We don’t agree with The Menzies Research Centre’s Nick Cater much but today he makes sense, joining the conga-line of critics bashing Australia’s demand-driven university system, which has crashed education standards, devalued the value of a degree, flooded the labour market (resulting in poor employment outcomes), and cost the Budget (and students) billions. From The Australian:
Are our degree factories delivering value for money? One suspects not, in the light of the [Productivity] commission’s recommendation that higher education providers should be included in consumer law, giving unhappy students the right to seek compensation if the service they received was “not fit for purpose” or was “supplied without due care and skill”.
The commission charts the extraordinary growth of universities in which more than a million Australians are enrolled today, twice as many as there were when the century began.
The federal government’s direct contribution increased from $19 billion in 2007 to $31bn last year, not counting the amount it lends to students, a substantial slice of which it will never recoup. Outstanding government loans to students have tripled across the same period from $16bn to $49bn… Four out of 10 women aged between 25 and 35 have a bachelor degree, or higher qualification, as do three out of 10 men in the same cohort.
Ten years ago the figures were 24 and 22 per cent respectively.
For those who regard human beings as inputs that increase production, this investment in education should be an unqualified good. Yet human beings, it turns out, are not machines, and the demand for the services of graduates has its limits. Full-time employment for graduates has fallen from 85 per cent in 2008 to 71 per cent last year.
More than a quarter of graduates work in jobs unrelated to their studies, to which their degree may add little value. In fields such as the humanities, languages, arts and social sciences, the figure could be as high as half. Graduate wages as a proportion of the average minimum wage have been falling since 2008.
Students’ return on investment is shrinking, and they know it.
A survey last year found high levels of dissatisfaction: almost half thought they had received inadequate services…
The average Australian Tertiary Admission Rank of university entrants, a proxy measure for academic preparedness, fell from 79.9 per cent in 2010 before the glorious Gillard revolution to 76.4 per cent last year.
Meanwhile, the proportion of students abandoning university courses rose, from 12.5 per cent in 2009 to 15.2 per cent in 2014. More than a quarter of students are failing to complete their degrees in nine years. In the commission’s view, this represents a waste of the student’s time and money, and squandered taxpayer funding.
Cater has dissected the issue nicely. But he did forget to mention the insane salaries being paid to university vice chancellors, whereby the average salary package recently hit an insane $890,000, driven of course by the $2.8 billion taxpayer-funded bonanza caused by the uncapping of university places in 2009.
For mine, this uncapping of university places is the greatest policy blunder and the biggest driver of the current problems afflicting Australia’s university system. It has facilitated a form of ‘quantitative easing’, whereby the universities have lowered entrance scores and printed as many degrees as possible to accumulate Commonwealth government funding through HELP/HECS loans, as well as sell as many degrees as possible to foreign students.
The end result is that the universities have flooded the market with so many graduates that a university degree has lost its value, despite the significant cost to both students and the Budget.
Given the abject failures of the demand-driven system, I believe that policy should first and foremost look to restrict federal funding and adopt a merit-based system that rations the number of university places based on a detailed assessment of the economy’s needs.
