Government Mismanagement of Universities

The university sector is in crisis, nowhere more so than in Australia, where COVID19 travel restrictions have all but eradicated new international students. While Britain has seen, in 2020, the largest ever increase in international students, Australia has seen a catastrophic reduction. Against this backdrop, it seems almost sadistic of the Australian government to introduce its “jobs ready” university reform bill, currently being considered by parliament.

For those of you unaware of this reform bill, it seeks to massively overhaul domestic student fees, primarily, I think, to reduce overall government spending on higher education at a time when the government is strapped for cash. But the real controversy surrounding the reform bill is that it introduces “reward-and-punish” incentives to encourage students to attain “jobs ready” degrees and, by the same token, dissuades students from studying, well, every other degree. For example, under the reform, a degree in mathematics or nursing will be significantly cheaper for students than is currently the case, but a degree in humanities will be double what humanities students currently pay. The idea is to direct students into degree programs that the government believes will add the most value to the economy.

This is a surprisingly non-liberal (in the Ricardian sense of the word) policy to come out of a Liberal government. The reform bill is predicated on the fallacious assumption that the government can correctly identify which skills will be most likely to add value and which won’t. But governments are notoriously bad at this kind of crystal ball forecasting. By distorting the free market, this kind of government intervention has the real potential to create a catastrophic oversupply and undersupply of different categories of skilled labor. Given that degree courses take years to complete, students could be misled by their own government into studying subjects that may well be saturated upon graduation.

“Governments are notoriously bad at this kind of crystal ball forecasting. By distorting the free market, this kind of government intervention has the real potential to create a catastrophic oversupply and undersupply of different categories of skilled labor.”

Take nursing as an example. Yes, there is a severe shortage of nurses in Australia right now. Much of that is driven by the fact that immigration has been reduced to a trickle, and much of it is due to a lack of domestic students. But if a nursing degree is going to cost students $3,700 per year and a humanities degree $14,500 per year (yes, these are correct figures according to the reform bill), you are likely to see a market-distorting flood of new nursing students and a deficit of humanities students.

I have nothing against nursing. My sister is a nurse, okay? But I also have nothing against humanities. In fact, a Bachelors of Arts degree is by far the most popular among the elected members of parliament. A degree in humanities, insofar as it teaches critical thinking and problem-solving skills, can be just as value adding as a degree in mathematics.

Another criticism I have against the reform bill is that it seems internally contradictory. For example, in addition to nursing and mathematics you will find English and languages in the highest subsidy (cheapest) band. Really? And in addition to the humanities you will find management, economics, and behavioral science in the lowest subsidy (most expensive) band. Seriously?

Let’s face it. Governments are never good at picking winners. And it’s even possible that this reform bill may backfire on the Government. Universities will now likely be pushing humanities degrees on students because the institution gets much more revenue teaching those students than individuals studying expensive STEM subjects. I have hope that the reform bill will be withdrawn and replaced by a bill that let’s students decide what they want to study.

Prof. Andrew R. Timming

This article is published under a Creative Commons 4.0 License.

2 thoughts on “Government Mismanagement of Universities

  1. Hi Andrew, I think your biggest mistake is to see this government as Liberal. The Liberal party has not been anywhere near liberal since John Gorton. More particularly, since John Howard it has been almost pathologically anti-university High Tory. I put it down to John Howard, always a conservative, giving back the hard time had in the left leaning university politics of his university day. Whether that is true or not, the Tories have been systematically ripping money out of universities, year after year. Remember the “efficiency dividends”? Tories want small government and cowed opposition; defunding universities, esp Arts, achieves both.


  2. Sir
    The way you write, the logic you cite and the issue you take up,are really significant. If you deem fit, i can share some of the problems which plague the higher education in India.


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