Issue Analysis

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The Free Market Case Against Voluntary Student Unionism (But for Voluntary Student Representation)

Andrew Norton | IA62 | 31 August 2005

The federal government plans to introduce ‘voluntary student unionism’ (VSU) into Australia’s universities by banning the current compulsory fee for non-academic services. However, market-based policies offer a practical alternative to the current VSU policy and the non-political services fee suggested by the ALP and the National Party. In the normal commercial world, the market provides the appropriate mix of bundled and unbundled services, and this should be the case for universities as well.

Introducing ‘voluntary student unionism’ (VSU) into Australia’s universities would do two things:

  1. It would make student organisation membership the result of choice, rather than automatic or compulsory as it is at many universities today, and
  2. It would also end the compulsory non-academic fees used to fund representation, amenities, and other services for students.

This second element especially has attracted wide opposition from universities, student groups, sporting and cultural associations, and the National Party.

Both sides of the debate assume that the separate non-academic fee is still necessary to sustain non-academic activities. In fact, its necessity comes from the era of Commonwealth domination of university finances. Most students now pay all or part of their tuition costs to universities and could in-principle pay one fee for everything, academic and non-academic. The low maximum student contribution amount price caps on Commonwealth-subsidised students are an obstacle to this, so universities cannot combine the fees without sacrificing money for teaching.

Prohibiting the compulsory non-academic fee limits universities’ capacity to bundle their services, ie to combine non-academic and academic services in the same package. Bundling lowers the cost of participating in campus activities and so strengthens the ‘campus experience’ some universities want to offer. However bundling adds costs for students who just want the course. The issue is whether the university market is strong enough to reflect the diversity of market demand. There are weaknesses in the university market, but the solution is to create stronger markets, not to introduce more regulation.

The voluntary student representation (VSR) parts of the VSU bill have merit. The traditional representative functions of student organisations are challenged by poor turnout in student elections and the rise of university-run student surveys as better sources of information. Genuinely voluntary and self-financed student representative organisations would be better than the status quo.

Andrew Norton is a Research Fellow at The Centre for Independent Studies and author of The Unchained University (2002).

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