Education for 'business innovation'?

October 7, 2006

Debts owed by students for university fees are growing by about $2 billion a year, according to the federal education department. Reporting the finding, the September 13 Melbourne Age observed that if the debt rise "continues at this rate, the amount owed will double in six years, from $10.2 billion in 2003-04 to more than $20 billion by 2009-10".

The rise in debt coincides with a 25% increase in HECS fees at most universities, and the increasing take-up of full-fee degrees — in some cases costing more than $200,000 — by students scoring below the entry-level mark.

HECS fees were introduced by the Hawke Labor government in 1989. Under changes introduced by the Howard Coalition government, the most expensive degrees — medicine, law, dentistry and veterinary science — cost students up to $8333 a year.

A report issued last month by the rich countries' Organisation for Economic Cooperation and Development's (OECD) found that Australian university students pay the second-highest fees in the world — an average of $5033 a year. Only in the US is a degree more expensive, with US students paying about $1000 more each year.

The report also found Australia was the only nation in the 30-member OECD to have reduced public funding of universities between 1995 and 2003.

What is Labor offering as an alternative? In July, Labor shadow education minister Jenny Macklin submitted for discussion a 101-page "white paper on higher education" titled Australia's Universities: Building our future in the world.

While citing the key problems as being the general cuts to funding and the shift towards new funding allocations contingent on implementation of the federal government's workplace relations regulations (which promote individual contracts for university staff), Labor is pushing for an education system centred on corporate business needs. The paper states that "the government has failed to utilise universities' capacity to address market and industry problems".

At a speech to the Australia-Israel Chamber of Commerce on September 20, ALP leader Kim Beazley described universities "As places of enormous and exciting potential … to foster innovation". Beazley's idea of innovation involves transforming "Aussie ingenuity, creativity and ideas into high skilled jobs and export dollars".

Labor proposes to invest $200 million into the establishment of an industry/university facility known as "Enterprise Connect" to "act as a link bringing together the various innovation tools in key industry sectors in Australia for the benefit of small and medium enterprises. This will also administer the provision of grants for specific innovation projects, to aid the costs incurred by business utilising and seeking innovation."

Examples of this kind of joint university and industry venture are already in operation in Australia. One of the best known is Lockheed Martin's $370 billion F-35 Joint Strike Fighter project, for which RMIT University in Melbourne is participating in research for the development of a warplane to replace the RAAF's F/A-18 strike fighters and F-111 fighter-bombers.

According to a June 9 report by the federal parliamentary library research section, "15 Australian firms have gained over $100 million worth of contracts for work on the JSF project, ranging from engineering drawing to the manufacture of engine stands and composite panels".

Each F-35 JSF is currently expected to cost $100 million to manufacture, and $15.5 billion has been allocated by the Australian government to the JSF development project.

Labor's white paper outlines new approaches for university funding that would give them some flexibility in deciding the distribution of funded places. Labor also promises to re-index university funding to the CPI and operate on a three-yearly budget.

A major positive is the proposed removal of Howard's "strings attached" funding that requires university funding allocations contingent on the implementation of "voluntary student unionism" legislation and the promotion of AWA individual work contracts.

The ALP has also stated its commitment to independent student representation and advocacy services.

However, Labor has failed to explicitly indicate it will repeal the Higher Education Support Amendment (Abolition of Compulsory Up-front Student Union Fees) Act 2005 — the "voluntary student unionism" law. Rather, Labor argues that universities will "need to demonstrate an independent, democratic and securely funded student representative body exists" to obtain government funding.

It's not clear where the secure funding is supposed to come from — a compulsory fee administered by the student organisation or the university's budget.

Labor proposes four options to enable greater enrolments. One is to reduce HECS rates for all students. This option is logical given that the reduced access to higher education has come at the same time as Howard has doubled student contributions to course costs. However, this is only one option, and is oddly argued against on the basis that students could be deterred from "under-invest[ing] in their human capital".

Another option canvassed is to reduce HECS band 2 rates in certain courses to band 1 rates. This is motivated on the basis that there is a skill shortage in the areas covered by band 2 (for example, commerce, computing, health, engineering). A similar argument is used to suggest HECS debt remissions in areas of skills shortage, such as nursing in rural or remote areas.

A third option canvassed is more targeted scholarships for students "undertaking courses of national importance" — counter-terrorism perhaps?

Labor re-affirms its position of abolishing domestic full-fee paying places, though it proposes continued provision of places for "students with access to income contingent loans to meet their share of the costs", rather than providing sufficient funding so that students don't need to take out "contingent loans".

A study by Ben Spies-Butcher, a postgraduate student at Sydney University, published in the September 21, 2004 Australian Review of Public Affairs found that free education — the abolition of all fees, plus a 25% increase in student support payments — would cost only an extra $2 billion. Sounds like a lot of money, but when it's recalled that the federal government recorded a $16 billion budget surplus last financial year and that it has $40 billion in funds on deposit with the Reserve Bank, spending this extra amount on higher education doesn't seem all that out of reach.

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