Vice chancellor furious as dunny paper degree printer breaks

By Leith van Onselen

Margaret Gardner, the vice chancellor of Monash University, is the latest vested interest to bawl over the Coalition effectively ending the demand-driven university system. From The Guardian:

Universities Australia aims to increase pressure on the Turnbull government and Labor, which has opposed the cut, but so far declined to say whether it will reverse it.

In the mid-year economic update, the Coalition unveiled a package of $2.2bn in cuts, the centrepiece of which is an unlegislated freeze on the demand-driven system for university places which Universities Australia has said will mean 9,500 places are unfunded in 2018.

In the speech, extracts of which have been seen by Guardian Australia, Gardner says the “ethos of universal access to public services, such as health and education, is central to the continuing project of Australian social cohesion”.

Gardner says the Rudd government’s move to uncap university places in 2009 was a “bold advance” that was supported by both sides of politics.

Since then enrolments from the poorest fifth of Australian households are up 55%, regional and rural students up 48%, Indigenous enrolments up 89% and enrolments of students with a disability up 106%, she says.

Gardner says the $2.2bn freeze “is really a cap on opportunity for all Australians”.

“And it isn’t just that this year, and in the years to come, there will be people who wished for and could benefit from a university education, who will miss out.”

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 a recent Productivity Commission 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.

The Australian’s Judith Sloan recently penned an excellent article explaining the inherent flaws with the demand-driven system:

Not surprisingly, the employment prospects and wage premium previously enjoyed by graduates have slipped alarmingly.

The proportion of graduates in full-time employment after course completion has slipped from mid-80 per cent to close to 70 per cent. A recent Treasury paper notes “workers with a university education had higher wage growth than those with no post-school education over the period 2005-10 but have since experienced lower wage growth than individuals with no post-school education”. The latter gap is more than 1.5 percentage points a year for the period 2010-15.

And if this is not bad enough — and recall that university students end up being saddled with debt whether or not they complete — the system of vocational education basically has fallen into a complete heap as more young people opt for university rather than a trade or other VET qualification.

The idea behind demand-driven enrolment was that students are better able to gauge what is in their interests rather than bureaucrats determining course numbers. But here’s the thing: the taxpayer also should have a say in this equation.

In most countries, an assessment is made of how much taxpayers should stump up for university tuition and that provides the basis for a cap. It can be a generous cap or a miserly cap.

But it is completely legitimate to limit the amount of funding for university tuition, given the high opportunity costs involved (spending on alternatives such as health, defence and the like or returning the funds to taxpayers).

Sloan’s point about vocational education is important. 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, the Government should 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, which also proliferated under the former Labor Government.

Fairfax’s Michael Pascoe has today noted that highly paid university vice chancellors are quietly panicking that the rivers of gold from foreign students might dry up now that the Turnbull Government has tightened requirements around ‘skilled’ 457 temporary visas, making it more difficult for foreign students to gain permanent residency in Australia:

A key cog in their money-making machines has just been removed with transitions from international student visas to 457 visas halving last year.

…457 visa applications for the six month period were down by 34 per cent on the previous corresponding period.

Within that, student visa transitions dived by 50 per cent.

Part of the attraction of our universities for some foreign students has been the ability to turn a student visa into a temporary work visa and that, in turn, into permanent residency.

The number of annual permanent visas has not changed, but to whom they might be granted has.

With the carrot of residency being dangled, the quality of Australian degrees has not mattered so much as long as the rich fees kept rolling in. Hence the infamous pressure on university staff to pass sub-standard foreign students.

With the visa carrot removed, our universities are playing catchup to market their courses on quality instead…

The universities are likely to see impact in next year’s enrolments – something that is not coming as a surprise to them.

In an off-the-record conversation, the university industry has admitted knowing the problem was coming, along with the realisation that quality shortcuts would come back to bite them.

The fees foreign students pay to attend our universities are the core of our third-biggest export industry, behind iron ore and tourism.

The law of unintended consequences is always at work.

Let’s be honest here for a minute. Australia’s third biggest export industry isn’t really “education exports”, but rather “permanent residency exports”.

Dr Jenny Stewart, Honorary Professor of Public Policy at the University of New South Wales, recently drew the direct link between permanent residency and foreign student demand in her excellent article Hooked on Students:

If you work in a university, you cannot help but be aware of the extent to which universities are dependent upon income from international undergraduate students. Many of us working in the sector realised that it was not for any intellectual brilliance on our part that the students came, but because for many, coming to Australia as a student was a significant step on the path to becoming an Australian resident.

What I had not realised, until I looked at the data, is just how significant this educational program has become in the migration sense. The numbers are substantial. In 2013-2014, of just over 290,000 student visas that were granted, 153,000 were for study in higher education institutions. (Most of the rest were for vocational courses, which in turn offer a pathway towards onshore application for a higher education visa).

What do these undergraduate students do once they have completed their qualification? Many, understandably, wish to remain in Australia…

With appropriate advice and support and the necessary persistence, it would seem to be possible for just about any international student who is a graduate of an Australian university to become, eventually, a permanent resident…

The RBA’s submission to the parliamentary inquiry into home ownership also admitted as much when it noted that “recent rule changes have made it easier for students to remain in Australia after graduation, including by becoming permanent residents”, and then forecast a huge increase in net migration from international students, particularly into Melbourne and Sydney.

Foreign student numbers are just fine at present, running near record levels, thanks to the decline in the Australian dollar over the past four years, whereas the number of Indian students studying in Australia has just hit a seven-year high:

And there’s the key: if the we want education exports to increase, do it by implementing policies that put downward pressure on the Australian dollar, as well as by driving greater quality in teaching, not the opposite which lowers living standards for everyone else.

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