How would student places be allocated under the Universities Accord?

August 8, 2023August 12, 2023 Andrew Norton1 Comment

The task of interpreting the Universities Accord interim report is like that of a biblical scholar trying to extract meaning from fragmentary and sometimes contradictory texts. But building on my post on a universal learning entitlement, in this post I try to understand what kind of student places allocative system the report proposes.

Existing and possible Accord allocative systems

All funding systems need methods for determining total resources and then allocating them between institutions, courses and students. The chart below has the three allocative models currently in use – what I call technocratic, block grant, and demand driven – and the Accord model, which on my reading has elements of the technocratic and demand driven models. However these models are in tension with each other – technocracy puts experts in charge while demand driven funding is based on decentralised decision making.

Decision	Technocratic (current system for medical students)	Block grant (current system for most students)	Demand driven (current system for bachelor degree regional Indigenous students with likely extension to all Indigenous students)	Accord model?
Total number of places/dollars for each year (system level)	Government decision	Government decision	University and student decision.	Aggregate outcome of student decisions (especially if universities have less control over who they admit). Or aggregate of Tertiary Education Commission university allocations.
Total number of places /dollars for each university	Government decision	Government decision	University and student decision.	Aggregate of student decisions with full learning entitlement model, possible voucher system. Or as negotiated/allocated by the Tertiary Education Commission.
Total number of places/dollars for each course or discipline	Government decision	University and student decision.	University and student decision.	Target allocations for courses determined by Tertiary Education Commission. Possible caps via aggregate voucher allocations/university-level enrolment caps on low priority courses.
Student-level allocative criteria, such as academic results or equity group status.	Can be a government decision, but for medical students a university and student decision.	University and student decision.	University and student decision.	Possibly a government decision through Tertiary Education Commission/national admission centre. Or keep current system but use targets to push unis to enrol more students, in general and from priority groups.

The Universities Accord universal learning entitlement – how might it work?

August 1, 2023October 10, 2023 Andrew NortonLeave a comment

One Universities Accord interim report suggestion is a ‘universal learning entitlement’. But what would this mean, and how would it differ from what we have now?

The first part of this entitlement is to support Australians in obtaining a tertiary qualification. But it aims to go beyond ‘traditional targets’, such as for higher education or VET, to meet ‘a range of skills and other objectives’.

The interim report defines entitlement funding as ‘an appropriate combination of a public subsidy, a student contribution that would be paid through an income contingent loan … and, for some lifelong learning, an appropriate employer contribution’.

Current limits on higher education enrolments

While no Australian citizen is specifically disqualified from accessing a funded place in higher education, in practice three admissions-related obstacles can stand in their way.

For universities the Accord interim report proposes a more extreme version of Job-Ready Graduates

July 25, 2023July 25, 2023 Andrew Norton6 Comments

The Australian Universities Accord interim report recommends overturning the most controversial Job-ready Graduates policy, using student contribution price signals to guide student course choices.

But overall the Accord interim report and Job-ready Graduates have strong parallels. They both take a utilitarian view of higher education, that its purpose is to provide benefits to others rather than being of any intrinsic value. Universities exist to meet skills needs, find practical uses for research, contribute to their local communities, and promote equity. The main difference is the interim report proposals are, with student contributions the main exception, more extreme and interventionist than Job-ready Graduates.

Substantially reduced university autonomy

Historically universities in Australia and other western countries have operated with a significant degree of autonomy from government. But despite using the word ‘autonomy’ a few times the Accord interim report shows little interest in this idea.

On my count at least 25 interim report proposals would reduce the scope of university-level decision making or are new reporting requirements that set universities up for future regulation. In my list these cover general mission direction, student admissions, the mix of disciplines and courses, curriculum and teaching, use of funds, and accountability.

The decline of the humanities

July 4, 2023July 15, 2025 Andrew Norton4 Comments

A couple of days ago the Sydney Morning Herald published an article on falling enrolments in university humanities subjects, with a focus on history and English.

I’ve converted the data into an index to make it easier to see the trends in fields with different absolute numbers of full-time equivalent enrolments. In the late 2000s and early 2010s the humanities shared in general enrolment growth, but after that went into decline. History’s growth and decline were greater than the humanities in general.

Would free university increase or decrease higher education participation rates in Australia?

June 22, 2023July 15, 2025 Andrew Norton5 Comments

In a previous post I argued that Australia’s practice of charging fees for higher education reflects its broader patterns of taxation and public funding of social services.

But we have had free higher education before, 1974-1988. For a government already spending over $600 billion a year the cost of free higher education is not beyond the feasible range. I estimate costs at $4.6 to $5.9 billion a year on status quo numbers of student places in public universities. The range reflects uncertainties about how domestic students currently paying full fees would be handled. The $4.6 billion transitions currently Commonwealth supported students to free, while the $5.9 billion fully compensates universities for lost fee revenue.

Of the arguments for free higher education the one that people find most intuitive is that it would increase higher education participation. People consume more when prices go down. But somebody is paying – the government on behalf of taxpayers – and so how they would respond is the key variable in whether the number of students would go up or down.

Debt aversion

Supporters of free higher education often make demand-side arguments, that fees or loans are a deterrent to higher education participation, especially to people from disadvantaged backgrounds.

As someone with working class origins free higher education advocate Duncan Maskell says he would not have gone to university if he had to take out a loan. Occasional school student surveys have picked up similar sentiments. But the ‘debt aversion’ hypothesis has always had trouble distinguishing between sensible prudence around taking out debt that probably is not worth it (good debt aversion), and over-caution in taking out debts that would probably lead to significant long-term benefits (bad debt aversion).

Why do Australian university students pay fees?

June 21, 2023July 15, 2025 Andrew Norton2 Comments

University of Melbourne VC Duncan Maskell secured some not always entirely positive media coverage today for his call to make university education free for domestic students.

University education is free or very cheap for students in some European countries and was also free in Australia between 1974 and 1988.

Why do countries differ on university fees?

My theory of why countries differ on this issue draws loosely on the work of Julian Garritzmann. We observe broad coherence between higher education finance systems in each country and their overall tax and social service/benefits systems. The chart below shows patterns in the OECD. Australia is in a cluster of countries in our region with government expenditure below 40 per cent of GDP and quite similar fees in $USD purchasing power parity terms. The countries with free higher education tend to have governments that consume more than 50 per cent of GDP.

Are mini-demand driven systems a good idea?

April 14, 2023April 14, 2023 Andrew NortonLeave a comment

In their second submissions to the Universities Accord review Universities Australia and Innovative Research Universities both call for extending the existing demand driven system for regional and remote Indigenous students to all Indigenous students.

Mini-demand driven systems support increasing enrolments from a target population, or potentially in a target course, without risking (from a government perspective) a major cost escalation under a full demand driven system.

Although I support a return to full demand driven funding I doubt that mini-demand driven systems are a good idea.

The risks of restricted-use funds

From a government perspective the attraction of mini-demand driven systems is their apparent pursuit of some desirable outcome at low cost. Only funding for the estimated additional student places is likely to be ‘new’ money.

If so, in the transition to a new mini-demand driven system each university would lose from its overall maximum block grant amount estimated funding for current students meeting the mini-demand driven criteria – in the UA/IRU case, probably the Commonwealth contribution value of their existing student load of Indigenous students living in metropolitan areas.

As a result, ‘old’ money that could once be used flexibly for any domestic student could after the clawback only be used for about four per cent of the population.

If in practice the university attracts fewer Indigenous students than expected, or these students enrol in subjects valued at less in Commonwealth contribution terms than forecast, then the university is left with stranded resources. It has student funding that is theoretically available but in practice cannot be used.

The 20,000 equity places that nearly weren’t allocated and that will probably never be delivered

February 6, 2023December 10, 2025 Andrew NortonLeave a comment

At the 2022 election Labor promised up to 20,000 new student places in skills shortage areas for members of equity groups. The minister announced high-level allocations last October. The funding agreements implementing the promise for 2023 were published last month, providing additional but not complete detail. This a multi-year program and the current 2021-2023 funding agreements do not include 2024 commencing places.

This post describes the available information on student place allocation, highlighting the policy and legal flaws in distributing funding this way. The policy’s problems are exacerbated by the Job-ready Graduates Commonwealth contribution changes.

Allocations by funding cluster

When universities received their allocations many were surprised by student places they had not requested. These were in funding cluster 1, the law, commerce and most humanities cluster. Just over 30 per cent (3,026) of the 9,851 places allocated in this round are in cluster 1.

The Department of Education’s manoeuvre can be seen in the funding agreements, an example below, which are prescriptive about the use of cluster 2 and 3 places, following information in funding applications, but not cluster 1. Instead, another clause says ‘these [cluster 1] places are to be delivered in line with a separate agreement between the Provider and the Department.’ To stay consistent with the original guidelines the cluster 1 courses need to be in skills shortage fields. Accounting and auditing are on the skills shortage list, although universities could also find other ‘relevant industry needs or shortages’.

Urban prospective students and regional student places: the Job-ready Graduates growth mismatch

December 22, 2022August 24, 2025 Andrew Norton3 Comments

In an earlier post I looked at how Job-ready Graduates could produce fewer total student places than originally forecast. This post examines the geographic distribution of those places. Both posts draw on my first submission to the Universities Accord review.

Job-ready Graduates ‘growth’ funding is based on campus location (‘growth’ in quotation marks because it is off a reduced base). Regional campuses get 3.5 per cent annual funding growth, with 2.5 per cent for metropolitan campuses in high growth areas, and 1 per cent for other campuses. Higher growth rates for regional campuses reflect concern about lower university participation rates for people from regional areas.

Growth funding is for coming increases in the school leaver population, which will translate into increased demand for higher education. My submission uses 2021 Census data to see where the school leavers of the mid-2020s to 2030 are located, and how this aligns with higher education policy.

City/rest of state growth rates

Full regional classifications are not yet included in the publicly available 2021 Census data, so the chart below uses a greater capital city/rest of state classification. The age groups cover the young people who will finish Year 12 and seek university entry from mid-decade through to 2030. It compares their numbers to those of people the same age at the 2016 Census, who reached/will reach university age in the first half of the 2020s.

Overall the population of 9 to 16 year olds was in 2021 13.5 per cent higher than in 2016 in the greater capital city areas and 7.8 per cent higher in rest of state areas. Population growth is significant in both categories, but larger in the cities that will get a smaller funding increment.

The chart also shows variations by specific year of age, with growth rates most aligned in the 11-to-14-years age groups.

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Andrew Norton

Higher education commentary from Carlton

Category: Higher education finance