Fees and the poor, again

January 17, 2007 ~ Andrew Norton ~ 4 Comments

And a further update: Theory saved! If I take out the private providers that have been added to the statistics, low SES commencing students go up from 15.16% in 2004 to 15.20% in 2005. Of the total student population, they increase from 14.62% to 14.67%. These are extremely small differences, but in the direction I predicted.

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The trouble with using evidence is that sometimes you have to admit that you could be wrong. In making the argument below, I compared the 2005 Higher Education Report with the 2004 version (pdf). The 2005 report said that low SES students were 14.5% of the total in 2005 and the 2004 version said 14.1% in 2004, so I concluded that the proportion of low SES students had increased between the two years.

But now the equity group spreadsheets are available. It says that the 2004 figure is 14.62%, not 14.1%. The fine print of the 2004 report says the numbers are not affected by changes of scope to enrolments – which they don’t explain, but which I think is a reference to a change in the way students are counted that was implemented a few years ago. Essentially, the earlier system was a snapshot in time at 31 March each year. But as more students enrolled mid-year, concern increased that this was inaccurate and the system was changed. The spreadsheet data, which I presume uses the now standard method of counting students, records 2,000 more low SES students than what I presume is a 31 March snapshot in the 2004 report. So I was not comparing like with like – though I will have to think about why you would get a higher percentage later in the year than earlier.

The next issue is commencing students. In absolute numbers, commencing low SES students are up by 2%. But in percentage terms, they are down 15.16% to 15.12%, contrary to my theory. However, the 2005 data includes private higher education providers that were not in the 2004 count. As they mostly charge full fees, perhaps they are less attractive to low SES students. It will take me a while to do a same institution 2004-2005 comparison, but I was almost certainly over-confident in my analysis yesterday.

Yesterday’s post:

I know evidence is but a flea on the elephant of intuition and ideology. But one aspect of the DEST Higher Education Report 2005, quietly put on the web late yesterday, is worth noting. This is the annual calculation of the proportion of domestic university students from a low socioeconomic background. The measure is, it should be pointed out, only a proxy. It is a postcode analysis, with anyone whose permanent home address is in a postcode in the lowest 25% as determined by the ABS Index of Education and Occupationdefined as ‘low SES’. Obviously, there are poor people in well-off areas and well-off people in poor areas. This limits it as an absolute measure of SES background of university students, but it is probably a reasonable trend measure, especially over the short term.
Continue reading “Fees and the poor, again” →

The rise of a factoid

January 15, 2007 ~ Andrew Norton ~ 12 Comments

Early this month, Labor MP Craig Emerson released some ABS data collated by the Parliamentary Library, using it to argue that

two-thirds of the jobs created under the Howard government have needed a university degree as a prerequisite.

Blogger Tim Dunlop was quick to describe it as a ‘telling statistic’. Victorian Skills Minister Jacinta Allan thinks it is telling too, using it in her complaints that Victoria gets too few university places to match demand for graduates in the labour market, a line repeated in today’s front-page lead story in The Age and on page three of the AFR. (Update: And it replicates itself again in Tuesday’s Age editorial.)

But how good is this number? The Parliamentary Library used these assumptions in arriving at their figure:

Level of qualification has been derived on the basis of the occupations in which people are employed. Hence, persons with degree qualifications or higher are assumed to be either ‘managers and administrators’, ‘professionals’ or ‘associate professionals’; persons with other tertiary qualifications are assumed to be either ‘tradespersons and related workers’ or ‘advanced clerical and service workers’; and persons with school level qualifications are assumed to be persons employed in any of the other occupations.

But when we look at the definitions of these ‘degree qualification’ occupations in the ABS classification of occupations this assumption does not look so sound. For ‘managers and administrators’ the ABS states that most occupations in this group

have a level of skill commensurate with a bachelor degree or higher qualification or at least five years relevant experience (my emphasis)

For professionals, too, the emphasis is on skills commensurate with holding a bachelor degree or above. But for ‘associate professionals’ the assumption is weakest:

have a level of skill commensurate with an AQF [Australian Qualifications Framework, usually taught in the vocational education sector] Diploma or higher qualification or at least 3 years relevant experience.

Indeed, this ‘associate professional’ category isn’t very satisfactory and the new system of occupational classifications developed with the NZ statistics people is discontinuing it, with those previously in it being dispersed to other categories including ‘Technicians and trade workers’, ‘Clerical and administrative workers’ and ‘Community and personal service workers’.

The weakness of the assumption can be seen if we examine the actual qualifications of people in these occupations, which we can do through the annual supplement to the ABS labour market survey reported in Education and Work.

In 2006, nearly 80% of workers classified as ‘associate professional’ did not have a university degree. Among managers, over 60% did not have a degree. Only the professions were principally the preserve of degree-holders, with 70% having a university qualification. Even the overall trend is quite modest. 42% of all workers in these occupations were degree-holders in 1996, and 49% in 2006. So many of the jobs for which we supposedly need degree-holders are in fact filled by people who don’t have one, and probably most of the ‘associate professionals’ and some of the other groups would not necessarily benefit greatly from having one.

I don’t expect my pedantry will do much good in the face of a politically-convenient factoid. You will hear this statistic again and again – but do some mental discounting when it happens. On my calculations, just under half of jobs created in that decade were for degree-holders. As I argued last month working out how many graduates we need is a very complex task, but on my analysis our main problem is the wrong mix of graduates, rather than too few overall.

The political case against big-government conservatism

January 13, 2007July 21, 2021 ~ Andrew Norton ~ 26 Comments

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:

Continue reading →

Can market prices help bureaucrats create better funding policies?

January 12, 2007 ~ Andrew Norton ~ 19 Comments

One for the economists: I’m working on a submission to the review of the Nelson reforms that I blogged on late last year. In particular, I am looking at the funding amounts for each funding cluster (a group of fields of study funded at the same rate), which are based on the so-called ‘relative funding model’:

The amounts for each cluster have their origins in the

Does diversity affect what we think about the welfare state?

January 11, 2007 ~ Andrew Norton ~ 20 Comments

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. Continue reading “Does diversity affect what we think about the welfare state?” →

Intellectual pass the parcel

January 10, 2007 ~ Andrew Norton ~ 18 Comments

Sometimes ideas can take circuitous routes into the mass media. Back in 2004, I posted on the mummy party/daddy party thesis about the different roles played by political parties, which I sourced to George Lakoff’s 1996 book Moral Politics: How Liberals and Conservatives Think. In late November last year, Andrew Leigh mentioned the idea again, attributing it to my 2004 post. Andrew L’s post prompted Don Arthur to explain the idea further at Club Troppo. Don was the one holding the parcel when the music stopped for the last time, and on Monday got credit for it in the SMH:

One theory, proffered by the commentator Don Arthur, is that the left-right divisions of Australian politics have been replaced. Instead, voters see Labor as the caring and nurturing party, better suited to state issues such as health and education, while the Liberals are seen as the strict father, best put in charge of the nation’s finances and defence and border protection. If such a political climate change has occurred it will tilt the odds of federal success against Labor.

Don’s very good at tracing the sources of ideas, and he gave the history of the mummy party/daddy party thesis in his post. But those who clearly explain ideas can come to own them as much as the people who think of them in the first place.

Buying students

January 9, 2007 ~ Andrew Norton ~ 12 Comments

When students buy their way into public universities through full-fee places it is described as an ‘inequity’, but when public universities buy students – as many of them are busy trying to do now with scholarships – it is reported by newspapers without negative comment and I suspect with very little tut-tutting among readers.

The SMH tells the story of former North Sydney Girls High student Jie Gao who, because she received 99.95 as her Year 12 score,

was offered a $10,000 annual scholarship by the University of Sydney and the University of NSW, a $4000 annual scholarship from Macquarie University and a $13,000 scholarship – funded by business – to attend the University of Technology, Sydney.

Yet which practice is really more objectionable? The full-fee students don’t make anyone worse off – indeed they generally make life better for other students by easing the financial pressure on universities and (usually) by giving up a HECS place in their second preference course. But the main effect of the scholarships is to provide further reward to people who are already very fortunate simply by virtue of their academic ability, and many of whom will also come from the privileged backgrounds that tend to produce very high school results. Though many universities have donations and endowment income that they have to spend on scholarships anyway, surely need would be a better basis for distributing it? And if the money comes out of general revenue, scholarships deprive cash-starved teaching activities of much-needed resources.

‘Merit’ scholarships are offered because of status competition between universities, as status partly comes from enrolling the best school leavers. But scholarships probably aren’t highly effective in doing this. As Jie Gao sensibly says:

she would make her decision according to which university and course she preferred.

I’d guess her choice is between UNSW and Sydney, which offer identical scholarship packages. So the scholarship will be a neutral factor, as it will be for other very bright students. Both universities, and their other students, would be better off if they had never started this status competition and instead spent the money on something that would make a difference.

Only UTS really has anything to gain by trying to push its way into the NSW higher education status game, and this is presumably why it is out-bidding UNSW and the University of Sydney. But how prestigious can you be if you have to pay bright students to attend? Isn’t this just a relationship of convenience, like the ugly but rich old guy with the attractive young woman who is really only after his money? And if the student is ambitious, what makes more sense – an extra $3,000 a year (less tax) or being with other very bright students at UNSW or Sydney, where the long-term networking could be worth much more than the added scholarship?

Perhaps the better measure of prestige is not 99.95 students, but how much the full-fee students are prepared to pay. If students are willing to pay top dollar, universities know they have something that people really want.

The rise of political familism

January 8, 2007 ~ Andrew Norton ~ 50 Comments

As a single and childless male I know an election year won’t be good for me. On both right and left, the trend is toward political familism, with the interests of people with kids put above those without.

On the right, the main trend has been toward income transfers. This year the Howard government plans to spend a staggering $28 billion on financial assistance to families with children. It’s the second-largest item in the federal budget after the aged pension, and does not include indirect benefits such as schools and health care. This largesse has helped make the Howard years exceptionally good for people with kids. In the latest NATSEM study Ann Harding calculates that real disposable income has increased by 29% for couples with kids over the last decade, for single parent families by 26%, for couples without kids by 23%, and for single households by 15%. This of course isn’t just government benefits; rising real wages and increased labour force participation are important too. But family benefits payments have undoubtedly skewed the income distribution further away from the childless. Everyone pays unnecessarily high taxes, but only those with kids get money back.

On the left, the main trend is toward advocating further intervention in the labour market in the interests of families. Kevin Rudd has enthusiastically embraced this agenda. In his first speech to Parliament as Labor leader, he said: [restored from NLA website]

…families are such a basic social institution that they deserve special protections. When you instead have a set of laws which says that you can be told to work at any time of the day, at any place and for virtually whatever rate of pay, that it can include weekends or whatever and that you can have your shifts and rosters changed at a moment’s notice, just pause for a moment. Let us think through where that all goes in terms of the impact on working families.

As yet, it is unclear exactly how this might translate into policy. Late last week, Julia Gillard floated the idea of pressuring employers of people with kids under six years of age to permit part-time work without the disadvantages often associated with it, such as less training. Barbara Pocock’s book The Labour Market Ate My Babies, cited by Rudd in his CIS speech, proposes that:

…Australian labour law should be amended to increase the time autonomy of workers, especially those with care responsibilities. …within a framework that restricts long working hours … [including] new capacities for changes in working hours that are initiated by employees…all parents [to have] an opportunity to take up to two years out of paid work with income support on the birth of a child.

Obviously making half a million people a year eligible for income support (250,000 births times two parents) has fiscal implications, and means higher taxes for others or less spending on other things. But this kind of labour market intervention also has significant implications for other workers, who must fill the gaps left by people who decide, without reference to others, to vary their hours of work. Inevitably, the childless or empty nesters will pick up most of the slack, lacking the ‘childcare centre shuts at 5.30pm’ and other excuses of workers with kids.

The basic concerns behind political familism have been widely accepted, even if the major political parties do not have the same policy responses. But these concerns do not seem to me to be compelling enough to warrant the redistributions of time and money occurring or being proposed.

As the NATSEM research shows, families with kids have higher incomes than other kinds of households, receiving about $250 a week more on average than the next most affluent household type, couples without kids. In my article on ‘big government conservatism’ I report research from the mid-1990s showing that at that time people with kids had above average satisfaction with their financial situation. Yet for all the spending, it is hard to see any significant trends in the basic family statistics except for increased use of formal childcare.

Obviously parents need time to look after their kids, and many surveys have shown at least a large minority of people perceive some conflict between work and family. But this in itself is not a policy, as opposed to personal, problem. For most people, there are more things they could do with their time than there are hours in the day or days in the year. Inevitably, trade-offs need to be made between competing uses of time. But the ‘right’ trade-offs cannot be set in Canberra or by academics. They depend on a wide range of personal, family, and work circumstances, which will vary greatly from household to household and within households over time.

For example, in the 2005 Australian Survey of Social Attitudes about a third of respondents said they would like to spend less time in their paid job and 70% said they would like to spend more time with their families (implying some other activity ought to be reduced). But only 10% agreed that they would rather ‘work fewer hours and earn less money’, with twice as many saying they would rather ‘work longer hours and earn more money’. So while in a constraint-free world we would have more of everything, in the real world of trade-offs work is more preferred than it might appear if we just looked at questions about work and family. In the kids interviewed for Pocock’s book about their parents’ work hours the same pragmatism is on display. Many would like to spend more time with their parents (particularly boys with their fathers), but they also accept that their parents need to work, often for money but also because they enjoy it.

People also adjust without intervention from above. In an analysis based on HILDA data, between Wave 1 and Wave 2 (about a year) about 30% of those described as ‘conscripts’ to long hours (50 hours a week or more) went to shorter hours, along with about a quarter of those described as long hours ‘volunteers’. There are several ways this can occur: the long hours were just a spike in work which went away, employers take on more people to reduce hours (when demand increases, employers often work existing staff harder and take on more workers only when they are confident the higher demand will last), or workers change jobs. There is also considerable movement (about a fifth of each group) moving between ‘volunteer’ and ‘conscript’, showing changing preferences for hours worked but not the fact of long hours.

It’s far from clear to me that blunt rules imposed by policymakers can improve on this dynamic process of trade-off and adjustment. Prohibiting long hours might help ‘conscripts’ to reduce work. But it would be bad for those who enjoy their work, or need the money, or both. There would also be flow-on effects for those who rely on the work done by long-hours employees. These will be worst in occupations where there are existing labour market shortages, and no spare workers to make up for the hours not worked. With such shortages widespread in health professions, much longer waits to see medical professionals may not seem so ‘family friendly’.

Political familism doesn’t just disadvantage single people to provide added assistance to families who do not necessarily have greater needs. It is an attempt to replace individual judgments made by people in and out of families with collective judgments made by social critics and politicians. Liberals – small ‘l’ and large, welfare and classical – should resist these intrusions into the private sphere.

Living standards under WorkChoices

January 7, 2007 ~ Andrew Norton ~ 4 Comments

According to the Newspoll on WorkChoices, a third of workers think that it will make them personally worse off. But another question from the same Newspoll, reported by The Australian yesterday, suggests that this is not spilling over into general perceptions of how people think their living standards are trending.

In response to the question

Do you believe your standard of living in the next six months will improve, stay the same, or get worse?

17% of respondents thought it would get worse. It’s not exactly the same sample – only people with jobs were asked about WorkChoices’ personal effects. But though in the total sample 47% thought that WorkChoices would be bad for the economy, it confirms that WorkChoices has not triggered any substantial degree of pessimism about their own living standards. Though 17% thinking their living standards will decline is higher than the 12% recorded in December 2004, that was lowest level Newspoll has yet found. In the more than twenty years Newspoll has been asking this question, only half a dozen times has the public been less pessimistic than now, and most of those polls were in the two years from June 2003 to June 2005. And the 17% of pessimistic respondents in the December 2006 poll is lower than the 21% found in the June 2006 poll.

As The Australian’s report noted, the main reason for the decline over the last 6 months is that Labor supporters are less pessimistic. There is a long history of partisan pessimism in response to this question. Supporters of the Opposition party tend to be more negative than supporters of the government (though presumably partly because people who think their living standards are declining are less likely to support the government). That’s still true here, but there has been a significant change since June last year – Coalition living standards pessimists went up from 12% to 14%, but Labor living standards pessimists went down from 31% to 19%. Though an election is more than six months away, perhaps the positive start to the Rudd/Gillard leadership has Labor supporters feeling better about the world.