Amanda Vanstone makes two key points in her op-ed this morning:
(i) That university students free ride on the community by having most (about 60%) of the costs of their education paid for by taxpayers in general (including those who do not benefit from tertiary education).
(ii) That these subsidies mainly go to the wealthier sections of the community since, on average, it is these wealthier students who end up going to university.
I think she is partly right too that the current mob of protesters look like an unattractive looking bunch of spoiled brats. They don’t offer logic or arguments only adolescent slogans.
Setting low education costs can be justified if there are externalities from having a well-educated community in terms of less crime, better social decision-making and so on. The fees then cover the private benefits students get in terms of better incomes. This sort of perspective suggest a lower charge for all students attending university – irrespective of their income. 60% average subsidies suggest these external benefits are quite hefty. It might be hard – but I imagine not impossible – to come up with a solid justification for them. It is certainly crazy to seek “free education” since then people will be consuming an expensive service that yields social benefits less than the cost of delivering the service.
Another argument for subsidies is based on an equal opportunity starting point in society. This seems a much stronger argument to me. People irrespective of their socio-economic background should have the chance to attend a university if their abilities are great enough. But this does not seem to steer things in the direction of the current HECs. Rather it suggests giving targeted scholarships to those from economically disadvantaged backgrounds or perhaps highly concessional HECs arrangements for such students.
I guess a final argument that can be advanced is that education is not primarily an investment in an individual’s human capital but is a basic right that enhances a community’s sense of intellectual well-being. As an economist I have only limited respect for these types of arguments – current trends in the universities seem to me to suggest a diminishing role for promoting learning in general. The universities are primarily unadorned degree factories. This is one of the reasons the protesting students appear to be such barbarians – they have not, in fact, received much of an education.
HECs is an intervention that helps people fund their educations in capital markets that don’t work well but the scheme doesn’t substantially address the inequality issue.
I am pessimistic about the future of the Australian universities on the basis of what I have seen as they have evolved over the last 30 years. The rise of managerialism and the “dumbing-down” of curricula are doing far more damage to the community than changes in the way fees are levied. But that is a topic for another post.