EDUCATION:Despite constant claims to the contrary from the heads of Irish univeristies, is the third-level sector really underfunded or is the problem something else?
WITH THE downturn in the economy, the higher education sector has come to prominence in public debate. It is portrayed as a potential saviour, a promoter of the "knowledge economy" and, conversely, as an underfunded sector in financial crisis. However, it is governance, not finance, that is the key challenge for this sector and for the innovation which it is expected to foster. From 5 per cent in 1970-1971 to 55 per cent in 2006-2007, participation rates in higher education have been a much reported "success story" of the boom years. In 2004 Ireland spent €7,445 per student on core educational services. Less than a quarter of this figure actually reaches classrooms - the majority being consumed by internal reallocation mechanisms.
Though the raw expenditure figure places Ireland on a par with universities in Finland and with most US state colleges, actual educational expenditure is much lower due to this reallocative consumption.
When official research expenditure is included, Ireland was spending €10,211 per student, per annum in 2004. This compares with approximately €5,000 in 1992-1993.
Despite talk of a funding shortfall, universities' gross income has increased rapidly. Trinity College Dublin's public accounting statements show income increased by 85.9 per cent between 2000 and 2005.
Is it true then that Irish universities are underfunded?
The answer is 'yes' if the sector is expected to educate almost 200,000 students; act as a centre of internationally renowned research and development; serve as custodian of teacher training; be pilotman of innovation and high priest of the knowledge economy. No exchequer could fund such disparate demands.
The answer changes, however, when one links higher education directly to economic growth. Ireland's surge in student numbers came 25 years after that of Europe and the US- a result of Ireland's late provision of free secondary education. The beneficial effects of free secondary education and an expanded third-level sector are clear, but education is not whole story of Ireland's "long boom" from the early 1990s to late 2007.
The Government connects education and innovation in the Strategy for Science, Technology and Innovation, 2006-2013. Doubling the number of PhDs graduating every year is seen as the key. The Higher Education Authority's recent strategic plan boasts that 1,300 PhDs a year are in sight. Somehow, activity has been confused with achievement.
In the US, the birthplace of the "knowledge economy", some 30 per cent of PhD graduates are unemployed upon exit. Of those employed, only 27 per cent work in industry or are self-employed. The remainder work in academia, government or other sectors.
The 2004 Eurostat figure for government expenditure on research and development amounted to €143,439.93 million in the US while Ireland spends €1,840.40 million. Ireland invests comparatively little - about €5,500 per pupil in 2006 - in primary education and has one of the highest student-teacher ratios in the EU. With 28 per cent of primary teachers considering themselves poorly prepared for teaching mathematics, the key issue is how to recapture Ireland's ability to compete on a human capital basis.
Research by the National Council for Curriculum Assessment (NCCA) in 2007 illustrated that students' mathematical ability at entry to secondary education predicts Leaving Certificate results. Failure to consider learning and policy outcomes of education from the primary level up to, and beyond, third level accounts in part for IBEC's concern about 5,000 students failing mathematics and the numbers focusing on law and medicine rather than science, mathematics or engineering.
Short-term policy objectives have characterised this top-down approach to education. Human capital competitiveness is no longer based on deep knowledge and the resultant inherent flexibility, but on a mechanical, simplistic model of an Ireland where the aim is 77 per cent of school leavers attending university and 1,300 doctorates are awarded yearly.
Ireland has 51 researchers per 10,000 people, compared to the Netherlands' 50 and the UK's 55. We are on a par with our European partners but this does not imply success: 24 per cent of those unemployed in Ireland are third-level graduates, compared to 14.6 per cent in the UK and 12.4 per cent in the Netherlands. Links between education and economics are not clearcut.
Our innovation deficit is not purely about finances, but about governance and a misunderstanding of innovation. As Fintan O'Toole stated recently in The Irish Times, Ireland's "knowledge society" is an illusion. Students are not embracing engineering, computer science, mathematics and science.
An economist's interpretation is that engineering, computer science and many of the hard sciences seem unlikely to pay enough for entry onto the property ladder. Property has skewed many elements of the market, but the blame does not entirely sit with that sector's voracious consumption of capital.
The professions and the medical sector, protected by the law and lobby groups, present a surer pathway to high income. Students are not training as innovators, but rather as rent-seekers, acquiring wealth through a combination of protectionism and political activity.
Fortunes may be made in financial mathematics, cryptography, artificial intelligence, new business practices and cultural activities but it is safer to be a doctor, lawyer or nurse - to gain entry into the protected golden sectors of Ireland's economy. Competition is sometimes cited as solution to these problems. It is necessary, but must be combined with control and regulation.
That we continue to see the professions as so important is a failure of imagination and courage across public and private spheres. The Government refuses to regulate and steer, the courts refuse to interfere and the public refuses to challenge or complain.
Many problems of the education sector reappear in Ireland's research and development sector. The Government's inherent fear of uncertainty has caused it to support policies that actually stifle innovation, presenting input consumption as a sign of success.
A secondary response to this situation is to arrange for government agency control, resulting in its own complications for innovation. Education and research, much like healthcare, consume funding insatiably, partly because expenditure is considered as a proxy for quality.
At a local level, this produces the Matthew Effect: those that have received most grant income will be rewarded with yet more.
Policymakers basing decisions on international league tables see expenditure on research as a proxy for quality. In an international competitiveness "arms race", expenditure on research and development is proxy for economic vibrancy and efficiency. This interpretation of competitiveness has been the crux of Ireland's innovation strategy.
In the knowledge economy, patents too have been used as a metric of quality and depth. The US's 1980 Bayh-Dole Act was intended to kick-start the US economy. University patenting had exploded a few years before but this act created incentives to measure success by number of patents. The only impact has been to occupy the majority of US patent lawyers, while licensing fees increase the cost of research. It was a point of law, not government policy, which enabled patenting of life in Diamond v Chakrabarty, and kick-started the biotechnology industry.
Policymaking which confuses inputs with outputs blindly increases education expenditure to non-optimal levels. It spends too much of GDP on third-level education and research and ignores primary and secondary sectors, where expenditure has a higher economic and social return.
This problem is exacerbated by governance failures. A plethora of agencies regulate our economy. They manage education, regulation and service provision. They are of mixed origin - established for tasks once managed by central government, created by ministerial order, designed to compensate for skills deficits in existing departments, or encouraged by European law requiring "independent" regulation. They are hybrid bodies whose functions interact with those of the State.
The Government has mooted reduction of the number of these bodies as a cost-saving measure. The number of agencies, however, is not the problem. The problem is how they relate to good governance.
If dealing with the state is difficult, dealing with an "independent" agency can be almost impossible. By deisgn, old-fashioned politics won't work - a noble aim, but one that has its dangers. Diminishing democratic control, public accountability and industry capture are but a few.
Tools for public or media participation and scrutiny have very uneven application. The Freedom of Information Act applies, for example, only where agencies appear on an exclusive list, not according the agencies' particular functions. Judicial review is also difficult. Irish administrative law relies upon the ability to seek judicial review of decisions but this is limited by judicial self-restraint, which seems to be applied very generously in the case of these hybrid agencies.
Irish quangos have no pattern. Citizens and entrepreneurs meet, in every agency, different procedures, governing bodies and appeal mechanisms. We have no unified rule-making system as in the US, and no formal collation of agency decisions. Ireland has stifled innovation by creating a legal environment where education, through the HEA, HETAC, FETAC, FÁS, CAO and the NCCA, and innovation, through the IRCHSS, IRCSET, SFI, IDA, HRB, Enterprise Ireland and Forfás, are controlled by obscure agencies.
This does not encourage entrepreneurs or innovators, rather it rewards rent-seekers who "work the system", above all other objectives.
The knowledge economy's appeal is clear but so are its potential dangers. Education is vital but has little to offer if investment is governed by short-term objectives which confuse inputs with outputs and activity with achievement.
Finance is one aspect of this debate, but of more importance is governance. The superstructure of our education and innovation systems suffer from a pervasive governance problem. Governance skews resource allocation, distorts incentives, stifles innovation and encourages rent-seeking. The 1980s put Ireland's fiscal house in order; the 2010s must put the institutional house in order.
We must learn not to succumb to hubris. Ireland cannot control its entire destiny, but it can ensure that the ground is prepared through measured and careful public investment in education and a supportive political and legal system. Only then will Ireland successfully absorb investment and maintain an innovative economy. Such a policy option will not be quick or easy - but it should be worth the effort.
The authors are members of the Swan Group and the Department of Economics, Trinity College Dublin and the Norwich School of Law, University of East Anglia. The Swan group is an interdisciplinary policy-orientated economic research group funded by the FBD Trust
