Video interview with Jan Libich

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Jan has posted a recent interview with me on economic policy. It ranges from stuff that Joshua and I did a decade ago to my views on university fees in the recent budget. The link is here.

12 Responses to "Video interview with Jan Libich"
  1. Excellent interview. You should do a tour of Australian media. The ABC should be picking up these views. I have no idea who was advising the government on HECS, but the policy hasn’t been thought through by professional (i.e., academic) economists. I think that there is a priority to having coherent scientific perspectives on this policy aired publicly and frequently. I view this urgency in the same way that I viewed the issues relating to the current account debate and the John Pitchford efforts at bringing some professional (i.e., academic) reasoning to the table.

    • I do not think that this government has interest in the expertise of professional (i.e., academic economists) or, God forbid, coherent scientific perspectives. You see it across the spectrum (e.g,, regulatory framework for the not-for-profit sector, or pricing of environmental bads) where professional economists are probably overwhelmingly in basic agreement.

  2. I agree with your argument (around minute 38) that the present governance arrangements with the university sector have lead to capture and unaccountability by the university hierarchy. It is a major problem and, as you say, is going to mean the coming fee liberalisation will lead to higher student fees, but not better education for the students. Unfortunately, the ministry in Canberra seems completely uninterested in governance issues and seems rather scared of the lobby of Vice-Chancellors.

  3. In fact, I think that there should be some lobbying by professional (i.e., academic) economists for an economic enquiry about university governance. I think that such an enquiry is likely to be no less important than the Campbell enquiry on the early 1980’s of the deregulation of the banking sector.

    • who would be suited to do such an inquiry? The Productivity Commission could do one off its own bat, but in order to be useful it would have to backed by politicians and civil servants. There seems to still be a lack of recognition in Canberra just how bad the problem has become. I talked to a senior education civil servant and from that I got the distinct impression that neither the LP nor the ministry had realised what the real problem is, and when confronted about it displayed fear of the VCs. They seem to take their information and their cue from exactly the wrong people.

      • The argument now Paul is that the deregulation of universities have made the issue of university governence urgent. One cannot remove caps on HECS without some thinking about university governance. Stephen makes a good point about this.

        I think that a Senate enquiry is needed. How can the government feasibly afford institutions unlimited potential subsidies without thinking about how these institutions are regulated and governed? It would be unconscionable to remove the caps on HECS without an inquiry.

        I agree with Stephen, it would be pretty simple to figure out the effects of the proposed new HECS regime on the incentives of private universities. But no one knows how deregulated-unregulated public universities are likely to react.

  4. Unfortunately the PC would need to be requested by government to do an inquiry into university governance.

    Of course, as we work at group of 8 universities, we are all hopelessly conflicted out. The policy will be a big win for the Go8. Rough number? Say fees for undergraduates rise by $10,000 on average over all degrees. In 2011 the Go8 universities had 213,366 undergraduates. Say that 20% of these are international students so the domestic student number is about 170,000. So that is an extra $1.7b for the Go8 universities. The total revenue for the Go8 universities in 2011 was about $10.5b. So the ability to set fees on an uncapped basis is about a 16% boost in their revenue.

    These are rough figures, but clearly the Go8 will be big winners. However, I cannot imagine ANY other policy that would allow public institutions to raise their revenue by this level without appropriate procedures and controls in place to ensure that the revenue is used appropriately.

    • You make a good point Stephen. At best we are likely to see what I have been terming “Investment Universities,” hybrid public-private institutions whose principle role is to manage massive (inefficient) public subsidies. I’m sure that investment banks like Macquarie bank are at present thinking about the kinds of University partnership opportunities that will realise with the new uncapped HECS regime (undoubtably, now a very sophisticated kind of government-backed derivative).

    • Lots of non-Go8s will be winners too. If Go8s raise their fees $10,000 (which seems a conservative guess in places like Victoria and Sydney — presumably some places like Melbourne U may opt to take less students for more, as was their mantra for some time), then non-Go8s can probably put theirs up 60-70% of that and still be ahead in most areas after the 20% cut. Probably the only areas where this wont work will be in the Funding 4 tiers with lower demand subjects (e.g., mathematics) and especially those that cost more money to run due to lab based stuff (e.g., engineering, some science areas, languages), presumably some of which will simply get cut (but they would have anyway in the long term).

      The biggest losers will be students that fall prey to the bottom-feeding frenzy that will emerge, as it did with great speed in Victoria with the deregulation of the lower-level education providers, which was then re-regulated due to the cost blow-out it caused (and dodgy stuff). Perhaps that is when there might be some inquiry into what goes on, although it seems unlikely. All that happened in Victoria is they simply stopped subsidizing the bottom-feeding groups at the expense of picking winners in the rest of the system with a mindset appropriate 1985 (i.e., just “trades”).

  5. hmmm. You are right that we have conflicting incentives and that this will go for most of the academics we know. It would almost be best if the pressure for an inquiry came from industry, like the Australian Business Council. They have been complaining about waste for years and here is a clear case of waste-in-the-making.
    The problem remains though that ‘Canberra’ seems to get its information from the wrong crowd at the moment. One needs a campaign of sorts.

  6. Grattan is doing work on the fees issue. Fortunately we have been planning for this for years and have a fair amount of historical fees data. Pity we are going to be working from a near blank sheet for empirically-based Australian analysis…

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