KEY POINTS:
Perhaps understandably, the National Party chose to campaign with a policy of retaining the fee maxima cap, which places a maximum on what universities can charge on top of the Government's subsidy for each course. Labour was making a strong pitch for the student vote, highlighted by its proposal to phase in a universal allowance. Any pledge to abolish the fee cap would provide it with the added ammunition of potentially higher student fees.
In such circumstances, diffidence held an obvious attraction, even if that policy carries egalitarianism to a doleful extreme.
But that approach should have ended with the call by the Vice-Chancellors' Committee for the cap to be removed, leaving universities free to set the cost of courses. This appeal was supported by compelling evidence that student financial support was being put ahead of university funding. The upshot, said the committee, was that universities needed investment desperately. More money from fees would suffice if the Government well was dry.
Education Minister Anne Tolley's lamentable response was that the Government would retain fee maxima and had no great plans to change the university-student funding proportion. Its focus would be reducing compliance costs, she said, somewhat lamely.
When the fee cap was introduced in 2003, it was said by Steve Maharey, the Tertiary Education Minister at the time, to be a middle ground between the uncontrolled fee increases of the 1990s and an inflexible system of Government-dictated fees. It was not. It was price regulation in another guise, aimed in part at steering students into science and engineering. Its very nature meant it stifled competition and diversity and provided no incentive for excellence.
Universities were allowed to increase their fees by 5 per cent a year until they reached the maximum, and, thereafter, by the rate of inflation. In practice, this has produced a dire outcome for the University of Auckland, in particular.
Auckland's fees were at or near the maximum for most courses, as befits an institution of its quality and status. A degree from there is generally of greater worth than one from other New Zealand universities, so students would expect to pay higher fees. But deprived of the ability to increase fees as required, Auckland has no room to move. One result, according to its chancellor, Hugh Fletcher, is the "Dickensian" state of the medical school. Another is the ability to attract and retain academic staff of high international standing.
This might be vaguely understandable if the withdrawal of the cap would, indeed, mean sharp fee increases. But there is much to suggest that would not be so. The cap has meant there is little cause for students to shop around; predictably, the maximum fee has become the norm. If universities could set the cost of courses, students would focus on quality or price. Competition would be reintroduced. Courses would have to be priced to meet demand. Students would decide whether they wanted to pay for a more expensive course at a particular institution. Excellence would be rewarded.
The need for change is graphically illustrated by the manner in which the proportion of Government funding devoted to universities has got badly out of kilter with that going to student financial support. Fifty-eight per cent now goes to institutions and 42 per cent to students. The OECD average is, respectively, 82 and 18 per cent. That disparity must affect quality.
The Government's response is, essentially, to tell the universities to tighten their belts. They will not be the only ones. But that is not acceptable when the solution to underfunding is so readily apparent. The cap should be removed, so that fees reflect the quality of the education.
