Category: Higher education

Kate Ellis’s red tape machine

~ Andrew Norton ~ 12 Comments

For some reason, Julia Gillard let junior minister Kate Ellis run with student amenities policy, cutting across Gillard’s own broader policy review under Denise Bradley.

Last week Ellis introduced complex legislation to regulate and finance student amenities, when for much of Australia prior to 2006 it had operated without any government regulation at all. Now she has released guidelines that provide more detail on how the legislation would operate.

Student unions are unhappy that the guidelines don’t force universities to give them money. But that they are not forced to do so is perhaps the only thing that can be said in favour of the guidelines.

The guidelines do require higher education institutions receiving tuition subsidies to provide democratic opportunities for students to participate in decision-making, and to provide ‘adequate and reasonable support resources and infrastructure’ for elected students to carry out their functions. They also require students to be given access to independent advocacy services for academic matters, for higher education providers to make available information on and access to health services, accommodation services, legal matters, and employment services.
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The Bradley enrolment target

~ Andrew Norton ~ 4 Comments

The Bradley report’s target of 40% of 25-34 year olds having degrees by 2020 is leading to some big projections of what it would take to reach that proportion of graduates. Bob Birrell thinks it might need a 71% increase in the number of graduates compared to 2006, coming from a combination of demographic factors (there will be more 25-34 year olds) and a higher qualification share among them. This would be nearly 600,000 people. In The Australian this morning, Vin Massaro puts the number at 544,000.

Birrell is saying we need to build lots of new campuses, Massaro is worried about how much it would cost and how far academic standards would need to be lowered to take all these extra students.

I have to confess that the maths on this has made my head hurt. But it’s not clear to me that the numbers involved are going to be quite as high as Birrell and Massaro think. For a start, they are assuming a base of 29% in 2006. That was the number in the Bradley report. But being in the grip of the OECD cringe, under which Australian data is not real until it has been republished in Paris, the Bradley committee used out of date statistics. By 2008, the figure was already up to 32%. I suspect this is partly due to migration, since migration criteria favours graduates.
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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.
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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?
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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.

Voucher confusion

~ Andrew Norton ~ 4 Comments

According to a news report in this morning’s Higher Education Supplement, the head of the National Centre for Student Equity in Higher Education, Trevor Gale, believes that vouchers may concentrate educational disadvantage:

Professor Gale argued notice should be taken of schools research from the UK regarding choice. “When the rule that students had to attend the local comprehensives was lifted, students from lower SES didn’t have the mobility or resources to exercise the choice,” he said.

“It suggests when you introduce market choice imperatives into the policy agenda you increase the concentration of disadvantaged groups in some schools and make it hard for students to access most elite schools. I think we will see more disadvantaged students represented in newer universities and less in the Group of Eight.”

There is an obvious mistake here, though one which highlights that vouchers in higher education are less radical than vouchers in school education. While in schools systems it is common for both demand and supply to be regulated (ie the state tells parents where to send their kids to school and controls the school), in higher education supply has been regulated but not demand. Prospective university students can apply anywhere they like. Indeed, the effects of a voucher system will not be obvious to applicants for public universities (prices would drop at private providers, so the change would be noticed there).

So any relative unwillingness of low SES students to travel is already built into the current applications system and won’t be changed by a voucher system.

Of course I would like to see proof that this unwillingness exists for higher education. The kids who have survived unfavourable social circumstances and the public school system, and have reached the point that they are candidates for university entry, are likely to be very different to the parents who are too lazy or incompetent to find their child a decent school.

What’s going on with science applications?

~ Andrew Norton ~ 24 Comments

Back in October, early Victorian university applications suggested that demand for science was well down, despite the government cutting the cost of science courses. But reports in today’s media say that science applications finished 19% up on last year. With overall applications up only 6%, that endangers my prediction that a price change would have little effect. The history of applications data is that it is rare for a discipline to gain or lose more than 1% of market share in a year.

The complicating factor this year is that several University of Melbourne undergraduate courses that draw on science-related interests and aptitudes – computer science, information systems, dental science and medicine – were offered for the last time in 2008, and we would expect that people aiming for those professions would now enrol in the new science or biomedicine undergraduate courses. And both show significant increases in applicants.

My other prediction of little supply-side response is also complicated by changes at the U of M, but without Melbourne offers are up 4% on last year. That is consistent with normal year-to-year movement.

ENTER scores are stable at Monash and Melbourne, the two big Victorian players in undergraduate science. Monash’s clearly-in ENTER was up 0.2 to 75.2, and Melbourne’s was stable on 85. So added demand is not doing much to push up the ‘price’ in ENTER scores of science courses.

I think my prediction that final science commencing enrolments will fluctuate within the normal range is looking ok. But if we see a similar pattern of increasing demand for science in other states, which do not have the U of M complication, then maybe the cut in price did affect demand.

How much will Bradley vouchers be worth?

~ Andrew Norton ~ 8 Comments

In an article I wrote for the Higher Education Supplement last week, I estimated that the per student funding increase from the Bradley review could be as low as 1-2% for most disciplines. I now think that this is an underestimate.

The difficulty is that though prices for student places are a critical element of a voucher scheme, the Bradley report doesn’t recommend either actual prices or a price-setting mechanism. The only specific proposal on prices is that teaching and nursing courses get the 25% increase in student contributions they missed out under the Nelson reforms in 2005.

So any estimates of prices rely on inference and assumptions. The committee recommends a 10% increase in teaching and learning funding, but also two clawbacks on teaching and learning funding. 4% of teaching and learning funding would go to social inclusion programs, and another 2.5% to a ‘performance’ fund that could include the results of teaching surveys, graduate outcomes etc. Because these clawbacks would be distributed based on criteria either than student enrolments, I take the view that this funding should not be counted towards voucher values.
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Who should receive university economic rents?

~ Andrew Norton ~ 22 Comments

In the Higher Education Supplement this morning, Griffith University economist Ross Guest considers what should be done with ‘economic rents’ that prestigious universities can extract by charging high fees. Rather than imposing price control as the Bradley committee suggests, Guest says that:

The efficient way of dealing with economic rents is to tax them; this is how we deal with resource rents earned by mining companies, for example. So why not tax any excessive economic rents earned by institutions and use the tax revenue to offer means-tested subsidies to students?

I think it is pretty clear that some universities charge fees for full-fee students that are well in excess of the cost of delivering the course. In my submission to the Bradley review (table 6) I showed that sandstone universities charge international students $6,000 to $10,000 a year more than Dawkins universities for similar courses. Some of that is probably genuine quality differences – better academics and facilities. But I think we can assume that there is some ‘economic rent’ here.

There seem to be three broad options:
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Why do squatters get to stay so long in university property?

~ Andrew Norton ~ 18 Comments

Melbourne readers will probably have heard of a long-running occupation by squatters of Melbourne University-owned terrace houses in Carlton (disclosure: some of my colleagues have been involved in this issue, but I have not). The squatters call themselves the Student Housing Action Collective, and have rested their case for staying partly on the ‘homelessness’ caused by a very tight inner Melbourne rental market.

What’s interesting about this case, I think, are the assumptions it reveals about the relationship between universities and their students. Legally, this looks like a straightforward trespass case. Many of us would like to live in a Faraday St terrace house, but none of us have the right to do so without the landlord’s permission, and we would quickly be thrown out if we tried to move in. But in this case, the squatting has dragged on for many months.

Every party to this dispute has been acting as if the normal rules do not apply. The squatter-activists (the squativists?) correctly judged that the University would not just throw them out. The University has been negotiating with the squatters despite its strong legal case against them. The media has been reporting the story as if the squatters have a case for staying.

In an Age op-ed this morning, housing lawyer Chris Povey put his finger on the underlying assumption:

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