Fixing Australian higher education - problems with markets & definitions

I finished my last post in this series, Fixing Australian higher education - problems with the horizontal slice, with this statement:

From a higher education perspective, one of the biggest failures of all lay in the failure to understand the complex market dynamics now being created. I will discuss this in my next post.

I became profoundly pessimistic and indeed confused as I ordered my jottings for this post. I want to share those confusions with you by sharing some of the questions I asked in myself.

What is higher education?

A distinction used to be made between education and training. Education may have involved some skills acquisition such as learning to read and write, but at least beyond school it centred on knowledge and learning how to think. Training, by contrast, may have involved knowledge acquisition and thinking, but it centred on the capacity to do. The term vocational education covered certain forms of higher level training that contained a major element of knowledge and thought but also focused on certain professions. In the British system, the term technical education applied to vocational training centred on the trades.       

I recognise that I am shorthanding dreadfully. As an example, the domain of the word training has expanded, that of education shrunk. Still, you get my point. You can see it today in the comparison implicit in the language VET or vocational education and training and the term higher education to describe two different education sectors.

So can you define higher education? Does it mean any more than the capacity to award a higher level tick, a tick recognised formally or, in some cases, though the market place?

The huge expansion of mass education has created a further, related, problem. In market terms, that expansion means that the value of a first degree in the market place is relatively about the same as the Higher School Certificate was first introduced in NSW. I was going to use the old five year secondary leaving certificate as an example, but that certificate actually opened up more opportunities than a Bachelors degree today.

Another very funny side effect of the associated rise of "professionalism" is that the higher education sector is actually training lower paid workers. Take as an example, the rise of the paramedic or, for that matter, the higher educationalisation of nursing.

I am not talking here about the standard of service, just relative pay. I have the strong impression that a nurse now relative to a qualified trades person is about the same. A primary school teacher is clearly worse off in relative terms, as is a university professor! So the nexus between participation in higher education and the income return is breaking down. 

Who is the customer?

This one is very messy. If we define the customer as the person who buys the service, then the Government is the dominant purchaser of higher education services in Australia at least. But it's not as clear cut as that. Indeed, you need a combined PhD in higher education funding, economics and financial analysis to understand just what happens. I struggle on the struggle with the detail and get confused. As a consequence, I am prone to error. 

To begin with, the Commonwealth Government has multiple and indeed conflicting roles:

• It buys teaching services for domestic students. Part of those purchases are recovered through HECS (Higher Education Contribution Scheme) whose rules are set by one agency, the money collected by another. This funding comes with reporting requirements.
• It provides certain assistance to students through the social welfare system. Here the amount paid is determined by general decisions on the level and conditions of welfare payments linked to age and family circumstances.
• It regulates the sector. Part of this cost comes directly from the taxpayer, part comes indirectly via the proportion of the regulatory costs born by higher education students in terms of university direct costs. The higher the cost, the lower the amount of money from payments for teaching services available.  
• It sees itself as the standards improver, using a combination of sticks (regulation, promotion of public measurement tools) and carrots (funding that universities can apply for) for standards improvement as defined in Canberra. Again, this imposes cost. Further, Universities aren't dumb.  They go for the cash, now and in the future. This twists university behaviour and increases the need for central managerial control within universities to ensure the university position in a complex world.
• It funds research, but on increasingly more stringent terms and conditions. Here it encourages research whose outputs can be measured; it emphasises the need to get commercial partners to support research on industrial development; and it creates new structures such as cooperative research centres with time limited dollars attached. Again, universities aren't dumb. The best way to maximise is seen as central control and coordination. Big is beautiful in this area, The bigger you are, the more you can afford to invest in marketing and proposal writing, the easier it is to absorb the costs of failure.
• It also imposes a variety of special requirements on universities to meet social and political needs.

Now if you think all this is complicated, consider this,

The higher education sector is more than just the universities. Other players are specialist medical colleges and the VET (Vocational and Technical Education sector) who are funded and regulated in different ways. Within specialist medical colleges, there has been an explosion in costs associated with Commonwealth Government intervention, some justified, some arguably not. Further, Commonwealth regulates dictate the barriers between sectors and especially higher education. The original simplicity associated with the idea of a qualifications framework has been lost.

Still with me? Well, it gets more confusing still. Faced with Government restrictions and controls, universities have been forced to seek new funding sources. Part of that has come from full fee paying overseas students, part from the provision of university services on a fee for service or joint contribution basis, part from alumni and benefactions. One visible outcome has been the visible mushrooming of new medical research institutes.

In all this, are students customers? Well, yes and no. Full fee paying students clearly are. The market for overseas students has become a major university driver. Domestic students? Well no, not really. They have some market power, but that's limited.

Universities are in a dilemma. They have to deliver in an increasingly cash constrained environment. They must meet all of the new requirements, while finding their own business development funds.  All this means that they have to lower costs, while still attracting students. This gives students some power, a power increased by recent Commonwealth Government changes to funding structures intended to increase the proportion of the Australian young people going to university. Here competition has expressed itself especially in marketing budgets.

Another factor now comes in, for students are their own worst enemies. For reasons that I will explore later, university students are very immobile. Unlike the US, the proportion who will move to go to a university of their choice is very small. They want to stay at home.

I saw this with my own girls who would not even consider the Australian National University despite its high global rankings, nor would they consider the University of New England despite the family connections. But you can also see it with the rankings provided in the Australian Good Universities Guide. If you  look here, you will see little correlation between student satisfaction ratings and student demand. An institution may have high student ratings measured by current students and yet fail to attract students.

There are very practical as well as cultural reasons for the immobility of the Australian young. I will address those next. For immediate purposes, it gives universities with large immediate catchments greater freedom to cut costs. Simply put, they can lower the standard of their offerings without affecting intakes. That's a pretty powerful market dynamic.

Is there any evidence that this has in fact happened? There is plenty of anecdotal evidence that suggests that this is so, but I am not aware of any hard data on the matter. What we can say with certainty is that the amount of available staff time per student is lower than in the past. Further, the time that is available is increasingly dominated by part time or casual staff. If you combine that with pattern of student complaints, there is at least indicative evidence of unsatisfactory if not falling standards.

Why won't students move?

I suggested that there were practical as well as cultural reasons for the immobility of the Australian young.

If you look at the data for enrolments in on-line or distance courses at any Australian institution, you will see a wide geographic spread of students. Clearly, students are mobile when they don't have to move! By contrast, internal student numbers are dominated by those coming from immediate catchment areas.

There are very few scholarships available today. The general financial support that is available through the welfare system does not cover costs, especially if the student wants to have any form of social life. So even full time students do at least some part time work, with those receiving support through the welfare system balancing this against the income rules; work too much and you lose your benefit for a period.  A large number also live at home.

If you are going to move away to study and do not have parental financial support, you have to fund additional living costs. Now another factor comes into play, the availability and stability of part time work. So in all this, why bother?

If going to one university compared to another actually made a significant subsequent employment difference, then a shift might be worthwhile. But with some exceptions, in a world of mass commodity bachelors degrees, there just isn't enough in it to make it worthwhile. Higher costs, no extra income? Why bother? But in the end, this may not matter much.

What on earth are MOOCs?

Higher education is as prone as any other sector to fall in love with technology. A year back, I started to hear excited conversations about the implications of MOOCs. Not wanting to appear ignorant, I had to look it up! When I did, I thought oh dear, here we go again!

MOOC stands for Massive open online course.  In simple terms, MOOCs are a type of online course aimed at large-scale participation and open access via the web. They are of concern to both universities and staff because they create a competitive threat. This series on The Conversation will give you a feel for the discussion.

Why did I say oh dear, here we go again? Well, it was partly because I have been through just too many crazes that failed to deliver beyond the wreckage left behind. In some cases now, this is getting close to bet your university stuff. But it's more because some of the conversations going on miss the point. To introduce this, my next question is who are the competitors? 

Who are the competitors?

I began this post with a brief discussion on what is higher education? There I posed this question: can you define higher education? Does it mean anymore than the capacity to award a higher level tick, a tick recognised formally or, in some cases, through the market place? I then asked the question: who are the customers? Part of my point there was to illustrate the complexity of the markets within which Australia’s universities operate. Each market has its own competitor mix.

In discussion now I want to focus on education and training services, the core business of most universities. We can look at these services in many ways. I have selected three, content, delivery mode and qualification, as entry points to the discussion on competition.

By content, I mean the material used in teaching. I accept that teaching is an old fashioned word in a world in which facilitation is all the rage. Perhaps I am old fashioned, but to my mind facilitation is a technique, part of the process of teaching.

Content is more than just words on paper. It depends on purpose and can include not just other forms of presentation, but also techniques and activities.

The earlier University of New England system of moral tutors seems quaint now. The reality is actually different, for those tutors actually had little to do with morals.

UNE’s early students came from a variety of backgrounds. For most, they were the first in their family to actually study at university. They came from country families who had little exposure to the broader world outside their immediate locality. The University saw its role in part as giving them the skills including social skills to be successful in the broader world they were to enter. Measured by later life performance, the results were quite outstanding.

I more or less accept that Australia can no longer afford such luxury. However, it illustrates my point that content is more than just words, more than the content narrowly defined, but a broader package.

When it comes to content more narrowly defined, Australia’s universities have no monopoly over content, nor is their content necessarily the best. In a world awash with content, every person or organisation with content is a potential competitor to Australia’s universities at the course level.

To be continued tomorrow.