Higher education deregulation - what are the long term implications for the education sector?

The proposed deregulation of the higher education sector in Australia is intended to facilitate the development of price competition. Ultimately, the goal is to liberalise the sector to the full force of free market.  This means, higher education would be on the same path of competition like energy, telecommunications and aviation, which were liberalised some years ago.  These industries have been transformed and are totally different now compared to the times of government regulation.

A full deregulation of fees (underwritten by HECS) means that over time students will end up paying more for the price of a degree, the result potentially being deferring from purchasing a home - just like the experience for many graduates in the USA. A complete liberalisation of the higher education sector means a total transformation of the sector that in ten years’ time will be vastly different to the one we now know.

The sector has been a global success.  It has shown the ability to transform, adapt, innovate and commercialise. The evidence is that more than 525,000 students (over 230,000 in HE) opted to study in Australia in 2013, making education Australia’s third largest export ($14.9 billion in 2013). 19 universities are ranked in the top 400 in the 2014 edition of QS World University Rankings. It is not a bad return on the roughly $15 billion annually the Australian Government contributes to support universities.

Over the past 30 years, Australia has waded its way through a series of educational reforms, courting fee deregulation, marketisation and liberalisation. Australia has been an active participant in multi-lateral and bilateral trade agreements, and higher education has been included in the bundle. It is therefore not surprising that the Federal government is proposing a full deregulation of fees for the sector.

The focus of universities will need to change in how they configure their products and delivery. Skills gained by students become critical in measuring success. Many universities are insufficiently equipped to compete on a fully commercial footing given historical costs and few commercial resources.

Government and university leaders need to be fully aware the long term implications of the decisions they make today.

Angel Calderon is principal advisor, planning and research at RMIT University and is a board member of QS World University Rankings.