Tuesday, March 10, 2015

Mr Pyne's education reforms - introducing the packaging problem

A very short post tonight because of time limitations.

It's been a while since I commented on Australian Education Minister Pyne's attempts to change the Australian higher education sector. He is now seeking Senate compromises, offering what is in effect a levy that would see universities increasing their fees beyond a certain point receive progressively less in their per student base payment. In so doing, he is attempting to meet a concern that the combination of deregulated fees on one side with an open ended student loan scheme on the other would see something of a price explosion.

When first announcing the changes, the Minister stated that university fees would not increase because of extra competition. This was immediately challenged on the grounds that the combination of deregulation of fees with an uncapped loan scheme and cuts to university base funding would create an irresistible pressure for fee increase that would spread across the sector in varying ways depending on the individual market power of the universities.  

Minister Pyne also linked the $150 million funding for the National Collaborative Research Infrastructure Strategy (NCRIS) - described as the "backbone of research in Australia" - to the government's stalled higher education changes passing the Senate on the grounds that continued funding depended on the savings built into the proposed changes. NCRIS facilities support 30,000 staff at 27 sites across the country.

The dynamics in all this are quite interesting. The proposal to cut funding to NCRIS has drawn apparently universal condemnation from the scientific community, coming as it does on the top of other research cuts. My feeling is the cut cannot proceed, although anything is possible.

 The proposal to reduce base subsidy if fee increases pass a certain point has split the university sector, with the powerful Group of Eight totally opposed. You would expect that of course, since they have the greatest market power and hence capacity to increase fees.

 In all this, Mr Pyne still cannot win the Senate. Underlying the mess that the Minister finds himself in is a rather unfortunate feature of modern public policy. I call it the packaging problem, the linking together of sometimes unrelated elements into a single package in which each element depends on the other in such a way that if one falls they all fall. I will look at this in a later post.


2 tanners said...

It's not a 'problem'. It's a deliberately designed strategy to force opponents' hands. Of course, when it backfires, it does so in spades.

Jim Belshaw said...

Mmm, 2T. As you note, when it goes wrong it does so in spades. But it's usually still very bad public policy whether it goes right or wrong, if only for the reasons you note

There are cases where the package makes sense because it is actually an integrated measure. It rarely makes sense when the primary purposes are either to persuade or coerce. Perhaps that's too strong, but I will try to write the case up properly.

Dr Purva Pius said...
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