The Senate has rejected the Coalition’s plans to deregulate university fees, cut university funding by 20% and extend government subsidies to private providers, despite a few modest measures offered at the 11th hour to attract the support of crossbench senators earlier this week.

Education Minister Christopher Pyne plans to re-introduce an amended bill to the Senate in 2015, with further modest changes to win the votes of crossbenchers who still oppose the bill. But some commentators seem sceptical that the bill would have a strong chance of being passed the second time around, at least in its present form.

Just as there is no federal budget crisis, so there is no higher education funding crisis requiring ill-considered fixes. Rather, there is a government determined to cut universities’ funding substantially and universities wanting to increase fees to compensate for the cuts, to increase their funding and to insulate themselves against possible future cuts to government funding.

There is a concurrent – and largely ideological – debate about the merits of deregulating fees and the resulting increase and vertical stratification of university fees, funding and presumably quality. But if deregulation is voted down a second time, there is an alternative to ensure universities don’t suffer the cuts without any means to make up the funds.

An obvious ‘Plan B’

Even conceding that the government should cut its funding of public universities and even conceding further that the full cut should be made up from increased student fees, the government could just raise its caps on student fees. An increase of 30% would compensate for the Coalition’s planned cuts. An increase of 55% would compensate for the cuts and give universities the 10% funding increase they argue they need.

An increase in fee caps of 100% would allow for the reasonable spread of fees the universities insist they would introduce. An increase of 200% would give universities scope to increase fees over at least the next two terms of parliament, and would give governments scope to further cut funding.

An increase of 265% would allow the University of Western Australia to introduce its planned fees of A$16,000 a year for all its undergraduate programs.

Down the market path

Two related issues are the demand-driven system and extending government subsidies to private providers. Both were recommended by the Bradley review established by the Rudd-Gillard government, and the Coalition’s Kemp-Norton review recommended that the demand-driven system be retained. Both are consistent with the increased competition in higher education sought by the Coalition.

However, both measures increase government spending substantially. They therefore may lead higher education down a similar path to vocational education, of governments cutting funding of public providers to extend subsidies to private providers. That may be unavoidable with Labor and the Coalition’s current bipartisan support of markets as the main mechanism for providing public services.

Where the government went wrong

The Coalition got two big things wrong in its first attempt to radically change higher education financing: policy and process. The merits of the Coalition’s policy have been debated extensively in The Conversation and elsewhere, so there is no need to rehearse them here. But the debate has resembled political guerrilla warfare. Supporters, opponents and amenders of the Coalition’s policy have engaged in ad hoc contests over the policy at different times and venues.

There has been no forum in which all those interested in the policy have had an opportunity to share their views and at least dispose of the issues that attract least support, if not reach a consensus on the whole policy.

This raises the second big mistake in the Abbott government’s first attempt to introduce its changes: a botched process. It seems that the major parties no longer develop policies in opposition and seek to persuade the electorate of their merits. Compensating somewhat for the lack of policies in election platforms has been the long tradition in Australian higher education of making policy by public committee of inquiry.

The National Commission of Audit report, which was eventually released in May 2014, recommended major changes to higher education financing. These hadn’t been previously canvassed by the Coalition nor in a higher education review. The commission recommended a 12-month consultation on fee deregulation.

The 2014-15 budget revealed the government’s plans to deregulate fees without any consultation with the sector. The Coalition’s failure to consult on its plans led to increasing frustration and an increasingly fractious debate.

Gavin Moodie is adjunct professor of education at RMIT University which would lose substantial funds from Government cuts to higher education funding but would be likely to raise increased revenue from increasing its student fees.