June/July 2007

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Democratization with Rising Student Debt

Power shifted from states to the federal government and then to collaboration

By Deryck M. Schreuder

New South Wales University researcher Supriya Pillai demonstrates her new solar panel that generates more electricity than existing panels.
REUTERS/David Gray
New South Wales University researcher Supriya Pillai demonstrates her new solar panel that generates more electricity than existing panels.

From their very beginnings all great federations embody split institutional genes: those which work towards a common constitutional recognition of regional pluralism and those which represent the powerful environmental factors driving and shaping their operating character. As in long-term marriages, a certain €˜mystery' surrounds their uniqueness, endurance and language of discourse.

Just as the Australian federation as a whole has moved from being highly decentralized at its formation in 1901 to becoming one of the world's most centralized federations in 2001, so the fate of the country's universities has been an indicator of the flows of federal power.

Before 1901, Australia was composed of separately founded and self-governing colonies within the British Empire. (The Canadian model was rejected as being too centralized.) Each colony ran its own government under the Crown, and these arrangements, of course, included basic services such as education and health, including universities. These colonial arrangements simply carried over into the new federal nation after 1901. The former colonies became states of Australia, and educational matters remained within their jurisdiction. Universities would belong to the states - their founding stakeholders - and would be publicly funded and governed by state legislation.

Then in 1974, the reforming federal Labour Government of Gough Whitlam legislated to take over the operations of Australian universities, in the national interest. Yet the 'takeover' was actually qualified, and a federalist form was retained.

The developments of 1974 had long been foreshadowed by a growing federal involvement in university affairs since the heyday of the Liberal Menzies government two decades earlier.

Issues of funding, student support and research allocation were at the heart of this significant development.

Federal 'Takeover' Left Some Control to States
In addition, the changes of 1974 preserved key aspects of state ownership of universities, in a form of pragmatic federalism that was smart politics but represented complex policy that continues to this day. The federal government has become the overwhelming funding source for higher education institutions and providers of student support. The Higher Education Support Act of 2003 (HESA ) is the latest formulation of that support.

Today, a significant dimension of the 1901 arrangements is still in place. The legislatures of the states continue to be the accreditors of new universities and the custodians of the university laws of establishment and governance. These ancient dimensions of the dual Australian system - national financing and local governance - even survived the veritable revolution brought to higher education by Labour Minister Joe Dawkins' White Paper of 1988.

As a key member of the Hawke-Keating government of 1983-95, Dawkins carried out a revolution, namely the massification of an old elite system, which, alongside a more debatable allocation of the national research dollar, remade Australian higher education. Massification meant the opening up of university access, resulting in an increase in university enrolments to at least half of the university-age population.

Dawkins Ended 'Universities for the Elite'
Most decisively of all, he ended the divide between the colleges of advanced education and the older university system, thus doubling overnight the number of higher education providers, from about 19 public universities to the current 38 (plus three private facilities). Even Dawkins' critics applauded those moves.

And that legacy endures: about one-fifth of Australians have acquired a bachelor's degree, a 250 per cent increase since 1996, and the student population has jumped to nearly one million including nearly 250,000 fee-paying overseas students.

A funding revolution underpinned the changes of the age called 'the user pays.' The federal government argued that a university experience was not just a public good but a private benefit. The Higher Education Contribution Scheme (HECS) was introduced along with massification. This ingenious
delayed-student-fee regime was based on equitable notions that higher education would be 'free at the point of entry,' but would then be claimed back in the form of student debts owed on an income contingent basis after graduation. An average graduating HECS debt is now $10,500 Australian ($8,751 U.S.) and the income threshold for repayment is $39,825 Australian. Some fee-paying students owe more than $50,000 Australian under a new scheme called fee-help.

The entrepreneurial university has also arrived in Australia. Many major Australian universities today draw less than 25 per cent of their budgets from the federal government, with the balance mostly taken from fees, charges and international operations. In short, the strong centralizing impulses in Australian federalism since the Second World War have become ever stronger.

Making it Work
There is one key consultative mechanism that makes this current and peculiarly Australian system work by ensuring that all the policy gears engage. That mechanism is the Ministerial Council on Education, Employment, Training and Youth Affairs, or MCEETYA.

Significant policy changes bearing on the universities have to win the assent of MCEETYA members. The states have the ability through their numbers to veto federal initiatives, while the federal government has the purse strings to make things happen.

Assuring Quality
MCEETYA members are the major stakeholders in the Australian Universities Quality Agency, or AQUA. This agency is an independent corporation reporting to MCEETYA, with a board of directors nominated by MCEETYA, the federal government, the university sector, plus the non-self accrediting providers, businesses and the community.

And the Federation itself is still on the move. An impassioned Sydney Morning Herald editorial of March 10, 2007 - titled 'States of disarray: it's time to fix the federation' - argued for major constitutional reform. It said that in a quest for votes, politicians had 'created a ham-fisted patch-work of shared responsibility,' not least in the area of educational policies. But whether that will happen, what impact it will have on universities and what improvements it will bring, remains to be seen.

Democratic federal systems are among the glories of the Western liberal tradition. They are also human creations which have small regard for symmetry, let alone simplicity, as they evolve the politics and policies of their pluralistic modern nations.

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Professor Deryck M. Schreuder, FAHA FRH S LL D, was educated at Oxford University, where he was a Rhodes Scholar. He is Chair of the Australian Universities Quality Agency and a Research Professor in the
Faculty of Education at the University of Sydney. He was previously a Vice Chancellor of two Australian universities, President of the Australian
Vice Chancellors' Committee and President of the Australian Academy of the Humanities.