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'Knowledge economy' just a vacuous notion

by Jane Kelsey,17 August 1999

On the eve of the Government's move towards a more active economic policy, JANE KELSEY suggests that the centrepiece, tertiary education, will need a great deal more than new rhetoric

Dialogue, NZ Herald, 17 August 1999

Two years ago the National Government unveiled its plans to corporatise the country's universities and polytechnics and force them to compete within a consumer-driven tertiary education marketplace.

Millions of dollars were wasted on developing a policy that those who under stood tertiary education knew was fundamentally flawed. Last month the Minister of Tertiary Education, Max Bradford announced that the proposed legislation will not proceed, effectively conceding that the market cannot be relied on to deliver tertiary education needs in the 21st century.

For opponents of the policy, this is a bitter-sweet victory. The mantra of the market has been replaced by the equally vacuous notion of the "knowledge economy." Ministerial speeches now insist that the country's future rests on bringing together education, science and industry.

Enterprise and innovation requires a more "activist market," with research driven by the needs of industry. Universities, they say, are producing too many lawyers and accountants and not enough scientists, technicians and engineers. There is no empirical analysis ministers construct their own evidence.

Some, such as former market evangelist Maurice Williamson, have become instant converts to the knowledge economy, even if it requires strategic intervention. A recent study tour of Ireland and Finland convinced him that New Zealand should follow their example and build the future economy on high-tech industry.

But transplanting policies from one economic, social, geographic and cultural context to another is simplistic. Ireland's economic strategy is centrally planned, with consultation under way between Government and social partners on a National Plan for 2000-2006. It is backed by substantial subsidies from the European Union.

Finland's economic miracle depends on the success of Nokia, which contributes 56 per cent of the value of the Helsinki Stock Exchange.

Their tertiary education policies contrast starkly with our Government policy. Both countries emphasise public provision and the role of universities in promoting socio-economic development. Finland has never charged tertiary students fees; Ireland cites the abolition of undergraduate fees several years ago as a major factor in its economic success.

Local and central government provides over 90 per cent of funding for Ireland's tertiary institutions; in New Zealand it is under 75 per cent and declining. Finland maintains a system of cooperative planning among the universities, while university governance draws heavily on academics' expertise.

By contrast, National sought to purge such "vested interests" from the university councils and increase Government control to monitor the growing financial risk. However, Finland's funding priority for science and technology has forced cuts to programmes and staff in social sciences and humanities a risk also highlighted by the Irish vice-chancellors.

The Government has glossed over such issues. Instead, Mr Bradford and his team of enterprise ministers have promoted their new vision through a series of roadshows in 25 city centres. These will culminate in a five-city link-up before invited studio audiences tomorrow.

Each roadshow followed a similar pattern of ministerial speeches, PowerPoint presentations and focus groups, the reports from which were massaged by senior officials (sometimes to the point of being unrecognisable) to accord with the new policy agenda.

Doubtless these reports will form a centrepiece of tomorrow's presentation, as proof that the Government has listened to key stakeholders in the future enter prise economy and designed a policy to deliver what they say they need.

The political appeal is obvious: the failure of 15 years of economic Darwinism is magically swept away as the politicians present a new vision for the century ahead. We can expect little by way of concrete policy. The contradictions implicit in the "knowledge economy" are too great to risk engaging with the real issues, especially this close to an election.

Indeed, the Government has been talking down expectations by calling this a first step towards a more detailed strategy. Some will see it as simply a taxpayer-funded launch of the National Party's election campaign. The lack of substance may see that backfire.

This would not automatically benefit Labour, which needs to explain how its vision of a "knowledge economy" differs from National's, and provide concrete policy commitments on how it would be achieved.

Meanwhile, the universities and their staffs are left with a market model in which the Government has apparently lost faith. Competition between tertiary institutions, the erosion of clearly differentiated roles for universities and polytechnics, the voucher system by which funding follows the student, and the move to fund the private sector on the same basis as public tertiary institutions are all inconsistent with the direction that both major parties appear to espouse.

Today's funding crisis threatens the international standing of many, if not all, our universities. New Zealand was recently ranked bottom in a Commonwealth study of university salaries. Major capital expenditure in most universities has been deferred. The debt burden facing students will deny many the chance to develop their potential and drive others offshore.

A genuine knowledge economy, located in a healthy society, requires its universities to produce leading-edge education and research on diverse subjects, with the highest quality of staff and infrastructure.

Unless a party in Government is pre pared to restore funding to a level that allows universities to enhance their intellectual capital, remove from students the cost disincentives of fees and loans and promote a vibrant contest of ideas, it should abandon the rhetoric of the "knowledge economy" now.  

Professor Jane Kelsey is president of the Association of University Staff.

Return to: "Resist APEC and globalisation".

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