31 July 2009

Beware of centralised funding

We are seeing a lot in the media these days about a possible Commonwealth takeover of responsibility for funding the nation’s hospital systems. The siren song which is seeking to lure us all onto the rocks of this proposal is the idea that the hospitals will still be run by the States; the Commonwealth will just have responsibility for the funding, and that will end “the blame game”.

If you believe that you will believe anything. Who pays the piper calls the tune, and this iron law certainly applies whenever it comes to centralised funding of major public systems, no matter how attractive that notion might seem on the surface.

Of three things we may be sure regarding centralised funding systems:

- There will still be a group of institutions competing for the central funding, gaming the system for all they are worth, and watching like a hawk who is getting how much, and for what purpose.

- The requirements for demonstrable “equity” and “transparency” will lead the centralised bureaucracy that administers the scheme to flatten out the policy landscape and stifle innovation, by establishing detailed criteria for determining “need”. In this environment, attempting to do anything new or different simply reduces an organisation’s ability to capture funds from the central pot – new and different things will not meet the criteria.

- The blame game will be alive and well; whenever anything goes wrong the Commonwealth will argue that the hospitals are operated by the States, the States will say that the problem is the conditionality which the Commonwealth attaches to the funding, which shapes the way they have to go about their business.

A couple of home town stories will illustrate the problem.

In 1928 the New South Wales Department of Education established in Armidale the first college to be established outside Sydney – the Armidale Teachers’ College, a specialised institution dedicated to providing non-degree training for primary and junior secondary teachers, and established specifically to train country teachers for country service. I am sure that the founding fathers of that very successful institution, such as C.B. Newling, its principal from 1928-47, felt that they were building something that would be a permanent feature of the New South Wales landscape, something that would develop its own culture and traditions and make an enduring contribution. The imposing building on South Hill that was constructed to be its home, now known as the C.B. Newling Campus, certainly denotes ambition of purpose and an intention of permanence.

Certainly the leading lights in the establishment in 1938 of Australia’s first regional university, the University of New England (initially the New England University College of the University of Sydney) felt that way – they felt that they were participating in a bold new experiment, an attitude which was still very much alive when I was a student there in the first half of the 1960s. From the outset the University grappled with the issues of students living far from home, in a small town with limited rental accommodation, and came up with the solution of a fully residential university, established on the basis of colleges (not halls of residence), which would have their own networks of Resident- and Non-Resident Fellows. This arrangement provided both an enhanced academic experience and an infrastructure for the delivery of a certain amount of pastoral care.

For the purposes of my argument you do not have to accept that this is a superior means of delivering university education – just to accept that it was different, indeed unique in the Australian experience.

It acquired another unique feature in the early 1950s. The State Labor Government of the day was very interested in the delivery of tertiary education to external students – for example, two-year trained teachers in country towns. Sydney University (which had opposed the creation of New England University College tooth and claw) wouldn’t play. The Government turned to the leadership of NEUC and enquired whether, if it became an autonomous institution, it would be prepared to deliver degree courses to external students. The answer was resoundingly in the affirmative, and NEUC became the autonomous University of New England, with State Government funding, from the commencement of 1954. The optimism and enthusiasm with which the University looked to its future were marvellous to behold.

Then, in about 1964, along came centralised Commonwealth funding of tertiary education, and the establishment of the Commonwealth Universities Commission to administer the funding. From that time on the notion of a fully residential university, and all the intangibles that went with it, was doomed, because it did not fit the template. It took a few years for that to work its way through the system, but that was the inevitable outcome.

Then, in Jolly John Gorton’s time, Colleges of Advanced Education were invented. This was the death-knell for Armidale Teachers’ College, because to become a CAE and qualify for the Commonwealth funding that was now available for the non-academic tertiary institutions, it had to become “multidisciplinary” – it could not remain a specialised teacher-training institution and qualify as a CAE. So it began to introduce other courses like nursing and aboriginal studies. These courses no doubt had their own merits, but their introduction was not driven by any perceived need for course delivery, it was driven by the need to qualify for Commonwealth funding, and was a distraction from a vital role the institution had been playing for over thirty years.

Then in the late 1908s the Commonwealth Minister for Education, John Dawkins, allowed himself to be persuaded that in order to be “efficient” Universities had to be large (a proposition that would no doubt surprise Caltech, which had a smaller undergraduate population than UNE), and the University of New England was merged with the Armidale and Lismore CAEs and Orange Agricultural College. It is not obvious to me that there were any efficiency gains to be had by “amalgamating” campuses hundreds of kilometres apart, particularly when governments responded to teacher and academic union pressure by promising that there would be no job-shedding. Nor were there obvious academic gains to be had from amalgamating one university, with a fine research reputation, with three non-research institutions.

The whole exercise brought the University of New England to its knees, and had to be undone some years later, leading to a painful process of disamalgamation. By the time that was complete, Armidale Teachers’ College had disappeared from the landscape completely, aside from its legacies of a grand building and the magnificent collection of Australian impressionist art embodied in the Howard Hinton Bequest.

As far as the blame game is concerned, John Dawkins always argued that the amalgamation was not a requirement of Commonwealth policy, the problem was the way the New South Wales Minister (Terry Metherell) interpreted and chose to respond to the policy.

My point about these tales of woe in relation to centralised funding models is that not a single one of the steps taken in relation to the University or the Teachers’ College was informed by any consideration of what contribution those institutions were making to society or what was best for them and their stakeholders. They were simply the (presumably unintended) consequences of one-size-fits all funding approaches conceived in faraway Canberra, and contoured as ever around what was deemed to work best in the capital cities.

So forgive me for not throwing my hat in the air at the prospect of the Commonwealth taking over the funding of the hospital system.

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