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.