Should the government increase funding for mining courses?

The Australian Institute of Metals and Metallurgy says that there is a shortage of graduates for mining companies. Its analysis of why, reported in The Australian this morning, is this:

[AIMM chief executive] Mr Larkin said the federal Government had given a commitment to fund disciplines of national importance but, because of the Government’s philosophy to move to a user-pays and market-driven tertiary education system, that was not happening.

As readers of this blog know, a tertiary education system in which market price signals are banned and places allocated by quota does not constitute a ‘market-driven’ system. Students have had the downside of part-user pays, the added costs, but not the upside, the collective power to shape the system in their interests.

It could be, however, that price signals from government are affecting university behaviour in supplying places relevant to the minerals industry. With a few exceptions, they can move places between courses within the dozen funding clusters, and with declining real funding per student there is a strong incentive to put places in courses with lower costs. If the low number of annual graduates in metallurgy cited in the article is correct, then universities will have a problem achieving economies of scale.

AIMM’s solution is for the federal government to increase funding by $4,000 per student in minerals courses. But why should a massively profitable industry like mining receive an indirect subsidy? Price signals working back through salaries should be sufficient to persuade potential students with interests compatible with mining careers to allow universities to charge the fees necessary to make these courses viable, with far more scope for fine-tuning than a sum like $4,000, which seems based only on matching the subsidy for agriculture, and not on an real cost information.

The problem here is that Australian doesn’t have a market-driven tertiary education system, not that it does.