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catallaxy in technical exile

7 reasons why free university education is a bad idea

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32 years ago, at the 1973 Premiers’ Conference, the states agreed to hand funding of universities over to the Commonwealth. From 1974, Labor under Gough Whitlam abolished tuition fees and took over full responsibility for funding university tuition. There were at the time no private universities in Australia. Though free education formally ended with HECS in 1989, the legacy of that 1973 decision is still very much with us, in the extraordinary micromanagement of Brendan Nelson’s tenure as Education Minister (see this blog, ad nauseum). Commenter Russell Hamilton says, in response to my assertion that this was one of the Whitlam government’s worst decisions:

I think it was (along with Medibank) the best decision, because it showed that free education is possible – it’s still possible, and it changed the whole paradigm about what was possible. The ‘problems that flowed from it’ could have been handled.

While free education is, strictly speaking, possible, I stand by my claim that abolishing tuition fees was a mistake. It was bad in theory, and worse in practice.

1. It could not radically change low SES university attendance rates. In the mid-1970s, overall Year 12 retention rates were under 35%, and probably way below for low SES groups. We don’t have directly comparable data, but it seems likely that the % of university students with parents in professional or managerial jobs increased in the decade after free education was introduced (from 43% to 61%). They were able to take advantage of the increased number of places because they were more likely to finish Year 12. At best, free education in 1974 was premature. But poor school performance is still the major obstacle to low SES university participation, even though Year 12 retention has more than doubled.
2. Within the constraints of Year 12 results, places are more important than prices. If you accept any Budget constraint – and even the spendthrift Whitlam government did – the same number of dollars can buy more places if you get students to pay some of the cost. This was the reasoning of the Hawke government when they introduced HECS and massively expanded the system, riding on increases in Year 12 retention. This policy had a large effect on low SES participation. According to Australian Council of Educational Research panel studies low SES uni participation went from 16% in 1980 to 27% (of their own cohorts) in 1994.
3. Because the benefits of free education went overwhelmingly to families that were already relatively well-off, the policy mildly increased overall income inequality.

That’s 3 arguments against free uni education from the left. But there are more educational and human capital reasons against:

4. Free education assumes that governments can correctly judge how much to invest in the human capital of each student. They cannot and have not. Indeed, I know of no serious attempt to work out optimal investment in the last few decades. If fees were set in the market, we’d get much closer to optimal investment.
5. By putting higher education spending in Budget competition with more popular spending priorities such as health and school education we have ensured that universities are chronically under-funded.
6. The quotas and price controls that have come with Commonwealth regulation have had serious negative effects on competition, and as a result undergraduate education has been seriously neglected. Only with reliance on fee-paying overseas students since the mid-1990s has serious, systematic attention been given to the quality of undergraduate education.
7. Free education made one of the institutions that ought to be an informed critic of government financially dependent on government. Ministerial intervention in research grants and course availability is the logical consequence of this.

When income-contingent loans were introduced in 1989 the last semi-credible argument of the free education lobby, that poor people could not afford to pay fees (though they could have been supported via scholarships, as they were before 1974), was destroyed. In my view, free university education is now beyond intellectual respectability, indefensible from left or right.

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Written by Admin

November 1, 2005 at 8:16 pm

Posted in Uncategorized

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