Threats about research funding and changes to its higher education legislation reveal just how desperate the Abbott Government is to deregulate higher education fees. It's clearer than ever that this is ideology in search of a problem, writes Stephen Parker.

The Government's decision today to split the higher education reforms into separate bills, so that a 20 per cent cut in teaching grants is to be debated separately from the deregulation of domestic student fees, helps us see more clearly what the agenda has been.

Saving money for the federal budget was always secondary to the central goal of strengthening competition and private markets in higher education. I said last year that this was ideology in search of a problem, and thus it has been shown today.

Let's step back for a moment. Australia has one of the best university systems in the world. This status is not under any particular threat except perhaps to the extent that the rankings of all universities from developed countries are challenged by the massive investment by China in their system, including into a small number of potentially elite universities.

More Australian universities appear in world rankings than a decade ago, courtesy of the current funding system. It is true that some are overtaking others within the Australian group, which is no doubt causing great angst to some vice-chancellors. But there is however nothing in the world-rankings of Australian universities to suggest a problem, let alone a crisis.

Australian taxpayers contribute one of the lowest proportions in the developed world to their universities, with the balance being picked up almost entirely by students who borrow their contribution from the taxpayer. Universities Australia in a submission to the Senate earlier this month estimated that in 2011 Australia ranked 30 out of 31 OECD countries for public investment as a percentage of GDP. There is no sense in which the taxpayer is being milked.

Universities Australia also argues that Australian universities face a long-term sustainability problem, but since 1947 vice-chancellors have been arguing that they need more money (even whilst our system became one of the best in the world), and if public investment rose even to the OECD average, our strength would be assured for a generation.

The main beneficiaries of fee deregulation will be Australia's sandstone universities, the Group of Eight. It won't be the taxpayer because amendments today and in December ensure that the system will cost more, not less. Fees will go up, the Government will advance the full amount to universities by borrowing at the long-term bond rate and by recouping the debts from students at the lower CPI rate. A rise in tertiary fees will also lead to a rise in the CPI, so all government outlays (for instance, certain welfare payments) linked in some way to CPI will go up as well. And as graduate debt goes up, non-repayment rates will also go up.

Younger universities, which have not yet had many decades of taxpayer dollars to build a strong brand, might benefit to some extent depending on their local market conditions.

Regional universities are thought to be the most vulnerable, but I'm not so sure. No sane private provider is going to move into these areas, except to pick any cherries that have not yet been picked. Regional universities have a de facto monopoly in many courses and could price them in the knowledge that local students would otherwise have to pay accommodation and other living costs in the nearest large city. If the regional universities also manage to extract an adjustment fund out of government it will be a masterful piece of manoeuvring.

As is to be expected from the introduction of more market forces in any sector, there will be winners and losers (or at least winners which benefit less than other winners), and the university sector will be further stratified from the traditional elites (to which the children of affluent families go) at one end to the open access, less-resourced campuses (to which other children go) at the other end.

The interests and views of the world will become so diverse amongst universities that their peak body Universities Australia will break up, unless perhaps Group of Eight vice-chancellors come to some meetings for a while as a form of noblesse oblige.

Tragi-comedy seems to have been averted today by the delinking of funding for the National Collaborative Research Infrastructure Scheme from the passage of the reforms. The fact that it was even contemplated shows how much the Government wants deregulation of fees.

I can't say how much, if any, of the reforms will now pass, but when going to the polls next time, the electorate might reflect on how it came to be that in March 2015, Parliament was debating measures under which universities would cost the budget more, students would pay more, policy was made on the run, and none of it was foreshadowed when they went to the polls last time.

Professor Stephen Parker is vice-chancellor of the University of Canberra.