detennine the demand for education.
Anindividual or their agent will nonnally pursue
education for that individual to the point where the costs to the individuaVagent of an
additional element of education outweigh the benefits. In such market conditions, the
nature and extent of this demand for education will call forth the appropriate supply. To the
extent that the costs and benefits of education accrue to the same individual, that person
may be best left to determine the course of action for themselves, that is, choose the nature
and extent of education he or she is to undertake. Between the customer and the provider
an implicit or explicit contract exists. This bundles together for each party: who chooses,
who pays (not necessarily, or entirely, in monetary terms), who benefits (ditto), and who is
accountable
for delivery of the services concerned (Treasury,
1 987b:3 1 ,emphasis in
original).
The notion of education expressed here is one of purchaser/provider, costibenefit, and supply/demand. Here, education is unquestionably represented through the ideology of market forces. The report continues in this vein; case in point: "[E]ducational services are like other goods traded in the market place. If the purchaser does not treat them as such and seek a fair rate of return they are liable to loose [sic] out. to the providers of the inputs concerned" (Treaswy, 1987b:33). In this market place, less government is best
government. Several arguments are made against government intervention in education and
[G]overnment intervention is liable to reduce freedom of choice and thereby curtail the sphere of responsibility of 'its citizens and weaken the self-steering ability inherent in society to reach optimal solutions through the mass of individual actions pursuing free choice without any formal consensus (Treasury, 1987b:41).
Here, the individual actor is rational, the market is "self-steering", and the outcomes are "optimal solutions" (Treasury 1 987b:4 1). There is also, according to this argument, increased risk for the tax-payer through state funding of, in this case, tertiary education; as the report continues: "[t]o the extent state funding acts to reduce the level of risk for individuals and employers, they may act to increase the riskiness of their actions, for example students may not study as diligently, increasing the risk of failing a course, since the taxpayer bears the cost of failing" (Treasury, 1 987b: 1 75). In other words, with the state paying for an individual's state tertiary education, there is no incentive for that individual to study or work hard. Here also was the rationale for the significant increases in domestic student fees: domestic students can be expected in aggregate to remain in the country and therefore are a public investment in the future. No evidence is given, however, that this was actually the case, that pre- 1989 (with the Education Act) the lesser fees paid was proportional to the number of individuals failing their university courses.
For the tertiary sector, the report recommends: removing central government controls and mechanisms so that tertiary institutions are self-steering bodies; making each tertiary institution a "profit centre" and decentralising "profit centres" to departmental or faculty level; retaining a central body to validate standards where public funds are at stake; removing externally fixed constraints so that institutions can respond to demand as they see best; selling New Zealand tertiary education abroad; and distinguishing entrepot and research functions from the education functions and funding them separately (Treasury,
1987b: 1 93-4).
The selling of New Zealand education abroad is relevant here. In support of selling New Zealand's education abroad, the report argues:
What is abnormal about the education sector's failure. to export its services is that this derives directly from government action to control demand (via the overseas student quota and other measures) whereas, in the case of other industries, export failure has been indirect - due to the protectionist policies which have had an adverse effect on their international competitiveness. As is the case of other industries, lack of direct exposure to
international competition may tend to reduce the productivity of domestic institutions. This would be to the long-term detriment of New Zealand students and to the overall cultural
and economic development of this country (Treasury, 1987b:256).
The report predicts, accurately, that two large markets would be Korea and China (cf Ministry of Education, 2002c). It identifies that international trends at the time, particularly in the United Kingdom, were in favour of re-introducing fees for overseas students. The report looks at whether a substantial increase of fees would affect the market and makes two interesting conclusions: "[a] lack of places for overseas students is likely to be a more serious immediate obstacle to the export of education by New Zealand institutions than any shortfall in demand" (Treasury, 1987b:260) and then a few paragraphs on, "[s]uppliers will need to pitch fees at competitive levels
without prejudicing the quality, and hence the
reputation, of their courses"
(Treasury, 1 987b:26 1 , my emphasis).This notion of quality is only mentioned briefly in this report. The report argues that the biggest incentive for tertiary institutions to increase their enrolment and fees for international students is the economic argument: they would retain tuition fees and recover capital used. However, where quality is mentioned, it is worth quoting.
The issue that does arise, however, is whether the state should intervene to provide quality assurance and, more particularly, to ensure that the reputation of existing academic courses is not undermined . . . . In support of this view, it would be argued that a private university with low academic requirements for degrees could undermine the marketing effort of all responsible, reputable New Zealand tertiary institutions . . . . The need may not so much be for visa restrictions on overseas students but for accurate descriptions, readily understood overseas, as to the education services on offer. Further, academic entry requirements should be determined and administered by the institutions themselves. There could be a role for an independent body to validate the accuracy of promotional material produced by educational institutions offering their services overseas (Treasury, 1 987b:265-6)
As argued in the next chapter, notions o f quality found resonance in the policy of the Labour Government elected