Rival fairness arguments in the university fees debate

This week I am on a panel discussing a fair price for students to pay for their university education. Both those who want students to pay more and those who want students to pay the same or less draw on fairness arguments.

Fairness arguments for higher student charges

Fairness to other taxpayers: Critics of free or cheap higher education have long thought subsidising students was unfair to other taxpayers. Way back in 1972 Malcolm Fraser criticised Labor’s free tertiary education policy on the grounds that it would lead to a ‘wharf labourer paying taxes to subsidise a lawyer’s education’. The 1988 Wran report, which recommended the introduction of HECS, justified it partly on the basis that ‘taxpayers carry most of the burden of higher education [but]…most taxpayers are not privileged members of society and neither use nor directly benefit from higher education.’

Fairness to other taxpayers is perhaps the lead trigger idea in reducing public spending and increasing student charges. Two of the three proposed nominal cuts in per student public spending of the last 30 years (1989 was the exception) occurred when there was a Budget deficit, creating an active choice between increasing taxes or charging students more.

A fair price: Underlying the fairness to other taxpayers notion is also an argument that it is fair to ask people to pay for what they receive. This has led to a recurring idea that there should be a ‘balance’ between private and public contributions to the cost of higher education. It appears in the Wran report, the arguments for the 1996 funding cuts and HECS increases, the Lomax-Smith review of funding (never acted on), and again in the Pyne and Birmingham policy documents. Students should pay for the benefits they receive, and the public should pay for the benefits it receives.

The public-private balance idea has had little influence on policy detail. Public benefit calculations have never been used to set public funding rates, and private benefits have been used to set private funding rates only once, in a back of the envelope way, in introducing differential HECS for 1997. This created the idea that student contributions should be linked to likely future earnings. Differential HECS connects to a market idea of a ‘fair’ price – pay more, get more. But it also links to progressive notions that the relatively rich should pay more, or get less in taxpayer-funded benefits. This is a common idea in the Australian welfare system. Despite the weak association with policy detail, repeated use of the balance metaphor suggests it reflects intuitions about how higher education should be funded.

Fairness to prospective students who would otherwise miss out: I have noted before the paradox of public higher education funding: that free or cheap higher education tends to reduce access, because rather than rationing spending per student place governments ration the total number of student places. This imposes costs in lost opportunities on those who would have attended if there had been more places. The 1989 introduction of HECS was explicitly intended to finance an increased number of student places. In the current round of reform, the government made much of the cost of the demand driven system, which has led to substantial increases in enrolments. Instead of re-capping the system, they are reducing per student funding and letting it continue to grow (about 20,000 additional Commonwealth supported places expected by 2020). This maintains fairness to the prospective students who would miss out if the system was capped.

Fairness arguments against higher student charges

Fairness to people on low incomes: Historically, a common argument against student charges is that they particularly deter people from disadvantaged backgrounds. Some protestors are shouting ‘education for all, not just the rich’, as they have been through the history of HECS, and Labor is raising fears that students could be priced out.

Fairness compared to earlier generations:
NUS President Sophie Johnston is characterising the higher education Budget changes as a ‘war on young people’. While we have long heard complaints that people who went to university in the free education era are imposing charges on later generations, current circumstances have given the intergenerational point more resonance. Recent students and graduates are caught in a situation where graduate outcomes are not as good as they were in the past, housing prices have increased much more quickly than wages, and graduates (along with everyone else) are going to be burdened with the fiscal consequences of a decade-plus of deficit spending, much of which was spent on older Australians.

Fairness compared to other budget priorities: Increasing student contributions is only one of long list of things that could be done to improve the Commonwealth’s fiscal situation. Labor’s shadow higher education minister, Tanya Plibersek, thinks the government should not have introduced company tax cuts.

Fairness compared to students in other countries:
It is often noted that student contributions in Australian public universities are high compared to most other OECD countries. I think this is at least an implied fairness argument: they are students, we are students, we should be treated in similar ways. These international comparisons were a reason the 2008 Bradley review gave for not recommending increases in student charges.

Fairness isn’t the only way of thinking about higher education prices. About 40 per cent of students have their fees set in the market, with the fees often as much as universities think they can get away with. There are market failure approaches to setting prices, which use discounts to attract people to particular disciplines – we have used these for nursing, teaching and science in the past. The Nelson reforms announced in 2003, which increased student contributions by 25 per cent, did so to create a more flexible and diverse system (Nelson wasn’t cutting public funding, so he did not need to use fairness arguments to justify them).

Since Gough Whitlam commenced Commonwealth regulation of student charges in 1974 fee changes have required a political decision. This has made fairness arguments important to setting student charges. But what fairness means remains strongly contested.

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