At first sight, the deregulation of fees for higher education announced in Tuesday’s budget is about the affordability of the advanced education typically required to enter middle-class professions. Ever since Whitlam removed the barrier of cost, it has become conventional to puncture the arguments for universal state-funded higher education by pointing to the personal financial gain that accrues to those with university degrees. That has proved a devastatingly effective tactic, persuading successive Labor and Liberal education ministers, and sinking the proponents of a state-funded system in their chardonnay.

First John Dawkins called for a modest ‘contribution’ by students to be drawn out of their future earnings through the tax system. Amanda Vanstone significantly increased this contribution – and it has risen under the various ministers since. Pyne, it would seem, has simply taken the process to its logical conclusion. The cost of degrees will no longer be determined by some government agency’s arbitrary notion of its value but according to the level of demand. If doctors stand to earn three times as much as the nurses whom they work alongside then it is right and proper that they should pay three times as much. As fees need only be repaid once students are earning, this should not discourage students from poorer backgrounds, especially when the budget has allocated extra funds for means-tested support and the like.

Australian universities have long been internalising this logic. In an analysis of the Organisational Change Impact Statement issued by Latrobe University in 2012 as it sacked 41 academic staff, Katherine Bode and Leigh Dale showed that the senior management could rationalise their strategy only in the terms of the market for students, and could only work on the assumption that students desired to be marketable – that is, to make themselves into attractive labour commodities.

Pyne will expect, perhaps even welcome a flare-up of student protest. Beyond the schadenfreude of seeing leftist students writhe, he knows there is negligible political impact to be suffered from the discontent of a group perceived to be shrill and privileged. In any case, the incoming policy will not affect the current cohort. Vice Chancellors will quickly adjust their thinking and get on with the business of tuning their staff to bid for now fully marketised student consumers.

The steps towards full fee deregulation have appeared to be incremental, but this should not blind us to the fundamental break that Pyne’s policy will effect. It will be the final expiration of Australian public universities as Universities: as civic institutions formed around the pursuit of unprofitable truth. This not a demand-side calibration of the price of critical thought. Pyne is attempting to divert the working basis of knowledge in our society.

This policy clinches and fully institutionalises the worldview that understands education entirely as a private good. The public benefits of major scientific discovery, of rigorous social diagnosis, and of cultural imagination will henceforth be the efflorescence of private ambition – a kind of knowledge philanthropy.

It is, in other words, overt and target-driven counterrevolution that sets out to erase the social instinct for democratic knowledge distribution. To state this is not to prophesy the immediate cessation of critical disciplines. The more established universities will, of course, retain these in some form and their students may graduate with a more-than-instrumental conception of the attributes cultivated in intensive study. The rub is that these will be the corporations that are strategic and/or fortunate enough to be in a position to adopt the University as their business model. Their essence is to be companies, their corporate strategy to be universities, conforming to the characteristic inversion of use and exchange value in commodities. This can only have the effect of disinfecting any socially disruptive consequences of autonomous thought, whose raison d’etre will hence rest on a notional and abstracted ‘skill-set’.

If this appraisal sounds overblown, we need only look to the recent devastation of British public higher education thatfollowed from the enforced introduction of full fees in the place of direct subsidy. To get properly abreast of those developments I recommend reading Andrew McGettigan’s The Great University Gamble, and the archive of his blog, http://andrewmcgettigan.org/.

To summarise some of the more salient points from his analysis:

Deregulation aggravates debt

As in Australia, the move towards deregulating fees was justified within a political narrative of deficit crisis. In fact, the outlay in England on higher education through the new loan system dramatically increased in the short- to mid-term; something disguised by the Treasury practice of listing loans as assets. The point at which the government would break even was initially projected to be around thirty years after implementation. Developments over the last three years suggest that it will be much longer, and will soon be more costly to the state than the previous system of direct subsidy. Such fiscal pressures have caused further budget crisis in the ministry, which been redressed by cutting the support for students from poor backgrounds – a sop to get the reforms through parliament in the first place.

Pricing signals are inappropriate

If it is to be conceived as a commodity, university education is best understood as a positional good; it promises future opportunities, not immediate satisfaction. With the sudden introduction of pricing signals, universities are incentivised to charge the most that they can in order to project their confidence in the opportunities that their degree products will provide. This has the effect immediately of driving up costs as universities seek to position themselves at the top of the market or at least upwardly mobile. Students are particularly vulnerable consumers as they do not face upfront costs, and securing a place in a particular course tends to make them optimistic about their prospects. The UK universities minister David Willetts at least set a ceiling on fees. There is no indication as to how Pyne will restrain loan expenditure to prevent cost blow-outs.

‘Ryanair’ user-pays provision

Those institutions which seek to position themselves at the bottom of the market tend towards a stripped-back ‘user pays’ teaching model, in which students get only what they pay for. Students at the newly established Coventry University College, for example, can browse but not borrow from Coventry University library and do not have access to its IT and sports facilities, nor, in the words of CU’s Pro-Vice Chancellor, ‘the social side of the university’.

Survivalist competition and private equity

In a fully-commodified marketplace, all of a university’s activities are tied to its ongoing financial viability. This incentivises upfront investment to get ahead of, or at least keep up with the competition. The most obvious way of raising capital is to issue bonds, whose holders naturally will take a keen interest in the university’s finances. This severely limits the capacity of universities to retain unprofitable disciplines or establish new or interdisciplinary fields of study except where the immediate economic benefit is assured.

Corporate group structures usurp the university’s civic mission

In England, universities are publically-listed charities, established with a clear civic mission. This can make it difficult for capital to bring their activities to heel within existing legislative frameworks. McGettigan shows how not-for-profit universities get embedded in group structures in which private companies strip their revenues for profit by selling them services and infrastructure.

New Providers

At the centre of Willett’s strategy is encouraging new private providers into the market. When Pyne speaks of his wish for ‘diversity’, it means the same thing. As building and staffing new universities on the traditional model is uneconomic for new entrants, this effectively means inviting large multinational companies such as Pearson PLC, which has a $10 billion capitalisation, to come to the market with a cheap mass-product that can be ratified by existing but financially vulnerable universities. Access to income contingent loans thus has been described by financiers as ‘treasure island’: a commodity proofed against risk on the grounds that it serves the public good.

In a recent speech in London, Pyne spoke of his hope that Australian universities will evolve to emulate the diversity of institutional forms in the United States. It is as though the US system were somehow the spontaneous result of uninhibited consumer choice, and not itself a contested system of private and public interests. There is no evidence that ‘freeing’ established higher education institutions to charge what they like will have the effect of producing Harvards or Amhersts. What is much more probable is the arrival on our shores of enterprises like University of Phoenix, which spends up to twice as much on marketing as on teaching, where the drop-out rates are as high as 80 percent, and recruiters follow scripts that salt the wounds of potential applicants. When the same notion of emulating US universities was proposed by Willetts, it was pointed out that the private-public system in the United States performed extremely poorly by comparison, both on quality and cost.

Pyne has supplied no evidence to show how deregulating fees will be more economically efficient, produce better institutions or allow Australian universities to ‘keep up’ with the pace of global competition. There is much evidence that it will stimulate predatory commercial practices that have no educational benefit and which will establish an unbridgeable gap between those who can and those who cannot afford a true university education.

We need protests more fierce than those provoked by Dawkins’ restructuring and any the various reforms following it. Pyne wants to secure the trajectory of the privatisation of higher education, robbing Australians of one of their most vital and successful public goods.

[A longer version of this essay has been published in the Sydney Review of Books]