Fees should be a no-brainer for socialists


ECONOMICS:A DECADE AGO, in the final year in which the better-off had to pay university fees for their offspring, I noticed a bill from Trinity College, in the amount of £1,500, on the desk of a friend. "That's the second £1,500 bill I got today," he said. "The other is from the yacht club. Why does the Government want to pay the one and not the other?"

Minister for Education Batt O'Keeffe, in re-opening the question of fees for third-level education, called for a rational debate on the many complex issues involved. Early indications are that he will be disappointed.

O'Keeffe was careful to stress that he did not favour fees for lower-income groups, and it is certainly the case that higher education would be prohibitively expensive for poorer families if fees covered a significant portion of costs. Medical graduates, for example, are currently receiving taxpayer subsidies of over €100,000 each over their undergraduate careers. But what the Minister seems to favour is a scheme where the poorest would continue to be subsidised. Most of the political responses to date are just the usual pandering to middle- and upper-income voters, the beneficiaries of the 1995 decision to phase out fees.

That decision, bizarrely, was introduced by the Labour Party, who continue to defend it robustly. Labour's Ruairí Quinn denounced O'Keeffe's initiative as "a right-wing, retrograde step". Fine Gael, the Progressive Democrats, the Green Party and Sinn Féin dashed off boring, ritual condemnations.

Biologists have identified a phenomenon in the evolution of species called "deceptive coloration". Sea and land animals disguise themselves by adopting over evolutionary time an appearance which makes them merge, in the eyes of predators, into the safety of their background habitat. Politicians do this too. It is not politically respectable to campaign for subsidies to the better-off, so it is necessary that the poor be identified as beneficiaries. The truly poor are as well represented in universities as they are in yacht clubs, and politicians defending middle-class interests must rely on deceptive coloration in order to outfox predators. The resulting Spot-the-Socialist competition is a bit of fun, but no help to Batt O'Keeffe.

There are three critical issues raised by the reintroduction of fees. The most important is the hugely regressive nature of free higher education. The poorest people in our society struggle to get their kids through school at all. Richer parents voluntarily pay fees to second-level schools which can grind out better points scores in the Leaving Certificate, qualifying their children for rationed places in professional faculties which promise high-earning careers.

Taxing the public at large to subsidise the kids of the professional middle classes redistributes from the poor to the rich. This should be a no-brainer for socialists and social democrats, even from South Dublin constituencies.

Free fees are an exchequer cost. The abolition of third-level fees made little sense in the mid-1990s, when the public finances were healthy. It makes less now, given the dramatic collapse of Government tax revenue. Next year, tax revenue will be short, as against the figure expected in December 2006 before the downturn commenced, by at least €7 billion, and possibly by as much as €10 billion. The deterioration has been the sharpest on record, and has shocked even the pessimists. The Government has no choice but to cut unnecessary spending on both current and capital programmes, and subsidies to better-off college students are unnecessary.

The extent of the public finance crisis has yet to sink in with a lot of people, including some Government Ministers, it would appear. The reintroduction of fees will help the exchequer in due course, and obviate the need for cuts elsewhere. It will not help the universities and colleges very much, since the Government will cut its subventions in line. The university presidents seem to think that the Government will reintroduce fees and maintain the subventions. Not a snowball's chance in the current fiscal environment.

The final consideration is the impact on the colleges themselves of the reintroduction of fees. The universities had substantial fee income prior to abolition, unlike the institutes of technology, which had always been free. Universities are now more heavily dependent on money dished out through a bureaucratic, centralising quango, the Higher Education Authority. Each university appears to have built an internal bureaucracy in sympathy, and the Minister has understandably initiated a cost review. Irish universities' costs are opaque, given the poor public availability of routine accounting information, and there is widespread evidence of a spending spree on administrative overhead. Free fees have also cut the financial link between the colleges and their customers, and the effect has been to convert them into non-commercial semi-state bodies.

Restoring fees, and a bit of competition for students, should help refocus universities on their core business - teaching undergraduates.

Colm McCarthy lectures in economics at University College Dublin