Funded by Universities Australia, KPMG have produced a report modelling the economic effects of increased investment in higher education. As an exercise in persuading Treasury, it is almost certain to fail.

Perhaps because of the way Universities Australia specified the project, the report assumes that this increased investment comes from the government. But this is not an assumption that can simply be built into an economic model. It is a highly contentious conclusion that never receives the arguments it needs.

The obvious alternative assumption is that students pay some or all of the increased investment. Under current HELP loan scheme arrangements this would still cost taxpayers, because of bad debts and interest subsidies, but not as much as direct subsidies.

Indeed, even setting aside the interests of taxpayers, it is highly likely that there would be more efficient investment and higher return if investment is determined privately rather than publicly.
Continue reading “When a conclusion appears as an assumption (or more dubious arguments for university funding)” →