Luke Slattery | December 18, 2008
PROMINENT vice-chancellor Fred Hilmer yesterday called for deregulation of university tuition fees and rejected as "dangerous" the Bradley report's proposed partial deregulation of higher education funding.
The report of former University of South Australia vice-chancellor Denise Bradley recommends a voucher-style funding model in tandem with "volume deregulation", which would allow universities to enrol as many students as they liked.
The report rejected lifting the 25 per cent cap universities are allowed to charge above the government subsidy, fearing students would be charged too much. But in an interview with The Australian yesterday, Professor Hilmer, vice-chancellor of the University of NSW, said universities would face significant financial risks if the Rudd Government accepted the partial deregulation of funding recommended in the report.
"It's like being a little bit pregnant," he said.
Professor Hilmer, a former Fairfax chief executive and management academic, called for the Government to address what he called a dangerous gap in Professor Bradley's blueprint.
Melbourne University vice-chancellor Glyn Davis said discussions in universities on the Bradley report had identified similar fears about the failure to embrace price deregulation as well as volume deregulation.
"This is a significant report and these are major changes, but many are wondering whether leaving prices fixed allows the market mechanism to work with the scope intended by a portable voucher scheme," he said.
"You've got two parts of a market, and they've deregulated one but left the other fixed. That raises a question of whether deregulation of volume would make much of a difference."
Melbourne University is looking to slow its rate of growth and is unlikely to benefit from a deregulation restricted to the numbers a university can enrol.
Professor Hilmer said the report had presented many universities with an incentive to grow, but they were likely to increase their size without the tools to manage the financial risks involved.
"Without some level of fee deregulation, universities would be faced with fluctuations in demand, and therefore revenue, with no capacity to adjust course prices in a situation where costs are largely fixed," he said.
"This would have the same effect on risk as being highly leveraged with debt."
Professor Hilmer said the instability introduced by a partial deregulation would be particularly acute given the weak state of university balance sheets in the wake of the global economic crisis. Even before the crisis wiped millions from university investments, eight public universities recorded operating margins of less than 4 per cent, while six operated in deficit.
Professor Hilmer called for a gradual deregulation of student fees "to help address the issue of risk and strengthen university balance sheets".
The chairman of the Group of Eight, University of Western Australia vice-chancellor Alan Robson, welcomed the report's focus on higher education but said many issues would need to be considered in detail.
