The past week has been a bitter education in political sabotage. - Paul Kelly, Editor-At-Large, The Australian, 6/12/14. Here is a snapshot of Australian democracy: as national accounts show living standards in decline, the Senate this week, in a display of contempt by the Palmer United Party and sabotage by the Labor Party, voted down the most important university reform for a generation rather than negotiate an acceptable outcome. What is bizarre about this week’s events is the reluctance to highlight the chaos and irresponsibility before our eyes in the parliament. PUP leader Glenn Lazarus had refused to even meet Education Minister Christopher Pyne, then accused the frantic minister of offending his sensibilities by harassing him with text messages. PUP refugee Jacqui Lambie merrily blackmails the government by voting down everything it proposes without reference to legislative merit. Refusing to negotiate in good faith is now presented as a virtue by Labor and the Palmer party. The government has many blunders in its higher education record. It broke a promise, left all stakeholders unprepared for its university package, combined the essential reform of fee de-regulation with a 20% reduction in public funding and produced a flawed model with a shift in the indexation factor for student debt, from the CPI to the higher long-term bond, hence legitimising the fairness campaign against its measures. Since then, Pyne has run a clearing operation on the wreckage. He has long signalled a willingness to compromise. This week he ran six main changes on to the package, including the long-foreshadowed reversion to the CPI on student debt. The key to Pyne’s position is the support for an amended package by Universities Australia, representing our 39 universities. For months its position has been shouted from the rooftops: “The status quo is not an option.” It wants this package with amendments and wants it desperately. The reason the status quo is not an option is elementary, given the huge expansion in university numbers, no government, Coalition or Labor, will meet from the public purse the demands of higher education, given the long-run budget crisis facing Australia and the superior electoral claim of health, welfare and schools. The obligation on the Senate, Labor, Greens, Palmer and remaining cross-benchers, was to act in the national interest and negotiate with a minister who was desperate to negotiate. The hypocrisy of the Senate majority was astonishing. After declaring their concern was fairness, they refused to make the package fairer. Despite its protestations, the Senate put neither the interests of universities nor students first. This was an exercise in ideology and cynical politics. The existing funding model for universities is non-viable. Virtually every vice-chancellor knows this. UA chief executive, Belinda Robinson, said this week, “Delaying taking action or rejecting the package outright is not the answer and risks condemning Australia’s education system to inevitable decline.” The PUP has an excuse: it is just ignorant, apart from the courageous Zhenya Wang, who openly split with Clive Palmer after the vote and called for reform. In years to come this debate will stand as an epic in Labor’s repudiation of its reformist past. It runs on the phony horror of $100,000 degrees and claims that fee de-regulation will stop students attending university. The claim does not stand up. The architect of HECS under John Dawkins, the Australian National University’s Bruce Chapman, the best analyst of this issue in Australia (and probably the world), rejects Labor’s argument. In a long interview last month, Chapman dismissed the claim that the amended scheme will inhibit university enrolments and limit university to the better-off. He says flatly, “There is no evidence for the proposition that high debts when you have an income-contingent loan, deter people from going to university.” In short, Labor is wrong. Chapman cites the British experience from 2011 when the university price trebled, backed by an income contingent loan. From year two of operation, enrolments were as normal. Bill Shorten wants to turn this into an election issue; that’s his motive. It reminds us again how easily cheap politics can ruin essential reform. Labor is in complete denial about the operation and meaning of an income-contingent loan, the core of the HECS scheme, one of the iconic reforms of the Hawke-Keating era. Indeed, it seems to neither under-stand nor believe in the evolution of this model. The truth is that Labor culture has reverted. Its resurrected romanticism for free education translates into a 2014 proposition that asking students to pay more is unfair, while expecting taxpayers to subsidise 60% of the costs of university is now seen, in some twisted way, as fair and just. The conventional view is that Tony Abbott and Pyne are to blame for the failure to get the package through the Senate, a convenient polemic by the Senate majority that killed the measure. This overlooks the much bigger story that concerns Labor. The university reform issue because fee de-regulation is about HECS constitutes, in pure form, a classic illustration of Labor’s abandonment of its market-oriented 1980s reform mentality. It offers a profound insight into the character of the Labor Party that, somewhere in the 1996-2007 wilderness era, changed decisively. There is no heart within Labor today for any reform de-regulation. The ALP can boast about its past glories like financial de-regulation, but it exists today as a populist instrument trying to win an election by crusading against university fee de-regulation, and the tide may be turning against it. Consider what is happening. Students will pay more for a university education because they value it more than what they now pay but the Senate says it won’t allow this to happen because it’s immoral and unfair. The fraudulent proposition is the notion that government will devote a higher proportion of taxpayer funds (or even increase taxes!) to fund the rapidly expanding system. The universities saw the Gillard government slash their funds at the end. They know a fraudulent proposition when they see it. La Trobe University vice-chancellor, John Dewar, also head of the Innovative Research Universities group, said the current funding system “has reached the end of its natural life” and the Pyne package, with its amendments, gives “the best chance of sustaining a successful and internationally competitive university sector”. Glyn Davis, the leader of our No 1 university, the University of Melbourne, said last month, “To reject the legislation is to support the status quo. If the Senate rejects what the government has proposed, we end up in a nightmare position.” The nightmare arrived this week. After the package was defeated, University of Western Australia vice-chancellor Paul Johnson warned of an unprecedented funding squeeze. “If the Senate turns around and says there is no fee flexibility, the only thing we can do is cut, and every university will retreat to its core activities. Without this reform we are looking at long-term deficits.” Labor, the Greens and Clive Palmer say that fee de-regulation, the heart of Pyne’s package, will Americanise the system, with Shorten declaring it means a “two-tiered Americanised system”. For those who knew the Hawke-Keating deregulation debate of the 80s this is a trip down the time tunnel with the beat of equity drum against de-regulation. Chapman rubbishes such talk. The US has nothing like our Higher Education Contribution Scheme. He says such comparisons are pretty much worthless. The real point is that fee de-regulation is the next logical step, following the past 25 years of policy. This was best put by Group of Eight director, Mike Gallagher, in a recent speech. Detecting a shift in the political wind, he said, “The new normal in the debate is the necessity for de-regulation of tuition prices for domestic under-graduate education. Everything else has been de-regulated.” That’s right. Everything else is de-regulated, notably enrolment numbers for international students, domestic post-graduate students and domestic under-graduate students. In addition, fees are de-regulated for international students and domestic post-graduate students. There is only one pillar left from the old order: the removal of regulation on fees for domestic under-graduates. As Gallagher says, the policy direction has been obvious and across party lines over the 25 years from 1998. Far from fee de-regulation being an aberration, it is a completion of the policy cycle. Just as the debate over and implementation of financial de-regulation took many years, so the de-regulation of the university system is even more protracted. Pyne’s optimism that he will carry an amended package in early 2015 may be a touch optimistic. He is correct, however, to argue that the current position, inherited from Labor, based on de-regulation of domestic student numbers but regulated fees for domestic students, is unsustainable. Reaching this conclusion is hardly rocket science. Hence this reform is likely to come, somehow, some way. The truth is that Labor’s populist scare has dominated this debate. But in recent weeks there are signs of an emerging policy rationality. Abbott and Pyne will fight on this front, so university policy will be a frontline political issue at the 2016 election. The point, of course, is that university is free at the point of entry and debt repayment is tied to income. It begins only at $56,000 income in 2016 and, even for the richest graduate, you never pay more than 8% of income on HECS debt. Pyne wants students to contribute 50% rather than the current 40% to the cost of their education given the benefits it brings. It may be unpopular, but its not unfair. For Pyne, the PUP is the key. Its higher education spokesman is Wang, who wants to be loyal to Palmer but who knows that reform is necessary. Wang told The Australian this week, “All the universities have come out and said they want this in some shape or form. You have to listen to their comments.” The fact that Palmer’s education spokesman has backed the reform cause changes the equation. With Pyne’s package defeated in the Senate 33-31, two votes made the difference. As for what will happen in 2015, with this Senate you never make predictions.
Posted on: Sat, 06 Dec 2014 12:47:39 +0000
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