catallaxy files

catallaxy in technical exile

Australia's mediocre Vice-Chancellors, part 2

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Last year I complained about the quality of Monash Vice-Chancellor Richard Larkins’ policy suggestions. This week he and Swinburne Vice-Chancellor Ian Young are back in the policy advice business, with similarly disappointing results.

Young proposes another increase in the maximum HECS levels, to what The Age interprets as 50% above the old HECS levels. Unfortunately, this is more pick-numbers- out-of-the-air policymaking. The old HECS levels don’t have much to do with anything – they don’t reflect costs (as we might want from a central planned system) or what the market will pay. They are just the end result of a long series of semi-arbitrary decisions made in Canberra. Certainly no rationale for this number was reported. I doubt it is even a back-of-the-envelope calculation of how much his uni needs in the short term. It was probably just what popped into his head. Regrettably, this would not be untypical of higher education policymaking.

If anything, Richard Larkins’ suggestion had even less basis in coherent policymaking principle.

Monash University vice-chancellor Richard Larkins said the proposed HECS rise was “tinkering at the edges” and removing the cap on full-fee places, in the absence of more government money, was a better solution

Leaving aside the obligatory putting out of the begging bowl, let’s look at this idea. For a start, he is picking a solution that benefits universities with significant excess demand (such as Monash in certain faculties) that does not benefit many other universities and faculties. It’s an ad hoc patch-up for Monash and a few other universities, but no solution for the sector. It also actively prefers the more anomalous of two possible policy proposals. The basic financial problem of universities is that because the costs of Commonwealth-supported students exceed the revenue they generate, they must enrol full-fee students to push average revenue per student up to break-even or better.

For example, say it costs $7,500 to educate a student for a year, and the revenue for a Commonwealth supported student is $5,000. If a university enrols a full-fee student at $10,000 a year it will receive the necessary revenue of $7,500 for each of its two students, though one pays twice as much as the other. However, given that there are rarely any differences between subsidised and full-fee Australian students that could justify these price differentials all we can say in defence of the full-fee policy is that at least it gets around the quota system and lets the full-fee student do his or her preferred course. But if a university is purely taking students for financial reasons, it would be better to get prices as close together as possible by raising the prices for Commonwealth-supported students.

The most sensible solution here is to abolish the fee caps on Commonwealth-supported students. That way, there need be no difference at any university between what the two groups of students pay – a goal that some universities are already nearly achieving within the constraints of the current system, though at low revenue levels. It’s a pity Young and Larkins did not run with this idea instead of their half-baked suggestions.

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Written by Admin

June 9, 2006 at 5:28 am

Posted in Uncategorized

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