The Neoliberal University in Crisis

More than thirty years of bipartisan deregulation and funding cuts to higher education, as well as the introduction of ever-growing fees, have made Australian universities deeply dependent on the lucrative international market, in the form of overseas student enrollments.

Underfunded regional institutions, such as Federation University and Central Queensland University, face the real prospect of collapse. Richer institutions are more secure, a legacy of a deliberate strategy to invest in assets rather than staff and students. But they won’t escape unscathed. Australia’s five multibillion-dollar universities (Melbourne, Sydney, Queensland, New South Wales, and Monash Universities) have long traded on their lofty reputations overseas, charging full-fee-paying international students many tens of thousands of dollars for an education. Now that this revenue has been cut off, universities are left starved of the funding they need to function.

This year alone the University of Melbourne (a $2.66 billion institution) has estimated losses of $500 million. But despite their vast shortfall, universities won’t qualify for the JobKeeper wage subsidy program. To be eligible for JobKeeper, a small to medium business must have lost 30 percent of its revenue. A big business (with a turnover of $1 billion or more) must have lost 50 percent of its revenue. Charities, on the other hand, need only to have lost 15 percent. Universities are officially registered as charities (due to their nonprofit status) — but the government’s policy treats them as big businesses, leaving them to fend for themselves.

This contradiction exposes the strange hybridity of the Australian neoliberal university. On the one hand, university assets are publicly owned. All “profit” is supposed to be reinvested in the institution itself. On the other hand, federal policy forces universities to compete against each other for funding, both public and private. The result is gratuitous waste — million-dollar marketing and promotion budgets go hand in hand with a millionaire executive class whose managerial techniques are transplanted from the private sector. This is cited to justify bonus pay and obscene travel expenses. In this sense, the current pandemic is not the culprit, but a catalyst accelerating contradictions implanted in the tertiary sector four decades ago.

Birth Pangs

Australia’s universities haven’t always been this way. Prior to World War II, undertaking research required Australian academics to travel to the mother country — Great Britain. It was only after the war that Labor and Liberal governments perceived a need to develop Australia’s own cultural and intellectual assets, leading them to invest in universities. This culminated with the introduction of free tertiary education under the Gough Whitlam government. It was the high point of the modern mass university in Australia: an academic education was no longer the domain of a tiny, mostly upper-class elite.

As Australia’s manufacturing exports declined throughout the 1970s, demand grew in the 1980s to address the terms of the trade crisis. At the same time, a new breed of “economic rationalists” began to populate the Canberra bureaucracy. Politics, culture, and society were no longer seen as the democratic subjects of state power, to be valued in and for themselves, but as obstacles to the rationalization of the economy.

The Australian Labor Party (ALP) initiated the neoliberalization of higher education. Deregulation was declared necessary to avert Australia’s reversion into a “Banana Republic,” and so universities were reframed as an untapped export commodity. For fifty years, governments had invested in Australia’s higher education system. When economic rationalists looked at this “comparative advantage,” they saw untapped profits. As a result, universities expanded during the 1980s — but not due to sustained public funding. Instead, education was commoditized and marketed to the growing middle classes of Asia. Public funding of universities steeply declined: still constituting about 90 percent of the universities’ total funding in the late 1980s, today that figure has dropped to just 40 percent.

Under the old neocolonialist Colombo Plan, overseas students had received a subsidy to study in Australia, but the ALP reversed this in 1986 by deregulating international student fees. From then on, universities were allowed to charge international students as much as the market would allow. A boom resulted as international students, mostly from regional neighbors like Indonesia and later China, purchased an education in Australia at great cost. This has only picked up pace since then. In 1990, there were just 24,990 international students studying in Australia. By 2018, that number had risen to 876,400, a growth sustained by double-digit increases year after year.

In the neoliberal era, the Australian economy came to depend on exports to its rapidly growing neighbors, China and India. Today higher education is Australia’s third-largest export, worth AUS$34.9 billion (US$24.7 billion), behind only iron ore and coal. Even before COVID-19, this made universities vulnerable. The crisis that engulfed the so-called Asian Miracle economies in 1997 created a temporary panic — but the recovery was swift enough that the neoliberal model did not enter a legitimation crisis.

Neoliberal Hegemony

The Higher Education Contribution Scheme (HECS), introduced in 1989 by the Bob Hawke Labor government, was another key to legitimizing neoliberalism. Under the scheme, fees were gradually introduced, though the impact was softened by government-backed student loans, repaid by income deductions once a graduate began earning above a certain threshold.

The HECS worked to conceal the defunding of the university, with the state still able to claim that it was making its “contribution.” By stealth, the universal right to an education was eroded. The idea of equal access was replaced by that of equitable contribution between public funding and private fees. This was a historic about-face for Labor: it was Gough Whitlam who had abolished tuition fees in 1974.

Following John Howard’s ascent to power in 1996, successive Liberal governments exploited Labor’s policy framework. Their goal was total fee deregulation and privatization. While that final outcome was fended off, the system that resulted belies any claim to fairness. As universities have grown rich on private endowments and international fees, participation rates among working-class Australians have failed to rise.

Staff and students have borne the brunt of these changes. Today, the higher education sector is at the vanguard of casualization in Australia. Seven in ten university staff are insecurely employed, and a reserve army of intellectual labor has been bolstered by the dependence on “permanent casuals” — a mass of insecurely employed, improperly paid sessional staff who generate vast profits for institutions hostile to academic freedom — all on the promise of a permanent job that never comes.

All of this has required dramatic changes in university governance. Corporate bullies have disempowered academic boards and senates that once enjoyed some say over the direction of their institution as a whole. Today, they have been reduced to arbiters of academic standards.

Perverse “metrics” — quantitative measures of research output intended to calculate intellectual worth — have been standardized and have only brought degradation. The education market was supposed to be democratic; it was meant to expel elitism. It only entrenched it. The animal spirits released upon stolid course offerings homogenized and banalized content.

Today, managers measure success by the disruptiveness of the organizational “vision change” — jargon for mass forced redundancies. Comparatively, vice-chancellors are paid some of the highest salaries in the world, while sticking obstinately to hiring freezes, despite huge growth in student numbers.

Surviving Today

The existential threat to Australian universities certainly precedes COVID-19, but to survive the current crisis, radical steps must be taken now. We cannot rely on the executives responsible for the system to save it, so in thrall are they to the neoliberalism they have ushered in. Reform can only be led by university workers (alongside students), who know the pain neoliberalism has ushered in and who are motivated to replace market autocracy with self-governance. This means not only more short-term economic fixes that we can demand now, but also a longer-term strategy for transformation: a new, democratic vision for tertiary education more broadly.

The Commonwealth Grant Scheme system currently subsidizes tuition costs for some courses, but many higher degrees are excluded, as are international students. As an immediate measure, the Commonwealth Grant Scheme could be immediately expanded to fund all enrollments and to cover the entirety of course costs.

In 2017, the higher education sector spent $622 million on “marketing and promotion”: a staggering reflection of the sector’s priorities. According to the Tertiary Education Quality and Standards Agency, it was the fastest-growing expenditure category for the sector, growing at 17.8 percent. The decommodification of higher education would relieve universities of the pressure to market themselves, at home and abroad, freeing up vast marketing budgets that are blown on mindless slogans like “Be the Change” or “All Kinds of Clever.”

At present, only 34 percent of university research is financed by the federal government. Universities draw on international and private sources for a further 15 percent of research funding. This includes gifts, bequests, and private sponsorship arrangements with corporate interests. In some cases, this has threatened to undermine research independence: for example, health supplements companies Swisse and Blackmores have donated to sponsor research into alternative medicine and nutritional supplements at La Trobe and Sydney Universities, respectively. Or take the maligned Ramsay Centre, which has now established itself at the Universities of Queensland and Wollongong and at the private Australian Catholic University. Funded by a billionaire’s bequest and led in part by Tony Abbott, the center promises to offer courses (supported by scholarships) on “Western civilization,” aimed at countering the progressive bias that conservative paranoia detects in university offerings.

These sources account for 49 percent of research expenditure. The remaining half of all research expenditure is cross-subsidized by sources not earmarked for research. Bizarrely, student fees, both overseas and domestic, underpin Australia’s much-vaunted “knowledge economy.” Greatly expanding Commonwealth research funding, administered independently, would both reduce universities’ dependence on student fees, decommodify research, and defend academic independence — and this should also be demanded as a short-term lifesaver for the sector.

In the medium term, bloated executive staffs and HR departments must be reined in and downsized. Those few managers deemed necessary should have their salaries linked to the average level of staff. At the University of Melbourne, the top ten executives alone make $7.5 million; if they were sacked, these millions could be redirected toward crisis pay for staff who are temporarily out of work.

In the longer term, we need a new model of university. And we may find it in what philosopher Raymond Williams once called the “democratic educator,” championed by the labor movement in the nineteenth and early twentieth centuries. After World War II, this movement played a major role in opening universities and making tertiary education available beyond a small, self-reproducing class elite.

University assemblies representing all staff groups — professional and academic, casual, fixed-term, and permanent staff — as well as representatives from student groups could lead this democratic revolution. Although it sounds utopian, the idea was developed by the radical student movements of the 1970s. The university assembly at Melbourne University lasted from 1974 until it was finally claimed by neoliberalism in 1989.

Unchecked, neoliberalism will be the death of Australian universities — but public funding and democratic control may save them.