Archive for December 13th, 2008

The voucher battle begins

With ‘vouchers’ for universities seemingly on the political agenda, there are polarised views of their likely effects. I am saying that if the price signals are right they could bring supply and demand for university places into better alignment.

But critics warn that deregulation could produce a mismatch between what students demand and what the economy needs. It could also encourage providers to invest only in higher-demand and low-cost courses.

This is a bit like saying we need government schools because otherwise kids from poor families would get a bad education – using a failing of the current system as an argument in its favour. The Weekend Australian did not use what I told them about how for years a chronic oversupply of science places has existed alongside chronic undersupply of places in health-related courses, despite serious labour shortages in the health professions.

The applications data shows that demand for courses shifts towards labour market shortages (see figure three in the University of Melbourne submission to the Bradley review). The blockage in the system is in supply, which is largely controlled by the government. In practice, the government’s only steering mechanism has been new places, rather than redistributing existing places. If there are no new places, inertia prevails.
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