Published in The Weekend Australian on 5.10.13
When champions of free markets turn to central planning as the preferred means of allocating scarce resources you know the world has gone nuts. Such is the weirdness of the debate about how best to allocate university places.
A recent editorial in The Australian urged Education Minister Christopher Pyne to re-apply caps to the number of university places to raise student quality. Judging by statements from the new minister, the plea is likely to receive a sympathetic hearing.
Supporting the editorial was Adam Creighton, the newspaper's economics correspondent, formerly of the reputable free-market think tank, the Centre for Independent Studies. Creighton claimed the increase in demand over the past few years had been for arts degrees that often provided "zero public benefit".
Denigrating arts degrees is a popular pursuit of the Right, but as the Grattan Institute's Andrew Norton (also ex-CIS) points out, demand for arts courses has been flat under the market-based, demand-driven system, with almost all the extra demand being in science, engineering and health, mainly nursing.
The system to which Creighton and some elite universities seek a return has been colourfully described by emeritus professor Max Corden as "Moscow on the Molonglo". Until 2010, public servants in Canberra allocated student places to each university and to each course within the university. Unfilled quotas were taken back and allocated to other universities, just like the old factory system in Soviet Russia.
The previous Labor government replaced this command-and-control system with a demand-driven one. By releasing pent-up demand, the new system produced a sharp increase in the number of students attending university; 190,000 more students are going to university now than in 2007. The number of students from disadvantaged and regional communities has increased by 43 per cent, compared with a 32 per cent increase in better-off students. After 40 years, Gough Whitlam's dream of fair access to university is becoming reality.
According to those advocating a return to central planning, the demand-driven system has lowered student quality. They cite falling university entrance scores and complain that allowing in students with lower scores is damaging the reputation of universities. Here's what they don't tell you: under the demand-driven system, universities are under no obligation to enrol more students. Nor are they obliged to reduce entry scores. Some of the loudest critics of the demand-driven system are its biggest users. It's as if they are imploring the government to save them from themselves. Not all the elite, sandstone universities oppose the new system. Universities Australia, representing 39 universities, certainly doesn't.
If those who seek a return to the command-and-control system are motivated by a belief a fixed amount of federal funding would be channelled away from suburban and regional universities towards research at their universities, they are in for a shock. A deteriorating revenue outlook and the demands of funding an extravagant paid parental leave scheme and another command-and-control scheme - the government's direct action climate change policy - mean any savings would not be devoted to the university system.
Creighton argues Australia would be more productive if fewer people attended university in recognition of what he describes as "the immutable if unfair distribution of human intelligence". He wants students who don't do well at school to become tradesmen. Rarely do parents with university degrees aspire for their children to become tradesmen. Is a young girl who gets poor marks from being unable to study in an overcrowded house in Logan City less intelligent than her counterpart in an affluent suburb? Was she born to be an ironing lady?
Yes, we need more young people with trade qualifications, but this shouldn't be achieved by locking the university gates for disadvantaged young people. Using bridging courses to prepare lesser-performing school students seeking to enter university has much merit. While achieving savings from a challenging efficiency dividend for universities, the previous government also increased the number of bridging places. More could be done here; maybe these course could be uncapped too.
Ultimately it's the quality of the graduate that matters. As Norton points out, re-capping university places or the government dictating minimum entrance scores would be a "policy tragedy". If we want high-quality teachers, nurses, scientists, engineers and, yes, creative Australians with arts degrees, we must stick with the demand-driven system and leave Moscow on the Molonglo to rust at the edge of Lake Burley Griffin.