It’s not all about supply and demand

Eleanor Gordon-Smith on why vice-chancellors don’t deserve all the blame.


The terminology of fee “deregulation” is no accident. In functional terms, it translates to “let them charge more”. That ‘deregulation’ is the term we use belies the reasoning; degrees are commodities traded in markets, and perfect markets should be deregulated.

The market explanation of tertiary education is that degrees, particularly “premium” degrees like Medicine and Law, accrue a private benefit to the graduate. People who get Law degrees get Law salaries later in life – why should the taxpayer finance their ascent into the wage stratosphere? There is some truth to this claim. In general it’s true that more qualified people earn more money. This is the backbone of the Go8’s proposal; the more a student stands to earn because of their degree, the more they should have to pay for it.

What this argument omits is that tertiary education also has a public good. It’s great to be a doctor, but it’s also good to be in a society with people who can provide healthcare. A lawyer might well get a marble floor and a water view, but everyone around her gets access to legal representation.

In all the vitriol aimed at vice-chancellors for bringing the proposal to deregulate fees, we forget that there is at least one other actor responsible for this situation. Government funding for tertiary education has plummeted in the last 20 years. It’s true that on a per-head basis, the government funds universities at a higher rate than it did at the start of the decade, but in real terms it’s far below what we received in 1994. Tertiary education is cast as a luxury; if the education sector were transport, universities would be the light rail. Nobody’s quite sure why we fund it and the people who use it have iPad subscriptions to The New Yorker.

Two decades of scepticism about the public good of tertiary education have eroded the federal funding base that universities might have drawn on before turning to their own students. All the problems in service provision that universities have can be traced back to the original pathogen of financial shortfall. If we had the money, we wouldn’t have to fire staff and we wouldn’t need to wring cash out of domestic undergrads. The vice-chancellors’ reactions may be deserving of criticism, but so is the system that provoked the reaction.

It’s a burden worth pushing, as USyd Vice-Chancellor Michael Spence did once upon a time in reply to then-Shadow Education Minister Christopher Pyne, who has since lost his shadow and solidified into a real Minister for Education. In a skirmish on Q&A about whether educational institutions should be “focussing on the money all the time”, Pyne asked Spence, “Well, have you got $6.5 billion?” Spence bit back: “No, but you do.”