Part 1  the 1974 decision to abolish  university fees and the coming of HECs-

The Whitlam Government’s abolition of university fees in Australia in 1974 represented middle class welfare at its worst. It made university education much easier for the middle class and more difficult for students from working class backgrounds. It was one of the first examples of the embourgeoisement of the labour party which has  continued at a pace ever since.

Introduction

Just prior to the 1974 decision by the Whitlam Government to abolish university fees about 8% of the Australian population had university degrees, this compared with 35 % of the US population, about 10% of the UK population  and 12 percent of the French population. By 2020, these percentages had become 51%, 50%, 51%  and 42 percent, respectively. From a lower base, tertiary education as a percentage of the population,  had grown more rapidly in Australia than in any comparable country.

Cause for celebration? I hold mixed views. The Whitlam reforms ushered in massive structural change in Australian higher education with mixed and, it is arguable, adverse impacts on rates of return to education, graduate unemployment rates and more importantly  a diminution of the role of education in social mobility in Australia . Put bluntly the thick middle class benefitted far more than the intelligent working class.

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The Structure of Australian Higher Education in 1975

In 1975, the structure of Australian higher education was characterized by a diverse array of institutions and a rapidly expanding system. This period was marked by significant changes driven by well-meaning but flawed government policies aimed at increasing access to higher education and responding to the growing demand for skilled professionals.

Types of Institutions

The higher education landscape in 1975 included several types of institutions:

Universities: There were 19 universities in Australia at the time. 1. These institutions were primarily focused on providing undergraduate and postgraduate education, as well as conducting research. Universities were in major cities and regional centres, offering a wide range of academic programs.

Colleges of Advanced Education (CAEs): CAEs were established to provide vocational and professional education. They offered diploma and degree programs in fields such as teaching, nursing, and engineering. CAEs were designed to be more practically oriented compared to universities, focusing on preparing students for specific careers

Technical Colleges: These institutions provided technical and vocational training, offering certificates and diplomas in various trades and technical fields. Technical colleges played a crucial role in meeting the demand for skilled labour in industries such as manufacturing, construction, and services

Teachers’ Colleges: Dedicated to training primary and secondary school teachers, these colleges offered specialized programs in education. They were later integrated into universities and CAEs as part of broader educational reforms

As part of this system, the Universities, in particular, had a well-developed part-time and external study system. For example, the University of Queensland had rule by which every undergraduate course taught in the day had to be available to part-time students at least once every two years. This enabled part time students to complete a degree course in reasonable time. This system produced a number of distinguished Australians including  former Treasurer and Governor General Bill Hayden who studied economics part-time at the University of Queensland. Contrary to  accepted wisdom, this kind of system allowed ease of access to university education, especially to city dwellers.

In essence this system, supported by means tested  scholarships and flexible and plentiful  part-time study options was in equilibrium, with no noticeable market failure in producing enough tertiary trained students to supply the labour market,   By 1974 there was little evidence that Australia was facing a major supply problem for undergraduate the average annual growth rate of the Australian economy from 1965 to 1974 was approximately 4.3%, which  would be the envy of most recent Treasurers.

Government Policies and Reforms

Within this system of relative equilibrium in higher education the Whitlam Government’s reforms in the early 1970s had a profound impact on the structure of higher education.

The most notable reform was the abolition of university tuition fees in 1974, which aimed to make higher education accessible to all Australians, regardless of their socio-economic background, The costs of full-time university attendance was made up of fees, accommodation, and other living expenses. In 1975, fees were only a small part of these overall expenses  The (at the time) popular move had the effect of changing the economics of university attendance because the lagged effect of these changes was a reduction in the real value of Commonwealth scholarships   which (under means testing) were most beneficial to students from lower socio- economic backgrounds and from the country.    The results were significant in 1975, approximately 24,000 students held Commonwealth Scholarships in Australia from a population of students of 110,000 full time and 38% part time. As scholarship holders were overwhelmingly part time , commonwealth scholarship holders  made up 21 to 22% of all students

By 1990, approximately 15% of university students in Australia held Commonwealth Scholarships  and this fell to 10% by 2005, a 50% reduction since 1974. This trend emerged due both to an upsurge is student numbers and a marked reduction on the part of the Commonwealth to provide funding for students beyond fee reduction in 1990, there were approximately 441,000 university students in Australia . By 2005, this number had increased significantly to around 957,000 students

While this upsurge in student numbers was predictable and in line with the original policy aims, the Hawke Government quickly came to the  realisation that education is not a free good  and that a policy of free university fees represented a transfer of income in favour higher earners. They introduced he HECs scheme in 1989 by which , students could pay for tuition after graduating and when they were earning above threshold an amount. In other words, rather than a relatively low-cost fee structure that existed in 1974, students now could  use a hire purchase scheme to pay for education at a much higher rate than existed previously and with no set repayment plan. Predictably, student debt began to grow. However, the lessons of avoiding populist and gestures in education have still  not been learned with the recent and similarly ill-founded proposals by the Albanese Government to amortise current student debt.

This is not to argue that reforms were not needed in Higher education. In 1974, The sector was dominated by those from higher socio-economic status, it still is. Diversity has improved but the system is beset by  problems of student debt, graduate unemployment  at  an unimagined level and student dropout rates have intensified. Much of his dysfunction can be traced back to the disastrous policy changes that began in 1974

Conclusions

The 1974 decision to abolish university fees for undergraduates  was a political one rather than one caused by economic or educational imperatives. It was a deliberate attempt to appeal to the middle class and bring them into the labour party fold by the most patrician and bourgeoisie Prime Minister in Australia’s. history. It began the destructive path of providing populist and unneeded middle-class welfare which has become a hallmark of Labour Government ever since. Belatedly the Hawke Government realised that higher education was not free or a public good to be supplied on demand and without controls on course selection. At last, the financial and educational blackhole the earlier policies had produced. forced them to introduce a  HECs, scheme, which for some turned out to be educational  self-funding on the never never. This scheme in turn introduced another set of problems.

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