Give Me Your Universities and I'll Give Them a $5bn Endowment. (May 10, 2007)

The Minister for Education. Science and Training, Julie Bishop is back with the mailed fist inside the cement glove.

Julie Bishop

John Garnaut and David Crawshaw of The Sydney Morning Herald report, "In her first post-budget interview, the Education Minister, Julie Bishop, told the Herald the states had tied

Steven Schwartz

 the universities in red tape but contributed nothing financially."

Ms Bishop intends to write to state education ministers asking them to cede their regulatory powers over university financial administration, reporting and auditing. Should they refuse, she raised the possibility of assuming control of universities through the Commonwealth's constitutional power over corporations would be considered.

Labor opposition leader Kevin Rudd, was quick to note that the budget papers (see The 2007/08 Federal Government's Science and Innovation Budget) show that education spending as a proportion of total government expenditure is expected to fall from 7.7 per cent in 2005-06 to 7.4 per cent in 2010-11.

"How can this be a budget about the future when the government's investment in education, as a proportion of total spending, falls over the next four years?"

The Prime Minister, John Howard's reply seems to defy reality -- Mr Howard said the figures were percentages of aggregate government spending and "made no allowance for the fact that expenditure in other areas may have increased at an even faster rate than education."

Well, now federal spending on education, certainly on higher education, has been the Cinderella sector for years, but never mind, the government remains in the very best of hands.

In the meantime the Education Endowment Fund (EEF) is being talked up in grand style, and with reason, but it's greatest feature is what it may grow to in the not to distant future.

The Australian is writing of the possibility of $50 billion "or more in a matter of years," i.e. dividends of $3bn per annum, which would be useful.

But the vice-chancellor of Macquarie University, Steven Schwartz, does inject a modicum of present day reality in his opinion piece for The Sydney Morning Herald:

Australian higher education is the very model of a nationalised industry. University buildings are falling down, much of our equipment is obsolete and our staff are demoralised and cynical... resources are allocated by bureaucrats rather than price and institutions are fined for "overproduction" (enrolling too many students).

In fact its rather like the management style of "the old Soviet Union".

But Professor Schwartz lauds the proposed EFF and its expected benefits as well as the additional "money for teaching and research [which] is also very welcome and it seems 'over-production' will now be sanctioned rather than punished."

However, Macquarie's V-C is less enthusiastic by the fact that "Most resources, including the earnings of the new endowment fund, will be allocated by bureaucrats rather than the market and universities will be given limited scope to vary the fees for HECS students. These are probably too hard to tackle in an election year."

He then gets on the market driven mantra, "Removing the cap on full-fee paying places will increase student choice and flexibility, creating - in Federal Education Minister Julie Bishop's words - a more 'demand-driven university system'. It also allows universities to use their spare capacity efficiently."

How this vision of Ms Bishop's marries with research and learning is not a matter examined because it surely should effect and will be effected by the largesse from the EEF.

Professor Schwartz on the other hand comes close the the approach advocated by many of the US top private research universities:

The equity and efficiency problems could be overcome by making all students HECS-subsidised. The best way to do this is to allow funding to follow students and to end all price controls. We should make a subsidy available to anyone accepted by a recognised university and allow universities to charge what they wish on top of this (repayable through the tax system). [and a means test coupled to a bursary?]

The Government's figures show that Australian full-fee students make up only 2 per cent of the total.

And as to the matter of diversity, it will sort itself out over a period of time without the Minister and her minions bludgeoning the universities into submission.