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March 08th 2009 print

Sinclair Davidson

Affirmative Action from a New Super-Regulator

On December 16 last year the opinion page editor of the Australian Financial Review phoned to enquire whether I could read an embargoed copy of the Review of Higher Education—the Bradley Report—and write up a 500-word piece before 4 p.m. that same day. The major recommendations of the Bradley Report had been widely leaked and I was able to get the promised 500 words to the editor, who promptly published them the next day. To the best of my knowledge mine was the first adverse opinion of the Bradley Report. Others have followed.

In brief my argument was that the Bradley Report did not treat students as individuals, but rather as cogs in a machine. I also argued that the kind of student-centred demand-driven system that Bradley envisaged did not require the kind of super-regulator that Bradley recommended. My review wasn’t all negative; I did agree that a student voucher system in which universities could enrol as many students as they pleased was an improvement on the current arrangements. Furthermore that student vouchers (or “entitlements” as the Bradley Report calls them) should be implemented.

By coincidence, on the same day my opinion piece appeared in the Financial Review, I met one of the Bradley authors. While welcoming the debate, he felt that I had not fully digested the report and urged me to read it fully and with more care on the way to reconsidering my position. In particular he felt that I had misrepresented the status of students in the report and that I had misunderstood the regulatory model being proposed. Being wrong is always a possibility; I promised to re-examine the report but indicated that I was unlikely to change my mind.

That has turned out to be the case. I have re-examined the report and, if anything, it is worse than I had originally thought. Having more than 500 words, I can now set out in somewhat more detail some of my criticisms. Unfortunately, I have neither the space nor the time to set out all my concerns with the Bradley Report. The report is inconsistent and the sum of its policy recommendations is incoherent. My personal copy is annotated with criticisms and objections on many pages. While some readers might like a paragraph-by-paragraph critique of the report, I am going to limit my criticism to just some of the more important problems.

What is a University?

The Bradley Report defines a “university” as an institution that has met certain agreed criteria and is recognised as being a university.[1] This is, of course, entirely unsatisfactory, but is symptomatic of Australian education policy. The simple question, “What is a university and how might it differ from any other higher education institutions?” has not been asked at a conceptual policy level for a long time.

The report does hint at an answer when it argues that some relationship exists between teaching and learning and research at universities.[2] That relationship, however, is unclear in the report. For example, in one part of the report we are told that teaching should not cross-subsidise research, while in another it indicates that it could find no compelling evidence to support the notion that graduates from research universities “are demonstrably better than those from teaching-only institutions”.[3] Nonetheless Bradley believes, correctly, that research is important in a university context but cannot articulate why that is the case. It is this type of confusion that leads to comments that it is “no longer helpful to see stark contrasts between higher education and VET”.[4] But VET staff don’t normally undertake any research, nor do they usually hold higher degrees such as PhDs.

Michael Oakeshott (1901–90) is not taught at any Australian university. Nor are his books widely available for purchase in Australia. Thankfully Amazon will deliver his magnificent writing to Australian addresses. While his Rationalism in Politics and Other Essays is simply monumental, it is his The Voice of Liberal Learning that should be required reading for anyone interested in higher education. There is no evidence that the Bradley authors are familiar with Oakeshott, yet his understanding of a university would have saved them much conceptual difficulty but would also have indicated that their education-as-social-engineering approach is flawed. Mind you, Bradley is constrained by the narrow view its terms of reference have towards education.

Oakeshott defines a university as “an association of persons, locally situated, engaged in caring for and attending to the whole intellectual capital which comprises a civilisation”.[5] Oakeshott tells us that in principle universities work “undistracted by practical concerns”. It is here that many “modern” readers will part company with Oakeshott. Yet he is not some out-of-touch mystic; he fully recognises that universities must be defended. He sets out the two defences that universities have come to rely on; first, universities contribute to “current undertakings”, and second, universities have “amenity value”. This latter argument is very familiar to Australians; “a piece of costly nonsense protected by our sentimental attachment from designed and immediate destruction but not so well protected against the imposition upon them of alien directions of activity”. Oakeshott goes on to describe a university as a place of education where individuals are engaged in formal teaching.

This is where a university differs from other educational institutions. Here it is well worth quoting Oakeshott in full:[6]

As teachers, they may be either better or worse than those elsewhere; but they are different because they are themselves learners engaged in learning something other than what they undertake to teach. They are not people with a set of conclusions, facts, truths, dogmas, etc., ready to impart or with a well-tried doctrine to hand out; nor are they people who make it their main business to be familiar with what may be called “the current state of knowledge” in their department of study; each is a person engaged in the activity of exploring a particular mode of thought in particular connections.

Nevertheless, what they teach is not what they themselves are in process of learning, nor is it what they have learned or discovered yesterday. As scholars they may live on what are called the “frontiers of knowledge”, but as teachers they must be something other than frontiersmen.

Here Oakeshott touches on a very important issue; the relationship between teaching and research at universities is fraught. To be sure, one does not need to be a researcher to be a good teacher. Indeed most university graduates can tell all manner of horror stories based on Professor X who never bathed, or changed his clothes, and lectured while eating peanuts with his mouth open, but was a brilliant researcher. Universities will tolerate all manner of poor behaviour from academics who publish.

Oakeshott has highlighted two very important points. University academics are both teachers and learners. But they do not have to teach what they themselves have just learnt. A good education does not have to occur at the cutting edge of knowledge. Indeed given the provisional nature of newly learned knowledge, a good education would not occur at the cutting edge. Bradley also emphasises the linkage between research and teaching, but is vague as to what that link is and why it might exist.[7] In fact, Bradley argues that teaching activities cross-subsidising research retards the quality of the university experience.[8] But if Oakeshott is to be believed, research and teaching at university are inseparable—they are both part of the learning process.

For Oakeshott, universities engage in the “pursuit of learning”.[9] Every human being is born into an inheritance of human achievement and an education is the initiation into that inheritance. He is inclusive as to what that inheritance entails:

an inheritance of feelings, emotions, images, visions, thoughts, beliefs, understandings, intellectual and practical enterprises, languages, relationships, organizations, canons and maxims of conduct, procedures, rituals, skills, works of art, books, musical compositions, tools, artifacts and utensils.[10]

Oakeshott forcefully argues that acquiring that inheritance and making the most of oneself are identical. Teachers are an agent of civilisation, but are too modest to make that great claim for themselves.[11]

In his 1950 essay “The Idea of a University”, Oakeshott had seen the future and forewarned of things to come. Universities, he wrote, are conservative institutions and should not be “jiggled about”. Most importantly, a “university needs to beware of the patronage of this world, or it will find that it has sold its birthright for a mess of pottage … that instead of educating men and women it is training them exactly to fill some niche in society”.[12] By 1975, his worst fears had been realised. In his essay “A Place of Learning”, he wrote that universities had betrayed their own missions. To open a business school or train corporate lawyers was somewhat harmless. The real threat lay elsewhere:[13]

But the real assault upon liberal learning comes from another direction; not in the risky undertaking to equip learners for some, often prematurely chosen, profession, but in the belief that “relevance” demands that every learner should be recognised as nothing but a role-performer in a so-called social system and the consequent surrender of learning (which is the concern of individual persons) to “socialization”: the doctrine that because the current here and now is very much more uniform than it used to be, education should recognize and promote uniformity.

So it is that universities not only sold their own souls; they sold their students’ human inheritance for a mess of pottage. It is here that Bradley fails. Students are simply cogs in a great economic and social machine, and universities are simply instruments of social policy. To be fair, this reflects the underlying assumptions of the terms of reference, but nonetheless Bradley does nothing to challenge those assumptions.

The Bradley Report is first and foremost a document that promotes social and national objectives above the individual. We are told, for example, that “education is at the core of any national agenda for social and economic change”.[14] Education is a tool for economic and social engineering; Bradley is quite explicit in that objective. Bradley sets out four functions of higher education; only one can be described as being student-centred. These functions, however, include “developing and maintaining a just, civil and sustainable society” and “building the national economy”. While Bradley doesn’t define what a “just” society is, it later becomes clear that it has a Rawlsian view of justice. Bradley then sets out eight dot-points in a “Vision for 2020”. Two can be described as being student-centred, while not one of four strategic goals are student-centred. In other words, students as individuals with their own ambitions and hopes feature very little in the Bradley Report. Rather students as “role-performers” in a system that is good for the economy and generates an undefined “just’ society are the building blocks of the Bradley Report.

To be sure, education should always contribute to the economy and a just society, but it is up to the institutions of civil society to build an economy and a just society. Universities are one of a range of such institutions, as is government. It is not at all clear that the government has sole responsibility to create the good society with universities as their tools.

Bradley spends a great deal of time dealing with students from lower socio-economic backgrounds. We are first told in the Executive Summary that, “All institutions in receipt of Commonwealth funds for teaching will be expected to establish initiatives to increase both the enrolment of, and success of, students from disadvantaged backgrounds.”[15] Educational achievement does not follow the population distribution, and Bradley wants to fix that “problem”. Bradley has a conscription model of university enrolment; we’re told that Australia needs to make the most of the talents of its people. But why don’t individuals from low socio-economic backgrounds attend university? Bradley argues, with no supporting evidence, that barriers to entry exist. These barriers include previous educational attainment, lack of understanding of the benefits of higher education, and a lack of aspiration to attend university. In plain language, they are either not sufficiently well-equipped or have no desire to attend. Yet the same report requires universities to accept such students, and presumably to pass them.

It is important to understand that since the Rudd government has outlawed Australian undergraduate fee places at universities, attendance at university for Australian students (but not international students) is a zero-sum game. For every unwilling conscript that is enticed into a university place another Australian student (not from a disadvantaged group) is denied a place. The authors of the Bradley Report are likely to respond that their recommendations would not result in a zero-sum game, but the Australian government is unlikely to provide the kind of open-chequebook financing that will enable every Australian who wants to go to university to actually do so, let alone for those who don’t really wish to attend university.

The Bradley Report openly endorses class warfare. It quotes approvingly, and without further comment, Professor Richard James where he wrote, “it is tempting to conclude that university admission/selection processes are quite resilient in reproducing a certain social order”. Here the Bradley Report argues that simply creating additional places at universities will not attract low socio-economic students, rather affirmative action policies are required. Universities, we are told, should not just follow simple and defensible approaches to admission but should adopt “other criteria” and even consider replacing the Tertiary Entrance Rank (TER). Bradley, however, does not explain whether those same affirmative action policies should extend to examination and graduation requirements. Once a class-warfare approach is adopted, however, it seems that any nonsense is justified and sensible debate is curtailed. Those individuals who want to attend university and are capable of doing so should do so, yet Bradley produces no convincing evidence to suggest that at present these individuals are being excluded from the university system.

When it isn’t re-engineering society, the Bradley Report is planning the economy. Students are simply economic inputs, not consumers of education. The report indicates, quite sensibly, that providing students “with a stimulating and rewarding higher education experience is a significant challenge”.[16] Of course, this is always true; not only of universities but of every organisation that provides goods and services. The reason students should have such experiences is so Australia can “meet its productivity goals”. Education exists to enhance productivity. Many readers might take a sanguine approach to that viewpoint; education does enhance productivity and given that education is taxpayer-funded it should provide taxpayers with a return on investment.

Regulation Trumps the Market

The Bradley Report recommends a complex regulatory structure and most importantly recommends the establishment of a new super-regulator—call it “Uniwatch”. In a competitive environment it is not clear that powerful regulators need to maintain as much control as Bradley envisages for Uniwatch. This regulator would be responsible for quality control within the industry. Remarkably the Bradley Report ignores existing quality control mechanisms such as the professionalism of academic staff, the oversight of heads of school, deans of faculties, academic boards and university councils. It may be true that these existing mechanisms to maintain quality have failed, but Bradley produces no evidence to support that notion. Rather it simply proposes more regulation.

George Stigler (1911–91), the 1982 Nobel economics laureate, is best known for his theory of regulation. Stigler explains why industries like being regulated and why this is seldom in the interests of consumers.[17] He argues that regulated industries tend to “capture” the regulator and that regulation ultimately benefits the regulated. Rent-seeking is cheaper than competition, and universities have known this since before Adam Smith went to Oxford. There are four ways regulated industries attempt to subvert regulations in their own favour: subsidies, barriers to entry, controls over substitutes and complements, and price fixing are often associated with regulated industry. The Bradley Report deals with all four of these mechanisms.

The Bradley Report wants to establish tight controls over entry into the university education market, while relaxing controls over exit from that market. In some respects this is quite contradictory. At the same time as Bradley wants to encourage more individuals going to university, it wants fewer institutions to remain as universities. In essence this implies reversing the Dawkins reforms of the late 1980s. Many individuals have long bemoaned those reforms, allowing upstart institutions to call themselves “university”, and compete for research funds and the rest. It has never been quite polite to say so, but many have long wanted an excuse to return to the good old days when universities were somewhat elitist. Of course, few have been so crass as to make that argument in public. Rather they tend to argue about quality, and rigour, and research. The smoking gun is found on page 125 of the Bradley Report (emphasis added):

While the panel recognises that over the last 20 years it has been very difficult for some of the post-1988 universities to build scale and depth in research when sufficient funds have not been available to support that endeavour, it considers that it is in the country’s best interests to insist that the generally accepted definition of a high-quality university education is enforced through the regulatory system.

This remarkable statement encapsulates many of the inconsistencies and contradictions within the Bradley Report. Having called for a demand-driven deregulated university system, the Bradley Report now indicates that quality will be maintained by regulators, not consumers. The idea that government officials better understand the needs and preferences of individuals is an organisational model that has failed throughout history. It is also clear that the Bradley Report is of the view that some post-1988 universities do not deliver the high-quality education that is expected. Yet it declines to name any such institutions, but clearly at least some present-day universities are on notice that their university status could be revoked. Pre-1988 universities are apparently safe.

The Bradley Report doesn’t provide any proper explanation as to why Australia needs another unelected and unaccountable body with dubious constitutional status. Universities are creatures of state government (except the Australian National University), the Commonwealth only has constitutional power to legislate for students, and its control over universities comes from having financial clout. As the smoking-gun quote indicates, this regulator will have the power to insist on all manner of things and constitutes the death-knell of academic freedom and institutional autonomy. Mind you, Australian universities have not jealously protected their academic freedom and institutional autonomy to date.

The best argument for a super-regulator is the recognition that current regulations vary from state to state. But there is no argument that this arrangement has failed, or that such an arrangement is inappropriate in a country with a federal political structure. Duplication and inconsistent regulations across states is a deliberate design feature of federations, not a sign of failure.

Key functions of the super-regulator would be to accredit and reaccredit higher education providers, undertake quality audits, provide advice on quality and efficiency and register and audit education providers for overseas students. In short, this regulator would control the entire higher education system.[18] The criteria for accreditation and reaccreditation would be developed by the federal government after consultation with the states and territories. This consultation process would have to provide constitutional cover for the whole process. But recall, the Bradley Report calls for a demand-driven system, yet government would decide the criteria, not students, or their parents, or prospective employers, or anyone else—the federal government in consultation with the states and territories. Once these criteria had been established the accreditation process would occur.

We are told, “Accreditation would lead to a yes or no decision on whether a university continued to operate, or whether continued operation might be subject to conditions.”[19] This raises all sorts of uncomfortable questions. What happens to the students currently enrolled in that institution, formerly a university? What happens to the graduates of that institution, formerly a university? Would they have to exchange their degree testamurs for a diploma? What would be the economic and social fallout from having a university suddenly degraded into some second-class institution by government fiat? To some extent this is a direct assault on past investments in human capital. The Bradley Report is silent on these issues. This proposal introduces substantial uncertainty into the education system.

The second argument for a super-regulator is based on information asymmetry. Bradley indicates that “reliable comparative information to underpin student choice of courses and institutions is limited”.[20] This simply begs the question as to the meaning of the word reliable. In one sense not much comparative information is necessary in a producer-driven, one-size-fits-all market. But this statement cannot be true. After all, the annual Good Universities Guide is published with reams of information, while students in consultation with friends, teachers, mentors and their parents manage to select course and universities. Furthermore, international students manage to make course and university selections too. Of course, the simple fact that information asymmetry exists doesn’t mean that it isn’t well managed, or that markets fail. The Bradley Report has a distrust of competition and consumer choice, despite advocating a demand-driven education system. It places all its trust in a super-regulator that would second-guess consumer choice and control the education system from top to bottom.

There is a large component of the Australian education market that is already demand-driven. This part of the market does seem to be able to solve the asymmetric information problem that so plagues student choice. The international student market receives a tick of approval from the Bradley Report, with some telling qualifications. While it reports that overseas students are “satisfied” with their educational experience, the Bradley Report does have some doubts. For example, most international students choose education programs in a narrow range of subject fields. It never occurs to Bradley that this is what happens when consumers are given choices—people tend to do what they want. According to Bradley there are threats associated with consumer choice; some institutions are vulnerable to sudden changes in demand.[21] But, of course, every single organisation faces that same risk; universities are hardly unique. Yet Bradley conflates this everyday business risk into a “significant challenge” to “the long term viability of the industry”.[22] Reliance on individuals voluntarily spending their own money on goods and services they chose to consume cannot be a significant challenge; rather it is the basic building block of any viable business model.

Remarkably, the Bradley Report is unable to translate the lessons from the successful international student program into the local market. At page 162, we read this extraordinary statement: “proponents of full price discretion assume that market forces within the higher education sector would prevent prices rising to excessive levels. This view needs to be tested.”

Such statements demonstrate a remarkable ignorance of basic economics. Prices are determined by both demand and supply. Even if universities did have significant market power—a dubious assumption at best—Bradley never once explains why prices for international students do not seem to have risen to “excessive levels”. If it does believe international prices to be too high, Bradley never calls for them to be lowered. This is one of the great confusions that permeate the report; Bradley wants a student-driven education system, but does not believe that competition could regulate such a system and recommends a regulatory system that is not based on institutions competing for students.

Rent-Seeking Run Wild

At its heart the Bradley Report is a call for more government funding of Australian universities. After singing the praises of universities being less reliant on government and better able to determine their own futures, the Bradley Report indicates that universities are now more reliant on their ability to compete for non-government money, as if that were a problem. Indeed, we are told that this is a problem; “Increased reliance on more competitive forms of funding can also make it more difficult to maintain over time the levels of infrastructure support and assistance necessary to ensure good student experience.”[23] That is true, of course. Yet this simply highlights the need for prudence, thrift and responsible decision making. Left to their own devices, universities should be able to manage this problem in the same way that every other organisation does. The bottom line, however, is that Bradley wants more money for universities.[24] Of course, there is no harm in the asking, but they could have provided good reasons for imposing an even greater burden on the taxpayer.

The panel has concluded that a diversity of funding sources and operational autonomy for universities is desirable, but considers that greater public investment in higher education is now warranted, given developments elsewhere.

But what are these developments? Bradley tells us that Australian universities are falling behind, that there are unacceptable cross-subsidies from international students to domestic students, and that there is a cross-subsidy from research to teaching. All these developments are somehow inappropriate. But it is not at all clear that Australian universities are falling behind. Bradley provides no evidence of a long-term decline in standards. It does provide evidence that public funds as a proportion o total funding has fallen—but funding is an input, not an output. Staff–student ratios have declined over the past twenty years and the Bradley Report believes this should be improved. In 1996 it was about 1:13 and by 2006 it was about 1:20. This is not unreasonable; after all, Jesus had twelve disciples but no PhD, no access to a library, or PowerPoint. We can expect some productivity improvements in education over 2000 years.

The Bradley Report argues that there is no basis for increasing fees for Australian students. It does, however, note the argument that the end of compulsory unionism has had an adverse impact on student satisfaction. It seems odd, however, that it could be inappropriate to require individuals to pay for their own education but make it mandatory for them to pay to belong to a union. The only argument the Bradley Report has against paying higher fees is that Australian undergraduates already pay “among the highest levels of tuition in the world”.[25] This statement is almost certainly not true, unless by “world” it means the OECD countries. This argument, however, is remarkably weak—and the Bradley Report actually provides arguments why the fee cap should be relaxed. Bradley, however, misses the most important reason for allowing individual institutions to set a fee in excess of the HECS rate—this would allow the institution itself to capture some of the benefits from improved educational quality and enhance incentives within the education system. Of course, Bradley with its suspicion of consumer choice and competition and its preference for a super-regulator would not appreciate that argument anyway.

Conclusion

There is much more to criticise in the Bradley Report. The role of university research in generating economic growth is an obvious candidate for further discussion. But readers should get the general idea. This is a terribly flawed document.

To be fair, the authors have undertaken a lot of work and are constrained by their terms of reference. Yet even within their arguments the document is riddled with inconsistency. A student-centred demand-driven education model is a valuable step forward, but the model Bradley proposes would have none of the advantages and incentives that such a system would bring.

Real education reform cannot be all things to all people. If students are at the centre of our education system, as they should be, then universities need to have the operational flexibility to meet student demands. The super-regulator that Bradley proposes will inhibit and stifle education innovation and reform.

Sinclair Davidson is a professor in the School of Economics, Finance and Marketing at RMIT University and a senior fellow at the Institute of Public Affairs. He would like to thank Chris Berg, Steve Kates, Andrew Norton and John Roskam for their comments on a previous version of this paper.



[1] Review of Australian Higher Education, (Bradley Report), available at www.deewr.gov.au/he_review_finalreport, pg. 201.

[2] Bradley, pg. 86.

[3] Bradley, pg. 82 and pg. 124.

[4] Bradley, pg. 180.

[5] Michael Oakeshott, 1991, The study of ‘politics’ in a university, In Rationalism in politics and other essays, New and expanded edition, Liberty Fund, Indianapolis, pg. 194.

[6] Oakeshott, as above, pg. 196.

[7] Bradley, pg. 124.

[8] Bradley, pg. xii.

[9] Michael Oakeshott, 2001, The idea of a university, In The voice of liberal learning, Liberty Fund, Indianapolis, pg. 107.

[10] Michael Oakeshott, 2001, Learning and teaching, In The voice of liberal learning, Liberty Fund, Indianapolis, pg. 37.

[11] Michael Oakeshott, as above, pg. 41—43.

[12] Oakeshott, The idea of a university, pg. 116.

[13] Michael Oakeshott, 2001, A place of learning, In The voice of liberal learning, Liberty Fund, Indianapolis, pg. 19—20.

[14] Bradley, pg. 4—7.

[15] Bradley, pg. xiv.

[16] Bradley, pg. 69.

[17] See, for example, George J. Stigler, 1975, The Citizen and the State: Essays on Regulation, The University of Chicago Press.

[18] Bradley, pg. 121.

[19] Bradley, pg. 122.

[20] Bradley, pg. 115.

[21] Bradley, pg. 91.

[22] Bradley, pg. xii.

[23] Bradley, pg. 148.

[24] Bradley, pg. 148.

[25] Bradley, pg. 163.