Keith Rankin: Battling the oligopoly of universities

COMMENT 
 

Today a parliamentary select committee will be in Parnell hearing submissions to the "Unitec Bill", or what is formally known as the Education (Establishment of Universities) Amendment Bill.

The purpose of this piece of legislation is one-fold: to prevent Unitec from becoming a dual-sector university. It is not clear why the Government is so set against Unitec applying to become a university in line with existing criteria, and along the lines of the newer universities in Australia.

One can only speculate. Maybe the Prime Minister is concerned that the establishment of a university in Mt Albert will be interpreted as an act of political favouritism towards her own electorate.

What is clear is that the word "university" is being used by the existing universities as a barrier to competition. Economics students will recognise the university sector as an oligopoly, made up of a small number of large firms.

Other such industries include banks, airlines, telecoms and petrol retailers. All are known for their aggressive strategies to keep new entrants out of their markets.

Universities represent one end of a tertiary education continuum. The more important words in 21st-century education are "school" and "institution".

Thus, the Auckland Medical School is a school with a world reputation for the quality of both its professional training and its research excellence. It happens to be owned by an institution known as the University of Auckland. If it were to leave the University of Auckland and become a part of the Auckland University of Technology, it would remain substantially the same world-class entity it is now.

The Auckland Medical School competes with other medical schools. It is the same with schools of architecture, business, engineering, nursing and so on.

Seen in this light, the value of a degree in any of these fields should reflect the standing of the school that conferred the degree and not whether the institution to which the school belongs has the "university" word in its official title.

The universities of New Zealand do not want another university, however, because the u-word confers an arbitrary competitive advantage to their professional schools.

In the contemporary world, most advanced tertiary education is professional training. The exceptions are the traditional "liberal" schools - humanities, science, social science. Our older universities were built around these liberal schools of pure knowledge and independent criticism.

But the numbers of students training for specific professional careers has grown much more quickly than arts and science students, even in the most traditional of our universities.

This professional-liberal distinction is important. The traditional liberal schools simply do not fit the market model of the business firm. Their outputs are inherently public. On the other hand, the professional schools fit the market model well. A professional education is, substantially, a private good.

Our universities reached a crisis point in the early 1990s when the market model was imposed on all tertiary institutions. Effectively, in the drive to get student bums on lecture-theatre seats, universities became advanced polytechs. The mystique of the u-word, however, enabled those institutions to continue to believe they were innately different.

In Australia, there are, in reality, two kinds of university. The traditional universities are distinguished by the central importance of their liberal schools and the inherently public orientation ("pure" rather than "applied") of their research. They can be regarded as "universities of society".

The second group are commonly regarded as "universities of technology". A more accurate moniker would be "universities of the economy". They are institutions that are best-known for their professional schools.

Unitec might not be a university-in-law but it is a university of the economy. It does not pretend to be the world-class liberal university - with its humanities, science and social science core - that the University of Auckland should be aspiring to be.

Unitec is no threat to higher education. It is simply an ambitious tertiary institution with professional schools that compete with (and co-operate with) like schools that belong to universities.

A thriving industry is always contestable. Unitec deserves the chance to compete on a level playing field. This is the 21st century.

* Keith Rankin teaches economics in Unitec's school of accountancy, law and finance.