PC: Demand-driven university destroys standards

By Leith van Onselen

The Productivity Commission (PC) has released a report card on the demand-driven university system, which was implemented by the Gillard Government and ran between 2010 to 2017.

According to the PC, this system led to a sharp increased in domestic student enrolments at universities, with more people from low socioeconomic backgrounds attending university following the expansion in the system, many of whom “often entered university with poorer literacy and numeracy and lower ATAR scores on average than other students”:

Indeed, as the below chart shows, the proportion of students accepted into university with lower ATARs has grown significantly:

This has led to higher drop-out rates:

Additional students are less likely than other students to succeed academically. About 21 per cent of additional students drop out by age 23 years compared with about 12 per cent of other students, rates that for other students have been trending down over time…

And those that do manage to complete their studies have poorer labour market outcomes:

And tend to be less satisfied with the outcome from studying at university:

For mine, the most worrying result from the PC’s study is this:

…the share of young people that attended university by age 22 years increased from 53 per cent in 2010 to an estimated 60 per cent in 2016, based on data from the Longitudinal Surveys of Australian Youth.

Basically, the demand-driven university system has sucked more young people into university, instead of studying a trade:

And this policy distortion has led to an oversupply in the labour market, as evidenced by skills shortages among managers and professionals running at recessionary levels, according to the Department of Jobs and Small Business:

By contrast, shortages among technicians and trades are running well above-average levels:

Clearly, Australia’s governments must fix this imbalance ASAP by shifting funding away from the oversupplied university sector towards publicly run TAFEs.

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