University reforms, part II: the barriers

Australian universities are admin-heavy, have high student-academic ratios and in recent years have seen a race to the bottom in standards, related to a battle over student numbers. The selling out of previously amassed reputation by reducing entry barriers most recently became official policy at UNSW and the University of Sydney (the ‘no ATAR’ rule that is hurting UWS), but merely followed standard practise in many other places. These forces have long been foretold by academic papers of decades past, so those looking to get their teeth into the question how it all came about should glance at this paper from 10 year ago, or this other old one, or this most recent one.

Government is now also waking up to this reality, witnessed most recently by a consultancy report by Ernst and Young that says about the future that “University asset bases and administrations will need to be significantly leaner than they are today.” In the US too has the explosion of administrators who give themselves fantastic salaries but don’t seem to add much been noted.

Whilst the Australian audience, which includes the education ministries and the general public, does not seem to realise the full scale of the governance problems in the university sector, even the insiders who do know the problem face an uphill battle in trying to think of solutions. Indeed, in this respect the consultancy report mentioned has no clue as to what to do and merely pushes hollow phrases like ‘universities will need to have a clear strategy’.

Rather than discuss what is wrong with popular particular proposals, like vouchers or privatisation, let us mainly try and get a handle on the quite baffling array of barriers that any solution has to navigate. Along the way you will get an appreciation for just what the underlying economics of our universities really are:

  1. Forget about anything that requires a wholesale increase in standards, mainly because that would cost us the overseas students who come for our easy degrees (the really smart ones do not come here unless by mistake). Hence a university inspectorate or something that would truly try to enforce high uniform standards for degrees is unlikely to get real traction. Indeed, as almost 40% of the population gets pushed through university, one can by implications not have super-high standards for normal undergrad courses.
  2. Forget about anything that costs more money. The call for reform only has a chance when times are lean and people are looking for savings.
  3. Forget about anything that needs the tertiary education unions on-side. You see, what are superfluous workers from the point of view of society includes fee-paying members from the point of view of the unions. They are members precisely because they need more protection than their more useful counterparts. Hence unions will be violently opposed to anything that would actually lead to real cost cutting.
  4. Forget about the active help of the academics. Sad to say, but when it comes to it, we are cowards. We have cushy jobs and those of us who are the best placed to push through ideas and reforms have the cushiest jobs of all, meaning they have a lot to lose and almost nothing to gain. We don’t mind telling you to what to do and engender a brain-storm session like this one, but realistically speaking we are not going to do it ourselves.
  5. Forget about mandating anything to do with who works at universities, like ratios of academics to administrators or rules on consulting. The reason why this is off the table has to do with the ambiguous answer to the question which part of government actually controls universities. You see, most things to do with budgets goes via the central government, including HECS fees, central grants, student Visas, etc. Yet, the legal power in universities rests with their senates or university councils. These are ultimately appointed mainly by the local state ministers for education who otherwise have few dealings with the universities in their state. This gives the local ministers the incentives to pay little attention to whom they appoint on these councils whilst blaming Canberra for everything. This is truly a knotty problem because universities exist by local and national acts of parliament. The current situation reflects the balance of responsibilities for education across these two tiers of government. To streamline the outside lines of authority operating on universities would require changes in the relative power between states and the commonwealth (one way or the other), no doubt in the face of furious lobbying by all concerned. To end up with one body that truly controls universities (local or central, does not matter) would then only occur if the problems are so open and so vast that people are desperate. Till then the state ministers have every incentive to look away whilst the commonwealth lacks the actual ability to force university rulers to do their bidding. Hence anything involving the appointment of the top people in universities (the core power) is immediately off the table.
  6. Forget about anything that requires lots of student mobility, such as competition between universities in different cities or even competition between existing universities within cities. The main reason why this is off the table is that mobility in general in Australia is low and students now overwhelmingly stay at home in order to avoid the very high costs of accommodation if they move out. Hence the cost of accommodation and the strong local social ties of their students mean universities have captured markets. They do not need to compete for a large slice of the students and the number of people they do need to compete for (those with strong disciplinary interests or particularly knowledgeable parents) is too low to care about. You can see the results of this captured-market thinking all over Australia: the Perth experiment is basically an exercise in wangling more money out of the people who go there anyway, copying the same experiment in Melbourne where there was a bit of a local competitor (Monash) who made them pay somewhat for dumbing-down their degrees. The ability to muddle the waters via all those fake ‘accreditations’ has meant that the competition on quality is furthermore really a very thin market. Competition on quality is basically now no longer existent for the mass degrees.
  7. Forget about anything that implies elite universities and ‘other universities’. A popular fantasy amongst GO8 scholars is that they should get more money and all the money going to research at other universities should go to them. Pure myth. Why? This is where the egalitarian culture and state governments get into the act: the egalitarian ethos makes it impossible to allocate central money solely to selective entities, unless one takes away the title of ‘university’ from most of the others. Yet that in turn is impossible because we all want our kids to have a university degree even if they are not smart enough to have a real one, which again is an egalitarian wish. So politicians will block any move to take university status away from any of the existing ones.  Moreover, state governments want their local universities to be ‘world leading’, even if they are out in the bush and have few students. There is simply no way that state governments would agree with plans to officially have their universities labelled as second-rate. Quite the contrary: expect all these forces to further level the playing field between all the universities in the future.
  8. Forget about the private sector coming in to save the day, either in the form of private universities somewhere remote or as overseas universities taking over some local entity. Indeed, forget about private sector forces within any of the universities that currently pretend to be run like the private sector. Why? Because the real ‘rent’ on which all the big universities float is neither their reputation nor their captured market of current students, but rather their property. The big inner-city universities are sitting on billions of dollars of prime real estate that they are only allowed to use for teaching and research. Their returns are paltry compared to just putting apartment blocks on the same land. If they were thus truly private or run for-profit, they would cease being universities in a second and just sell all their buildings and land. For the same reason is it simply too expensive for any overseas or private university to buy their way into the Australian system.

Would-be reformers of the Australian higher-education system thus have to be exceedingly clever and creative. They must come up with a way of improving the incentives within universities so that it fires the ones that are useless and increases the power of those more useful, yet they must do this with their hands tied behind their backs. They must brave the current powers-that-be, including the unions. They can neither pour more money into the system, change the legal governance structure, call in foreign or private forces, concentrate research in a select few universities, mandate standards, or count on mobility as an organising force. Oh, and it shouldn’t be too hard to explain either because otherwise no politician will run with it.

All that the would-be reformers potentially have on their side is parts of the commonwealth bureaucracy and limited public and business support. Some of the academics will cheer them on, but don’t expect real help from them either.

Seems like an impossible challenge, does it not? It has certainly been too much for a whole generation of would-be reformers.

I do not have the answers either. I have some vague ideas that I will put in future posts (along with discussing the ideas of the commenters!) but nothing I would put my hand into the fire for. It is really a tough one.

Since they are the only ones with something real to gain, perhaps it should be concerned parents and budding students who should try and think up something that would actually have a chance. Or perhaps concerned businessmen should take up the challenge? Or perhaps a coalition of them?

So, with a clearer picture of all the barriers and incentives, I encourage the readers to put mode ideas in the thread below. The ones put on the comment thread sofar include a couple of quite innovative ones (and I do plan to come back to them!) and it would be useful to see a few more!

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28 Responses to University reforms, part II: the barriers

  1. GrueBleen says:

    So politicians will block any move to take university status away from any of the existing ones.

    Quite. Indeed it wasn’t all that very long ago that a goodly collection of “second rate universities” (aka Colleges of Advanced Education) were shoe-horned into the ‘single-stream’ university structure.

    However, despite your comprehemsive description of misfunction abounding, I’m not sure why we should want to change anything. If we consider a classically simple analysis in terms of inputs-outputs-outcomes, don’t we, in fact, have a good system ?

    Inputs comprise 40+% of the local population plus some lovely fee-paying students from overseas.
    Outputs: many, many ‘degrees’ that the holders can use for their one true purpose: employment ‘signalling’, plus, as always, a percentage of genuine ‘students’ who do go on to tertiary apprenticeships (aka doctorates and post-docs) – though probably too high an incidence of the latter seeing some of the work that supposedly qualifies as ‘research’ these days.
    Outcomes: lots of satisfied, signalling-able degree holders, both local and from overseas (and a healthy dose of foreign earnings to boot), plus a local research community which, in many instances, is world class. Plus any number of well paid jobs (both academic and administrative) that wouldn’t otherwise exist, thus boosting our GDP and our GDP per head at the same time.

    What’s to complain about ?

    • Paul Frijters says:

      Fair points. The main reason for society to care is the money that could be spent elsewhere. If there is 30-40% waste, which is what I believe, then that represents a lot of opportunity cost. We could for instance double development aid with that, and substantially increase teacher pay for primary/secondary school. The waste is a luxury we can only afford in the good times.
      Another reason to care is that you get lower quality education than you could. At the moment, that is not so important because we get skills via offering citizenship to overseas trained people. Still, that huge free gift may not keep coming forever.

      For academics, another reason to care is that it feels weird to be at the top of the academic ladder and still only be the 7th or 8th layer in terms of university hierarchy. No-one likes to be bossed around to that extent.

      • GrueBleen says:


        The ‘opportunity cost’ argument is easy to agree with – more, and even possibly better, or at least better paid, primary and secondary and tertiary teachers would be a good thing to achieve. And though I have absolutely no idea what most of those highly paid ‘administrators’ do (my contact with university happened nealy 50 years ago) it seems very doubtful that they actually contribute much of value.

        But I’m a little doubtful re the ‘quality education’ argument, since I have very little idea what a ‘quality education’ comprises. For those who are simply seeking their ‘signalling’ degrees, they are almost certainly getting all the ‘quality’ that they want or need.

        Something I remember from my younger years (but not who said it, unfortunately) is: “For those who will go on to careers in mathematics, their mathematical schooling is too little, too late. For everybody else, it is too much, too soon.”

        I have this deeply felt conviction that ‘quality education’ is irrevocably inconsistent with ‘single stream’, and even with broad content, education. Perhaps, at least for some, what we need is less ‘education’, and a lot more ‘facilitated learning’. And that would certainly require more ‘teachers’ (at all levels) than ‘administrators’.

        As to your beef about where on the totem pole you sit, I sympathise. One does tend to think that teaching institutions should be controlled by the teachers with others providing such support as is necessary to not waste valuable teacher time – but that, I suspect, is just another of my old-fashioned ideals.

  2. conrad says:

    Paul — I think there are free changes to be made without having to use a chainsaw (as noted before), you just need to find them — for example, cutting back research stuff to just the ARC and NHMRC would perhaps save 5-10% of all administration costs (as a pure guess) by itself (how much time in your own department alone do you think the ERA cost?), yet the money would still be get distributed almost identically. Apart from the public servants running that, who would care? If we want rankings, we have the SJTI anyway. AUQA is in the same boat as are all the happiness monitoring things (which is done for free and far more impartially by outside organizations anyway). So just think of all the government monitoring, think what is duplicated (often more than twice) and think whether we need any of it. This may be a very micro-solution way to look at things, but there is a lot of waste that is related to nothing else.

    Also, I’m not sure why you blame OS students for easy degrees — I’m in an area with very few of them, yet the demand for things to be easy is overwhelming, both within courses and across courses (i.e., students want easy courses and pick degrees that they think will be easy). If anything, in areas like maths, the OS students are keeping the standard higher than it would be otherwise.

  3. Tel says:

    I’ve noticed a trend in the IT industry for people just doing online industry courses (Oracle University for example, or Cisco, or RedHat) and those are pretty well regarded by employers.

    [1] these groups define their own standards, based on the market and how they feel about their own reputation.

    [2] from a student’s perspective Oracle is not cheap, but comparable with university fees when you consider paying HECS, union fees, transport, etc. From the point of view of companies like Oracle, they can write the whole thing off as advertising and then some, but anyhow I would guess that running online courses is chump change for those guys.

    [3] no problem, unions weren’t invited.

    [4] no problem, they already have plenty of in-house expertise when required.

    [5] no need for any of that.

    [6] no problem, Internet has already solved that, emphasis on already, NBN speeds are not required (although faster speeds always find a use somewhere, but in the marginal case, the return in low).

    [7] centrally allocated money not required (well, other than the centrally allocated favours open to all big corporations who can buy lobbyists, but that’s another story).

    [8] Again, don’t underestimate quite how disruptive the Internet is going to be for property owners. We haven’t even started into the swing of online courses and online work-from-home but all of the pieces are already in place other than the cultural acceptance. If we get NBN then probably even moreso, but without NBN still it will happen. Only cultural ties hold us back.

    Actually, some of the large engineering laboratories probably still require real estate, but firstly most Australian universities are cutting back on heavy engineering and also cutting back on lab work, and secondly, it’s a lot easier to setup something like that in a big industrial warehouse well out of the city.

    • Paul frijters says:

      I have been skeptical about the ability of the Internet to really challenge the lecture business model, but perhaps you are right. If distance is no longer an issue the units suddenly do face competition. Still, I tend to believe people go to physical lecture as a precommitment device and a social activity, which you don’t get on the Internet.

      • Tel says:

        I tried one of the Mises Academy courses (mostly because of the awesome certification), and they use some moodle/wordpress hybrid to organise their classes and discussion groups (online text-based discussion, a bit like a blog), etc. I sometimes find it a bit fiddly but all told it works pretty well.

        Plus they use webex to deliver live lectures over the Internet. Once you have joined the live lecture you tend to feel compelled to stick it out, and you can ask live questions in the Q&A section (which is short-message text) so if you don’t bother joining into the webex you don’t get to ask questions. If you haven’t used webex, what you see is most of the screen has the lecture slide, then the corner of the screen shows the little “talking head” lecturer at low frame rate (you can’t read his lips but you can see he is talking) and the audio comes through equivalent to quite a good quality phone call. If the lecturer wants to underline something in the slide, or circle something or draw an arrow then they do it freehand and you see the sketch happening pretty close to realtime.

        I think webex can be setup to do more than that, I’m a newbie user, so I won’t vouch for anything in particular.

        You can review the lecture afterwards from the recording.

        I’m probably more excited by the teaching technology than by the subject matter (History of the Great Depression) but also Mises Academy seems to attract older students, maybe there’s some difference in terms of approach. Mind you, young students are very adaptable and you only have to look at where social media is at to recognize that physical lecture halls and canteens have absolutely no monopoly on social activity and network building. If particular groups of people want to meet face to face there’s nothing stopping them organizing an outing for themselves… even teenagers can figure that one out.

  4. Richard Tsukamasa Green says:

    There’s considerable overlap between 6 and 7. One of the problems with specialised (either as research, or in particular fields) universities in Australia is the same thing that prevents much competition. Bond to the home are strong for young people, but accommodation in this country is expensive, particularly around universities – a very large cost of education that can’t be put on HECS. This effectively gives a huge subsidy to the student who happen to already live within proximity of a university.

    Like you say, many people will frame this as an equity issue (which it is), but it’s also a clear efficiency problem. It means we’d be selecting professions in a large part based on the addresses of the previous generation, which is a poor selection method for getting the temperaments and skills neeeded for a given specialisation.

    I brought this up a few times when Joshua Gans or Stephen King would cite specialisation or competition as magic bullets at Coreecon, but there was no response. But accommodation costs and proximity to family are by far and away the biggest considerations for students, daylight second. We can’t simply hope that people spontaneously change, and the human clay moulded to suit our favoured solutions.

    It’s not the elephant in the room, it is the room (a very expensive one).

    Whether that’d include more on campus accommodation (which is expensive, and most urban universities are land constrained) or an ability to put other costs on HECS (which almost makes the scheme an interest free credit card), it can’t be ignored if one favours competition or specialisation.

  5. john r walker says:

    Re point 1, is there anything that could be done to reduce end demand for fairly content-less degrees?

    • Taking away their subsidies might make a difference at the margins. But people enjoy these courses, so I doubt demand will drop away too much.

      • john r walker says:

        “On Profzi Schemes” suggests two things
        a) that getting people to leave academia is hard (possibly because they lack the skills needed to leave).
        b) that the demand for ‘degrees’ very much is driven by academia.
        which brings me to point 8
        If we allowed Unis to convert say 20% of their real estate to commercial uses it would reduce the size of the Uni sector, making what it produces rarer and more carefully alocated and at the same time provide unis with income that does not come out of public revenues?

    • Paul Frijters says:

      Hi Jim,

      thanks for that. Yes, I agree that devolution of responsibility closer to the coalface is desirable. The question is how to do it? The university hierarchy controls all the assets, so moving to a college-system like Oxford and Cambridge has would involve changing the legal structure of the uni so that schools would own the buildings they use – off the table. Giving more money directly to the academics helps a bit but is engendering a more sophisticated system of taxation of said academics by the hierarchies – also not helping much hence. The existing power structure really makes it difficult.

  6. meika says:

    On Profzi Schemes, (a related phenomena)

    “Are other professional programs worrying about this? Are medical schools running workshops on what career options their med students have for when they fail to become physicians? Do law programs train their students for the many career opportunities outside of the legal system?”

    • Tel says:

      There was a chain letter going around where you can guarantee to improve your citation index by making sure you cite the five articles listed at the bottom of the letter, take away the top article, put your own paper at the bottom of the list and move them all up a notch.

      Send the new letter to five people and tell them to keep the chain going. :-)

  7. Jim Belshaw says:

    Paul, very briefly because I have people coming for lunch. You have to start at the top of the food chain and work down., Unless the Government and its officials are prepared to change their approach, nothing else will change. And its very difficult to do this because the operating assumptions built into the approach are shared across the Government system at all levels. Our present systems of public administration are the horizontal slice. The complex higher education chain the vertical slice.

    While I have written a bit on this, I might try a post that draws together the history, for that’s important. When I talk to current officials, I find that they don’t know what I am talking about because they have grown up in the current system. Even where they do recognise that there is a problem, they also know that they cannot do anything about it!

  8. john r walker says:

    Germany proportionally devotes a lot more budget to vocational skills training than we do and it has real benefits, perhaps the pain of reform of higher education budgets, as a longer term economic /social benefit could be sold to Gov ?

    In Germany, more than 50 percent of all students who were college-bound in high school but decided against university apply for vocational training, and many companies participate in vocational training. Companies provide training voluntarily, and often at their own expense, because they believe that this is the best way to meet their own need for skilled staff. Private companies bear two-thirds of the total costs spent every year on (initial) vocational training in Germany – costs which amount to an average of 15,300 euros per trainee per year. Businesses that take part in the practice consider training their own new employees the best form of personnel recruitment. Training companies save on recruitment costs and the cost of new-employee training. They also avoid the latent risk of hiring the wrong employee for the job. The main benefit for trainees is receiving market-relevant training that improves their chances in the labor market while simultaneously improving social skills and developing personality. Finally, the state, too, benefits from the dual system through easing the burden on public budgets by participation of the enterprises and by keeping the workforce up to date.

    • Paul frijters says:

      Yes, the German vocational gaining program is good, but it took centuries to build up, is completely integrated into their culture and economy, and fits the economies of scale of a large industrial zone. It is not something that can be copied here apart from, as a start, in particular industries and professions with suitable conditions. Given the lower scale here though a manufacturing zone based on local training is somewhat unlikely.

      • john r walker says:

        agree about manufacturing and we are not anything like germany.

        I feel that a core problem leading to the oversupply of uni admin is the lack of a fairly clear ‘German style’ end purpose/use for a lot of the uni ‘training’ that has developed over the decades.
        Paying for the granting of degrees of social distinction to 40% of the population might make everybody feel high…but are public university degree courses in homeopathy, good policy?

        • Paul frijters says:

          I agree with the critique of these fake degrees, but unis are essentially reacting to demand on that point. And in many other countries too do you see lots of demand for dumb degrees, so I don’t think it’s an issue specific to us. What is an issue is that it in Aus engenders a neglect of the top streams, at least as far as I can see: no competition on quality.

        • conrad says:

          People complain a lot about this, and whilst I agree there are lot of dumb degrees, I think the number is less than most people think and I think the “dumbness” of them is not as bad as people think either. The reason for this is that a lot of what is being taught now is just basic literacy and numeracy that high schools are failing to teach. Most people who are not used to kids even in the middle of the distribution don’t understand how poor their actual levels of these often are.

        • Paul Frijters says:

          yes, I agree with that too Conrad. As your earlier reply points out, the demand is across the board and not just from internationals. It is the furious pretense that all the degrees are top that makes it impossible to truly compete on quality on selected streams.

        • john r walker says:

          I definitely agree about the problem of high schools failing to deliver, however it is also the case that quite a few uni graduates also need post graduate remedial help to do what it is that they theoretically know.

  9. meika says:

    the not-so-bright are always with us

  10. Stephen Bartos says:

    Paul, you paint a gloomy picture. In some ways I share the pessimism. I was in the university system but left it due in large part to the culture of excessive administration. In my experience I was obliged to spend more than half my time in unproductive meetings rather than doing anything useful.

    However, there are some ways to deal with the problems you outline.

    1) The concept of earned autonomy could be used as a powerful tool for reform. Its applicability is at present limited because universities are already largely autonomous. But they could have more control imposed, and be asked to earn back their autonomy through reform. This would be possible: put in place much more detailed conditions on funding to universities, amounting in effect to placing them in administration, unless they were able to demonstrate how they were reducing their administrative costs and improving the quality of the delivery of education and research. The politics are reasonably easy: make copious mention of the scandals and problems of universities (a trawl through the media would suffice) and announce a commitment to fix these systemic problems through tighter controls EXCEPT for those universities that demonstrate they can manage themselves effectively. Give them a year to get their own house in order before introducing more draconian controls.

    2) Improve university governance through both incentives both a) positive in the form of more funding (governance improvement is cheap, this could be done easily without adding to budgets by some redirection) and b) negative in the form of financial penalties for failure to reform. There used to be a university governance improvement program, under the previous Commonwealth government; when priorities changed under the current government it quietly withered on the vine. I don’t even think that the Commonwealth meant for this to happen, it was in the interests of universities to try to engage on other concerns and allow governance improvement to disappear off the agenda.

    3) Serious reform of ARC and NHMRC grants processes to reduce the amount of administration required, and tie this reform in to broader university reform. Apply the lessons from the evaluation of the NCRIS program (disclosure: I was involved in that exercise).

    4) More publicity and resources to online reporting of university performance through the My University site (yes, acknowledging all the objections that have been raised to it – it is still better than being uninformed, and the more it is used the better it can become over time).

    5) a Productivity Commission inquiry into university performance.

    None of these are complete answers, and there will continue to be problems while the fundamental question, who owns Australia’s universities, remains contested and unresolved. At present some members of governing bodies of universities think they own themselves and are accountable to nobody. Where governing bodies see their accountability as being to amorphous concepts such as “the community” or “society” rather than to owners then they are less likely to govern well. Note this is not arguing for private ownership, ‘owners’ can be government acting for the public as a whole – governments do this well in relation to many other services. But as you rightly point out the problem in the case of universities is the mismatch between funding and legislative authority which means that the ownership role is not exercised properly. Indeed, the miracle is that universities function as well as they do, and have in many cases good quality governance despite this accountability gap.

    • a lot of good stuff in this.
      Option 1) looks pretty radical and one would think hard to do in a hung parliament. sounds like the sort of thing to do at the start of a new cycle, no?
      Option 2) is also in the mold of DIISRTE taking more of an interest. So far, I have been unimpressed with their lack of awareness of the governance and administration issues in universities. They seem not to know and be offended if you put a guess in front of them. I dont know if they are geared up to take on the role you envisage.
      Option 3) is clearly feasible and desirable. The form inflation is really getting ridiculous on those grants.
      I dont know the 4) one. Cant really comment. It needs outside interest for more information to have much effect and I dont think the interest is quite there yet. Few more scandals maybe.
      Option 5) I can readily agree with. At least the commission is sufficiently removed from academia that it has the right incentives

  11. Pingback: University reform, part III: so what can be done? | Club Troppo

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