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The death of a political icon made Education Minister Christopher Pyne’s push for deregulation of university fees even harder to sell. By Martin McKenzie-Murray.

Pyne needling

The government’s proposal to deregulate university fees was buffeted oddly this week. First by the Palmer United Party’s sustained obstinacy in the senate, and second by the wave of reverence, grief and nostalgia formed by the passing of Gough Whitlam. 

On the first, Education Minister Christopher Pyne sought PUP’s backing by dropping his intention to charge the interest on student loans at government bond levels – instead pegging it to the consumer price index, a lower rate. It is unlikely to work, given PUP’s desire for the abolishment of university fees entirely. On the second, Whitlam’s own removal of university fees in 1974 – a policy that would last 14 years – became resentfully contested when the Greens appropriated Whitlam’s image for what was essentially a commercial. Above Whitlam’s picture ran the date of the removal of university fees, and beneath it, beside the party’s logo, the words: “Gough Whitlam’s legacy for a progressive Australia will be remembered.”

Labor MP Tim Watts’s description of the image as “grave robbery” was widely reported. But much as Mark Twain said that the difference between the right word and the nearly right word is “the difference between lightning and a lightning bug”, the difference between the media’s packaged quote and the full statement is stark. For context’s sake, Watts’s fuller remark was: “When Christopher Hitchens wrote about the tendency of figures from across the political spectrum to claim and re-purpose George Orwell’s writings and political legacy for their own ends, he unfavourably described the practice as ‘body-snatching’. If it’s distasteful for political opponents to appropriate a figure’s legacy in death, when they are no longer able to object, it’s even more repugnant to do so while family and partisans are still in raw mourning. To engage in ‘body-snatching’ on the very day of the death of a figure starts to smack of grave-robbing.”

Labor elders Bill Shorten and Anthony Albanese expressed their distaste, while the Labor leader called for the Greens to remove the image from their sites. The Greens refused, calling Labor’s response an “over-reaction”. Labor’s statements were made with sincere irritation, inflected with a tender pride. When I asked Watts if it didn’t all appear brittle or disproportionate, he responded immediately and vigorously. “History matters,” he said. “The legacy of Gough matters. If we don’t properly understand his legacy, we’ll end up having to defend it and debate it forever.”

The Greens, like PUP, believe in a return to Whitlam’s free universities. Labor, while passionately rejecting the government’s push to deregulate, does not. “The sine qua non of Gough’s achievements,” Watts tells me, “was modernising the party – that’s what made everything else possible. And free education was a noble idea. But I believe that higher education is best delivered through the HECS system. It’s the international par excellence for funding. The economist Joseph Stiglitz visited here recently, and he told us that the world was envious of our model. But the Greens want to go back to the future on this.” 

Pyne’s legislation met with the past and the future – Whitlam’s death enlivened Labor’s opposition, if it needed enlivening – and had been thwarted for now by a senate largely established in its fitful recalcitrance for the next six years. 

About-face

Clive Palmer isn’t the only obstacle in Pyne’s way – the Coalition’s past statements are, too. During the 2013 campaign, the Coalition promised voters in its “Real Solutions” brochure-cum-manifesto that “we will ensure the continuation of the current arrangements of university funding”. In this year’s budget, however, the government announced plans to deregulate university fees from 2016. 

Pyne described the move as “critical to improving Australia’s higher education system”, which he argued had grown weak and slovenly under government largesse. Deregulation, Pyne argued, would boost university freedom, productivity and dynamism. It would not, he argued, increase fees – rather, competition would drive prices down. 

“I don’t think deregulation will reduce fees in public universities,” Andrew Norton, an adviser to Howard government education minister David Kemp, tells me. “In most cases, the market value of their courses is much higher than current student contributions. While some universities may for mission reasons hold fees around current levels, others will lift their fees closer to market rates.” 

However, Norton believes that “fees will be reduced in the non-university higher education sector if the demand-driven system is extended to them. This is because they will have tuition subsidy income from government that they currently don’t get. Several providers have publicly said that they will reduce their fees, and there will be market pressures across the sector to do so. While these providers often have good reputations in their fields, none of them have the prestige brand power that would let them get away with much higher fees than their competitors.” 

Tim Watts reflected that final point also, though not with the equanimity of Norton. The Labor MP is concerned that sandstone universities will increase fees in a bid to enhance prestige – high costs putatively reflecting high quality. 

“That will almost certainly happen,” he tells me. He’s far from alone – the man who designed the HECS system, Bruce Chapman, believes significant inflation will occur if government caps on fees are removed. 

A spokesperson for Pyne told me: “If universities charge fees which seem to students to be too high, they will lose students to other institutions. The government expects that increased competition, including on price, and the transparency of information on provider quality and performance available to consumers through the Quality Indicators for Learning and Teaching (QUILT), will moderate fee increases.” This depends, of course, on the elasticity of demand. 

Pyne has talked about the price signal in a deregulated market pushing fees down as students shop around for a better deal. But it’s unsure how the price signal might fully function in a market where, because of deferred fees, price might not be that great an influence on some prospective students. 

The counterargument, put by Norton, is that deferred payment “does blunt price sensitivity; that is what it is designed to do. But we still see the range of fees in HELP-supported markets for the same or very similar courses. Also, if HELP [Higher Education Loan Program]truly wiped out price sensitivity, we would expect domestic students to pay more than internationals, who have to pay upfront. But we never observe that – international students almost always pay significantly higher fees than domestic students.” 

It’s not uniform yet, but there’s a growing coalition of university leaders who support deregulation. Australian National University vice-chancellor Ian Young spoke at Canberra’s press club recently. He was passionate in his support for the legislation. “It would be a great tragedy … if our senators pass up this opportunity, and leave us with no reform, harsh funding cuts and the likelihood of ever declining funding for research and education,” he said.

“That outcome would mean ever bigger universities, ever bigger classes, more casual staff, less internationally important research. It will mean decay of our system and the potential loss of one of our most successful export industries – international students.”

Norton, who released a report on higher education this month, is surprised that the universities’ support – potted as it is – has been so long coming. For many years, the sector has complained of inadequate funding, frustratingly subject to the vicissitudes of politics. It has also left universities vulnerably dependent upon international students – a population that can vary. “The only surprising aspect of the recent shift in vice-chancellor opinion is that it took so long,” Norton tells me. “I think it is overwhelmingly a pragmatic judgement that the Commonwealth government is never going to subsidise domestic students to the extent that universities want. In my view Labor’s efficiency dividend announcement in April 2013 finally shattered the faith in public funding at senior levels of university administration. The reality is that the Commonwealth has controlled university income for domestic undergraduates for 40 years, never come up with any scientific way of adjusting per-student funding rates, and often subjected universities to arbitrary budget-driven cuts. A major enterprise like a university cannot be run this way.” 

Whitlam once said that the most rancorous debate in the 1960s was not Vietnam but education. He would face dissent within his own party, too. “There was always some resistance within Labor to free higher education,” Norton says. “Because it was seen as middle-class welfare. But the reason for HECS was that the government wanted to expand higher education participation without spending vastly more money. The desire for expansion came from a belief that the economy would need many more workers with higher education qualifications than it had, and the knowledge that increasing school completion in the 1980s was flowing through to more demand for higher education. HECS was a clever policy innovation which enabled charging without upfront fees. The idea had been around since the 1950s – a version of it was first popularised by [American economist] Milton Friedman, of all people – but Australia was the first to try it on a national scale, and show that it worked.”

What now for Pyne?

The bitter or melancholy or prideful responses to Whitlam’s death this week – from all sides – revealed something about our politics: there remain passionate distinctions between people and parties. That passion and those distinctions might be marred by lukewarm oratory and opportunism, but just as likely ignored by a media grateful for the iconoclastic clowns in the senate. When Senator Lambie expresses anxiety about sharia or doubt about our responsiveness to Ebola-laden terrorists, our merry media cycle becomes infected with its own damaging virus. As a parliamentarian expressed to me this week, “Would Gough have had many media grabs today?”

What now for Pyne? It was a difficult week to sell the legislation, pinched by the dramatic reappraisals of Whitlam’s legacy. Of course, it also faces intransigence in the senate. Pyne’s office was poker-faced on the question of further compromises to the legislation, telling me simply: “Discussions continue with the senate on the government’s reforms to higher education. The minister looks forward to further constructive discussions on the future of reforms and has previously stated that he is prepared to constructively negotiate on aspects of the package.”

Andrew Norton has doubts about the legislation passing, but he sees another way out for the government. “The current bill may well not get through the senate. But the government has other options for controlling expenditure, including freezing the demand-driven system from 2017 [because] funding agreements with universities are due to expire at the end of 2016.”

This article was first published in the print edition of The Saturday Paper on Oct 25, 2014 as "Pyne needling". Subscribe here.

Martin McKenzie-Murray
is The Saturday Paper’s chief correspondent.