The report of the Bradley review of higher education policy says that Australia’s university completion rate was 72% in 2005. For this they rely on the OECD’s Education at a Glance publication.

The reason the review report doesn’t use an Australian source is that we actually don’t know what our completion rates are. The attrition rates occasionally published by DEST/DEEWR on a year-to-year basis count someone taking a year off or changing institutions as a ‘drop out’, but someone dropping a course but staying at the same institution in another course as a retention.

The OECD calculates its drop out rate by taking completions as a % of commencements n years earlier. But this is far from straightforward in the Australian statistics, since some people will be counted as ‘commencing’ more than once if they change courses. There used to be a ‘new to higher education’ commencing figure, but unfortunately it no longer seems to be published. But if I remove from the 2005 commencers those admitted on the basis of previous higher education and age the cohort three years I get a completion rate of 87%. Of course this is also highly problematic because some courses are longer than 3 years, and many people take more than 3 years to complete a 3-year course (and many of the people who completed a course will not have enrolled in that particular course originally). But it highlights how statistical factors influence results.
Continue reading “How high is Australia’s uni drop-out rate?” →

As I feared, the Bradley higher education report undermines its voucher proposal by failing to fix the price signals.

Indeed, it is worse than not deregulating fees, bad as that is. The Bradley committee haven’t even given any serious attention to how public funding could help make a voucher system work. Universities aren’t going to rush to enrol additional students under a voucher scheme if the price isn’t right. Indeed, if the price is wrong their response might be the opposite one: to use the lifting of regulation to shed uneconomic students.

The one study we have on university expenses relative to income for Commonwealth-supported places suggests that in half the disciplines they looked at universities lost money. This study has (acknowledged) data problems, but that finding is consistent with the observed behaviour of universities in trying to cut costs and recruit profitable fee-paying students. And a few of the disciplines in question did get some extra funding in the 2007-08 Budget. However, it suggests that an economically rational university would not be rushing to take extra students across a wide range of fields of study.
Continue reading “The price is wrong” →

Much more on the Bradley review of higher education policy to follow, but first a postscript to the story of Brendan Nelson’s seemingly endless capacity to believe contradictory things. According to a report in The Australian,

THE former Opposition leader Brendan Nelson was on the line last week when The Australian broke details of the Bradley review…. [He] liked what he’d read in the morning’s paper.

In fact he was gobsmacked by Denise Bradley’s embrace of a voucher-style demand-driven funding system, which was something both he and a fellow former education minister David Kemp had favoured, and thought the consolidation and merger of regional universities was inevitable.

But if he favoured a voucher scheme, why did he do the exact opposite and introduce unprecedented government control over the distribution of university places? In the case of new places, this was often down to the detail of precise numbers of students in specific courses at designated campuses.

Did Cabinet reject a voucher scheme for a second time??? Or (as I have long suspected) did Nelson just not understand the bureaucratic monster of a reform package that his department created for him?

With ‘vouchers’ for universities seemingly on the political agenda, there are polarised views of their likely effects. I am saying that if the price signals are right they could bring supply and demand for university places into better alignment.

But critics warn that deregulation could produce a mismatch between what students demand and what the economy needs. It could also encourage providers to invest only in higher-demand and low-cost courses.

This is a bit like saying we need government schools because otherwise kids from poor families would get a bad education – using a failing of the current system as an argument in its favour. The Weekend Australian did not use what I told them about how for years a chronic oversupply of science places has existed alongside chronic undersupply of places in health-related courses, despite serious labour shortages in the health professions.

The applications data shows that demand for courses shifts towards labour market shortages (see figure three in the University of Melbourne submission to the Bradley review). The blockage in the system is in supply, which is largely controlled by the government. In practice, the government’s only steering mechanism has been new places, rather than redistributing existing places. If there are no new places, inertia prevails.
Continue reading “The voucher battle begins” →

In a Weekend Australian opinion piece attacking the government’s ending of undergraduate full-fee places at public universities, Glenda Korporaal says that

Far from creating a warm, multicultural glow, the over-reliance on foreign students has led to an undercurrent of resentment among many young Australians, who feel these students are depriving them and their mates of places at good universities (italics added)

In a reform of the last Howard Budget, universities no longer have absolute limits on the numbers of local students they can enrol. However, government policy still provides strong financial disincentives to take domestic undergraduates.

Up to 5% more than their quota number of student places, universities receive roughly the same as they would for within-quota students (ie the government subsidy plus the student contribution amount). Over that, they get the student contribution amount only. In most cases, international student fees will be significantly higher than either amount – twice as much or more than for within-quota students in some courses in the ‘good’ universities.

So now the key problem is less quantity constraints than price control. Australian students are not allowed to compete on price with international students. They are priced out of the market – not through prices being set too high, as the left supposes, but through prices being set too low.
Continue reading “Do international students take uni places from Australians?” →