Review of Australian Higher Education The Bradley Review

ates or mixes of funding programs (such as
knowledge transfer). Changes requiring public
investment will stall each time macroeconomic
policy dictates spending constraint. If institutions
are free to offer more expensive courses, this
diversity will emerge more quickly. This is
already happening in the private higher education
sector since FEE-HELP was made available to
its students.
Less control on student co-investment assumes
that most students, as intelligent adults, are able
to make decisions about the costs and benefits
of different educational options. Government has
a role in making available information to increase
the quality of decision-making (see section 8.2),
but otherwise students can decide whether it is
worth paying more to purchase different teaching
methods, class sizes, campus experiences or other
factors that they think are relevant. These choices
will allow students to maximise their individual
potential, and through that the contribution they
can make to society as a whole. Fewer restrictions
on student co-investment will also allow
universities to restore services lost as a result of
the voluntary student unionism legislation.
4.3 Fee regulation
As in other markets, the main factor regulating
price would be market competition. We can
see from student reaction to full-fee places that
students resist paying prices they see as too
expensive. For example, though Victoria has very
high rates of students receiving offers for second
or lower preference courses, of over 40% in 2007,
only 14% of applicants put a full-fee course on
their preference list, and only 4% enrolled in a
full-fee course. This indicates a high willingness
to take cheaper substitutes. University concerns
about access and equity would also moderate
prices or see higher fees offset with scholarships
for disadvantaged students.
Though fears of unaffordable fees are overstated,
retaining some fee regulation would assure the
public that fees would not escalate excessively in
Commonwealth-supported places. Careful initial
analysis of costs by an independent regulator with
the necessary economic expertise is necessary for
this to be done without compromising the benefits
of reduced constraints on student co-investment
(see section 8.2). The approach of utility regulators
like the Victorian Essential Services Commission,
which in setting maximum retail prices has to take
into account both preventing misuse of market
power and industry viability, may provide some
guidance here.
The regulator’s main task would be to estimate
the minimum per student spending necessary
to achieve the graduate outcomes expected for
diploma, bachelor and postgraduate courses in
each discipline area. It would be expected to look
at the requirements of accreditation authorities,
professional bodies, expert views on class
sizes and teaching methods, and technological
requirements. Veterinary science, for example,
cannot be taught on current Commonwealthsupported
student rates partly because the
technological requirements have changed
dramatically since the RFM was conducted.
Ultrasonic imaging, computed radiography, and a
large number of other diagnostic facilities were
simply not envisaged 20 years ago. The University
of Melbourne is responding to a sector‐wide
problem of too little classroom experience during
teacher education courses through the creation
of a new Masters of Teaching on a clinical model,
but this adds significantly to the costs of provision.
Given the large number of international students
enrolled in Australian universities, and the plans
many Australian students have to work overseas,
this exercise requires an international dimension.
The results of these studies would set the baseline
price for Commonwealth-supported places.
Universities and other higher education institutions
would then be permitted to vary the price up to a
specified percentage, perhaps 30%, more than the
baseline. This would allow more expensive options
to be added, and also serve as a safety margin
to insulate standards from the consequences
of reductions in Commonwealth spending. The
balance between Commonwealth and student
contributions within the base amount would be a
political decision, made in the context of the overall
macroeconomic situation, the evidence in support
of added subsidy, and the Commonwealth’s other
spending priorities. The base and the cap would be
indexed to inflation and periodically reviewed by
the regulator.
14 University of Melbourne Bradley Review Submission