Australia’s higher education system (Part 1) — interview with Julie Hare | VIEWPOINT

Australia’s higher education system (Part 1) — interview with Julie Hare | VIEWPOINT

October 10, 2019 8 By Stanley Isaacs


Julie: Of course, it costs a lot of money
to…for the government to run a free education system. And if you’re not getting the equity
outcomes, which is ultimately the reason why you…a government would fund that system
in the first place, well, they needed to be another way around it. Jason: So I think one of the things that would
be most interesting to just sort of start off with, and I think a lot of people in U.S.
audiences don’t understand, is Australia used to have a free college, what we would call
in this country free college or free university, in the 1970s, and decided to abandon that.
Let’s start there. Julie: Okay. So back in the 1970s, we had
a Prime Minister called Gough Whitlam. He was a transforming, larger-than-life character
and he changed the country. He modernized Australia. One of the things he did was introduce
free university, so university fees. And there was a feeling that people from disadvantaged
backgrounds flooded into universities as a result of the free tuition fees. As it turned
out, by the 1980s, the government had realized that that wasn’t actually the case. The numbers
increased dramatically, but it went from elite to not quite so elite, but still, it was a
lot of rich kids going to universities and the working classes hadn’t exactly flooded
through the doors as expected. So by the time we got to the mid-’80s, we
had another Labor Government, this time run by Bob Hawke. And they were concerned about
the fact that the poor or the working poor was subsidizing the tuition fees of the wealthy.
So they had to work…find a way of how to reintroduce fees without disadvantaging poor
people, and also, they had to keep the Gough acolytes, so the true believers on the side,
because, you know, there was a lot of people who still believe that Gough was God, basically,
in Australia. Jason: I’m sure, for U.S. audiences, this is
a little bit surprising because, as you may know, we’re having this debate now about free
college, as a way to actually increase access for underrepresented, underserved students.
But what you’re saying is that in the ’70s, when you had free tuition in Australia, it
wasn’t…it didn’t produce the results to the extent that everyone thought it would
in that. Julie: There was a very strong kind of mythology
among Australians of that generation, of which I’m one of them, that it did increase access.
And there’s a lot of people will say that they went to university because of Gough’s
free tuition, but the numbers just don’t really stack up. There was a very strong and powerful,
you know, scholarship system that preceded that. So people like me, who came from the
working poor, would have still gone to university, and I would have been on a scholarship. I
wouldn’t have been disenfranchised from the system. So the problem was that it didn’t increase
the number of, basically, people in the lowest quartile and that they were the people who
were subsidizing the relatively wealthy to go to university. It needed to be more equitable.
And of course, it costs a lot of money to…for the government to run a free education system.
And if you’re not getting the equity outcomes, which is ultimately the reason why you…our
government would fund that system in the first place, well, they needed to be another way
around it. And it also meant that the university system
couldn’t grow. They couldn’t go into massification. It had to remain relatively elite because
they just couldn’t afford to increase the number of students going. Jason: Yeah. And I think that’s a thing that
we sort of miss here is this, it’s free, but only certain people get it. Right? So it sounds
like you’re saying there’s a sort of like a capacity constraint because it’s expensive. Julie: The enfranchised get it, you know,
the fortunate get it, because they know how to, you know, how to work within the system.
And if it is constrained, if the capacity’s constrained, it’s those people, it’s the advantaged
who get more advantage as a result of it. Jason: And they have the high test scores to
clear the… Julie: Yeah, exactly. Yeah, yeah, exactly. Jason: So this system of free starts to come
under criticism in the ’80s. Julie: Well, it didn’t come under criticism.
So there was a great deal of belief in Gough and what Gough did. Jason: The Prime Minister at the time? Julie: The Prime Minister, Gough Whitlam.
He was only prime minister for three years, the early 1970s, from ’72 to ’75. And during
that time, he introduced free, you know, on tuition fees, universal health care, you know,
open relations with China, bought Jackson Pollock’s Blue Poles for £1 million, which
outraged the nation, indescribably. So he was very much a reforming prime minister and
he’s, as I said, he modernized Australia in lots and lots of ways. And there wasn’t particularly
a lot backlash against tuition fees. But by the time we got to the next Labor Government
run by Bob Hawke, which again was another reforming government, and on sort of the left,
centrist-left, I guess, the equivalent of your Democrats, that they realized there was
a huge cost. They wanted to do a lot of things with the country. They wanted to modernize
again, and they realized that the cost of running a free education system stopped them
also from opening up, from massifying the systems. So they had to find a way to reintroduce
fees without upsetting the true believers, the Whitlam believers, but also get many more
people from disadvantaged backgrounds into the system. Jason: So this is 1980s, early ’80s? Julie: Hawke was elected in 1983, I think.
And so by the mid-’80s, they were definitely talking about ways in which to massify the
university system. Jason: So yeah. And I think that’s interesting
for U.S. audiences too that you have a center-left, politically center-left government that is
looking at the free university system and saying that this is just too limited to the
enrollment…who can enroll… Julie: You’ve got to remember, this is the
government that also, you know, took…just unleashed the Australian dollar and put it
on the free market, that also took all subsidies and tariffs off all our exports. So it was
a very, very free market government. They, once again, completely transformed the nature
of Australia. Modern Australia today has everything reliant on what happened during the Hawke
era. Jason: Interesting. And so it was this government
that sort of came to realize, and see if I can get you to explain that, that in order
to expand the number of seats that were available at universities, they were going to have to
do away with the free tuition or fees, as you call them. Julie: Absolutely. So they needed to find
a way through that. They couldn’t, from an ideological point of view and from…they
couldn’t introduce fees, full fees again, because that would just automatically send,
you know, a signal to the market that poor people couldn’t afford to go to university.
They probably couldn’t afford… They couldn’t afford a big scholarship system, if they wanted
to massify the system. So they had to find a way through that, how to reintroduce fees
without stopping poor people from going to university. And the way they did that, which I think is
a piece of policy genius and I think it’s remarkable piece of policy, is that the then
education minister at the time, a guy called John Dawkins, found a young economist called
Bruce Chapman, who had just arrived back in Australia with a freshly-minted PhD from Yale,
and together, they developed something called income-contingent loans. They’re in a number
of countries now, but they were Bruce Chapman’s idea. And the idea was that you could reintroduce
fees and the government would pay a certain proportion of what the fee was under what’s
called the Commonwealth Grant Scheme, and the students would pay another percentage
of it, which meant that they had a debt, but they didn’t start repaying the debt until
their income hit a certain threshold. Jason: So the government, the Australian government
continues to subsidize the universities, but now students have to pay tuition. But they
actually don’t have to put any money upfront. Julie: So there’s no money upfront and there’s
a safety net, so that if you don’t benefit from your university education, if you don’t
get a great job that pays… And the threshold was quite high. Jason: Before you have to start paying back
this loan. Julie: Before you pay back. And so if you
never get to that threshold or you move in and out of that threshold, particularly for
women who are working part time, maybe after they’ve had children, that they only pay at
that threshold. And the money, the other part of the genius is it’s collected through the
tax system. It’s a very simple system for repayment. Jason: I think this is where many people in
the United States, this is the part of the Australian system that they know most about,
or maybe the only part that they hear about is the loan… Students get a loan, everybody
can get a loan, they don’t have to put any money upfront to pay for college, and then
they pay back based on their income and only after their income reaches a certain level. But I think one thing that, I think, piece
of context that’s missing there though is that these were…this form of paying tuition
or deferred tuition, as some people call it, was a way to bring revenue into the universities
to offer more seats. And so usually, we’re sort of focused on the mechanics of the loan,
but I think there’s still a limit to the number of seats at these universities, right? So
talk about that in the 1980s. Julie: So in the 1980s, before the full of
the introduction of income-contingent loans, so what we call HECS. Jason: So when the loans are introduced, who
decides how many seats there are at a university… Julie: Well, the government decided. Jason: So explain that. Julie: Well, it’s hard to explain, really.
The government… was a very bureaucratic system in which the government capped the
number of places, gave a finite number of places in every single course and every single
university in Australia. And that was obviously a lot of courses. And if universities went
above or below, I think it was about 5%, they were then fined by the government for not
meeting this exact number, so that it was incredibly bureaucratic and stupid really,
because if a university had a really great law program, but a really ordinary science
program, it couldn’t enroll more students in its law degree, where the demand was and
might have people clambering to get into their law degree and no one wanting their science
degree, but they couldn’t move places between those two systems. So they were stuck with
what the government assigned. I’m not really au fait with how negotiations
went between universities and the government, but I get the impression that they probably
weren’t very constructive. And it was called “Moscow on the Molonglo,” the Molonglo being
a river in Canberra and Moscow being a Soviet city. Jason: So there’s sort of this complaint that
sure, we have this, you know, very sensible solution to the too few places under the free
system. So we have this sensible solution, very practical, where we’re gonna…where
Australia is going to give people income-based loans, where they pay back the loan based
on a share of their income. This will bring in the revenue, there’ll be more places available
at the universities, which all seems like a great idea. But I think what gets lost in
the conversation is that as you’re describing it, even with these reforms, the government
at this time was essentially determining how many majors, how many science majors, how
many biology majors you could have at a certain university in a given year. Julie: Yeah. And ultimately, you know, how
many were being released, you know, at the end of three years, because we got a three-year
undergraduate system, onto the market after that. So, you know, it was highly controlled
and probably not very scientific at all. But that meant the government could control costs.
It knew exactly how much the higher education sector was going to cost it every single year. Jason: I think that’s key. Julie: It is. Jason: I think that’s key, that this is a…it
is a form of rationing, essentially. Julie: Yeah, absolutely. Jason: Right. So it’s a heavily subsidized system,
but it’s expensive. Even with the income-contingent loans. Julie: It’s not as subsidized as it was though
under free education. Jason: Sure. We’ll get there. That’s where we’re
headed. By the way, I think in the United States, where I think people will be shocked
to know that Australia used to limit how many bachelor’s degrees you could have, as a way
of controlling costs, as you said. So flash forward to sort of 2005, 2006, 2007,
and I remember this era very well, where there’s, sort of, you know, there’s a global economic
boom. And even in the United States, everybody is talking about global competitiveness. And
China’s producing so many engineers and everybody’s going to have a bachelor’s degree and we need
to compete. And when I look at what was happening in Australia around the same time, it looks
like a similar theme, and there’s a desire again for more capacity at universities. Is
that a fair…? Julie: Kind of. So it was capped…once again,
we’ve got another Labor Government after years of 11 years of John Howard Government, of
conservative government. And then in 2007, we had the Kevin Rudd Government, get elected
in… Kevin 07 was the t-shirt logo. And once again, the country was very wealthy. We’d
made a lot of money out of digging iron ore out of the ground and shipping it off to China.
So there was a lot of money in the system. Once again, university places were capped,
so we weren’t producing more graduates for the system. And what happened in 2007 is that
Rudd’s education minister was Julia Gillard, later prime minister, yeah, later prime minister,
and who commissioned a review by a former university vice-chancellor called Denise Bradley.
And that review came up with 46 recommendations. Jason: A review of the higher education system. Julie: A review of the higher education system
because obviously, there were problems, right? You know, about capacity, about capacity building. Jason: So still concerns about capacity around
2006 and ’07? Julie: Well, yeah, because of the change in
government, so they needed a new…they just needed to throw some fresh light on what was
going on. So Denise Bradley undertook a major review and her…she came up with a number
of recommendations, the chief of which was that university undergraduate places for domestic
students be uncapped. Jason: So her recommendation is, “We have to
lift these caps that the government has in place,” so who decides who gets in? Julie: The universities decide who gets in.
So universities in Australia are self-crediting. I guess like the American system, they decide
who…how many people they enroll and what the academic standards of the people coming
in have. Jason: So this is a recommendation that comes
out of this review of the higher education system. Julie: Called the Bradley Review. Jason: Called the Bradley Review, okay. And
now in the U. S., we have lots of panels and commissions and reports and reviews and nobody
does anything with them. They sit on shelves. But what happened in this case, with the Bradley
Review? Julie: Well, what happened in this case is
they got to work very quickly. Julia Gillard was an extraordinary effective education minister.
Gotta remember she was also running women…she had a portfolio for women. I think she had
the portfolio for industrial relations and for all the education sectors. She was incredibly
productive. They got to work and they started implementing the recommendations of the Bradley
Review. I think they ended up actually meeting about half the recommendations and a few of
them got wound back fairly quickly, but… And chief among those are the targets. Bradley also set a couple of targets. One
was that she wanted 40% of people aged 25 to 34 with a bachelor’s degree by 2020, and
20% of low…what we call SES, so low socioeconomic students, so financially disadvantaged students
in the university sector by 2022. Jason: Okay. So the goal here… So it’s more
bachelor’s degrees because they’ve been capped, and more access for low-income…students
from low-income families. Julie: So there was a very strong equity dimension
to this. It was a very strong, the equity dimension. And also, you know, just increasing
the number of places because, you know, what Bradley saw was, you know, the knowledge economy
coming down. It was, you know, before we started talking about the Fourth Industrial Revolution
and Industry 2.0, but we could see that there was going to be a need for more people with
bachelor’s degrees in the sector. Australia is a very services…despite the
amount of iron ore and coal we dig out of the ground, we’re a very service-oriented
society and we’re a very urbanized society and so we needed more people with bachelor’s
degrees. And so that’s what they saw and that’s what they were aiming for. Jason: And the solution to that problem is to
remove the sort of centrally controlled caps from government and let universities decide.
And this is called the demand-driven system. Julie: It’s called the demand-driven system. Jason: Sounds very market oriented. And although,
you know, I’ll remind our listeners that the universities are still… Universities would
now be in charge. There are some people watching, you would say, “Oh, well, I mean, you know,
six and one-half a dozen, the other, the government setting caps, the university setting it, you
know, what have you really solved?” But it does seem like a radical change in how this
is done. But so students though would still be able to get these loans. Julie: Students could still get the income-contingent
loans, yup. Jason: And so describe how this system starts
to roll out there. Julie: Okay, so they started uncapping places
in 2010 onwards. And so what they did for the first two years was allowed the universities
to increase by 10% and they would pay the Commonwealth Grant Scheme and also the HECS
contingent of that. Jason: The loans, the HECS are the loans. Julie: The loans of that, by 10%, but universities
could enroll as many as they wanted. They just wouldn’t get the government contribution.
They would just get the student contribution. Jason: So sort of a phase-in to start. Julie: So it was a phase-in. And the first
year went, you know, fine, a bit quietly, a couple of universities were a bit enthusiastic.
By the next year, a number of them were getting quite enthusiastic because they realized that
by the time you got to year three, that they would have the full amount. So by 2012, the
caps came off completely. Jason: Hey, everyone. Thanks for watching Part
1 of our discussion with Julie Hare. If you enjoyed what you saw, remember to like the
video or leave us a comment. And if you want to see more, check out Part 2.