Guest Post: A bad report based on shaky foundations, Productivity Commission verdict

Posted By TEU on May 18, 2017 | 1 comment

One week after a public forum in Auckland critiqued the Productivity Commission’s report into new models of tertiary education, independent economist Brian Easton shares his thoughts on what the recommendations mean for the sector.

I do not think one should dignify the Productivity Commission report with any praise. It is a bad report based on faulty foundations and a complacent one ignoring the issues it should have looked at. But these issues do not conform to its thinking.

For instance, the commission observes that the ratio of non-academic to academic staff in the sector is rising (by about 20 percent in five or so years), but it does not bother to investigate why.

Everyone is critical of the Performance-Based Research Fund (PBRF) but the commission lacks the wherewithal to investigate how it might be improved.

There are obvious concerns about the quality of teaching and delivery of some institutions but the report does not even consider how extensive the problem is, even as the sector drifts increasingly towards certification.

Why does the report not grapple with the issues that face the tertiary education and training sector? The short answer is because it sees competition as the solution to everything. Any defects are temporary to be resolved by competition working its way through the system. Yeah right.

The commission is so committed to competition by business units as the only way to run a sector that it does not need to evaluate how well the sector is doing, other than to identify where competition is being hindered by the government.

For competition to work effectively it requires a number of conditions, many of which do not apply to the tertiary education sector.

First, it requires that the output of a business can be well evaluated.

This is the reason why the commission does not try to distinguish between education and training. Even the metrics it proposes – which do not align with the outcomes the sector might want – hardly exist. Some of the metrics it proposes will distort behaviour (in the way the PBRF has).

Second, it requires that the recipient of the output can make good judgements of its quality.

But isn’t the point of education that students can really make good judgements only after they have finished the course?

Third, it requires that the business is operating near the point where any economies of scale are exhausted. Not generally true here – just ask Lincoln University.

Fourth, it requires that there is an alignment between the funding and the consumer. True when you purchase a can of spaghetti at a supermarket; certainly not true in education.

Finally, it requires that the production unit has a hierarchical business structure.

Often not true in an educational institution, although they are being pushed that way. (Incidentally not true in the US government, as Donald Trump is finding out.)

The Productivity Commission ignored all these inconsistencies with the model they are trying to impose on the sector. (In fairness to them, the model has been being imposed on tertiary education sector ever since Rogernomics and the Hawke report).

Instead the commission fantasied a problem and used it to propose moving the sector further towards the business market model.

It claimed that the sector is not innovative enough. (‘Innovation’ is the current fashionable term – nobody knows what it actually means, but people seem to think it is a good idea.) The report did not provide any evidence; it just posited it, assuming it was true because the sector was only imperfectly competitive.

And so we have a Procrustean exercise of getting the tertiary sector to fit the model; in fairness to Procrustes, he first looked at the evidence of whether you fitted the bed. This is not an evidence-based report.

You may think it is futile to object to the steamroller of the competitive business model which the Productivity Commission is advocating. But someone has to.

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