The cost of study at an Australian university should havecome down – Matt Pinnuck explains why it has not.
The University of Melbourne accounting academic has two big ideas to improve university productivity – the higher education establishment will hate them.
Professor Pinnuck sets them out in a personal submission to the Senate committee inquiry into university governance underway in the previous parliament, (it is expected to reconvene for the new one).
He proposes: "Universities should state their cost-of-education per student in the finance section of their annual reports."
“Without disclosure of the cost of education there is no information and thus pressure to hold universities to account for their efficiency in delivering education.”
"Minimising costs and efficient education delivery should be explicit objectives for all institutions."
“Universities do not operate with the goal of producing efficiently and minimising costs. Instead, universities aim to spend all available revenue, on an unlimited list of ‘grand’ projects, in an effort to increase their prestige.”
When he reviewed all 2023 annual reports, he found “ ‘productivity’, ‘cost efficiency’ and ’lowering cost of education’ are never mentioned.”
Plus, international student fee income has actually increased costs. “The primary incentive of the university administrators has been to spend the funds on capital works and tenured staff … thus escalating and permanently increasing the cost of education.”
“These permanent costs increases are then passed onto students in the form of higher fees,” he warns.
And prices have increased, “notwithstanding the significant potential scale economies from greater student numbers and significant technological shifts which should have significantly lowered the per student cost of education.”
In particular, he suggests that as education costs are mainly fixed (infrastructure, administration, content) economies of scale as student numbers increase should reduce the per student cost.
“This implies that if universities were efficient then due to the benefits of economies of scale, as students numbers increased significantly across the period from 2004 to 2022, there should have been a substantial decrease in per student cost of education.”
“There is no evidence of this cost saving potential being used to decrease education costs across time.”
