee deregulation for all students.