Demand-driven system to become less demand-driven

The demand-driven higher education funding system is to become a little less demand-driven than we thought. The Minister has announced that sub-bachelor undergraduate degrees will be excluded from the system.

It’s a move designed to protect the TAFEs, already being hit by the federal and some state governments in other policy areas, from further competition from universities.

In The Australian this morning, I gave this move qualified support.

The problem is that the TAFEs and other non-public university higher education providers have been excluded from the demand-driven system. This puts them at a competitive disadvantage. The danger in my mind is that universities could seek to use this period to wipe out some of their non-university competitors, leaving us with an even less diverse system than we have today.

The danger remains for TAFE bachelor degree programs, though they have always known that they were taking on the universities and so have niche products. But not many unis have large associate degree or diploma programs, so the TAFEs had a wider market for these.

It would be better if the same rules applied to all, and there was no need for anti-competitive rules. And this should have been announced earlier – sudden rule changes undermine the confidence needed for future planning. But in our world of second and third-best policy, this policy seems better than its most likely alternative.

  1. “The danger in my mind is that universities could seek to use this period to wipe out some of their non-university competitors, leaving us with an even less diverse system than we have today.”

    Isn’t that the idea of competition? It’s strange to see you complaining about it. Looking at La Trobe, perhaps it’s going to wipe out university competitors also and it will be interesting to see how ACU holds up. I might note also that non-university competitors have alternative advanatages, since they don’t have to abide by all the rather expensive rules and regulation universities do (who knows where the fair line really is).

    In terms of real changes, as far as I can tell, this has actually created a lot of bad outcomes incidentally, since it’s spread distributions of students everywhere, and that’s quite hard to deal with for those that actually have to deal with it (obviously not management). Even Monash, which is already gargantuan in size, has still dropped its scores to get more students (and I seem to remember reading Melbourne did too). So, for students and good courses, it appears essentially everyone is worse off.

  2. Except in this competition the public unis (until this announcement for the sub-bachelor courses) get places with tuition subsidies and a very soft loan scheme, while the TAFEs get no subsidies and loans with a 25% surcharge. If all players were admitted on the same basis I would oppose this restriction on unis.

    At least to 2010 – DEEWR hasn’t managed to published 2011 figures yet – the strongest growth in enrolments had been in the <70 ATAR group. I don't have any info on where they are.

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