We live in the age of education democratisation. With the
advent of online education providers, people can study the degree and the
skills they like without having to go to campus.
We all love the idea. My issue is with how universities
are funded and whether they have an unconscionable advantage over private
sector training organisations – particularly here in Australia.
Australian tertiary institutions are largely funded by
the Australian Government based on the number of students they have enrolled.
They also receive grants from the State governments to set up new schools
(which usually gets spent on new buildings, rather than academic and support
staff, but that’s an issue for another time).
So, basically we have institutions where the physical
buildings, the salaries and all other costs are funded by the taxpayer.
Let me give an example. Here in Queensland the State
Government set up a training provider panel a couple of years ago to provide
training to public employees. The State
Government has a budget attached to each employee of $5000 per year. The training
panel criteria was that training could be provided at approximately $250 per
person per day, and that all training would count as credit towards a university
degree.
Even though the most effective forms of training for the
public sector are likely to be vocational courses (i.e. applied skills) this
move has provided two outcomes.
1) The
private sector can’t compete because universities are indirectly and/or
directly subsidising courses through taxpayer funds, and
2) Universities
have expanded their role into vocational education, taking away a chunk of the
market for private sector providers.
Yes, the State Government has saved costs, but it has
also locked in a monopoly arrangement for universities – which in the current
phase of democratisation of education seems quite short-sighted.
On top of this, we are seeing those same taxpayer funded
resources used to set up online training.
In case you think I am blowing steam about a non-issue,
let’s look at how government owned power generation companies are treated.
Government owned power generation companies have access
to a lower cost of capital than their private sector competitors due to an
implicit government backing. They also have access to large amounts of legacy
assets which provide both the cash flows and the people to work on new power
projects.
In recognition of the unfair advantage that government owned
power generators have, they are now forced to use private sector equivalent
pricing for their services and on new projects. They are legislated in black
and white on these matters, and in some instances face a competitive neutrality
fee to help enforce this.
Ports, rail and other government owned businesses face similar regulations.
To quote the Queensland Treasury - “Competitive neutrality means that government businesses
should not enjoy any net competitive advantage over their competitors simply as
a result of their public sector ownership.”
While we don’t call them government owned, given the
funding model for them, aren’t universities really the same thing.
