Obiter dicta by Professor Gavin Brown AO

Commonwealth scholarships

8 August 2003

Apart from self-mockery and a gentle jibe at that cast of mind known as 'Old Sydney', I chose the generic title Obiter Dicta to make clear that this column contains only personal comment and is never delivered ex cathedra. It is as well to give that reminder, because today, I have decided to tackle the issue of full fees.

It is timely to address the subject because I estimate that the recently announced Labor Higher Education Policy would, in a steady state, deny some 2,000 young Australians the opportunity to gain a publicly-subsidised place at the University of Sydney. The Nelson Review, by no means perfect on the issue either, proposes some substantial changes to the present system, providing HECS-style capped loans at a real interest rate and raising to 50 per cent the number of fee-paying places that may be offered in each course, additional to our quota of government subsidised ones. At present, we have well over a thousand students who have opted to pay full-fees and I would expect that number to double in due course.

At the risk of boring those who are familiar with the technicalities, let me remind everyone of the present system for undergraduate places. There are three categories. First, there are Australian students who pay HECS at one of three levels depending on the discipline. The cost to the student, which may be deferred to be recovered through a tax surcharge on subsequent income, is roughly one third of the full cost of provision. The Government provides a contribution to the remainder of the cost by allocating each year a fixed number of places, and the University rations these on the basis of Higher School Certificate performance and, where appropriate, other factors. Demand heavily exceeds supply. Secondly, we have overseas students who are required to meet equivalent entry standards and to pay the full cost of their course. Thirdly, we have full-fee places for Australian students who are also required to meet the costs of their programs, although the charges are somewhat less than international fees.

These are, of course, additional to our allowed government quota and are at present restricted to 25 per cent of that quota in each course. These students may be admitted with scores up to 5 points lower, albeit, in practice, most fall just below the usual cut-off.

It is the last-stated mechanism which is often characterised as inequitable, but I argue that this is largely a matter of presentation. In all our courses we are obliged to exclude students who are perfectly capable of undertaking the program because there are not enough places available. All of those who opt to pay full-fees are well able to undertake their program of choice and could have obtained a government-subsidised place in another course.

Thus, at present, more than a thousand additional HECS places are being freed up for students who have performed less well.

Perhaps I can make the argument more clearly by re-conceptualising matters. Think of all Australian students being liable for full fees. Those with the best track record on entry would receive effective fee-remission by gaining one of the limited number of HECS places. Those who still qualified competitively for entry but missed the government quota places could opt to pay and the University could offer a range of fee-remission scholarships. Some would still miss out, but the situation would be similar to the old Commonwealth scholarship scheme, which many now see as having promoted both merit and equity.

This analysis points to a flaw in the present government's approach. Because the fee-remission implicit in the award of a HECS place is notional, it does not count as taxable income (and that is good) but any fee-remission granted by the University, for socio-economic or other reasons, is regarded as taxable income (and that is bad). Accordingly, an artificial poverty trap is created; whereas a properly designed and regulated full-fee system would be socially progressive. As I have already noted, this is no radical new idea because it revives memories of the old Commonwealth scholarship scheme.

Labor's abolition of full-fees would cost our university about $20 million per annum and we would have to cope with that through a mixture of staff redundancies and increased international student recruitments. I am unhappy to be faced with the twin threat of cutting staff and Australian student places for the sake of a point of debatable ideological principle.