Friday, April 23, 2010

Student union fees and the costs of ideology

Sometimes the cost of ideological purist positions distresses me.

We used to have compulsory fees at the University of New England for Union membership. There were also compulsory fees for the Students' Representative Council and the Sport's Union. External students had to pay fees, but at a much reduced rate given that they came to Armidale only for external schools.  

The Union itself was not just a student body, but open to all. It was a key hub of campus life. The Union provided services, various types of entertainment, meeting rooms and small subsidies to university student societies. The net result was a vibrant place.

Today it is a much diminished body to the point that it has become almost an embarrassment to the University. In saying this, I am not being critical of those in charge, simply commenting on the outcome.

There are a range of practical problems involved on delivering services such as food on a campus like UNE's.

The on-campus student body is not huge. Further, many of the students live in residence and have the option of eating elsewhere. During holidays, the campus goes very quiet, unless an external school is on. Then you get a demand peak.

Costs of delivering services have increased because of various regulatory imposed requirements. Then, too, customer requirements have changed. People expect more.

All this creates a difficult management problem. The Union used to have a stable cash flow from fees that allowed it to provide a core minimum level of service. During holiday periods, a loss was incurred. During very busy periods, service could be expanded from the base. It is now much more difficult.

I am not close enough now to be sure of all my facts, but the outcome appears to be something like this.

The more up-market dining area at nearby Bool for those who can pay is doing well because the campus is big enough to support it. The food and indeed general services at the main Union itself have declined. As they have, the incentive for people to go there has declined, reinforcing the problem.

I said that this had become almost an embarrassment to the University.

Students and especially external students are now complaining about poor service and lack of facilities. They are doing so privately and in letters to the local papers. These complaints are especially pronounced from students who have known the Union in the past, but are broader than that. The net effect is damage to the University.

I can see no easy solution in the absence of the re-introduction of compulsory student fees, The University's ability to find services from normal student tuition fees is severely limited.  

In terms of economics, we have an externalities and a free rider problem.

With compulsory membership, the payments made by one benefit all. An individual may not get a benefit directly linked to cash paid, but students as a whole benefit. In a voluntary environment, there is no incentive to pay since the student expects to get the core benefits anyway. However, once a sufficient number of students adopt this position, the benefits vanish.

I started this post by saying that sometimes the cost of ideological purist positions distresses me.

I really don't care about all the consumer choice and market arguments advanced to support the original Howard Government stance. I only care that a University that I love has been weakened as a consequence to the cost of its students.         


Bronwyn said...

Although I no longer work full-time at the uni, as an occasional employee and PhD student, I am a reasonably regular visitor, and I have been dismayed by the poor provision of food services since the cafe was contracted out. While the service at Bool isn't too bad, the cafeteria is an embarrassment to the university.

Although I'm no economist, the arguments of non-term 'down-time' and college provision of lunches to excuse abysmal service provision don't make any sense to me.

If we take a look at the numbers, it makes even less sense. There must still be over 1000 staff at the university, and around 3000 students on campus during term. Even during non-teaching periods, there are still all those staff, many post-grad students, and visitors, all of them a 'captive' market, with only three choices for food - the cafeteria, Bool, or bringing their own, as town is too far for a quick lunch trip.

So, being conservative, even at it's quietest time of year, that's a potential market of 1000+ customers between two food venues; and for the vast majority of the year, there would be 4000+ potential customers on campus every day. (Yes, many students can eat in college - but most won't trek back down there for an institutional meal if there are decent, quick, inexpensive options 'up top'.)

So, to compare uni food venues to the number of food venues in Armidale itself. Armidale has a population of about 23,000 - at least 1000 of whom work up at the uni. I'm not sure what proportion are school students, but let's assume, that on any given day, there are about 6,000 people working, visiting or shopping in town (which is probably a rather generous guesstimate.) How many caf├ęs, pubs, and fast food outlets cater for these people? Let's be conservative, and say 30. That gives a ratio of 1 service provider to every 200 potential customers - and the vast majority of those food venues provide a pretty good service, and are sustainable businesses. Oh, and if you happen to be caught up in meetings until after 1.30pm, you can still get a decent meal - unlike at uni, where one simply starves instead.

So, given that even at the quietest time of year, the ratio at uni must be around 1/500, and during the majority of the year it would be around 1/2000, I really don't buy the argument that the abysmal service provision in the cafeteria is for financial reasons.

(I'm happy to be corrected on any of my guesstimates and assumptions by those more knowledgable than myself - I am, as I said, no expert!)

Bronwyn said...

I should hasten to add that my comments above only relate to the food issues at UNE; I am certainly not a proponent of Howard-esque 'let market forces drive everything' philosophy, and I had mixed feelings about the across-the-board abolition of student union fees, and the consequent loss of many support services.

However, where the market should easily be able to sustain a well-managed business, which I believe to be the case in the matter of food at UNE, then no subsidy should be needed.

Jim Belshaw said...

Hi Bron and thanks.

One of my problems that I have to bear in mind is that the old structures that I knew have gone. If I am correct, the old union has been replaced by student services, a very different concept.

I don't think that you can compare town and campus in market terms. They are very different.

The University today is not all that much different to when I was there last as a full time student in 81 and 82. Staff numbers are down a bit, on-campus student numbers up a bit.

I don't think that the economics are any different. The campus remains a very fragmented marketplace, in fact more fragmented, with significant peaks and troughs in demand over the year.

After reading your comment, I did some web searching looking at structures and numbers. Accepting your points about standard of service and the way that this reduces demand, I am left with the conclusion that one of the big changes is actually loss of focus and purpose. A union vs student services.

When I was first at UNE there were only 1,200 students on campus. Nearly all of these lived in residence. The union attracted more people at lunchtime than it does today, I am speaking only of the main building, because it was the centre of student life.