Labor defends its demand-driven university failures

By Leith van Onselen

Late last year, the Turnbull Government implemented university funding reforms to make it harder for students to access the Higher Education Loan Program (HELP) for courses that have poor employment prospects, thereby effectively ending the demand-driven university system established by the Gillard Labor Government.

Today, the federal Labor opposition has attacked these changes, arguing that they will squeeze aspirational families in the outer suburbs of major cities. From The Canberra Times:

Enrolment figures from the education department – parsed by Labor and the parliamentary library – show the boom in university participation under Labor’s uncapped system was strongest in outer suburban and semi-regional areas around Melbourne, Sydney, Perth and Brisbane.

Between 2008 and 2016, the number of people enrolled in bachelor degrees surged by more than 50 per cent in 45 out of 150 federal electorates. The vast majority of those seats were in the outer suburbs of major cities, and 31 are currently held by Labor.

The Turnbull government has effectively dismantled the demand-driven system by imposing a two-year funding freeze and a cap on future funding growth, for which universities will have to compete. It will save the budget $2.2 billion over four years, but has angered universities – particularly regional institutions that have seen enrolments surge in the demand-driven era.

Shadow education minister Tanya Plibersek said Labor had opened the college doors to 190,000 extra students and the Turnbull government had “slammed them shut”. She said aspirational families in suburban electorates would be hit hardest.

“Some of these Australians would be the first in their family to go to uni, and instead of supporting them, the Liberals are locking them out,” she said. “This is a cruel blow to the thousands of year 12 graduates who studied so hard to get into uni.”

Of course, an objective assessment of the demand-driven policy would have found that it has massively oversupplied the economy with university graduates:

Leading to poor employment outcomes, despite the massive cost to the Budget as well as university students:

A point that was also acknowledged in the Productivity Commission’s latest report:

For those who do complete their degrees, post graduation outcomes have been getting worse. Full-time employment rates for recent graduates have been declining, even as the Australian economy has continued to grow (figure 3.3). Many of those who do not work full-time are not in that position by choice, with the underemployment ratio among graduates at 20.5 per cent in 2016, compared with about 9 per cent in 2008. Graduate starting salaries have also been growing slower than wages across the broader economy (declining from nearly 90 per cent of average weekly earnings in 1989 to about 75 per cent in 2015)…

Further, over a quarter of recent graduates believed they were employed full-time in roles unrelated to their studies, to which their degree added no value. To the extent that someone without a costly university education could have undertaken these roles, this can then have cascading employment and income effects down the skills ladder.

Many employers are also not satisfied with the quality of recent graduates, with about one in six supervisors saying that they were unlikely to consider or would be indifferent to graduates from the same university…

University students are also not satisfied with the teaching in their courses…

As this site has argued ad nauseum, the uncapping of university places has delivered a form of ‘quantitative easing’ to the university sector, whereby universities have recruited as many students as possible in order to accumulate HELP/HECS funding. The entry bar has been lowered so far that actual tertiary entrance scores have plummeted, devaluing a degrees’ worth in the process.

Moreover, while funding for universities has exploded, vocational education has suffered:

And yet that is where Australia’s biggest skills shortages lie:

Precisely because apprenticeship and trainee commencements and completions have collapsed:

As such, employment outcomes are much stronger in the trades, reflecting the relative undersupply:

In short, Australia is spending way too much on university and not enough on vocational education and training (VET).

Accordingly, if Labor had any sense it would argue to divert funding away from universities towards publicly-run TAFEs, which according to the 2016 VET FEE-HELP Statistical Report, offer lower course fees and have much higher completion rates than private (rorted) VET providers.

Such a policy would help the working class far more than shunting them into expensive dead-end degrees.

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