One popular theme in the submissions to the Bradley review of Australian higher education policy is that scholarships paid by universities ought to be exempt from Centrelink income tests. The problem is that if the scholarship gives a student on Youth Allowance more than $118 a week it will be caught by the YA income test, and so the scholarship saves the government 50c in the YA dollar. The universities reckon that this provides a disincentive to provide income-support scholarships.

While the frustration of universities is understandable, there should be no special treatment of scholarship income. The main function of scholarships is positional competition between universities. Mostly they compete for the very bright students. Often these students come from privileged backgrounds, but even when they do not their high intellectual ability means that they are likely to do very well in life whether they get a scholarship or not. The public policy case for sending special extra financial rewards their way, through exempting them from welfare reductions that all other students must suffer, is very weak. Indeed, exemption would be a particularly egregious example of the generally regressive nature of higher education subsidies. Read the rest of this entry »

Intimacy for money is a taboo, which is why when newspapers want to dramatise student poverty they talk about student prostitutes or, in The Age today, fake marriages to qualify as ‘independent’ for Youth Allowance:

JOHAN Stutt never planned on getting married at the age of 18 - let alone to someone he didn’t love. Some might say it was a matter of survival.

Stories like this have been around for decades - 20 years ago there were ‘TEAS marriages’ [Tertiary Education Assistance Scheme, a Youth Allowance predecessor], though usually in the version of the story at the time between gays and lesbians, whose marriage rights weren’t worth anything anyway (another reason for gay marriage - reduce welfare rorting!).

But a quick check of the marriage statistics shows that this is not likely to be a growing problem. The teen marriage rate is in long-term decline, and teenage men have a less than 1% probability of getting married for any reason. In 2006, there were 423 marriages by men aged 19 or under (and at a guess, most of them will never enrol in any degree).

We don’t need to worry much about this kind of Youth Allowance rorting, as not many people who would marry someone they did not love. It’s the easy work/earnings test I want to tighten up, and I am quoted saying that right at the end of The Age article. Unsurprisingly, I am the only person going on the record suggesting that in some cases we spend too much, rather than too little, on student income support.

Backroom girl has been vigorously contesting my view on who should be counted as ‘independent’ of their parents for welfare purposes.

I’d say that the following are normally signs of independence:

* receiving no or trivial financial support from parents
* moving out
* starting own family, marriage and especially own children

Under the current independence test, only children will get you straight onto the welfare roll, though if you have been married or [corrected; comment 1] in a de facto relatationship for 12 months you can also get YA in your own right.

Moving out doesn’t make you independent, unless your parents are a threat to you. However, even if your parents help with the bills I’d say living away from your parents does require self-sufficiency in many other respects.

However working 30 hours a week for 18 months or 15 hours a week for two years does make you independent, though the latter does not in my view meet any reasonable test of what ‘independence’ means. A low-skill worker could not earn enough to live independently on 15 hours a week, even in a shared expense household. As the AVCC student finances report found, that’s routine hours for undergraduates and means that many of them would qualify as ‘independent’ for YA after 2 years at uni, despite their actual circumstances not changing at all.
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A bit of a debate is raging in the Youth Allowance post about how dependent students are on other members of their family. Sinclair points out that most 15-24 year olds live with their parents. Based on a mix of census and DEST data, I have estimated in the past that around 60% of late teen uni students live with one or both parents. Of those at home, they are an affluent bunch: median household income is $104,000 a year.

But how much sharing goes on within the household? The AVCC/Universities Australia student finances survey asked this question, referring to parents and partners. For ‘often’ relying on non-cash assistance, for full-time undergraduates:

Meals: 60%
Accommodation: 58%
Telephone: 53%
Use of car: 31%
Clothing: 20%
Textbooks: 28%

38% of full time undergraduates classed themselves as ‘financially independent’.

The 2006 General Social Survey found that of the people who had children aged 18 to 24 living away from home, 58% provided them with support: Read the rest of this entry »

This weekend the Fairfax broadsheets have been pushing student welfare issues. The SMH focuses on the issue of accommodation:

HUNDREDS of university students are living in conditions so poor they are technically homeless, although they remain hidden in statistics on youth homelessness.

Though the reason they are not appearing in the homelessness statistics is that ‘technically’ there are not homeless at all, but instead lack a permanent home. It doesn’t make for quite as good a media beat-up, but a problem nonetheless.

The Age looks at some possible solutions to the issue of student income, including paying students the same as the unemployed, and HECS-like loan.

Having spent some time this week examining these issues, I agree entirely that the student income support system is a shambles. In fact, it is a far bigger mess than the media is reporting. There are at least five different programs supporting students: Youth Allowance, Austudy, Abstudy, FTB A and Commonwealth scholarships.

Youth Allowance and FTB A both provide welfare for families with full-time students aged 24 or under, with the student getting the entitlement under YA and the parents under FTB A. The same household cannot claim both. Though eligibility for YA stops at much lower household income than FTB A, for families earning $50-60,000 a year the student would be better off forfeiting his or her YA, and getting FTB A cash from his/her parents instead. This would also let them take advantage of the FTB A child earning threshold being much more generous than the YA personal income test, where effective marginal tax rates of at least 50% start at $118 a week.
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My blog suggestion yesterday that ‘working couples with children’ deserve ‘much less’ welfare assistance attracted some questioning in the post’s comments. NPOV asks

is this from the starting point that you believe almost everyone deserves “less”, and couples with children deserve “much less” because they already get more than everyone else?

Certainly my starting point is the classical liberal one that people are entitled to keep their earnings unless there is some strong reason to tax it away from them. Among the reasons given for taxing, redistribution of cash to families seems to me to be among the weakest. It is not specifically aimed at meeting any need that is generally agreed upon, such as for education or healthcare. It is given to people with incomes that are well above average, who are quite capable of giving their children food, clothing and shelter without any outside help at all.

Though some family welfare meets genuine needs, much of it is redistribution between family types irrespective of need. Recent years have seen a significant improvement in the financial position of families relative to single people and couples without dependent children (though people in the latter still generally have the most to spend on themselves).
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The previous government was extraordinarily generous to families.  According to calculations I did from Treasury’s Intergenerational Reports, the FTBs alone increased, in per person terms, 29% per person between the 2002 and 2007 reports. And that’s not counting the baby bonus or childcare handouts.

Yet according to the 2007 Australian Election Survey, only 41% of respondents thought that the Howard government had become more generous over the last 10 years to ‘working couples with children’. 23% of Australians, who must have been holidaying on another planet during the Howard era, even thought that they had become ‘tougher’ on these working families.

But in this familist time, is there any end to the demands of ‘working families’? According to the AES, 49.5% of respondents agree that ‘working couples with children’ deserve more or much more from the social welfare system. My answer, that they deserve ‘much less’, is supported by a miserable 0.8% of respondents. Even the answer that they deserve ‘less’ support has only 4.5% support. And I thought I had a tough task selling higher education reform.

But some hope comes from this morning’s Newspoll reported in The Australian. About two-thirds majorities support means testing the baby bonus and FTB B, and 57% support means testing childcare tax rebates. And there is majority support for the testing to begin at $70,000 a year, which if based on household income would start to make some serious savings.

Of course I think these savings should be directed to tax cuts, which would in part benefit those same families. Yet this Newspoll, like other recent polling on the subject, finds that support for tax cuts drops (in this case from 66% to 36%) if respondents are told that tax cuts might cause interest rates to increase. But tax cuts financed from reduced family spending ought to be neutral for interest rates, since the total amount ending up in consumers’ pockets will be the same.

In January I was sceptical, based on studies of student work and academic results, that increasing Youth Allowance to reduce work hours would pay academic dividends.

The first results (pdf) from the Australian Survey of Student Engagement reinforce the conclusion that the average 15 hours a week that undergraduates work for money is not a cause for concern.

The ASSE is based on a questionnaire (in the pdf above), with the questions grouped for analytical purposes according to six scales: academic challenge, active learning, student and staff interactions, enriching educational experiences, supportive learning environment, and work-integrated learning.

It found that, with the exception of work-integrated learning, only those working more than 30 hours a week off campus showed lower results in the various scales. For work-integrated learning those working more than 30 hours did better. Working on-campus was consistently a benefit.

The main reason, I suspect, is that the student lifestyle typically isn’t that busy by the standards of the professional and managerial jobs most students are headed towards. The ASSE finds that more than half of students report spending less than 10 hours a week preparing for class (unfortunately this question is a a bit ambiguous - the prompt is ’studying, writing, doing homework or lab work, analysing data, rehearsing or other activities’ - which leaves it unclear whether essays or major assignments would be included). Say 15 hours in class, 15 hours at work, and 10 preparing for class, and you have a not very stressful 40 hour week.

This is just a summary report of the ASSE. The questions asked would let us create student timetables covering paid work, class preparation, and campus activities, and compare those with self-reported grade averages. It would be a useful addition to a debate dominated by intuition and anecdote to know more about the relationships between these variables.

In addition, I’m not convinced that if all university students in Australia received free education and enough income support to live comfortably that the majority would spend all that extra time studying.

- backroom girl this morning.

In her doubts, backroom girl goes against some higher education orthodoxy. 43% of Australian students in a survey released last year agreed with the proposition that ‘work commitments adversely affect my performance in university’. The Vice-Chancellors have called for more Youth Allowance to ‘ensure optimal educational outcomes’.

It certainly seems plausible that if students worked fewer hours they might optimise their educational outcomes. But like many plausible-sounding ideas in higher education, the evidence for it is mixed at best.
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Labor’s education rebate, under which recipients of Family Tax Benefit A can receive

* A 50 per cent refund every year for up to $750 of education expenses for each child attending primary school (maximum $375 per child, per year)
* A 50 per cent refund every year for up to $1,500 of education expenses for each child attending secondary school (maximum $750 per child, per year)

will no doubt go down well in the electorate. I’m much less keen. It is another example of the government taxing us more than necessary and then giving the money back with strings attached, in this case a requirement that money be first spent on ‘laptops, home computers, printers, home internet connection, education software and school text books.’

Most families will spend this much and more on items on the list anyway, so the distorting effect is likely to be small in this case - it’s effectively just another cash handout for families in exchange for yet more government paperwork (Labor says it will reduce the ‘digital divide’, but this seems unlikely since families still have to find the cash to cover the full cost since they only get the rebate with their tax return, more than twelve months later if they purchase at the beginning of a financial year).

But how long before more of the FTB-linked money starts coming with strings attached, so parents spend the money as approved by Nanny - no fattening foods, no cigarettes or alcohol, no plasma TVs, no clothes made in sweatshops, no coal-generated electricity etc etc.? The current government is bad enough on these things, but Labor is full of busybodies who think they know how the rest of us should live.