Perth merger good for academics, not for students

Fifteen years ago, driven by hoped- for economies of scale, a wave of mergers swept through Australian higher education. Mostly there is now little enthusiasm for more unions of universities except in Perth , where the political ghost of merger-pushing former federal education minister John Dawkins still haunts Curtin, Murdoch and Edith Cowan universities.

Late last month, Edith Cowan University vice-chancellor Millicent Poole reignited on-again-off-again amalgamation discussion, suggesting an academic menage a trois with Curtin and Murdoch.

Her advances were spurned by both universities which, it turned out, had been quietly discussing a two-way combination.

Issues of academic status influenced the Dawkins-era rebadging of former colleges of advanced education, such as Edith Cowan, and former institutes of technology, such as Curtin, as universities; and status issues are again partly behind these merger talks.

The less research-intensive universities fear that the impending Research Quality Framework will disadvantage them unless they concentrate their research resources. They also believe greater size could give them more political visibility at home and more market visibility abroad.

From this perspective, Perth university amalgamations are worth considering. It is in their roles as teaching institutions that merger scepticism is needed.

In teaching, the merger thinking is reminiscent of the Dawkins phase of higher education policy, in which diversity counted for little and competition for nothing.

Universities could not greatly differentiate their services, could not compete on price, received a standard government subsidy, and were near-guaranteed their numbers by a quota system.

The main variable was cost, which universities were expected to minimise. Now again, Poole suggests that a merged entity "would have more scope to drive down operational costs".

Obviously universities should eliminate waste where possible. But in other ways, the higher education system is beginning to move beyond the mass-produced, low-cost, standard state-mandated product towards a market.

A market system has two main advantages over a bureaucratic model. The first is diversity: with varying funding levels, institutions and degrees can be differentiated.

The second is competition, pressuring universities to concentrate on the needs and concerns of coursework students.

The full-fee market now one-third of students drives resource differentiation. This year, there is a nearly $10,000-a-year fee difference between the cheapest and most expensive business or commerce degree for a foreign student at a public university.

Already, there is extensive competition for overseas fee-paying students. Fee-Help for students at private institutions strengthens them as domestic competitors, especially in Western Australia , with the University of Notre Dame. Against this, competition has taken a backward step with federal micro-management of the student places it partially funds.

But it is hard to see that this red-tape extravaganza will survive in the long term, and it is important that other institutional changes do not spoil future competitive possibilities.

A three-way merger of ECU, Murdoch and Curtin into the proposed University of Perth would seriously undermine competition. On 2005 funding agreement figures, the new institution would control over 90 per cent of commonwealth-supported teaching and nursing places in WA. In the funding clusters containing computing, built environment, health, foreign languages and visual and performing arts it would have about an 80 per cent share. Only in the small dentistry, medicine and veterinary science funding cluster would the University of Perth have less than 50 per cent of student places in the regional market.

A Curtin-Murdoch merger would have a less dramatic effect; but with at least one-third of federal supported student places in each funding cluster, and about half in several, it would have considerable market power. If the University of WA 's high entrance requirements put it in a class of its own, the effective level of competition could be much lower.

In a 1998 speech, the then chair of the Australian Competition and Consumer Commission, Allan Fels, warned that universities were not exempt from merger law. He said that "the impact a merger will have on competition depends critically upon whether the market is judged to be national or is more constrained to a state or region".

For foreign fee-paying students, there is a national market. But for WA students, the financial and emotional costs of studying far from home and family make the market primarily a local one.

A three-way merger may help researchers and give the new university greater prominence but at the expense of student interests. The WA government should not allow it, and the ACCC should step in if it does. Only a two-way merger should receive serious consideration.

Andrew Norton is a research fellow with The Centre for Independent Studies.