Universities are among the institutions we should fund as a public good. They are worth funding in their own right and in the national interest. Just like hospitals, say, or public schools. Also like them, however, in recent years, universities have had difficulty reminding governments and the public of this with sufficient force to drive the allocation of adequate levels of public funding.

Current policy settings and funding arrangements do not reflect the importance of a high-quality, broadly accessible higher education system for a modern and sophisticated civil society. A well-educated population is a public good in itself. This is not only in terms of any benefits it might confer on the individual — the acquisition of knowledge, capabilities or qualifications — but also in terms of the benefits for the population as a whole for the levels of learning, innovation, adaptability, resilience and social values it instils and supports.

The idea of the public good has lost considerable ground, however, and something else has filled that space. In The Shrinking Nation, I argued that the working definitions of the national interest and the public good had been so narrowed down over the last three decades that they have become overwhelmingly concerned with the state of the economy rather than with the state of the nation or the health of the society. Indeed, I suggested, the state of the economy has operated as a proxy for the state of the nation, while the national interest and the public good have been reduced to the interests and commercial values of business and the resources sector.

This has reshaped the policy context in which the universities have operated. As Hannah Forsyth has noted in her history of the Australian university, by the 1980s, “university planning became economic policy, compelling institutional and political leaders to think about and manage universities differently”. What that new regime of planning did, she argues, was to explicitly “position higher education as an industry, seeking financial reward”.

The neoliberal push towards the privatisation of public sector institutions, organisations and services, and the marketisation of the relation between these privatised entities and their users, was the major influence here. Within the neoliberal orthodoxies that came to dominate public policy from the 1980s onwards, the market was the preferred mechanism for the distribution of resources and opportunities among the population. Commitment to the public sector eroded in the face of the private sector’s insistence that it was inherently leaner, more responsive and more efficient.

Consequently, governments around the world engaged in large-scale programs of privatisation. They marketised and commercialised services that had hitherto been run by the public sector. These included railways and other transport services, public utilities such as electricity, and the distribution of social welfare. Public authorities that had been responsible for the provision of essential services for the nation — the domestic water supply in the United Kingdom is one of the more extreme examples — were sold, often without much consideration of the possible negative consequences. These include what happens if there is not sufficient regulation to protect citizens against monopolistic commercial practices, how to manage prices if the projected competitive market doesn’t eventuate, or what would be the consequences if a business providing an essential service were to fail (as, indeed, eventually happened with the private providers of some of the United Kingdom’s domestic water supplies).

There were plenty of short-term attractions for national governments. Selling off their assets raised funds that could be spent elsewhere. But the long-term attraction was how these initiatives shifted the cost of these services and institutions out of national budgets. At the same time, it shifted the responsibility for their performance onto the private sector. Consequently, there was a whole raft of capabilities — many of them essential to the services infrastructure of the nation — for which the government no longer took direct responsibility.

The management of Australia’s public universities, albeit while never privatised to that extent, was a part of this. Indeed, in some respects, they had the worst of both worlds. While in many respects they were increasingly market-driven in a concentrated commercial sector, they were also not-for-profit institutions that were subject to detailed government control over their activities and to policy changes that treated them as an instrument of government policy. Among the consequences, they became much less lean, responsive and efficient.

Over time, the imperatives of the market displaced earlier formations of the purpose of a publicly funded higher education system. What’s wrong with that? Well, for a start, the university system should not be allowed to work like a market. On the contrary, the maintenance of a substantial knowledge infrastructure requires a long-term commitment to a comprehensive knowledge base that must be protected against short-term movements in the market.

There have been many moments when Australia has only belatedly understood this. When 9/11 happened, Australia discovered it had very little expertise in Islamic histories and cultures and was thus poorly placed to understand the forces behind the growth of radical Islam. That has taken years to rectify.

More recently, we have realised that managing the impact of AI involves not only technical computing expertise but also a broad range of social, cultural, medical and ethical considerations that have only now been put into the mix — well after the horse has bolted. In 2024, dealing with another concerning gap in our knowledge infrastructure, Foreign Affairs Minister Penny Wong raised the alarm about the national interests put at risk by the disappearance of the teaching of Indonesian languages, history and cultures from our schools and our universities.

A “demand-driven” system, however it is configured as a means of managing the funding of undergraduate enrolments, is not sufficient for the purpose of maintaining the nation’s knowledge infrastructure in the absence of complementary, long-term considerations of the national interest and the public good.

The responsibility for the protection of that national interest should not be left to our universities. Since their interests have been progressively redefined as commercial rather than public, they are no longer acting as disinterested custodians of our national capacities in teaching and research — either individually or as a sector. Nobody is. We hear constant talk about restoring our “sovereign capacity” in manufacturing. We also need to think about how we restore our sovereign capacity in the production of knowledge and the provision of expertise.

Finally, let’s remind ourselves of how poorly some of the recent directions in higher education policy have served the nation’s citizens. Here is one of the more disturbing examples.

In 2023, The Australia Institute’s Richard Denniss shocked his audience at the National Press Club when he pointed out that the federal government collected more in HECS-HELP student loan repayments ($4.9 billion) than it did from the petroleum resource rent tax ($2.2 billion).

These HECS-HELP student loan arrangements were put in place to broaden access to higher education, while shifting much of the cost of this access onto its beneficiaries at a point in their lives when they could afford it. The result of this policy now, years later, is that Australia is taxing its children’s pursuit of a tertiary education more heavily than it taxes those commercial enterprises making super-profits from extracting our natural resources. For some of these children, it has been reported, the debt burden from their participation in higher education has reached amounts of up to $100 000, something that was never envisaged when this policy was introduced.

Just how would this stack up as public policy, one wonders, if we were to evaluate it simply for its contribution to the national interest or the public good?

This is an edited extract from Broken: Universities, Politics and the Public Good by Graeme Turner (Monash University Publishing).