Month: July 2008

A simpler way to increase low SES uni enrolments

~ Andrew Norton ~ 19 Comments

Never choose a simple scheme when there is a complex alternative: that, unfortunately, seems to a maxim of higher education policymaking. It was on display again yesterday morning at a Group of Eight forum on higher education and social inclusion.

In her presentation (ppt), Sydney University Deputy Vice-Chancellor Ann Brewer suggested an ‘equity trading scheme’ to encourage universities to enrol more students from low SES backgrounds. I must admit she lost me on the detail of how it would work, but presumably it would mean that those universities (like, I suspect, her own) that failed to meet their equity targets would have to buy credits from those that had more credits than they needed.

There is a much simpler way of dealing with this problem, which is to fix the market design of the whole Commonwealth funding scheme. At the moment, the total number of Commonwealth-supported places is largely fixed overall and for particular institutions. This means that all the specific proposals for recruiting low SES students she and other presenters offered would operate in a zero-sum game. The only way to increase low SES numbers is by decreasing numbers from other SES groups.

Universities have weak incentives to spend large sums coaxing under-prepared low SES students into university when they can take bright, well-educated upper-middle class kids who apply without needing encouragement. Brewer is right that the incentive structure would need to change before this would happen. But there is a simpler option than an equity trading scheme: just deregulate the market.
Continue reading “A simpler way to increase low SES uni enrolments” →

Liberal primaries

~ Andrew Norton ~ 8 Comments

Julian Leeser had an op-ed in the SMH yesterday calling for primaries to be introduced for Liberal Party preselections (his full paper is here). Party members could vote automatically in preselections, while other people could vote after paying a fee (to limit supporters of other parties voting for unelectable candidates).

I used to be against primaries, mostly on grounds of financial cost to the party and to the candidates, and the dangers of party divisions being on display during high-profile preselections. And thinking ahead to what would happen under a possible future presidential primary, we would not want the US system where the presidential campaign effectively runs for two years.

But overall I have changed my mind and think the Liberal Party should adopt primaries.

Both major parties need to increase their membership base, but particularly the Liberals who lack the institutional support Labor has through the union movement. The campaign against political donations is likely to have considerable success, at significant cost to Australian democracy in making politics even more one-sided. The Liberals have to tap into the 10% of the Australian electorate who say they strongly support the Liberal Party, plus the 20% who say their support is fairly strong (AES figures).
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What is independence from parents? (part 3)

~ Andrew Norton ~ 5 Comments

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.
Continue reading “What is independence from parents? (part 3)” →

Should students be considered ‘independent’ of parents?

~ Andrew Norton ~ 18 Comments

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: Continue reading “Should students be considered ‘independent’ of parents?” →

A connies con

~ Andrew Norton ~ 21 Comments

In another case of opinion masquerading as journalism, The Sunday Age yesterday led with a story headlined ‘It’s time to bring back the connies’. By ‘connies’ they mean tram conductors.

This is a story that periodically crops up as slow-news day nostalgia in the Melbourne media, but this one uses ‘research’ commissioned by the newspaper to bolster its case. The net cost of $12 million a year is based on some very optimistic assumptions about higher fare revenue, through reduced evasion and increased patronage.

It’s true that conductors would encourage dishonest tram users to buy a ticket. But conductors would reduce revenue from honest tram users who want to buy a ticket but cannot. The main problem with the tram system is peak-hour overcrowding. You simply could not get to the conductor most of the time to buy a ticket – particularly in the very long newer trams with narrow passageways above the wheels, which would make it difficult for conductors to walk up and down. It’s hard enough for passengers to get to the validating machines sometimes, but at least there are lots of them and they are near the doors.

Just like there are people who still prefer to line up between 9.30am and 3.30pm Monday to Friday to see a bank teller rather than use an at ATM at their convenience, there are people who prefer transactions with conductors to a brief encounter with a validating machine. Mostly lonely elderly people with too much time on their hands, I’d suggest. For the rest of us, conductors are just a nuisance, interrupting conversations and making you fumble around for your wallet after you have already sat down. And if trams are already overcrowded, how does an extra person on board help?

If there is a spare $12 million a year, spending that money on some extra capacity in the system would be a much better investment than an expensive exercise in nostalgia.

Reforming Youth Allowance

~ Andrew Norton ~ 37 Comments

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.
Continue reading “Reforming Youth Allowance” →

The problem of Ministerial discretion

~ Andrew Norton ~ 1 Comment

All this week, The Age has been in campaign mode on corporate political donations. But the problem with their analysis (you don’t need to read it, or help from me, to guess what line they are pushing) was there in the very first paragraph on Monday:

CORPORATE donors to the Victorian Labor Party are almost invariably companies with lucrative public contracts or development, gaming or alcohol interests at the mercy of Government discretion. (emphasis added)*

Isn’t the problem, then, that businesses are at the mercy of Ministerial decisions, rather than that perhaps some try to minimise the risks posed to their income by sending a few dollars the ALP’s way? Wherever possible, governments should set rules of the game that are neutral between businesses, and let the outcome be driven by how they play by the rules, rather than by picking winners or playing favourites.

While it is improper to try to influence a tender outcome or property development approval with donations, there is nothing wrong with backing a party that proposes rules of the game that are consistent with how a business or other organisation sees the world. Renewable energy companies should be allowed to back the Greens, unions should be able to back Labor, and corporate Australia should be able to back the Liberals in their occasional tax cutting mood.
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Why the Liberals should be federalists again

~ Andrew Norton ~ 6 Comments

Tony Abbott is an unrepentant conservative centralist. Giving some initial publicity to his forthcoming book Conservatism After Howard, he told journalists that he wanted the Constitution changed to give the federal government complete power to pass laws over-riding the states:

The electorate wants problems solved and they don’t want a treatise on why the relevant level of government can’t solve a problem because it lacks the power.

“The federal government is totally hamstrung by the legal authority that resides in the states. Where the federal government needs to take charge, it shouldn’t need to bribe the states to do so – and it only operates as long as the bribe is in place.”

Some new polling suggests that, with some regret, the electorate agrees with him. As a general principle, a slim majority supports the proprosition that

It is better for decisions to be made at the lowest level of government competent to deal with the decision.

Continue reading “Why the Liberals should be federalists again” →

Should companies impose fuel surcharges?

~ Andrew Norton ~ 3 Comments

Four years ago I puzzled in a Catallaxy post as to why airlines had started imposing fuel surcharges. Why didn’t they just add it to the fare? That mystery has now been cleared up. They add the surcharge to flights redeemed on frequent flyer points and only pay travel agents commissions on the base fare. Particular characteristics of the airline industry make surcharges more lucrative for airlines than fare increases of an equivalent amount.

But now The Age reports that the practice is spreading to other industries:

From construction material suppliers and trucking companies to florists, businesses are considering imposing a special levy to offset fuel prices.

There are less aribtrary ways of imposing surcharges than the way airlines do it. FedEx, for example, has a scheme based on monthly movements in actual fuel prices, rather than the flat dollar amounts imposed by airlines without any direct link to fuel costs. With the FedEx scheme, falls in fuel costs are passed back to customers.

But overall I think this is a bad practice. The claim by Shane Oliver in The Age that businesses were ‘adopting fuel levies because they offered greater price transparency’ seems doubful to me. The only transparency I am interested in is how much, in total, I have to pay – I don’t want to have to think about industry cost structures when deciding whether or not I can afford to make a purchase. One of the annoying things about daily life in North America is that you have to do extra mental arithmetic in adding taxes and tips before making purchase decisions.

I doubt surcharges are really good for business either. When booking airline tickets I always getting the feeling I am being conned with the surcharge, despite not feeling the same way about the wide price differences between the same seats on the same flight, but with slightly different terms and conditions.

My trip to Planet Irf

~ Andrew Norton ~ 26 Comments

At his blog Planet Irf, Irfan Yusuf claims that I – along with Michael Duffy, who was interviewing me – am guilty of inconsistency. As readers may have gathered, I do not like inconsistency. Irfan says:

During the interview, Norton and Duffy discussed the relationship between racism and immigration. They both seemed to agree that opposition to immigration during the latter half of the twentieth century in Australia wasn’t necessarily to do with racism but was more an issue of the fear among Australian workers of migrants taking jobs….

Later in the conversation, Norton Duffy state that immigration increased under the Howard government. This, they alleged, meant that the Howard government (and presumably John Howard) were therefore not racist.

So if you support the pursuit of policies that lead to an increase in immigration, you simply cannot be racist. But if you oppose immigration, you aren’t necessarily racist. Go figure.

It seems fairly simple to me: the Howard government and the Australian people are accused of White Australia style racism. But support for an immigration policy that includes record numbers of people with dark skins and exotic beliefs is inconsistent with this interpretation of the last decade. A strong racist would always oppose a policy that let in so many people from cultures they did not like. Because there are few strong racists, migration opinion is driven by other factors.

Support for the migration policy is, however, consistent with lower-level prejudices. Social distance surveys show that letting people into the country is one thing, but letting them into your life another. There can be large attitudinal gaps between migration and marriage. So while I can’t recall what I said to Duffy in that interview, I very much doubt that I claimed that ‘if you support the pursuit of policies that lead to an increase in immigration, you simply cannot be racist.’

After all, I was being interviewed about an article that showed why that was not the case.