Dialogue: 'Graduate and pay' plan has hidden snags for us

Donations from former students are not the way to offset university funding cuts, writes TIM DARE*. A tax on graduate occupations would be better.

Robert Solomon, in a Dialogue column, proposed that we respond to cuts in Government funding of tertiary institutions by following the American path, encouraging alumni to make up shortfalls by way of donations to their alma mater.

Those of us who studied in the United States need no reminding of the strategy - we receive constant importunate letters.

Mr Solomon, a visiting professor at the University of Auckland, says he is normally reluctant to recommend that New Zealand emulate the US on social policy.

But on the appropriate relationship between students and their alma mater and the appropriate way to mark that relationship he thinks we do, indeed, have something to learn from the American way.

We should treat his pitch for greater reliance upon private philanthropy with a good deal of caution.

There are a number of difficulties. Mr Solomon does not mention the very great differences in quality between American tertiary institutions.

Graduate philanthropy is not evenly spread and contributes to a system in which students receive a very much better education at some institutions than at others.

Of course that creates a feedback: students able to attend the best institutions tend to make more money, so can donate more to their institutions. In the meantime their poorer cousins get less and give less.

Why would New Zealand wish to follow the US down this path?

Furthermore, many of the most desirable and most generously supported American institutions are private. We simply do not have a tradition of similar private institutions.

The real comparison class for our universities are American state universities, and they do much worse from private donation than their private competitors.

None of this occurs in a social vacuum. The role of immense private fortunes in the development of American society cannot be underestimated. New Zealand just does not have as many Rockefellers and Gettys as the US and there will always be fewer philanthropic pickings here as a result.

Because of that, we might be wary of encouraging the Government to think of such donations as an alternative to adequate state funding.

And it is not clear that New Zealand is always on the wrong side of these social and historical differences.

New Zealand is a more egalitarian society than the US, and the different views on the place of private philanthropy flow in part from that difference.

Hence the American response is not one that can be simply uprooted and planted here. Its successes, such as they are, depend on a wide variety of social and historical conditions which do not, and perhaps should not, hold in this country.

The suggestion also has practical implications. Reliance on alumni generosity is likely to make university income streams less predictable and planning and investment in long-term research and teaching initiatives more difficult.

That is one of the reasons universities have been pushing not just for an increase in funding but also for longer-term financial commitments from the Government.

Mr Solomon thinks the Government should provide tax incentives to encourage donations. Government savings under such a scheme would be the difference between the cost of direct Government funding and the cost of the tax incentive, plus various economies on collection and redistribution. But note that the larger the tax break and the more effective the incentive, the less the Government saves.

Not all of these points suggest that alumni donations are a bad thing. Most suggest, however, that such donations should be an addition, not an alternative, to adequate Government funding.

One of the great difficulties of adequate tertiary funding policy is the problem of intergenerational injustice. I took my first degrees and paid about $127 a year in tuition fees. Today's students pay between $3000 and $10,000.

Mr Solomon's suggestion looks like a solution to this problem. Richer past students are being invited to contribute to their alma mater in ways that might keep down the fees of today's students. But it is a haphazard and inequitable solution.

And, of course, it is hardly likely to be attractive to students who will feel they have already paid an inequitable amount. One might expect the crop of donors to die out.

I have another proposal. I suggest we consider placing an extra tax either on graduates or on graduate occupations - jobs for which tertiary training is necessary.

Of course there will be difficulties in working out these categories and there are bound to be hard cases.

The appropriate level of such a tax is a solvable mathematical issue, but should reflect the joint public-private nature of the good of education.

If we could solve such problems, some such scheme would allow us to draw support from the people who have benefited from tertiary institutions, as Mr Solomon wants, but without the disadvantages of the American strategy.

* Dr Tim Dare is a senior lecturer in philosophy at the University of Auckland.