The wrong way of financing student amenities

As expected, the government is trying again to restore compulsory amenities fees. I will do a detailed analysis of the bill tomorrow, but on an initial examination it is the same as the 2009 version that was rejected by the Senate.

I support unis being able to provide whatever services they like at whatever fee they determine. Let the market decide. But this amenities fee legislation should be rejected. These are my reasons:

1) It will force universities to provide non-academic services and student representation specified by the government. Universities should be able to make their own decisions about the right mix of services. We are yet to see draft guidelines which set out which services will be on the list, but the 2009 version had absurdly complex distinctions between what had to be funded from university money and what could be funded from student money. One factor that has changed since then is that the government’s guidelines could be disallowed by the House of Representatives.

2) The new obligations on the universities are unfunded – unless per student grants are increased they will have to come out of money formerly allocated to teaching. As the Rudd-Gillard government has cut per student funding in real terms every year it has been in office, and is now choking the supply of international students, it is unreasonable to impose any new obligations on universities. (Though admittedly in many cases this will just make legally binding what has been happening already).

3) There will be a price cap on the student amenities fee of $250 (indexed). I am sceptical of all price control, and this number seems to have been picked out of the air.

4) Students will be able to borrow the $250 under a new student loan scheme, SA-HELP. This creates extra complexity and administrative costs. Anyone who needs to borrow $250 will also need to borrow for tuition fees under HECS-HELP or FEE-HELP, and it would be preferable that they only needed to use one loan scheme for what is effectively the one transaction. SA-HELP has no upfront discount, but I think students will be able to engineer themselves one by taking out the loan and then repaying it with an ‘early’ bonus.

I fear VSU will end up being like WorkChoices – a controversial Coalition policy destabilises the policy status quo, creating the political space for a worse regulatory arrangement than the one we had before. Universities Australia backed the 2009 amenities legislation because they were so desperate to get the cash, when for reasons (1) to (3) above they would have opposed this legislation if Labor had proposed it instead of the pre-2006 arrangements.

30/9: The legislation is substantially the same as last year’s version. The main change is to move the list of things the new amenities fee can be spent on from guidelines to the statute itself. This presumably reflects the government’s nervousness about its own survival. They don’t want to risk a future Liberal minister altering the guidelines.

They intend for the new scheme to start on 1 January 2011. However it seems very unlikely that a new loan scheme could be up and running by then. It takes DEEWR forever to do anything, and there is a lot of system work at the uni level as well.

11 thoughts on “The wrong way of financing student amenities

  1. Per the Victorian experience with “VSR”, all that will happen is that a generation of lefty activists will learn how to launder money.


  2. Andrew – agree there are better ways of providing for student services, but assuming this does get up, what’s to prevent the Coalition from reversing the legislation when they get into power? (other than not having control of the Senate which I suppose is a strong likelihood whoever wins the next elections)


  3. Mark – As you suggest, it is unlikely that the Coalition will control the Senate again.

    If Labor did as I suggest and increased the student contribution cap it would achieve 80% of its policy objectives, snooker the Coalition, and save a lot of pointless bureaucracy.


  4. The debate should be good. We’ll get to see a bunch of 50 somethings reliving their salad days as student politicians. I can’t wait to hear Eric Abetz thunder about how AUS supports the PLO.


  5. One disturbing development, illustrated by but not limited to this bill, is parliamentarians’ making it up as they go along, according to what they think will are good or expedient ideas, without reference to the costs and consequences of their decisions or any lessons that have been learned from experience.

    We saw it in Workchoices, the mining tax, VSU, the NBN, the Telstra privatisation, all higher ed policy etc.

    Look even at how Gillard constructed her cabinet. What a dog’s breakfast.

    It’s rather chilling, just how little critical thinking is going on at the top. Perhaps they’re incapable? Or just too lazy?


  6. I don’t fully understand what’s wrong with having the system revert to how it was before. If Jacques Chester is right, the solution to that problem is to have the police investigate and lay charges.

    Mark – As you suggest, it is unlikely that the Coalition will control the Senate again.

    Especially with the rise of the Greens, and the Gillard/Rudd faceless men debacle, and just NSW Labor in general, isn’t the Labor party overdue for another split? It’s been what, over fifty years since the last time, hasn’t it?


  7. Alexander;

    It’s not as simple as that. It’s usually legal in the letter, even if it makes a mockery of the intent. The classic example is: take the VSR money. “Invest” it in an on-campus business. Harvest gross income from that business, spend it on political purposes.

    Due to withdrawals, the business is making a massive paper loss, but due to cash deposits, in practice it continues. Either way, the political money is no longer coming from the student fees. It came from the business.



  8. You’ve got to remember, Jacques, that the today’s students who manage to subvert the intent of VSR will be tomorrow’s tax lawyers who will subvert the intent of the Income Tax Assessment Act.


  9. All universities except the regional universities are unaffordable unless you’re on a scholarship. Especially if you wish to rent in the area or stay on campus. It was stupid to abolish CSU and it was stupid of those students to do political demonstrations unrelated to University Education.

    A university I attended allegedly used the student facilities fee as it was called to fund the library, gym, bar, computer room – I don’t know what it is like now but I imagine the morale boosting facilities no longer exist except perhaps the rugby union team and who gives a fig about that.

    So I can see the merits in changing CSU (as it was) but the abolition of it is just stupid. This legislation seems to be somewhat of a middle ground that follows on from the Rudd method – try it, doesn’t work, discard it, try something else. That seems a sound principle.


  10. “All universities except the regional universities are unaffordable unless you’re on a scholarship.”

    Except of course for the million or so people enrolled without a scholarship….


  11. Senexx

    There are far fewer SES barriers to university entrance in 2010 than any time in Australia’s history. So what are you talking about?


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