The Bank governor’s gauntlet

Joseph Muscat called him a fat cat. Tonio Fenech, the Minister of Finance, assured us that, on this point, the government has been ignoring him for years. University students gave him a sermon on economic incentives, social justice and electoral promises. But if you look, the gauntlet is still lying where the Central Bank governor threw it down last Friday during his speech at the annual dinner of the Institute of Financial Services.

No one engaged his argument. The students came closest. However, Michael Bonello never urged politicians to break electoral promises not to means-test stipends; only to stop making them. He never said the universal stipend system was not beneficial for its recipients; but that the money could be spent more effectively: to create a better University, with more students and financial aid for the truly needy.

As for social justice, he is all for it but argues it means redistributing money to the needy and not everyone including the affluent. Because universal coverage, he says, actually damages the chances of the needy. It slows down economic growth, limits opportunities and misspends funds that could be used to enable social mobility during the years of expansion and social protection during those of shrinkage.

Mr Bonello is concerned with increasing both high quality, better paid jobs and the number of highly qualified people able to take them up. While we spend more on education than the EU average, we produce only around two thirds the EU average of people with an advanced tertiary education. So, he says, the money is not being spent in the most effective way. The entire system, he says, needs a reality check.

Picking up his gauntlet means agreeing to conduct such a check. No one is arguing about the imperative to continue to improve the quality of University education. The reality check concerns parents and the effectiveness of stipends.

When stipends were universalised a generation ago, the concern was not just about parents’ ability to pay. Malta was still then a society whose University student body was less than 10 per cent of what it is today. Even if parents could afford to support their children’s University education, it could not be assumed they would morally support the decision to go to University (especially, perhaps, with daughters). Nor could it be assumed that a student with University potential would resist the temptation to begin working and earning immediately.

The governor’s implicit assumption is that, 23 years later, when the children of the first beneficiaries of the stipend system are now close to University age, the desirability of a University education is widespread. Moral support and ambition are no longer in question. Only financial ability is.

Until middle class students begin to step forward to denounce their own parents’ reluctance to support them through their University studies, we can assume the governor is right. Just as middle class parents make considerable sacrifices to put their children through private schools and extracurricular lessons in the arts and sport, they would today be ready to continue making those sacrifices to see their children through University.

Only they may already have begun to do that. Something else has happened over the last generation. Wanting to enrol in a Master’s programme is becoming the norm. Even at the University of Malta, these are fee-paying programmes (even if often priced below market rates) and students are supposed to maintain themselves. But many middle class parents, in my experience, save up to pay for their children’s graduate study abroad.

The government has responded to this by multiplying the number of scholarships for graduate study. Maybe what we should be discussing is the pros and cons of means-testing the stipend but guaranteeing universal government sponsorship for graduate study: for any student who is accepted in any Master’s programme anywhere in the world.

And what if the stipend money were spent on high-quality childcare centres to encourage more dual income households? Would that address both general economic needs as well as create households with a greater disposable income for their children’s further education?

I’m not sure the pros would outweigh the cons but this is a discussion we should be having. Just as, either way, we should be discussing how the government can encourage and regulate savings plans offered by financial services to parents wanting a nest egg for their children’s tertiary studies.

What about the point made by Mr Bonello that our system is under-producing students qualified to begin advanced tertiary education? He himself offers no solutions and actually recommends using savings from stipends to solve a different problem: quality higher education.

Maybe we should be considering whether the stipend money would be better spent on quality early education, at that point where, in practice, a pupil’s self-image and ambition may be fundamentally shaped with lifetime consequences. Would that lead to a larger student cohort qualified for further education?

It would turn things upside down to describe such questions as based on pulling the government out of its social obligations. On the contrary, they are based on seeking how best to involve the government in education and financial services and how to maximise children’s chances of higher education.

There are no reliable intuitive answers to such questions. The discussion needs to be informed. But is that an excuse for not picking up the governor’s gauntlet?

ranierfsadni@europe.com