Why Michael Cullen was wrong and Steven Joyce is right

July 1st 2010 at 11:00am, By David Choat

I’m the ‘junior member’ of the ED team, and most of my tertiary writing has been for the Insider and other projects rather than for ED Blog. But I said to Dave that I wanted to write something in response to the recent announcement of the tertiary funding rates for 2011.

These rates put the money that was ‘topsliced’ for the now-abolished TEO Component back into the standard ‘bums on seats’ funding based on EFTS (equivalent full-time students).

But, what’s more, they do so in a way that restores the funding rate for students studying at polytechnics and wananga to the same level as students as universities (apart from at postgraduate level).

This was an admirable decision by the current minister, Steven Joyce. And one that is consistent with the founding principles of the modern tertiary education system, as established in the Learning for Life reforms of the late 1980s.

Those reforms, which were driven forward by current Labour leader Phil Goff (who was Education Minister at the time), involved an explicit Cabinet agreement to the principle that students in public tertiary education should be funded at the same rate for similar programmes of study, regardless of which part of the sector they were studying in.

This principle remained in place until 2006 when it was discarded as part of Tertiary Education Minister Michael Cullen’s changes to the funding system. It seems that Dr Cullen felt there was a need to allocate some funding on a basis other than student volumes. The figure of 30% was chosen, apparently arbitrarily, but the universities successfully argued that the PBRF funding should be counted as part of their 30%. So polytechnic and wananga EFTS funding was ‘topsliced’ to well below the rates universities were paid for equivalent programmes.

TEC argued that since the money was being reallocated via the new TEO Component, it didn’t make any difference. But this was nonsensical. Unless the TEO Component was simply EFTS-funding ‘in drag’ (and to be fair at times it did seem like that), then over time the amount that individual institutions and subsectors overall would get through the TEO Component was bound to diverge from what they would have got if the money had been left in EFTS funding.

And, given the stronger lobbying leverage of the universities and the power of student volume pressures, it was almost inevitable that the consequence over time of the ‘topslice’ would have been a gradually widening gap between funding levels for universities and funding levels for polytechnics and wananga.

Plus, there was the signalling effect. Having a system that said, for instance, we’ll fund students at a higher rate to undertake a nursing degree at Massey than we will to do the same thing across town at UCOL didn’t exactly do much to foster ‘parity of esteem’ between the subsectors.

So Michael Cullen made a mistake in dumping the ‘Goff principle’ (as I call it). And Steven Joyce has done the right thing in bringing it back.

I take no pleasure in saying that. Unlike my ED colleague, I am in general much more supportive of the previous administration’s policies in tertiary education than I am of this one’s. And I have enormous respect for Michael Cullen, who I think will be remembered as one of New Zealand’s greatest finance ministers (and who is primarily responsible for the fact that we’re not on the verge of a sovereign debt crisis at the moment, as many other countries are).

But on this issue he was, I think, poorly advised. How poorly can be judged (as can the failure of institutional memory) from the fact that at no time was Cabinet made aware of the fact that they were in effect rescinding a principle agreed by the previous Labour government, let alone why that principle was no longer relevant or desirable.

So, with regard to this decision at least, congratulations to Mr Joyce, and to the officials that assisted him in making it.

(22) Comments
Tags: Funding, Learning for Life, Michael Cullen, Minister - Tert. Ed, parity of esteem
Categories: Policy

22 Responses to Why Michael Cullen was wrong and Steven Joyce is right

Dean Carroll

July 1st, 2010 at 11:48 am

David
Wonderful. Could I agree more with this post? I am struggling … no it is absolutely correct. The key points of your argument: fairness and equity of treatment; robustness of mechanisms for accountability (and to whom, students); the role of pricing and signaling to actors in the tertiary sector. All top-notch, first-principle points.

I used to feel sick to my stomach that of all people a Labour Minister of the Crown used to call 250,000 young New Zealanders attempting to improve their and their country’s lot “Bums”. “Bums”. Not students, or people. Not even the new-Right which reduces people to “customers” does that.

The lack of accountability to students (not to mention the huge expensive wasteful bureaucracy to administer that mad funding system) is, I believe a major psychological contributing factor in the current environment in which institutions feel they can behave in the way they do around access.

But there is much to do. The report in December highlighting the worst economic rates of return for degrees in the OECD; the massive NZ aid-package to Australia that is the ‘brain drain’ to that country; and the issue of access are all to be concretely tackled. On that last issue the key is “Open access to the system, not specific institutions”.

Again, great post.

Paul Williams

July 1st, 2010 at 12:45 pm

I know that that hurt you Dave. How though, should any additional costs associated with additional (sometimes statutory) functions of universities be funded? Only through the PBRF?

Stephen Marshall

July 1st, 2010 at 8:40 pm

Certainly one way to bring the polytechnics back into financial viability, but I worry this will act against differentiation in the sector – we don’t need more degrees being granted, we need a range of educational providers targeting diverse student populations and qualification needs. And, as Paul notes, universities have to maintain a much more substantial engagement with research and a much greater range of subjects – a real challenge while the Government prevents unis from using fees as a mechanism for driving quality… or perhaps they just want one real university and a bunch of polys generating cheaply qualified people for a cheap workforce (so we can outcompete China on labor costs – give me a break) while the well heeled do the sensible thing and cross the ditch.

Dave Guerin

July 1st, 2010 at 10:39 pm

Paul, various statutory roles have never been funded fully and ITPs and wananga have some that universities don’t.

Stephen – this change doesn’t really affect anyone’s funding levels (and some other tweaks mean that there’s a minor funding drop)- it mainly corrects a fiction that recategorised funding was being used for something different. And universities get 95% odd of the PBRF, which provides research funding, along with COREs and competitive research pools through FRST, so there’s considerable differentiation in $$ in that area, reflecting the diffderent roles.

Overall, I’m now happy that a nursing undergrad degree will get funded the same way in different institutions. If a uni offers a postgrad nursing degree, they’ll get extra money.

I agree with Stephen on fees but since I’ve had a 24 hour debate with Paul on that this week, I’ll leave it.

David Choat

July 1st, 2010 at 11:16 pm

@Dean – Thanks for that. Though to be fair to Michael Cullen (after my scurrilous attack), he didn’t coin the term “bums on seats” — I had heard it for a number years in sector circles, particularly amongst critics of ‘over-reliance’ on the EFTS approach, before he became Minister.

@Paul – to add to Dave’s points, if there were any additional costs associated with the additional functions of a particular subsector, I’d rather those functions were funded directly and transparently rather than cross-subsidised through higher EFTS rates.

@Stephen – again to supplement Dave, your aims of restricting the number of degrees and encourage a range of providers targeting diverse needs are valid ones, but the question is what’s the most appropriate and effective way of achieving them. I’d argue that your aims might be more effectively be addressed through course approval processes and/or decisions about which mix of study to fund, rather than through across-the-board funding differentials.

July 1st, 2010 at 11:56 pm

Dave G and I are on a compulsory niceness pact. Nice.

Clearly I’ve been in Australia too long as I’d not appreciated the transgressions I’d perpertrated…. thinking instead they were just robust…

Might I however offer the observation that if Parliaments legislate functions, they ought to fund them. Ideally transparently.

July 2nd, 2010 at 12:01 am

Yes, I think that’s fair enough in general, Paul.

Although I don’t think we’re going to see a Critic and Conscience of Society Fund anytime soon!

July 2nd, 2010 at 9:47 am

Sector circles: you mean academics and administrators. certainly not student representatives or people who care about student outcomes. my point exactly David. Cullen went into the job thinking of himself as a Vice-Chancellor. Famously told them so in his first meeting “You know I could have been one of you, but chose to do something else” … his exact words. He bought into their worldview (why i don’t know, not through insecurity). Then Hodgson and Cullen stood back aghast. What? universities focused on themselves and not the interests and views of the paying student. I cannot believe this is happening. 70% of their funding comes from students … blah blah blah. I hate the fact that the Tories are doing a better and more coherent fist of it. But thems the breaks.

July 2nd, 2010 at 9:50 am

Oh and David he (Cullen) didn’t hear it from one Emeritus Professor G. Hawke.

A scurrilous attack on a great man « Policy Progress

July 2nd, 2010 at 11:34 am

[...] I may have wrecked my progressive credentials with my latest post over there, though. It’s entitled Why Michael Cullen was wrong and Steven Joyce is right. [...]

July 2nd, 2010 at 12:36 pm

Actually I think I did hear that phrase from student representatives at times. The student movement was caught in a bit of a cleft stick with regard to demand-driven funding. On the one hand, they do want institutions to be responsive to their needs. On the other hand, they’ve general been pretty opposed to the ‘market model’ in tertiary education, i.e. institutions being driven by students’ market choices.

In part I think this dilemma comes down to the relative importance of ‘exit’ and ‘voice’. And at this stage, since I’ve linked to this post on my blog Policy Progress, it’s only fair that I include a link to a post on PP canvassing some of the arguments I used to make about that back when I worked for NZUSA/APSU:
http://www.policyprogress.org.nz/2010/05/vote-with-your-feet-or-work-for-change/

Jim Doyle

July 2nd, 2010 at 1:34 pm

Did I see in ‘policyprogress’ the phrase: ..the growing literature on the sucess of economies using bank-based financial systems?

Given that we now know who to point the finger at with respect to the global financial crisis (bankers 1st) perhaps there is now a growing literature on the faliure of economies using bank-based financial systems.

July 2nd, 2010 at 1:55 pm

Be fair Jim, I did write that in 1997! And the quote does go on to say “compared to those using capital market-based systems” (such as the US and UK) — I wouldn’t say the Global Financial Crisis had particularly reset the score in that respect. In fact, I think the “shadow banking” sectors of the capital-market-based countries are actually the ones most people are pointing the finger at, rather than the traditional banks.

(Sorry Dave, we’ll get back to talking about tertiary education now.)

July 2nd, 2010 at 2:49 pm

Um, David if it might cut through the Gordian Knot of this ‘choice’ policy conumdrum: some points that might provide some light intellectual relief for the student ‘movement’ struggling with the idea as to whether they should represent their members interests or not. Might I venture that currently academic coherence in higher eduction is built upon three things: first, qualification coherence, a summative end-point (normally tested in someway) in a body of knowledge in a field of study about the real or imagined world(s); secondly, course coherence. That the ‘managable’ building blocks of study are in themselves coherent, both internally within the material under instruction and externally to other building blocks. NB: a qualification (or programme of study) and course can be the same thing. Lastly, there is the coherence that the student brings him or herself. This might be from pre-existing knowledge or experience (RPL, cross-crediting etc) or particular scholastic aptitude or interest in a range of subjects. There are also the circumstances in which the student studies (ie: they might be working, or care-giver etc) which also impacts on the coherence of the programme of study. Or in the case of vocational training the demands and economic interests of the employer or industry. Over time universities have had to adapt to meet student coherence through greater choice on subject matter and also delivery mechanisms. Many of our academics in the 1970s and 80s (well the ones that went to Oxon or Cantab) spent many a morning at a Senate or Academic Board meeting wailing against “super-market education” and wishing to impose a pre-determined highly prescriptive outline of what should be taught and how. In an more democratic (read less authoritarian)environment post 1968 of increasingly distributed non-hierarachial decision-making (something of course academics themselves enjoy once they are ‘members’ of a university but, for at least some of them, would not wish to extend the courtesy to students) universities (well until 2010) in this country have had to move resources around to meet student coherence as well as meet the demands of the other two (particularly in the case of qualification coherence the introduction of new knowledges). All of this (it is taken) is within the material constraints of time/money/technology/human capital. Devolved student decision making as a driver of resource allocation within universities might be seen as ‘market-led’; and therefore ‘right-wing’ and therefore ‘a bad in and of itself’. But there is another way of looking at it. In fact it is the constraint of academic choice (hardly mentioned in the rush to academic selectivity and therefore higher ‘academic’ standards) which will result in sub-optimal educational outcomes as a result of the latest attacks on access. But that, my friend is for another day. Does this help? Sorry to talk about actual educational processes when we should be talking about the TES or investment plans. It won’t happen again.

NMG

July 3rd, 2010 at 11:31 am

@Paul – on your argument that if Parliaments legislate functions, they should pay for them….maybe. It’s not like universities don’t get some benefit of having their status protected in law – they get massive barriers to entry, and semi-monopoly powers.

Surely that’s compensation enough for these legislated functions…which they don’t seem to carry out in any case?

July 4th, 2010 at 9:09 pm

@Dean – I’m not 100% sure I completely followed your argument, in particular the key sentence where you say, “it is the constraint of academic choice . . which will result in sub-optimal educational outcomes as a result of the latest attacks on access.” Does that mean the constraints imposed by academic choice or the constraints imposed on academic choice, and are you referring to the choices of academics or the academic options available to students? Sorry to be dense!

July 5th, 2010 at 10:49 am

Sorry Dave, I was madly typing (and at times clarity was lost at the expense of haste and emoting). My point is that, as you know, I have always thought that academic interest and scholastic aptitude should the key determinants of resource allocation within higher education. Student choice (the location of decision-making) has an important role to play in efficient and effective education allocation. As you will know I have supported greater levels of selectivity re: university entrance; but only where there is a coherent academic ‘pipeline’ and strong support for equity of access. The New Zealand tertiary education system does not do those things well (there are some examples BOP Poly/Waikato Uni etc). I am very concerned that knee-jerk/ad-hoc restrictions in choice/access (both at an intra and inter institutional level) will result sub-optimal educational outcomes. Some improvements in educational performance will come from greater levels of selectivity (which I support). There is, of course, a simple, coherent, effective proven way out of all this which meets the test of academic excellence and equity of access. “Open access to the system; not access to specific institutions.” Since 2000 i have advocated a federal university system educationally integrated into other areas of tertiary education: A revised University of California system. But that would take the NZVCC to show genuine academic leadership of the sector; TEC to be far-sighted and strategic; and MoE to incentivise the funding system appropriately. As Kant said “Ought implies can.” I have put my money on Uruguay winning the World Cup instead. Does that make it any clearer?

July 5th, 2010 at 4:30 pm

Yep, that makes sense. And it’s an interesting suggestion. As I said in my previous post (a few months ago) it would be good to have an actual debate on the ‘open entry’ question, rather than a series of ad hoc decisions!

July 5th, 2010 at 7:23 pm

the secret, of course, is the academic pipeline and preparation of students. The key? Ensuring a % of university places to those with associate degrees (you will remember those from one of the many TEAC recommendations not implimented by either of those stellar examples of the New Zealand civil service: TEC or NZQA) from polytechnics (in the case of California: community colleges). Of the many good things about ED the range of options being put fwd into the public space is great (see Dave G’s latest post).

July 6th, 2010 at 11:56 am

Ah Dean, a simple, logical and efficient pathway for learners. A single University of NZ with 8 constituent University Colleges and 20 Community Colleges. The role of the Comunity Colleges is to provide low cost (yes low cost) access to two years of post-school education. This is provided at three levels, community and adult education, Trades and Technician. The Technician level qualifications lead to a Diploma or Associate Degree with full credit recognition to any of the 8 University Colleges. The Community Colleges would also be linked very closely to ITOs which would develop nationally recognised qualifications delivered mainly by the Community Colleges.

No, makes too much sense and would save too much money. Will never happen.

July 6th, 2010 at 4:25 pm

almost my perfect model Jim. To a tee. I have been advocating almost this exact model now for 10 years. I know others who also share the vision believe in this model too. Your final two sentences say it all. Oh also it is based around educational principles and focused on the student/learner and would require a smaller more-cost effective centralised government agency: ergo it will never happen. Remember most civil servants are there for themselves.

Neville M Blampied

July 22nd, 2010 at 2:49 pm

Contributors to this debate may be interested in an article by stephen Parker, VC of Canberra University, in The Australian (14 July, 2010).

Parker argued that each Australian university should have an associated polytechnic. Polytechnics would undertake the provision of teaching-only courses/qualifications (associate degrees, diplomas, and advanced diplomas) and universities would provide “research-led education” (degrees) and that this should be strictly enforced (no teaching-only courses at university, ever). Pathways of study would lead from the polytechnic qualifications to the university qualifications. There would be a separate vocational education sector providing certificate-only qualifications.
See “Need for new system must end in tiers”, The Australian, Higher Education Supplement, p 25.