Why have the Lib­er­als got it in for busi­ness stu­dents?

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This is another non-debt post. I’ve just heard Costello describe tonight’s bud­get as an “Edu­ca­tion Bud­get”. There was a wel­come “equity” bequest to uni­ver­si­ties, to fund infra­struc­ture and research: but there was also a shal­low “shell and pea” trick in the allo­ca­tion of fund­ing for Uni­ver­sity places.

The com­pli­cated CGS band­ing system–which deter­mines what the Gov­ern­ment pro­vides per stu­dent, and varies depend­ing on the dis­ci­pline being studied–is being ratio­nalised from 14 bands to 7. In 6 of those new bands, the amount being given in 2008 is slightly more than the high­est amount given to the pre­vi­ous bands. For instance, the four bands of Maths, Behav­ioural Sci­ences, Edu­ca­tion and Com­put­ing are being amal­ga­mated into one band; the high­est fund­ing level per stu­dent in 2007 was $8,057 for Com­put­ing, and the low­est $5,381 for Maths; the new fund­ing level is $8,217–a 2% rise for Com­put­ing, and a 52% increase for Maths.

I cer­tainly don’t dis­par­age the fund­ing boost for Mathematics–God knows math­e­mat­ics edu­ca­tion deserves bet­ter sup­port in this coun­try. But the whole thing is being funded by a dra­matic reduc­tion in fund­ing for busi­ness stu­dents.

In one and only one band, the new amount is only slightly larger than that given for the low­est–funded band in 2007. Law and Busi­ness are being banded into one; pre­vi­ously, Law got a pal­try $1,642 per stu­dent, and busi­ness got $2,703 (the sec­ond low­est amount); now the com­bined band will get $1,674 per stu­dent: a 2% boost for Law, but a 38% cut for busi­ness.

12 universities.jpg from the Budget images Zip file

Need­less to say, with Com­mon­wealth fund­ing as low as it is now, this sharp a cut would bank­rupt most Busi­ness Fac­ul­ties in Australia–it would cer­tainly bank­rupt mine. So the Gov­ern­ment will enable us to top up their dras­ti­cally reduced fund­ing by increas­ing HECS: Busi­ness dis­ci­plines are being moved from HECS con­tri­bu­tion Band 2, which has a $7,188 ceil­ing on what Uni­ver­si­ties can charge stu­dents, to Band 3, with a $8,333 ceil­ing (page 15 in icss_booklet_2007.pdf from www.goingtouni.gov.au).

So this bud­get takes over $1,000 out of Uni­ver­sity fund­ing per busi­ness stu­dent, and replaces it with up to $1,145 more from each stu­dent.

The Government’s ratio­nale for this move is that “CGS fund­ing for Account­ing, Admin­is­tra­tion, Eco­nom­ics and Com­merce will be adjusted down­wards to match the Com­mon­wealth con­tri­bu­tion for Law reflect­ing the com­mer­cial nature of these courses” (Bud­get Paper 2, Page 115).

If there’s any ratio­nale to this, it’s the belief that busi­ness and law stu­dents earn squil­lions and are in it for the cash, whereas other pro­fes­sions are there for love and earn a pit­tance.

The Bud­get Overview con­firms this with the state­ment that: “The cap on the HECS-HELP fee and the pub­lic sub­sidy for Account­ing, Admin­is­tra­tion, Eco­nom­ics and Com­merce will be aligned with Law to reflect the high salaries that grad­u­ates in these dis­ci­plines receive” (page 11).

So hit the rich with the tax and let the poor in free–an admirable social­ist prin­ci­ple… How­ever, even that Bol­she­vik logic doesn’t cut the mus­tard. The start­ing salaries for busi­ness careers are cer­tainly not the high­est in the land, nor are they com­pa­ra­ble in any way to salaries in Law. Check:

http://content.mycareer.com.au/salary-centre

There you will see that the min­i­mum salary for Account­ing (which I pre­sume cor­re­sponds to what new grad­u­ates can expect) is $37,000–versus $39,000 for a teacher, $41,000 for an engi­neer, and $50,000 for a career in sci­ence.

On the other hand, the band that busi­ness stu­dents now share their edu­ca­tional bills with includes law (start­ing salary $49,000) and med­i­cine ($51,000).

So a Social­ist inter­pre­ta­tion of the Government’s motives here doesn’t make sense–which is just as well, I sup­pose: cop­ing with the ironies of Higher Edu­ca­tion fund­ing in this coun­try is dif­fi­cult enough, with­out hav­ing to believe that Peter Costello is actu­ally Che Gue­vara in dis­guise.

What makes more sense is that this is a smoke­screen: it’s a way to seem to be increas­ing Uni­ver­sity fund­ing, with­out really increas­ing at all. You’re merely steal­ing from Peter (in busi­ness) to pay Paul (in Math­e­mat­ics). I expect that Edu­ca­tion was told there wasn’t much more money for recur­rent fund­ing, so shuf­fle the cards to increase fund­ing for some dis­ci­plines, and get the money you need for that from some of the oth­ers.

Once again, it’s the busi­ness stu­dents that have been shafted. This is ironic, com­ing from an allegedly pro-busi­ness gov­ern­ment. But it suits the mind­set: keep over­all gov­ern­ment fund­ing con­stant, make the stu­dents pay, and hit the busi­ness stu­dents first because they’re only there for the money any­way.

The dilemma for us edu­ca­tors is that this fund­ing level–even when sup­ple­mented by increased fund­ing from the stu­dents themselves–simply isn’t suf­fi­cient to pre­pare stu­dents for the envi­ron­ment they’re going to con­front when they enter the work­force. Our grad­u­ates often get a first job in a trad­ing depart­ment of a finance company–and come face to face with a Bloomberg screen for the first time in their lives, because most Uni­ver­si­ties can’t afford to set up mock trad­ing rooms.

So busi­ness-per­sons, please ask this “busi­ness-friendly” gov­ern­ment to get real on fund­ing busi­ness edu­ca­tion. There’s no way that Uni­ver­sity edu­ca­tors can pro­vide the edu­ca­tion you want your grad­u­ates to have on this pit­tance.

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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