From a purely technical point of view, a bureaucracy is capable of attaining the highest degree of efficiency, and is in this sense formally the most rational known means of exercising authority over human beings.

Max Weber, weirdly enough, in the Australian Government “Report of the Review of the Measures of Agency Efficiency“, March 2011

Whether it was efficient or inefficient, I’ll leave it to you to decide, but I think you’ll agree that only death is truly efficient. Life is very inefficient and not cost-effective at all, from a health-care efficiency point of view.

Victoria Sweet, God’s Hotel

Higher education’s in the headlights in Australia this weekend, as the Federal government has announced plans to fund its schools upgrade by applying significant savings measures to universities, university students and their families.

Cunningly, the proposition was announced in a note slipped to the media on a Saturday when, as one television commentator put it this morning, “everyone’s watching the football.” (Which just goes to show that neither government nor media have any idea how higher education workers spend their weekends.)

People have commented on the logic of cutting support to one part of the educational ecosystem in order to fund another, especially in a village economy like ours. And it’s proving a first rate opportunity to watch apparently progressive, socially-aware policy being communicated awkwardly.

I’m an Australian higher education worker and I have three children in three different public schools. I understand conflict of interest, and I also get that this strategy is an important play for a left-facing government taking a very long run up to an election. There are more votes in the education of my children than there are in the wellbeing and fair treatment of my colleagues.

Still, I’m not convinced by a communications strategy based on the message that higher education has been enjoying government largesse to such an extent that this tiny setback shouldn’t disturb us at all. This is patronising. It underestimates the pragmatism, social conviction and resilience of the higher education sector, and obscures the details of the proposal that deserve careful, constructive thought.

Here’s the part that interests me. $900m of savings will come from the application of a two-year Efficiency Dividend to universities. The Efficiency Dividend has been operating in Australian government for over 20 years, and from certain angles it does come across as a standover tactic, particularly when applied to agencies irrespective of size–indifferent to whether or not they can actually tighten their belts further without passing out. It derives from the belief that public sector organisations in general lack incentive to achieve savings because they’re not profit driven, unlike businesses who offer performance-based dividends back to their investors. Public sector organisations, the thinking goes, plough any savings they make from efficiency back into improving the quality of their outputs.

The problem is that we can’t readily measure the Efficiency Dividend this way as it’s almost as hard to measure quality as it is to measure efficiency. How do we account for the transformation of individuals from one state of capability to another as a direct result of their educational participation? Typically we turn to outputs measured quantitatively (numbers of graduates employed, measurable salary benefit of being a graduate etc.), and inputs measured in terms of standards and risk minimisation (numbers of staff employed per student, level of staff qualification, fiscal and operating sustainability). Then we further apply proxies of reported satisfaction to the complexity of experience (student exit surveys), and finally we submit the whole fruit cake of institutional data to the show judge in the hope of ranking well.

And this is why we end up with plan B: efficiency troped as cost cutting. Like Mark Dapin, I grew up in Britain under Thatcherism, and I remember how strongly the case was made for improving public sector efficiency on the basis of accusations and assumptions about what other people would do if left to their own devices. What we got was socially bad policy ineptly disguised in political euphemism. The long-term result was Billy Bragg, and significant harm to the capacity of government, media and citizens in the UK to work together on more or less any topic.

So as we look at the mess Thatcherism made of the efficiency project, maybe this is a moment for those of us who work in Australian universities to try to tackle efficiency doctrine more purposefully, especially where we have the expertise to know that a blunt instrument approach will not produce good results. In fairness to everyone who will have to make this work, we need to generate both evidence and constructive suggestions, so that we can avoid the almost magnetic lure of false economy that Efficiency Dividend planning represents.

In terms of the bit I know, I believe we should treat both online education and casualisation as efficiency bait that we’d be wise to circle around for a while. Online education in particular isn’t in its infancy, but massively open courses are quite new. They’re soup du jour in efficiency circles because they suggest that content developed and delivered entirely on someone else’s dollar could help us lower the cost of teaching our own students. But we haven’t yet figured out how this would shape the way we develop locally relevant curriculum, or maintain capacity in our own sector; we haven’t confronted the long-term risk they represent to Australia in terms of import dependency. I’ve heard a number of people over the last week say that we’ll always have higher education because we’ll always have cinemas; it seems to me that if this is your view, you need to look much more closely at the economics of cinema in Australia.

So at the end of this odd weekend of TV celebrity for Australian higher education, we need not to panic or simply complain. We have been asked to step back in favour of another part of the education system. Done. But that being the case, we now need to speak up in precise and evidence-based ways about the opportunity cost of applying the Efficiency Dividend to something as complex and socially diverse as Australian higher education. The risks are serious, and can’t be addressed indirectly by fixing the separate, upstream problems of our school system.

For weeks, I’ve been reading Victoria Sweet’s account of her 20 years working as a doctor in the last almshouse in San Francisco, in her book God’s Hotel. The Lagunda Honda hospital was repeatedly subjected to efficiency audit during her time there, and repeatedly found to be in breach of the standards applied. But somehow, doctors and nursing staff working together had achieved extraordinary results in terms of patient care, restoring individuals to life who really had no business living. This continued until the application of measures applied by highly paid consultants to reduce staffing and increase compliance, that had the additional impact of increasing dependency on forms and reporting. Laguna Honda’s auditors lacked the experience to judge the value of the procedures they observed, and misread many.

Care diminished, workers were harmed, and patients lost out. But efficiency increased.

Related articles

• Government cuts university funding to pay for Gonski (abc.net.au)
• Uni funds cut to pay for school reforms (news.smh.com.au)
• University sector to be hit in Gonski reforms (theage.com.au)
• Funding cuts will hurt unis: peak body (news.com.au)
• Govt cuts uni funding to pay for Gonski (bigpondnews.com)
• Measuring Bowen and Baumol Effects in Public Research Universities (Martin & Hill, 2013)
• False Economies: decoding efficiency (Christopher Stone, Centre for Policy Development Public Service Program)
• Beyond the Blunt Instrument: the efficiency dividend and its alternatives (Jennifer Doggett, Centre for Policy Development)