Archive for January, 2011

Assorted links and comments

The first poll on the flood levy finds opinion heavily polarised on partisan lines, but overall against, 53% disapproving to 39% approving.

A different question on the same poll finds that 64% of respondents believe that universities would be better run by the public sector and 20% believe universities would be better run by the private sector. This dichotomy does not include the public-private hybrid nature of Australian universities as an option.

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In the context of the fascinating events in Egypt, Tyler Cowen reminds us of an outstanding book on public opinion, Timur Kuran’s Private Truths, Public Lies. In authoritarian regimes people conceal their true political views, but new dynamics can take over in which more and more people are emboldened to express their opinions. With no real support, in these circumstances regimes can crumble quickly when they lose the will to kill.

An interesting post on the signalling dynamics of cutting communications.

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A low quality higher education spending cut

I was right that universities would be high on the list when budget cuts were called for, but wrong about what would get cut.

Instead of postponing the demand-driven system they are abolishing the Australian Learning and Teaching Council (ALTC), and the Capital Development Pool.

Rather unusually for a government agency run by career public servants, the ALTC is offering a feisty response on its website:

The Federal Government will force the Australian Learning and Teaching Council to cease operations at the end of 2011 leaving a gaping hole in the sector.

CEO, Dr Carol Nicoll responded to the Prime Minister’s announcement made earlier today.

“The ALTC represents the Australian Government’s commitment to enhancing the quality of learning and teaching in higher education through means other than regulation,” she said.

“Obviously we are deeply disappointed that the Government’s stated commitment to improving the student learning experience for Australian students is not matched by continuing funding.” …

“The Government has taken the easy option of abolishing the ALTC. The savings to the government will be less than $22 million per annum but the damage to the higher education sector and student outcomes will be far reaching,” he [ALTC chair John Hay] said.

Read the rest of this entry »

The misguided critique of GDP

In yesterday’s Weekend Australian, Mike Steketee joined the list of GDP critics.

Some high-profile economists have given this critique some credibility. And it certainly needs some big names to rescue a very small idea.

There are two components to the critique, one resting on a mistaken assumption, and the other true but irrelevant.

The mistaken assumption is that we inappropriately use GDP as a measure of broad national welfare. Steketee uses as his examples of this:

When the Reserve Bank decides whether to raise or lower interest rates, it looks at a range of economic indicators, but none is more important than the quarterly GDP figures. The same applies to the government when it is framing its annual budget. GDP has become the de facto measure of national welfare.

But these examples are less than compelling proof of this assumption. The RBA’s major indicator isn’t GDP growth, it’s inflation. GDP is one of many indicators considered in the budget, but it is hardly inappropriate – since the government primarily taxes income and consumption, GDP is a crucial indicator of its fiscal capacity, as well as being correlated with other important indicators such as employment. Read the rest of this entry »

Will uni finances be washed away by the floods?

We should of course be a little sceptical when Julia Gillard talks about cutbacks. But if cuts need to be made, who will take a hit?

Step forward, Australia’s vice-chancellors. Higher education has long been near the top of the list when money needs to be saved. And in recent times, higher education spending has been out of control. As I noted last year, massive over-enrolments have forced multiple large upward revisions of federal spending on higher education. Postponing the decision to ‘fully fund’ these places (unis receive only student contributions if they exceed their funding agreements by more than 10%), promised for 2012, could produce nine figure savings.

If this does happen, it will confirm my view that there have been some reckless decisions to take so many students. And there is little sign in this month’s offers figures that there has been any attempt to bring numbers under control. In NSW and the ACT, where much of the 2010 over-enrolment is concentrated, offers are up 2.6% on last year (acceptances may be higher or lower, so we can’t directly infer commencing student numbers from this figure). In Victoria, offers are up 1.1%.

The 2011 intake will ‘replace’ (in terms of total student load) smaller commencing cohorts from 2008 and preceding years who have now completed, so total over-enrolments are likely to be well-up on 2010.

Unless unis really do have very low marginal costs, cutbacks could mean that the ‘irrational exuberance’ of 2010 and 2011 enrolments leaves some universities with students they cannot afford.

False cynicism about politics

An Essential Research poll out today asks whether, in general, governments make decisions that favour corporate interests or favour the interests of voters. 60% say that governments favour corporate interests, and only 9% think that voters interests are favoured.

Only last month, however, another Essential Research survey came up with results that seem rather in tension with this. Asking about the attributes of the political parties, only 29% thought that the Liberals were too close to the ‘big corporate and financial interests’, and just 15% believed that of Labor. So many voters seem to believe that governments in general favour corporate interests, despite the two possible governing parties not generally being viewed as too close to those interests.

What’s more, 50% of voters thought that Labor ‘will promise to do anything to win votes’ – including ignoring corporate interests? – and 36% though the Liberal were also willing to promise anything to get votes.

When asked about politicians in general the public tends to resort to lazy cliches without worrying too much whether or not they are consistent with each other. Politicians are too poll driven, and they don’t listen to the voters enough. They favour big interests, and they will do anything to win over voters.

Though there are still contradictory views about political parties, the more specific the question the more other sorts of information than stereotypes come into play. Their own partisan loyalties, for example, or specific examples (or non-examples) of the attributes in question.

When asked about individual politicians, views tend to improve still more. I’ve noted before that named politicians always get higher trustworthy ratings than politicians in general, even politicians like John Howard who were continually accused of being economical with the truth.

In practice, the Australian public isn’t really very cynical about politicians. If anything, it has a naive faith that politicians and government can fix their problems.

Has anyone really accrued a HELP debt of $384,957?

The Herald-Sun this morning reports on the country’s biggest HELP debts, with the highest coming in at $384,957 according to the ATO.

I did some background for this story (though unfortunately for my media mentions, in the story I am only one of the anonymous ‘education experts’ recommending caps on HELP debts), including some modelling of how much somebody could end up owing.

In my maximum debt scenario, my hypothetical student has been enrolled continuously since HECS started in 1989. Until 2002, he/she takes the most expensive HECS course on offer. When the PELS scheme for full-fee postgraduate students starts in 2002, he/she takes the most expensive MBA course for $48,000 a year for two years (though in reality you need business experience to get into these courses). They then find another postgraduate course to do for another couple of years over 2004 and 2005, at $30,000 a year. Now they are covered by the capped FEE-HELP loan scheme, and to max that out I enrol them in a full-fee medicine course for $25,000 a year for four years. In 2010 I switch them to a Commonwealth-supported place to continue the medical course, with a HECS-HELP loan of just under $9,000.

The total debt for all this, including the effects of indexation, is $371,787. Read the rest of this entry »

The folly of donations caps

I’m working on a CIS paper on political donations, so today’s lead Age story on the biggest ever donation to an Australian political party caught my eye. Wotif founder Graeme Wood gave the Greens $1.6 million.

Despite this, Greens leader Bob Brown is calling for donations to be capped at $1,000. Remarkably, he seems to understand that – like virtually all electoral ‘reforms’ – donations caps are attempts by existing political players to rig the system in their own favour:

‘”‘…the Greens are going to continue to get a disproportionate increase in funding,” he said.

“Maybe it will be that factor which will get one or other of the big parties to bring in restrictions on political donations.”

Exactly. As Bradley Smith argues in his book Unfree Speech: The Folly of Campaign Finance Reform, political newcomers often find it hard to raise money through small donations. They frequently lack the strong organisational base needed to tap into networks of many donors. Read the rest of this entry »