The Australian Vice-Chancellors’ Committee may have changed its name to Universities Australia, but so far at least nothing else seems to have changed. Their recent media releases contain more of the second-rate rent-seeking that has long marred the organisation’s public advocacy.

Last week, in their tradition of ‘good first step’ reactions to government initiatives, they welcomed a small extension of student income support and issued a media release repeating their call for:

“Firstly all scholarships and bursaries (regardless of their source) to be excluded from assessable income for the purpose of student income support; and

“Secondly, a reduction in the age of independence for Youth Allowance from the current 25 years to 18 years over the next term of parliament,”

There is no mention (and nor was there when the proposal was first made in August) of how much these changes might cost, how important this proposal is compared to other higher education spending options (let alone other alternative uses of the money), or other implications of the changes.
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As reported in this morning’s Age, the Victorian government has introduced legislation to ensure overseas students cannot successfully use equal opportunity laws to receive public transport concessions. There is a case before the Victorian Equal Opportunity and Human Rights Commission alleging the policy that allows domestic but not international undergraduates to receive concessions discriminates on the basis of race.

I had an opinion piece in Education Age earlier this year arguing that the concessions should not be granted. In her second reading speech, Transport Minister Lynne Kosky makes similar points:

Providing transport concessions to private full fee-paying overseas students would be very costly. The money used to pay for extending the scheme to these students would have to come from another area of budget and could impact on other service improvements if the entitlement was granted. In addition, it would be inconsistent with the terms of the students’ entry into Australia. When private full fee-paying overseas students gain a visa to study in Australia, they must demonstrate that they are already fully self-sufficient and able to meet all their living expenses, including public transport expenses, while they are here. The students are required to pay substantial fees to study for their degree and, at the same time, they are also not eligible for benefits such as Medicare, Newstart allowance or Austudy. Unlike Australian citizens, permanent residents and students with refugee status whose intention is to live and work In Australia on an ongoing basis, there is no expectation that private full fee-paying students will continue to live in Victoria beyond completing their education.

Pretty clearly this was not, in any case, an instance of racial discrimination. Read the rest of this entry »

An editorial in today’s Age follows on from yesterday’s story about would-be students from regional areas being more likely to defer their university studies to improve their Youth Allowance eligibility.

The editorial draws attention to both the claimed under-funding of regional campuses and the added costs faced by regional students when they have to move to study, calling for an inquiry but effectively suggesting both receive additional Commonwealth resources. Yet there are tensions between improving income support for rural students and helping rural campuses.

I don’t believe that there is any inherent reason why educational delivery costs should be higher in regional areas. The problem seems to be achieving economies of scale by spreading fixed costs over a large number of students. That’s been hard to do for several reasons: low initial population density in regional areas, weak school results limiting the pool of potential applicants, and the preference of many students for study in capital cities.

In Victoria, there is only one truly regional university, the University of Ballarat (though Deakin University has a substantial regional presence, and other universities have rural campuses). The Victorian Tertiary Admissions Centre provides statistics for each university by the home region of applicants. 35% of applicants to Victorian universities from the Central Highland region where the University of Ballarat is located gave it as their first preference in 2005 for academic year 2006. So about two-thirds of potential local students actually want to go somewhere else - except for Swinburne, applications are spread fairly evenly across the other Victorian universities.
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An article in this morning’s Age reports on research from the On Track survey of recent Victorian school leavers finding that:

Thirty-seven per cent of regional students told the survey for State Government initiative On Track they were waiting to qualify for an independent Youth Allowance before studying, compared with 15 per cent of city students. The easiest way to qualify is by earning about $18,000 over 18 months before starting.

For eighteen months now I have been curious about why university students seem to be starting at a later age, with this kind of playing the Youth Allowance system being high on the list of theories.

Unfortunately, there was no data released for 2005 on the ages of students ‘new to higher education’, so I had to use the commencing student data (which isn’t as good, because it includes people transferring from other courses). While the trend of an absolute enrolment decline in ‘young’ commencing students, which I define as those aged 16 to 18, stopped and their numbers started to climb again, they continued to decline as a proportion of all commencing students aged 16 to 21. If the 16 to 18 year olds had maintained their year 2000 market share of all commencing students 21 and under in 2005, there would have been about 6,600 more of them at university than in fact was the case. Read the rest of this entry »

Today in The Australian my CIS colleague Peter Saunders comes out in favour of ‘conditional welfare’, in which some welfare payments for parents deemed irresponsible or incompetent are restricted, so that they can only be spent on items the government deems appropriate.

So far as I am aware, this is not an idea that has been directly tested in an opinion poll. But based on answers to other questions we can take an educated guess as to what the public might say if asked.

Most of the people to whom conditional welfare would apply would presumably be on unemployment or single parent benefits, two groups which have not inspired enthusiasm among Australian voters. For example, a 2001 Saulwick poll asked about benefit levels for various beneficiary groups. Majorities supported higher payments for those who could not reasonably expected to work, the aged and disabled. But only 22% wanted more for single parents, and only 17% for the unemployed.

Both groups, perhaps, are seen as vulnerable to the moral hazards of welfare. Read the rest of this entry »

If leftists support “political programmes that seek to eliminate status differences or moderate their impact” then the best way to reduce the left’s opposition to free markets would be to sever the link between income and status.

Don Arthur, 10 June.

But how strong is the existing link between income and status? This issue can be approached from two directions. We can ask people what weight they give income when assessing the status of another person - I am not aware of research on this, though I’m sure somebody must have put the question in a survey. We can also ask people how they perceive their own status and compare that self-assessment with their income. A question in the Australian Survey of Social Attitudes 2005 asks:

In our society there are groups which tend to be towards the top and groups which tend to be towards the bottom. Below is a scale that runs from the top to the bottom where the top is 10 and the bottom is 1. Where would you put yourself on this scale?

Overall, whatever others may think of them, most people do not think they are on the ‘bottom’ of society. Only 2% rate themselves as ‘1′ and only 18% below 5. If we thought of society as having 10 status deciles, 40% should rate themselves below 5. Consistent with an egalitarian ethos, few rate themselves too highly either. Only 3% of respondents put themselves in the top 20% of society.

Low income is, however, associated with lower status. Read the rest of this entry »

Yesterday the ABS released the latest of its surveys of the winner and losers of Australia’s taxing and spending, covering the 2003-04 period.

And the winners are…unemployed single parents with children under 5, taking in on average $878 more a week in income transfers and welfare services than they pay in tax, most of which is indirect tax (it has a statistical caution on the number, but despite low overall tax this group scores the highest payment on ‘tobacco products’, consistent with previous research showing the poor pay a disproportionate share of ’sin’ taxes).

And the losers are…the top 20% of households by income, who pay on average $571 a week more in tax than they receive back in benefits and services.

As with previous surveys, this one finds that the bottom 60% of households are net beneficiaries of the tax and welfare system, ie they receive more in income transfers and welfare services than they pay in tax. The Australian gave this aspect its lead story, with the heading ‘Tax take helping Howard battlers’. The poorest 20% get more than 40% of all social assistance, and the richest 20% only 9%.

But the redistributive aspect of policy is driven by income transfers rather than government services. Read the rest of this entry »

In the executive summary of the second Intergenerational Report, released today, it says after noting various fiscal pressures that will build over the next 40 years:

It will be important to focus on the efficiency and effectiveness of government spending

I couldn’t agree more. Unfortunately, the government isn’t heeding its own advice, as the Integenerational Report itself shows. In an appendix on spending projections the Report compares spending forecasts made in the first report five years ago with those Treasury makes now. Back then, they thought that Family Tax Benefits A and B would consume 1.3% of GDP in 2006-07. In the second Report they say FTB spending will be 1.6% of GDP in 2006-07. In a trillion dollar economy - as various government Ministers for some reason keep telling us - that 0.3% is a lot of money. In real per person terms, it’s gone from $613 per person to $790 per person, or about a 29% increase.

Now what do we have for all this money? According to the Report:

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I’ve posted regularly on the Howard government’s big spending habits. While I think much of this spending is unwarranted on policy grounds, it’s going to be hard to resist while Liberals still believe that it works politically. In this morning’s Weekend Australian I outline an argument as to why big-government conservatism isn’t a viable long-term strategy for the centre-right (there’s more detail in my Policy article).

The argument has parallels with the mummy party/daddy party thesis. Voters view political parties in stereotypical terms, seeing Labor as stronger on ‘welfare’ issues such as health, education and social security, and the Liberals as stronger on tax, defence and immigration (Newspoll’s list is the most accessible). Like most stereotyped views they are not completely immune to reality, but as the general public often has a poor grasp of actual trends they tend to form judgments based on their general perceptions of the parties, rather than their real record or (for Oppositions) their alternative policies.

This is one reason why despite increasing spending more quickly than the Keating government on education, health and social security over the last few years, and at a considerable rate by any standard, the Coalition still trails Labor as the better party on these issues. Using the Australian Election Study measure, the Coalition has recovered some of the ground lost as they cut the Budget deficit in the mid-1990s, but they are not back to their 1996 position. And as I say in the Weekend Oz:
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As part of his well-deserved early career award from the Academy of the Social Sciences, Andrew Leigh was asked to write a paper for their journal Dialogue. As he explains on his blog, he chose to write on something a ‘bit provocative’, the possible negative effects of ethnic and linguistic diversity. One of these possible negative (sic) effects is reduced support for the welfare state.

For this hypothesis, he draws on the work of Alberto Alesina and Ed Glaeser, who argue that one of the major reasons for the much smaller welfare state in the US compared to Europe is that the US is more racially diverse. Or to put it more bluntly, the wealthy white majority isn’t too keen on giving money to the poor black minority. Extrapolating from this, Andrew notes that Australia’s welfare state is small compared to Europe’s, and that our linguistic diversity is higher than either the US or Europe, and therefore ‘our high level of linguistic diversity helps explain Australia’s relatively small social welfare sector’.

I doubt it. Indeed, you only need to keep reading Andrew’s paper to find at least one reason for doubt. Using answers to a question in the Australian Election Survey about whether people agree or disagree with the proposition that ‘income and wealth should be redistributed’ he finds that only in Queensland is there are a statistical relationship between disagreeing with the proposition and levels of local ethnic diversity. This he puts down to the relative success of ‘racially-driven politics’ in that state, with One Nation its most public manifestation. But what about all the other states? They, after all, contain the vast majority of seats in the Australian Parliament.

My CIS colleague Peter Saunders has argued that this analysis of the comparative welfare states misses important cultural differences between the ‘Anglo’ countries and Europe. The Anglosphere countries have much older and more powerful traditions of individualism than Europe. Alan Macfarlane wrote a well-known book on this, The Origins of English Individualism, tracing it back many hundreds of years. In particular, the Anglo countries have a much greater belief in self-reliance. Read the rest of this entry »