Estrategia 2. Reducción y control de emisiones en vehículos y

The government sat on the BFR’s report for fourteen months, despite increasing pressure from the higher education sector. In the interim the Grattan Institute released a report by Andrew Norton entitled Graduate Winners.185 _{In the Grattan report all benefits of higher education were reducible to} individual benefits, such as rates of return to graduates. Even public benefits were identified in terms

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of individuals, such as graduates’ rates of volunteerism in the community. The report ignored collective relational benefits not reducible to individuals, such as social literacy, national defence or a sustainable environment, despite the long discussion of collective outcomes on the literature. Norton

recommended that government subsidies per student place should be halved. The Grattan Institute report argued that to the extent higher education generated public benefits—though Norton was plainly skeptical about some of these—those benefits would be generated regardless of the source of funding; that is, whether domestic student places were funded by the taxpayer or by the students themselves. Given this argument, Grattan might have recommended the complete abolition of public subsidies for teaching. Its proposal for subsidies at the 50 per cent rate could be presented as a compromise generous to the sector (though without any guarantee that the 50 per cent level would hold).

Here the Grattan report’s conclusion was simply a product of Norton’s assumptions, in which individualised public benefits were modeled as spillovers from individual private benefits.

Nevertheless, it was an effective line of argument in the context of the debate. The BFR had failed to anticipate Norton’s line of reasoning, for example by modeling the change in the expectations of public benefits that would flow from a substantial increase in the role of private contributions. In an increasingly straightened fiscal environment, the Grattan Institute was attractive to politicians from both government and opposition. Its Report received widespread publicity. Arguably, it displaced the Base Funding Review as the hegemonic policy document in the field. But Grattan’s normative commitment was to the full-blown market model that Norton had advocated for more than a decade. It made no effort to grapple with the system’s long-term funding anomalies, dilemmas and lacunae. The public role of the institutions was not one to be augmented and developed, or rendered more effective and monitored in the public interest. It was seen rather as a source of fiscal savings. The funding system’s problems and anomalies would vanish, it seemed, if market forces had full scope. Two months after the Grattan report was released, the government announced that it was suspending the phase-in of full cost research funding, at a cost to the higher education sector of half a billion dollars. It was a turning point. Beginning with this decision, in seven months Labor was to take $3.8 billion off the forward estimates for higher education and research

The government finally announced its response to the BFR on 28 January 2013. The official response was that: ‘The Review made 24 principal recommendations with another 5 recommendations

concerning implementation. The Government has accepted, either in full or in part, 13 of the 24 principal recommendations’. In reality, however, none of the main elements of the BFR’s solution were adopted. ‘A further general increase in funding is not accepted’, stated the government. ‘The evidence is insufficient to demonstrate that current rates of discipline funding are significantly

misaligned’, it said. On the 40/60 split of funding: ‘The Government does not support this proposal. It considers that the potential private benefits from some courses are sufficiently high to justify

differential student contribution rates. A single contribution rate would introduce new inequities.’ Labor refused to do further work to establish the real costs of provision. The BFR report had been gutted. The effect of these decisions was to sustain the existing under-funding and to leave in place the late 1980s cross-disciplinary funding relativities, which were developed prior to the information technology revolution. The once-in-a-generation opportunity for modernisation had been thrown aside.

Instead of implementing the BFR reforms created by its own policy, the government moved to defend the status quo. It inflated its fiscal performance. It claimed it had funded the universities generously, focusing on the absolute volume of funding rather than cost pressures and class sizes. And it

emphasised that: ‘The great challenge for universities over the next few years will be to ensure that the significant additional funding from the Government does not make them complacent about the actions they need to take to constrain costs and look for ways to be more efficient.’ The Howard-era rhetoric had returned.

In the May 2013 budget the government announced a 3.5 per cent ‘efficiency dividend’ would be imposed on the sector over the next two budgets. The ostensible rationale was to help in funding the Gonski school funding package. The opposition announced that when it came to government it would not implement the Gonski funding reforms. Nevertheless, it stated, the cuts to higher education funding would stand. The wheel had turned full circle.

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Conclusions

Labor has given up on its 2007 project of fixing university funding and rendering public support internationally competitive. As of mid 2013, given the constraints on both public funding for teaching and public funding for research support, if the institutions are to plug the growing gap between aggregate income and real costs, two alternatives are left: a hike in domestic student contributions, or a substantial increase in international student revenues. The longer-term trajectory of the international student market is unclear. In early 2013, there was a modest increase in international student

commencements in higher education. But total enrolments were still falling after the decline of

commencements in 2011-2012. Gone are the days when international student numbers can be cranked up by 10-15 per cent to fill a revenue gap. It does not seem feasible to increase institutional

dependence on this uncertain market. In 2011, higher education institutions on the public schedule received $4.12 billion in international student fees, 17.4 per cent of revenues from continuing

operations. Some are more exposed than the national average suggests. In 2011, Macquarie and Central Queensland each received 33.1 per cent of their income from international students, RMIT 31.2 per cent.

Labor and its BFR have proven unable to transcend the dualism in Australian higher education policy between competitive market and public purpose. This dilemma is a function of Anglo-American liberalism, which turns on the divide between state and market/civil society. English-speaking polities are prone to policy dilemmas in sectors like education where government is one, but not the only, player. Such dilemmas are sometimes overcome but it requires a unifying public philosophy sustained by a proactive and forward-looking state. English-speaking polities do this mostly in periods of crisis, as illustrated by the 1930s New Deal in the United States. The 1980s Hawke Labor government in Australia followed such a path with its cooperative approach to national reconstruction. However, in present higher education policy the first instinct in Canberra is not to lead but to transfer responsibility to university executives and student choices. The market will not spontaneously solve the state/market standoff and to leave the solution to the market is to impoverish the public good.

The BFR pointed to the symptoms but could not cure the disease. It could not do a Bob Hawke. It was a committee appointed by government, operating within policy, not the government itself. It could not define a new political philosophy, though its terms of reference in effect required it to do so. The BFR could not build momentum for change. It was unnecessary for the government to adopt it. It was easy to send it to the ‘too hard’ basket.

Will a future Coalition government solve these problems? The Coalition is likely to first increase income contingent student contributions, and then adopt a more complete market by running down public subsidies and deregulating domestic fee charging, either on an open-ended basis with

universities setting the fee, or within a capped maximum. Income-contingent loans would soften the impact. The strong universities (but not all universities) would build a war chest for global research competition. The system would become more stratified between research-intensive and teaching- focused universities. All this in turn would create a new set of policy issues. The public burden of HECS debt, due to subsidised interest rates and partial non-repayment, would increase, eroding policy support for income-contingent loans. If commercial loans came into play this would upset the policy balance between high private costs and public equity. Leading universities would become more closed to all but wealthier families. Lesser status universities would depend on shrinking public funds and cut- price tuition. The federal government would focus on tuition loans and research, making Australia more like the US. But in Australia the cost of income-contingent loans would cut into research support. It would not be like East Asia, where government secures high private investment in lesser institutions and concentrates public money on research, top universities and high achieving students. In a deregulated Australian system top universities would have less help from government, and lesser status universities would draw less private resources. Highly stratified education is less acceptable in Australia than the USA or China. But having handed the system over to the market, government would hope to wash its hands of any fall-out.

On the other hand the Coalition may do what Labor has failed to do, and find a new basis for public funding in the national interest. Australia will eventually discover the idea that has already gripped East Asia and Singapore, Northern Europe and North America—that higher education and research are

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strategic in determining the future of nations. The dramatic rise of research universities in East Asia will provide if not the rationale then the pretext for public re-investment in Australia. Australia’s precarious position on the edge of Asia, with all SWOT indicators blazing red, half hoping and half coping, brings larger solutions to the agenda. The question is, when will the penny drop? Under the next government, or the one after?

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Chapter 8!