Author: Andrew Norton

What do higher education subsidies achieve?

~ Andrew Norton ~ 11 Comments

This year, the federal goverment has budgeted to spend around $4 billion subsidising higher education tuition. Strangely, though most people in higher education politics think we should spend more than this, nobody seems quite sure what this expenditure is supposed to achieve. The Bradley report confessed that ‘there is no easy basis on which to determine the “right” mix of public and private contributions’. This was not just an empirical problem; it was a conceptual problem too.

The most defensible theory of higher education subsidies is that by fiddling with prices via subsidies demand for education is increased to socially desirable levels and/or supply is increased by making it more attractive for higher education providers to offer disciplines that might otherwise be under-supplied.

Behind this theory is an argument about externalities. In comments over the weekend, commenter Rajat Sood suggested that the widely varying share that Commonwealth subsidies make of per student funding, from as little as 16% for law to more than 80% for science, may reflect (at least approximately) the ‘social externalities’ involved. The idea here is that because not all the benefits of higher education are captured by the student, in a pure market they won’t pay the prices set and higher education will be ‘under-produced’.

But this theory does not fit with current system design. Under the quota system, suppliers do not receive price signals, so they cannot respond to extra demand or provide extra supply. Under a voucher scheme, they would receive price signals. But as my Issue Analysis paper argued the effect of the combined subsidy-price cap system recommended by Bradley would mean that suppliers would receive price signals that would encourage them to reduce supply below what a pure market would provide. So the effect of Commonwealth fiddling with prices would be the opposite of what the externalities theory says it should be.
Continue reading “What do higher education subsidies achieve?” →

A defence of political partisanship

~ Andrew Norton ~ Leave a comment

Light posting due to a do-nothing weekend, but I liked this defence of political partisanship by Nancy Rosenblum at Cato Unbound.

Though the book on which it is based on sitting in my daunting pile of unread books, Rosenblum has more than any other political theorist I am aware of been a defender of voluntary assocations, finding what good they do (if only for their members), rather than finding them wanting against an abstract standard, as tends to be the case in the work of others. In a much less comprehensive way, I try to do something similar in my criticisms of anti-discrimination law and arguments against political expenditure laws.

Australia’s party identification figures (largish pdf) are fairly resilient, and this is broadly healthy for our political system which relies on there being an alternative government. The problem is that partisanship rarely converts to party membership, which means both major parties are suffering from shrinking and ageing memberships, narrowing the pool of candidates and affecting campaigning capacity.

The Victorian Liberal Party is experimenting with pre-selection primaries, an idea I converted to last year. I’m not sure how successful it will be in attracting Liberal partisans into the party, but given the dismal alternative of slow but steady decline it is worth a try.

Brian Naylor ‘hommage’

~ Andrew Norton ~ 2 Comments

My Brian Naylor obituary translated into a French ‘hommage’:

Au nombre des 108 morts confirmés ce matin se trouve Brian Naylor, qui a lu les informations de Channel Nine pendant 20 ans à partir de 1978, dans les années où les informations de cette chaîne dominaient les taux d’audience. Quasiment tous ceux qui vivaient à Melbourne à cette époque recevaient leur ration d’informations de Naylor, qui possédait le comportement sobre, sensé et fiable que nous préférons chez les présentateurs, mais il savait aussi traiter les histoires émouvantes ou inattendues avec lesquelles Nine aimait souvent conclure.

Il terminait chaque émission par «Je vous souhaite de bonnes nouvelles, et bonne nuit». C’est tellement triste que sa vie ait pris fin en participant à une actualité aussi affreuse pour autant de monde.

Google Translate doesn’t get it quite right turning it back into English, but not a bad instant effort:
Continue reading “Brian Naylor ‘hommage’” →

The resilience of party stereotypes

~ Andrew Norton ~ 2 Comments

The Newspoll results reported in this morning’s Australian show the Coalition’s lead over Labor as the party which would best handle the economy has been reduced to a statistically insignificant 1%.

While the paper’s article on the poll rightly sees this as bad news for the Liberals, putting it in the context of other questions asked in the same poll it shows that there is some resilience in party stereotypes when questions are framed broadly.

When Newspoll’s respondents were asked whether the federal government was doing a good job handling the current economic crisis, 63% said yes. Even 31% of Coalition voters agreed. 57% thought that the stimulus would be good for the economy, with again 31% of Coalition voters agreeing. 48% of respondents thought they would be better off over the next 12 months due to the package. When asked whether the Coalition would do a better or worse job handling the crisis, more thought worse (39%) than better (33%). Only 28% of Newspoll’s respondents believed the Coalition would deliver a better stimulus package.

But though the Coalition is clearly well behind on the major economic issue of the day, on the more abstract question of who would better handle the economy they remain fractionally ahead, showing the reserve of credibility on this issue they have built up over many years.

(It would be interesting to know the question order in this survey; this result would be more interesting if this question was asked after rather than before the specific questions.)

The Bradley report’s social democratic delusion

~ Andrew Norton ~ 8 Comments

According to Denise Bradley, it is

pathetic that lifting price caps — a minor issue no one had ruled out — had displaced debate about how to bring education sector funding up to a level that supported a modern services economy.

But as I argue in my new CIS Issue Analysis paper, which came out today, this is a major issue, and in fact identical to the issue of how funding reaches the level appropriate to a modern services economy. (I summarise some of the arguments in this newspaper article).

The Bradley report has no answers to key question such as

* how do we know what level of investment is necessary?
* if we can find that out, how do we ensure the investment occurs in a price-capped regime?
Continue reading “The Bradley report’s social democratic delusion” →

VSU repeal bill introduced

~ Andrew Norton ~ 1 Comment

Today Kate Ellis introduced the VSU repeal bill. Her second reading speech is here.

There are no surprises from last year’s in-principle announcement, though a little more detail. Spending the money on political parties or election campaigns for Australian parliaments or local governments is specifically prohibited in the legislation, but clearly wider spending controls are envisaged via guidelines.

However the larger red tape extravaganza will be created by requiring students to apply for a separate SA-HELP loan scheme, to add to HECS-HELP, FEE-HELP, OS-HELP and VET-HELP. Since my original post last year I have thought of a reason why they want to do this, which is avoid paying the upfront discount for those students who do not take out loans (under the current system, students get 20% off the student contribution amount for paying direct to the university, with the government paying the discount to the universities so they are neutral between payment options).

However, there must be a simpler way. Given the costs to taxpayers of the loan scheme, I would recommend a 25% surcharge for those who do not pay up-front.

Labor and ‘neoliberal’ policy

~ Andrew Norton ~ 31 Comments

One of the most difficult problems Kevin Rudd faced in writing his Monthly essay was the extensive, and indeed dominant, role of the Hawke and Keating Labor governments in implementing ‘neoliberal’ policies.

When he says that the political home of neoliberalism in Australia is the Liberal Party he is giving the Howard government more credit (from a reformist perspective) than is warranted by the historical evidence. While the Coalition moved further ahead on labour market deregulation, waterfront reform and the privatisation of Telstra than was likely under Labor, most of the major reforms had already taken place by the time Howard took office in 1996, and what the Coalition did was incrementally advancing or fine-tuning reform processes initiated by the previous government.

Apparently when the Coalition introduces a market reform it is ‘economic fundamentalism’, but when Labor implements a market reform it is ‘economic modernisation’.

The differences between social democratic market reformers and ‘neoliberal’ reformers are larger in their underlying philosophical perspectives than in their substantive policies. In The Australian this morning, Dennis Glover put it this way:

Rudd does not believe the free market is an end in itself; it exists to serve society. For Rudd greater social equality is a moral good.

Continue reading “Labor and ‘neoliberal’ policy” →

Brian Naylor and dozens of others, RIP

~ Andrew Norton ~ 3 Comments

When Victorian Premier John Brumby warned last Friday that Saturday could be the ‘worst day in the state’s history’ I thought he might be exaggerating. Late on Saturday, even after Melbourne has experienced a record 46 degrees, I still thought that might have been the case. On Ash Wednesday in 1983, when Melbourne’s suburbs were full of smoke, city-dwellers knew that things were seriously wrong. Though on Saturday afternoon it looked like there was more haze than usual, the air did not smell.

But as all media have been reporting, Brumby was right. Among the 108 confirmed dead as of this morning is Brian Naylor, who read the Channel Nine news for twenty years from 1978, in the years when Nine news dominated the ratings. Almost everyone who lived in Melbourne at that time would have received part of their news from Naylor, who had the sober, sensible and reliable demeanour we prefer in newsreaders, but could also handle the touching or quirky stories that Nine often liked to finish with.

He ended each broadcast with ‘may your news be good news, and goodnight’. It’s so sad that he ended his life as part of a very bad news story, for so many people.

Brian Naylor and dozens of others, RIP.