Conclusion to Knowledge Economy

[Full chapter available here]

This chapter has sought to interrogate some of the great mysteries of the 1980s for higher education. Things like: why did change happen so quickly? How could a Labor government succeed in achieving, in the late 1980s, what university opposition had made impossible for a Liberal government less than a decade earlier? What exactly were the causes and patterns of ideas that most people can only describe as ‘floating around’ in that decade? The answers lie in the confluence of discursive and policy elements and their intended and unintended consequences. If at any point they had been floating, eventually they coalesced to focus on two things: a transformation of the structure in which knowledge was produced and a change in the values attached to its production.

Entrepreneurialism and professionalism became values appreciated in academic staff over (what Murray had called) “knowledge intoxication” – indeed, to be knowledge intoxicated in the 1980s was more likely to be seen as self-indulgent, wastefully pursuing ‘hobby’ research. This shift was reinforced and extended by policies that shaped a competitive academic environment. It was the entrance of competition that gave government control over knowledge. When academics internalised financial scarcity as their own inadequacy, they handed authority over the value of knowledge to the government. Institutions, unions and government then together transformed the structure of the community of scholars to facilitate an environment that privileged the moment of exchange in the production of knowledge over the value of knowledge itself.

As Minister for Education from 1987, John Dawkins functioned as higher education’s bogeyman. It was widely stated that each change might threaten the integrity of university knowledge, but lofty ideals seemed impossible. The Dawkins excuse could always be invoked and in so doing, historical mythmaking ensued. The anti-Dawkins discourse that roamed university corridors perpetuated a myth that universities did not jump, but were pushed into an entrepreneurial, managerial and increasingly profit-focused world. It is more truthful to say that (partly from fear of Dawkins) they pushed themselves – and went far beyond what Dawkins could ever have achieved.

That government took control of knowledge in the late 1980s was in part a consequence of the loss of legitimacy universities experienced in the 1970s. That the university had no obvious capacity to claim its traditional role in legitimising knowledge left a power vacuum that government was only too happy to fill. This is not to suggest that the delegitimisation that resulted from 1960s and 1970s protest movements was wrong. Rather, the movements had not (and could not have) predicted that government would use it to reaffirm the economic functions that had been increasingly connected to university knowledge since the Second World War.  More, that government could thus claim a right to control it.

Government had no claim to authority over knowledge either, ordinarily. But it was in the connection between university knowledge and economic development that the Commonwealth government located its initial claim to legitimacy. The role of knowledge in the economy – a role that had been increasing as the nature of the economy changed – gave government in the 1980s some rhetorical justification for directing knowledge. However, it was insufficient. The control of knowledge depended not only on the right to deploy it, but also on the right to select it: to decide what (quality) knowledge was. With no expertise to use as its foundation, government turned to the logic of the market. Market forces would determine and demonstrate quality knowledge. Significantly, government policy did not use undergraduate student fees to this purpose (though HECS certainly made it easier to do so later). Rather (and this is the topic of the next chapter), both university and government policies would draw on a different commodifying concept to evaluate quality knowledge: intellectual property.

The end of the community of scholars

In my interview with Robert HT Smith, he said:

John Scott, who was a lovely man, Chair of the AVCC at the time, used to proudly say he was a member of FAUSA. I remember one of my earlier meetings of AVCC, they had a show of hands for who is a member of the union. Everyone put their hands up.

The membership-based collectivity of the Federation of Australian University Staff Associations functioned as a signifier for the community of scholars. Membership enabled the Vice-Chancellors to identify themselves as primus inter pares – first among equals, but inseparable from their staff. Robert HT Smith thought they were mad: “now I know I am in cloud cuckoo-land,” was his response to that meeting, “I mean, you’re either management or you’re union”. He represented the new way.

Tension had long been growing in the staff associations, focused on the alignment or opposition of the staff with university leadership. Some members of the Federal Association had been keen since 1973 (when a salaries tribunal had been established) to convert that organisation into a formal union.  They were not a majority – it had been voted down in 1981.  Apprehension incubated in the individual staff associations as well. Sybil Jack describes the reluctance to unionise felt by members of the Sydney Association of University Teachers as a result of “gentlemanly” sentiments towards university government, invoking a political and class distinction between the approaches.  This is probably fair. But it was not the only thing going on.

Reluctance to unionise was related to the subtle and vulnerable structure that regulated the community of scholars: the gift economy.  The ethic of the gift  configured the complex system of obligation within the universities. Teaching, supervision and peer review are tasks that were structured by the gift ethic.  In a pre-managerialised university, the same gift economy governed the monitoring of office keys, laboratory equipment and university finances.  The economy of gift giving and the obligations each gift engendered created the ties that gave academics enduring membership in a community of university-based intellectuals.  The system of obligation stretched across international networks of scholars, binding disciplines and individuals in productive ways. Equipment, specimens, artefacts, gossip, employment opportunities and graduate students, Tamson Pietsch shows, traversed networks of individual scholars, irrespective of national and institutional alliances.  Archived papers of former academics are swollen with letters – requests for advice, debates of ideas, comments on publications and drafts, invitations and references – all traces of gifts and the debts each gift incurs.  The gift was the intangible substance that defined, beyond individual institutions, the idea of the university.

This is not to advocate nostalgia for academia’s gift-giving: after all, a gift economy is an economy nonetheless.  In fact, it has distinct disadvantages in some instances. The gift economy, for instance, has often led to the exploitation of (especially, but not exclusively) laboratory-based graduate students: power structures where authorial credit is the obligation of the student to their supervisor as a kind of gift-exchange, regardless of actual intellectual input.  Gifts in a gift economy are not given freely. Nevertheless, the system of gift-based obligation worked well (by and large) for the academic community for three key reasons. Firstly, exchanges did not have to be equal in the instant they were made: a gift was deposited into the network, but would rarely be returned via the same source.  It relied on the richness of the community (richness in this case meaning knowledge, equipment, scholarship) and obliged each member to contribute to it. This created its second benefit: it placed the idea of the university at the centre of its economy, so that returns were gains in knowledge. And thirdly (and this is the point most relevant to what Vice-Chancellors and unions were doing at this moment in Australian university history) it bound the leadership of the university to its scholars in their shared responsibility for the protection and promotion of knowledge as the substance at the university’s core.

So of the changes forged in the 1980s, the repositioning of academic staff is possibly the most important. A gift economy is regulated by the risk attached to being excluded from the community.  But something was changing. The probability that someone would fail to honour her or his obligation was increasing. Trust crumbled. Vice-chancellors, wishing to appear to be efficient and productive in response to public pressure, squeezed harder. Staff associations braced themselves. They had been preparing for this: some of them, anyway. The Orr case, the Ward case and even Knopfelmacher had shown that they “had teeth”, as Ken Buckley put it.  Formal unionisation seemed inevitable. A union could still be consultative, one proponent of unionisation had said in 1979:

A move into the industrial arena does not imply any radical change in universities. Despite what the scare-mongers say, staff and university representatives can still sit down together and work things out. The existence of such an option may of itself encourage greater consultation in the future – indeed we believe the art of industrial relations is to avoid rather than encourage confrontation-arbitration.

They had misunderstood. By labelling the collegial drive “gentlemanly”, pro-union members mistook the complexity of the gift economy for civility and good manners.

Adding to the turmoil, The Australian Council of Trade Unions (ACTU) was restructuring. A decline in union membership across all Australian industries prompted them to reorganise, starting with amalgamations of small unions into larger bodies that would represent whole sectors. Under this crusade then, they intended to establish a large union for the whole of education, but higher education asserted its own distinctive issues. The various staff associations (also reflecting the end of the binary system of colleges and universities) merged to form the National Tertiary Education Union.  As a formal union (and in such tumultuous times) they were then positioned in a structurally adversarial relationship to university leadership. Ironically, this was the reverse of the position that had originally given the staff association strength. They had resisted the master-servant relationship established during the Orr case because it destabilised academic freedom (as seen in an earlier chapter). But formal unionisation decisively located academics as employees, invoking the employer/employee divide.  The shared vocation of protecting, upholding and promoting knowledge was reduced to its paid obligation. Without the community of scholars the university would dissolve into nothing. However, for two reasons, the collapse of the community of scholars would never be absolute. One is that the idea of the university was fundamentally related to academic motivation: many aspects of the gift economy would be perpetuated through that alone, though always in tension with the new structures.  The other reason is located in the legal character of the universities. Their Acts that instated the existence of the public institutions said that the university was its members, a membership dominated by academic staff. 

Robert HT Smith told me that by the end of the 1980s no vice-chancellor identified as union.  From all to none in less than a decade: it represents a major shift. But it was not formal unionisation that changed the vice-chancellors. Public and government scrutiny of the internal efficiency of universities prompted the vice-chancellors to change their approach, which Marginson and Considine describe so clearly.  As well as promoting greater entrepreneurialism, the universities ran themselves in more managerial and less collegial ways: collegiality as an old-fashioned idea, was assumed to be inefficient. Managerialism necessarily contributed to the employer/employee divide. The gift ethic that bound the vice-chancellor to their academic staff crumbled. Academic work was now firmly labour in exchange for money.

This exacerbated the problem of scarcity, which as I have already suggested, had been pushed out from the sources of funding to institutions and individuals as a quantitative indication of their worth. Universities, departments and individuals were compelled to demonstrate their value through competition. It was an approach that contradicted the gift ethic: it was difficult to maintain gift-based obligations with those with whom one must also compete. It thus disrupted a larger idea of collegiality as well as the one that used to govern the university: consideration of issues at (say) department level could no longer be based on its impact on the university as a broad idea, on the integrity of the system that maintained the nation’s “intellectual health” (as Ashby had put it).  Rather, self-interest would be expected to frame decisions that would enable it to compete, leaving the integrity of knowledge a secondary consideration. They made a fundamental change to the university environment. In this structure knowledge would no longer flow like gifts, it would flow like money.

[As usual, references have been removed for this posting. Please contact me if you would like them.]

Tuition fees that failed to commodify

Dawkins reintroduced tuition fees. At the time, this was a major issue, provoking student protests and heated debates. Simon Marginson, who at that time was working for the Federation of Australian Staff Associations, describes it as a key commodifying event: it seems obvious then that it should be central to this thesis. It is not, for reasons I will explain shortly. However, discussion and debate that surrounded tuition fees had significant impact. It centred on the public benefit of knowledge and education, which participants in the debate considered to be central to the question of fees.

Simon Marginson understands the public good of knowledge in terms of public ownership – the danger of this perspective is that it makes it sound as if all knowledge needs to be owned, when perhaps it is better not owned at all. But for him, the public ownership of knowledge is congruous with the 1980s staff association position that regarded free education as a right of citizenship. If knowledge is publicly owned, it should not be privately sold. Not only is it obvious that successive governments have happily sold public assets, but Marginson’s logic would emphasise education’s exchange value, having a commodifying effect. He attempts to address this by describing knowledge as a non-market good, stressing that possessing knowledge does not prevent someone else of having it. The same applies (for example) to music download, which has a massive market: it does not prevent commodification in the way Marginson would like.

Public good understood in a different way – not as public ownership, but as public benefit – was losing its persuasive power. What Ian Clunies Ross would have called “civilisation”, economists of the 1980s started to call “positive externalities”.  For free market economists, the existence of positive externalities was insufficient to justify public funding. Many commodities produce positive externalities without requiring state interference, they claimed.   Higher education might be good for the public, but public subsidisation interfered with the value system that a market economy would supply, a system they felt would better regulate quality.  Similarly structured arguments were used in reverse. Opponents to the market system, especially the Federation of Australian Staff Associations, claimed that the values of the market disrupted the value system that promoted the intrinsic value of knowledge. 

Neither side was happy then, with Dawkins’ scheme for student tuition fees: a system designed by Bruce Chapman for the Wran committee on higher education funding.  The Higher Education Contribution Scheme, known as HECS, failed to commodify education in the sense free-market economists had wished, since the fee was still subsidised and state regulated and would only be repaid at a rate deemed reasonable to graduate’s earnings – and never at all if they did not reach the income threshold or if they moved permanently overseas.  Don Watts tried to make the best of it:

Thinking parents will surely make sacrifices now rather than allow their children to inherit a tax liability.

While for the Federation of Australian University Staff Associations the new fee violated their long-held insistence on free education, the claim of higher education as a right of citizenship had lost its traction in government. Indeed, post-Whitlam Labor had for some time been concerned that public funding of university degrees drew on the taxes of all to systematise financial and social privilege. 

Analyses of the impact of HECS have failed to show the calamities that its opponents predicted. A small reduction of participation by mature age women is a loss indeed, but does not show a widespread shift in higher education towards the privileged.  Except that HECS perhaps made it possible for the Howard government to introduce full domestic fees (a phase of university history just beyond the scope of this thesis), Dawkins’ tuition fees had little impact at all.

Scarcity as inadequacy

The Vice-Chancellor at the University of Melbourne, David Penington, knew that government had seized control of knowledge because he had closely read Dawkins’ research policies. These had originated in Don Aitkin’s “road to Damascus conversion”:

I was beginning to react as a political scientist to the notion that I found everywhere in the universities that this was their money. It’s not. It actually comes from taxpayers. There has been an agreement that some of the taxpayer’s money will go to research because - we’re excellent? No! Because it is in their interest…it will lead to, in some tangible, definable way, a better Australia, a better society for them.

The way Dawkins imagined academics meant they could not be trusted to identify tangible or definable outcomes. $65 million of recurrent funding was removed from the universities to the Council for competitive redistribution on the basis of national priorities. This civic role for university research shaped Aitkin’s contributions to the Dawkins reforms. National priorities to inform research decisions were related to his idea that that academic work should become more professionalised and less dependent on the independent scholar. 

Some years working with the Australian Research Grants Scheme had led Aitkin to believe that research funding was “spread too far, too thinly” and that competitive allocation would enable the “best people” to be funded “properly”.  It was an idea that resonated with other 1980s discourses around the equation of financial with academic value. How could you tell which research was “best” if everyone was funded equally? Funding was starting to function as a signifier of value. Excellent research must have a higher exchange value, according to the rising logic. More, the exchange value implied that funding fewer projects at a higher value exhibited a system dedicated to quality. It also meant that funding more projects at a lower value denoted a system dedicated to mediocrity: 

“When I tell them [US-based academics] we fund 65 per cent of all applications they say we didn’t realise Australian scientists were so good”, Professor Oliver says. “But they have a grin on their faces when they say it, because in America you have to be in the top 25 per cent to get your money.”

Academics who opposed the idea of increased competition for scarce resources (since their arguments were assumed to be self-interested) risked exposing themselves as unable to compete, as not the ‘best people’ to do research.  Competition pushed the problem of scarcity back to individual academics. Competition pushed the problem of scarcity back to individual academics. If there were good enough, they would receive funding. In this way, government policies leading to financial scarcity were internalised and institutionalised as inadequacy.

A kind of perverted Bastille Day

By the Federal election of 1987 each of these discursive elements were converging on higher education. Entrepreneurialism, increasingly utilised by academic staff as a self-regulatory ethic, was offset by a more controversial, but highly vocal call for widespread implementation of privatisation initiatives and (more importantly) its associated values. These issues were given focus, in the minds of many nervous members of the higher education sector, by Ryan’s request for a report on efficiency and effectiveness, which the sector thought would act as a judgement and a mandate for what would happen next.

The review of efficiency and effectiveness in higher education, which reported at the end of 1986, was a firmly Canberra-based affair. Hugh Hudson chaired the review – he was then Chair of the Commonwealth Tertiary Education Commission (CTEC). Peter Karmel was a prominent member too: he had then moved from CTEC to Vice-Chancellor of the Australian National University. There were a few other members too, but in Canberra this was understood to be Hugh Hudson’s report, conducted though it was under Karmel’s shadow.

Canberra is in every possible sense a city apart. The character of this separateness is central to the 1988 reforms of higher education. When I went to interview the first chair of the Australian Research Council, Don Aitkin, he gave me a tour (he is now chair of the National Capital Authority and felt it his duty to give me a sense of “my” capital, he said). Aitkin told me that every piece of Canberra is designed, every flowerbed considered, each roadside monument a part of a city that is one great work of art. Driving to the edge of Canberra (which does not take long, it remains an oversized small town) the artwork simply stops, becoming bushland. Robert HT Smith – Bob in person, but not on paper – was invited in 1987 to move there. He told me it was a strange world, where the correctness of the process was appreciated more than the value of the outcome: where decisions were considered in light of other Canberra colleagues rather than their impact on the world beyond its surrounding protective hills. His wife didn’t like it, so they chose not to stay more than a couple of years.

In some of Canberra’s back rooms, around a year before Aitkin and Smith were encouraged into their new prominent roles, advocates for change in higher education were despairing over both Hugh Hudson’s “E & E Report” and Susan Ryan’s sympathetic approach to the universities. The efficiency and effectiveness review had failed to describe lazy, layabout dons in antiquated oversized bureaucracies. It did not tell the truth reformers wanted to hear. Instead of affirming their conviction that full Commonwealth funding over the decade since Whitlam’s reforms had made the universities fat and indolent, the report said:

There have been substantial improvements in the efficiency and effectiveness of higher education over the last decade. On the other hand, the scale and rate of change, coupled with the pressure on resources have also had its effect. To some extent, morale has been affected and standards reduced.

The report was a symptom of the system’s disease, not a diagnosis, thought the reformers – though it did outline several ways institutions should continue to improve their efficiency. Robert HT Smith told me that the whole system was infected by what John Dawkins referred to as a type of “terrified conservatism” – though Smith thought the E & E report had more value than Dawkins believed.

After the 1987 election it was what Dawkins thought that would matter. Susan Ryan was moved sideways for Dawkins to take over a super-portfolio consisting of industrial relations, workplace training and education. “Ossified bodies incapable of adaptation” was how Dawkins saw the older universities, and no report would persuade him otherwise.  In fact, a report that described these antiquated institutions even slightly favourably incriminated its authors. CTEC, it was felt in Canberra, was all together too cosy with the universities.  The world was changing and knowledge had a central role in it. Surely the spoilt, ineffective public bureaucracies that Dawkins saw could not be trusted with the ownership and control of knowledge?

After 2000, when Dawkins reviewed Simon Marginson and Mark Considine’s book The Enterprise University, he expressed surprise at how influential they considered his reforms to have been. Changes to the internal management of universities, for example, were things he could not have influenced, he claimed, since they fall under the power of the States.  In this episode of Australian university history, causes and effects, triggers, scapegoats and convenient excuses are all difficult to untangle. Dawkins himself engineered some of this murk, starting with the deliberately mysterious establishment of an almost-secret group of advisors.

Seven people received phone calls or visits from Dawkins or one of his senior staffers shortly after he was made minister. “I knew every one of them”, Don Aitkin said: they had a lot in common. “If he’d asked for advice on research” in the normal way, Aitkin told me, “he’d get it from eight different areas and they’d all disagree. What’s the use of that?” These were leaders in the university system that Dawkins knew he would agree with. Hugh Hudson, suddenly finding that he and his efficiency and effectiveness report had been marginalised in Canberra, “outed them”, calling the group the “purple circle”.  Helen Hughes, Don Watts, Don Aitkin and Robert HT Smith joined Mal Logan from Monash, Jack Barker from Ballarat College of Advanced Education and Brian Smith from the Royal Melbourne Institute of Technology over dinner to plan the reform of Australia’s higher education sector.  Red wine flowed, fuelling conversation. Don Watts – still yet to suffer the launch of Bond University – was as irrepressible in person as he had long been on paper: discussion was lively in any room he inhabited. Dawkins’ staffer Paul Hickey abstained, taking the notes that would become the Green Paper. Drafts of it were circulated on more sober days, when there was time to reflect. When everyone agreed, it was released.

The publication of the Dawkins Green and White papers and their reception by the universities, Colleges of Advanced Education, Institutes of Technology and the Federation of Australian University Staff Associations is well known.  The moment of the Dawkins reforms and their consequences are recounted and memorialised by the higher education sector like a kind of perverted Bastille Day. Certainly the dissolution of the binary system so that all institutions became universities (many needing to amalgamate to qualify), the instatement of a new system of tuition fees, deregulation of postgraduate coursework (added to the earlier deregulation of international education) and centralisation of research funding amounted to a revolution, which is what Peter Karmel called it. 

The sector long knew something was up. The not-so-secret Purple Circle had signalled change was on its way. “I deliberately made it a bit mysterious”, Dawkins later said.  Releasing revolutionary plans after a nervous wait set Dawkins up as higher education’s bogeyman, triggering widespread, and perhaps panicky, changes. They were changes that, as Dawkins himself observed, went a long way beyond what he was constitutionally permitted to instate. He became the Vice-Chancellors’ scapegoat and their convenient excuse. Dawkins became the effect and the cause of all of higher education’s problems and solutions. Apart from the Purple Circle Dawkins felt no compulsion to persuade, for reforms were unstoppable once revolution had started. Government had stormed the universities and taken control of knowledge.

Sheltered workshops for intellectuals

"The universities are essentially large-scale worker-cooperatives funded by the state: sheltered workshops for intellectuals"

Such unflattering descriptions were common in 1984, when Monash’s Centre for Policy Studies held an invitation-only conference entitled “Withering Heights”. The title indicated their belief in a growing stagnation by an irrelevant higher education system. Academics had become associated with the worst of public service inefficiencies, an idea confirmed in early 1980s popular culture via the BBC series Yes, Minister, which portrayed a civil service that structured incentives for wastefulness.  It was only the commercial ethic of competition, many claimed, that inspired individuals to work efficiently and productively. Guy Redden has shown that the economic theory of rational choice gained a new importance in this period, fostering a belief that structural incentives determined “efficient or inefficient work choices, regardless of individual agency or intrinsic motivation.  This language led advocates of change to agitate for government policies that would support a more competitive, commercially oriented academic culture.

Government interference in the universities was on its way. Prime Minister Malcolm Fraser had been mumbling about higher education for some time when he implemented funding cuts and forced amalgamations amongst the Colleges of Advanced Education. There was talk of reintroducing fees, which had been removed under the Whitlam government in the early 1970s. Murdoch’s Higher Education Supplement regularly featured letters and articles from university members on the importance of university autonomy. Grotesque descriptions in the media of “layabout dons” led many – including Peter Karmel – to ask: what incentive is there for academics to perform?  By December 1981 the Fraser government announced an inquiry into tenure.

These acts provoked the staff associations into action. They protested the “razor rule” of forced amalgamations and funding cuts and threatened that universities would not collect fees if government imposed them on students.  But academic reputations had fallen so substantially that government and the public saw staff association measures that had worked in the past as the pathetic bleating of an irrelevant, elitist and probably over-funded academia. Where the staff associations were most successful was in their vehement opposition to measures that would impact tenure.

Tenure – the right to a continuing academic position – is central to academic freedom. As Sir Keith Murray had said in 1957:

The public, and even statesmen, are human enough to be restive or angry from time to time, when perhaps at inconvenient moments the scientist or scholar uses the licence which the academic freedom of universities allows him, and brings us all back to a consideration of the true evidence.

This academic freedom is only possible when academic staff feel sufficiently secure in their employment to produce evidence at “inconvenient moments”. So in the defence of tenure, the staff associations were able to combine traditional trade union concerns over employment conditions with academic concerns with knowledge. The Commonwealth government was not easily dissuaded, however – and nor were a selection of people within the universities. Opponents to tenure considered academic freedom to be no more than an old-fashioned tradition and claimed that, far from supporting quality work, tenure supported laziness.  There was no incentive to “perform” in a secure employment situation, they claimed. The rational choice, according to economic theory, was to do as little as possible.  Many – both in and out of universities – assumed that new employment structures, free of tenure, would encourage increased efficiencies. Economist Helen Hughes suggested that academics that claimed threats to tenure also threatened academic freedom were protecting “past privilege”. They constituted, she said, a “highly articulate and literate”, but fundamentally self-interested, bureaucracy.

Tenure was a “question” that investigations never seemed to be able to give a right answer to. A senate inquiry into academic tenure was launched in 1981  only two years after an inquiry had made (but not implemented) a range of recommendations regarding tenure.  The new inquiry heard, in 1982, that abolishing tenure would threaten academic freedom and would “not solve the problems of incompetent, lazy or disaffected staff”.  Despite this, such was the strength of the anti-tenure feeling that within one year of the inquiry’s conclusion, the question of tenure was re-opened yet again.

After the election of the Hawke Labor government in 1983, pressure kept mounting for government to restructure higher education in a way that would coerce academic behaviour. Minister for education Senator Susan Ryan, who was a supporter of university autonomy and academic tenure, chose to interpret this pressure as a desire to ensure the efficiency and effectiveness of higher education – a much broader and more diplomatic question, she felt, than that attached specifically to tenure. There were students, displaying the haughty side of academic culture, who pointed out that efficient and effective knowledge carried absurdities: “53 concepts per hour is not good enough…” read one cartoon.  Nevertheless, in October 1985 Senator Ryan announced a review of efficiency and effectiveness in higher education.

The discourse of privatisation

I have just been working at restructuring some of this chapter, so much of this posting is a re-work of an earlier (and now deleted) post. I am trying to show the influence of privatisation even though it failed quite hopelessly. If you have advice for me, please let me know!

One of the key economic concerns of the early to mid 1980s was Australia’s low export ratio. Helen Hughes, based then as Professor of Economics at the Australian National University, was keen to reinvent higher education as an “export market” to help improve the national balance of trade – and in so doing, improve the perceived contribution and thus reputation of Australian universities.  It was a view the government shared. As a result, in 1986 Susan Ryan (along with then minister for trade, John Dawkins) gave universities permission to offer courses to international students at fee rates that universities would set themselves.  Helen Trinca, editor of the Higher Education Supplement reflected widespread opinion within the universities by describing the policy as an “experiment in privatisation”:

It is something of an off shore coup for the free-marketeers in higher education, a dry-run for deregulation, if you like, that could well spill over to the domestic system.

Susan Ryan, who was by no means a “free-marketeer” did not see it like that. What she found especially irksome about discussion around establishing an international export market was that it added volume to the pro-fees lobby, whose voices had already been growing louder by the day.  And it was the volume of the discussion, rather than the outcome of privatisation policies and experiments, that had the most sustained influence on higher education.

Privatisation of government-owned organisations had been a topic of debate in politics and economics starting with the Liberal Fraser government in the mid-1970s and continuing into the subsequent Hawke and Keating Labor governments from 1983. In higher education, it had been an issue commenced by those who had opposed Whitlam’s abolition of tuition fees in 1974, escalating to a point that by 1986 Anwyl and Jones (between them representing the two major centres for research in higher education at Melbourne and New England universities) said that “privatisation was entrenched in higher education jargon”, but that it now referred to a much broader suite of potential reforms and was the site of a wider range of ideologically-driven debates.  It was now also more than just talk. Deregulation of international student fees combined with new private sector initiatives to make privatisation real. Some of these realities were making spectacular claims for their new role in the sector. The most prominent of these was Bond University.

Don Watts, the first Vice-Chancellor of Bond University, had long been the loudest of the pro-fees lobby. The notion that a marketised higher education system would produce an improved “product” was a faith held he held with vehemence. In 1987 Watts said:

Education in Australia, in the absence of even a modest fee, provides no real contractor-customer relationship.

It was in the obligation to the consumer that Watts idealised university quality:

The institutions simply are not accountable to a market. Students, the real market, have no incentive to question institutional performance.

And he was convinced that exchange-value, where an item is attributed value by its connection to the fee paid for it, was the best way of demonstrating the value of education to society:

In commercially-minded societies almost everything has a price and thus a value. There is clear evidence that the Australian society does not understand the value of education. This is not surprising. Goods obtained by gift are difficult to place in an ordered system of values.

The only real way, in Watts’ mind, for higher education to regain its status in Australia was an affirmation of knowledge’s value with an explicit price.  With this in mind, Watts sought the creation of an explicitly private sector in higher education – such as there was already in schools.  The first of these was Bond University, named after its founder, Alan Bond.

Bond University embodied the 1980s free-market utopia in higher education. It was naturally therefore also the centre of the debate surrounding privatisation, a debate that raged through universities and in which everyone had an opinion. Bond Corporation proposed the scheme mid-1986 and later that year partnered with a Japanese company, EIE Development, to commit $125 million to stage one, with a view to enrolling 800 to 1000 students in 1989. It was a shocking proposal, to many (most vocally the staff associations), who saw the university tradition being appropriated by one of the corporate sector’s most prominent figures in Alan Bond.  This, many thought, had potentially disastrous consequences for the (now economically important) international reputation of Australian university standards.  Privatisation advocates described this argumentation as “entirely predictable” and even “elitist”.  On the other hand, supporters of Bond University were predominantly “right-wing loonies” according to an advocate of more “rational” privatisation schemes.  It was a period that demanded name-calling.

While some members of the Commonwealth opposition supported Bond University as an exemplar of privatisation , the Minister for Education, Senator Ryan and the Labor government were not in favour of the private university – largely because if private funding was to enter the system, they believed that it should go to public universities , relieving the treasury:

The stated aims of the Bond proposal are to attract private money in higher education, to bring industry and education into a profitable partnership and to tap the market for wealthy overseas students. All of these things can be done, and are being done, by our public institutions….The Bond proposal offers nothing new or constructive in these areas.

However, Bond, like every other university, was created by an Act of the State government (in this case Joh Bjelke-Petersen’s Queensland), and the Commonwealth could do nothing to prevent its existence. Both hopes and fears proved to be unfounded, however, for Bond University was unable to live up to its own fanfare.  No one had really understood how much it would cost to establish a world-class university overnight. Bond’s poorly stocked library would scrape by on interlibrary loan agreements, but two months before students were due to walk through the doors, Watts had to relinquish any hope of offering undergraduate science due to inadequate infrastructure.  Attracting students had been tough. Amidst talk that Bond was only for the rich and stupid, the Commonwealth’s determination that a private university would receive no public benefit at all led Watts to the awkward position of claiming that student income support (unlike tuition fees) was a civic right.  Only slightly more than 300 students commenced at Bond in May 1989, just as Watts announced it was having short-term difficulties meeting its operating costs and was arranging an $80 million bridging loan in anticipation of a $200 million, 14-year loan to be able to run the university (which had originally been planned to break even within four years).  While in August 1989 Bond University “promised to pay its bills”  , by October Alan Bond himself was exposed as having more than $1.6 billion in debt: one of many precursors to Bond Corp’s ultimate collapse and Alan Bond’s eventual imprisonment.  While the university did better than the man, it would still be some time before Bond University could extricate itself from financial and reputational difficulties.

Despite its reassurances in August 1989, only one month later Watts went to the Queensland government to ask for a short term loan. This renewed speculation that Watts had contributed to the political demise of the former premier (ousted by political coup) who had been refused a loan earlier in the year, when Watts had gone to see him with Alan Bond.  Watts, feeling that Bond himself might be an impediment, decided to see the new Premier without him to talk about the loan. Bond University scraped through what must have been an excessively stressful year for Watts. Never again did the university use its original strategy of elitism in its advertising, which had originally compared Bond to Harvard  . Based on his faith that everyone would associate the cost of education with its value, Watts had thought this would be convincing. That it was not demonstrates that education was not as easy to commodify as advocates of a free-market approach to higher education had claimed. Watts resigned from Bond University in 1990, shortly after being labelled “Captain of the Titanic” – he was still saying that everything was fine. 

The ethic of the free market was so compelling to its faithful that their rhetoric was sustained even when market logic failed in reality. Other private initiatives of the 1980s, as Simon Marginson has shown, failed (or struggled, to the point of failure or near-failure in subsequent decades) as well.  Privatisation initiatives were more successful in the public universities, such as at Melbourne University under David Penington. It was the partial privatisation of the Melbourne business school, Marginson demonstrates, that led to the failure of the private Tasman University.  This is not just that public funding (and Melbourne University’s accumulated wealth) provided a more secure financial foundation for privatisation: Melbourne University Private, an initiative of a later Vice-Chancellor, lasted only seven years. 

No failures of reality, no matter how spectacular, could impede the contributions privatisation made to discourse. This was its real, sustained contribution to higher education. The unshakable faith of free-market economists bludgeoned every discussion of potential reform in higher education, informed every debate about improving universities’ relationship to the community and – despite abundant evidence of its failure in fact – seemed to offer a solution to the system’s financial woes. Discourse about the functions of education as a commodity that some – such as economist Jon Stanford – started to consider education to be somehow inherently commodified. He said: “education is an economic commodity and should be treated as such”.