Down under or upside down? Higher-Education reforms in Australia



It’s not news that higher education in the United States is in crisis. Student fees are out of control. Enrollment growth is slowing. Executive pay is skyrocketing. Faculty hiring and job security are plummeting. Nothing is working the way it is supposed to. Looking closely at the American system, the new government in Australia has decided on an overhaul of its own higher-education sector … by turning decisively towards the same marketization, competition, and “user pays” models it sees in the United States.

What is going on and why?

Australia’s higher-education system comprises 39 fully accredited universities, of which 37 are public institutions. Most Australian undergraduates only pay part of the cost of their degree, with the federal government contributing the rest. What’s more, under the aptly named Higher Education Loan Program, or HELP, they qualify automatically for a federal loan to fund their contribution. These loans are paid back over time as the student enters certain tax brackets, a system that has been widely imitated, including in New Zealand. In real terms, HELP debts do not increase over time since there is no interest charged.

The new government, led by Prime Minister Tony Abbott, insists that given Australia’s precarious finances, existing government support for higher education is unsustainable. Under a new scheme, introduced last month, the government contribution to higher education will be reduced by no less than 20 percent—with no guarantee against further cuts.

HELP will also be restructured. Students will have to repay their debts sooner. Debts will be indexed to the 10-year bond rate rather than the Consumer Price Index, so what were effectively interest-free loans will now accrue interest at up to 6 percent per year. And interest will be compounded from the moment a student acquires the loan—not from when the student actually reaches the payment threshold.

To compensate for the decrease in state support, public universities will be recast as competitors in a free-market system. Universities will be “unshackled,” allowed to charge whatever they choose for degrees. In this way, the government argues, universities will be able to “compete” and become “world-class” as they respond to student demand.

As I pointed out recently in The Sydney Morning Herald, these proposed reforms are shortsighted. First, they shift the burden of paying for higher education onto student debt, which experiences in the United States and elsewhere show is a particularly unreliable source of funding with substantial socioeconomic side effects. Just as the current system enables the government to effectively set a ceiling on fees and therefore student debt in the public interest, the new regime would empower universities to set that ceiling in their own interest at whatever levels they feel the market can bear.

Second, putting “demand” on a pedestal ignores that students don’t make choices solely on markers of educational excellence like quality of research or teaching. Studies show that they also favor prestige and reputation, campus aesthetics, school spirit, expensive sports programs, social opportunities, and more. The government’s plan will force universities to give students what they demand at 18, which is not necessarily what they and society need in the long term from an education.

Finally, in most of my conversations with Australian faculty members over the last couple of weeks, they stress one theme: What is the problem that these reforms are designed to fix?

The balance in the Australian sector between furnishing an education to its citizens and supporting high-level research is by any measure a good one. Australia’s universities provide excellent teaching for students at a price that almost anyone can afford, especially with HELP. Among adults age 25 to 34, 40 percent of Australians whose parents did not earn a college degree have one themselves (only 14 percent of such Americans do). Students fees are low, and faculty salaries are high.

On the research side of the equation, Australia punches way above its weight for a country of only 23 million people. In the Times Higher Education rankings for 2014, Australia has five universities in the top 100—bettered only by the United States, Britain, and Germany. No fewer than five of the top 16 law schools in the world are down under. Nor are such figures skewed by heavy government spending. Only 0.8 percent of Australia’s GDP is spent on higher education, well below the OECD average of 1.1. The conclusion is unmistakable: Other countries should be copying Australia’s system, not the other way around.

To enact its education reforms, the government will have to persuade senators to back its plan. And negotiations will take place against a backdrop of fierce public resistance. A future of limitless fees, education for the privileged, and heavy student debts has been poorly received by a society brought up on low-cost public education and the ideal of social egalitarianism. The polity has been rocked by street protests and virulent op-eds, while government ministers have been repeatedly harangued off campuses.

The pall of ideology hasn’t helped the government sell its new vision: Alongside cuts to the public sector that have been justified as being necessary to balance the budget, the government has simultaneously offered to open state funding to private entities, including professional colleges and vocational institutions. The respected political commentator Mike Carlton recently wrote of the government’s budget: “It is not so much a fiscal document as a political tract, driven by a brutal right-wing ideology in which ordinary people are lashed to the wheels of ‘the market’ and conscripted to serve an economy which should be serving them.” While this might be normal language in American political discourses, it isn’t in Australia.

If government ministers have been surprised by the vehemence of the public outcry, they have not been alone. University vice chancellors have been backpedaling furiously on their previous support for fee deregulation. Ross Milbourne, the vice chancellor of the University of Technology, Sydney, said, “I don’t support this budget package because it is a badly designed model of deregulation plus the biggest funding cuts in history to higher education.”

Others have been more pointed. Greg Craven, vice chancellor of Australian Catholic University, labeled dreams of an Australian Harvard an “overseas nirvana.” He added, “The most important thing is not that you have the best university in the world but the best university system in the world.”

Author Bio:Jamie Miller is an incoming postdoctoral fellow at the Mario Einaudi Center for International Studies at Cornell University and a graduate of the University of Sydney.