Universities lose a lottery

Andrew Norton1 Comment

In the Mid-Year Economic and Fiscal Outlook statement, the government announced that it would cut part of its ‘performance’ funding for higher education institutions.

The idea was that universities, through ‘compacts’ with the federal government, would sign up to various performance goals relative to a benchmark. If they met their goals, they would get part of the available performance funding.

The student experience and quality of learning performance performance measures will no longer be funded (the MYEFO does not say whether the targets will be abandoned; other parts of the compacts seem to expect unis to do what the Commonwealth wants without funding). Participation and social inclusion performance funding will be retained.

I’m not a fan of these ‘performance’ funds. I’ve called on universities to ignore them. Aside from the difficulty in devising robust indicators that don’t encourage gaming or downplay other important goals, higher education policymaking is too unstable for the performance programs to be credible.

The indicators end up changing almost every year – this abolition is just part of a pattern – so there is little point in universities putting in place long-term programs to achieve their targets. Effectively, the performance funds are little better than lotteries. The universities that happen to be good at whatever indicator is favoured in a particular year will get rewarded, rather than the performance fund causing the good performance.

The universities will be sorry to lose the cash ($105 million in 2013-14). But they won’t be sorry if they also lose the associated bureaucracy of trying to get their share of it.

Science degrees to cost $11,000 more

Andrew Norton2 Comments

One of the policy decisions in today’s Mid-Year Economic and Fiscal Outlook is to rescind Labor’s cut in the student contribution amounts for science, maths and statistics subjects.

While students starting before 2013 will be grandfathered, those starting in 2013 will according to the government’s estimates pay $3,662 a year more, or about $11,000 over a three year degree.

I opposed the cut to student contributions at the time, among other reasons because I doubted that it would increase demand. The MYEFO repeats this argument, citing the Bradley review of higher education policy.

The Bradley review, however, reported shortly before the cut to student contributions came into effect. The student applications data since suggests that my prediction, along with Bradley’s prediction, was wrong.

In the two years after the cut took place, demand for science courses increased 32% in a market that was up 12% overall. Though the slow-moving DEEWR bureaucracy hasn’t yet published the 2011 applications data, media reports earlier in the year from the tertiary admissions centres suggests that science demand was up again.

Given that science graduates were having above-average difficulty finding work on course completion even before the demand surge converted to more graduates, cooling demand is not a problem if that is what occurs.

Though we can never tell for sure simply based on applications, a drop in demand following a price increase would help increase our confidence that relative prices were a science demand driver.

Why run an expensive ad for one PhD place?

Andrew Norton3 Comments

Why would a business school buy expensive media space to promote its PhD scholarships? The advertisement below appears on page 3 of today’s Weekend Australian, offering a $50,000 PhD scholarship at the UQ Business School. The ad on its own would be worth a good percentage of the scholarship’s value. There are surely much cheaper ways of communicating with the smallish pool of potential business research students.

Is it some kind of branding exercise for the UQ Business School (‘Australia’s most recognised’, ‘international reputation for research’, ‘close links to industry’ according to the ad)? But if so I would have thought that there were better ways of doing it, and good outcomes for graduates would be more important. Keeping up the flow of fee-paying coursework students is the key to a successful business school (some of which have a history of losing money, which isn’t exactly a great endorsement of the business acumen contained within their walls).

I’d welcome any theories explaining this ad.

Demand-driven system to become less demand-driven

Andrew Norton2 Comments

The demand-driven higher education funding system is to become a little less demand-driven than we thought. The Minister has announced that sub-bachelor undergraduate degrees will be excluded from the system.

It’s a move designed to protect the TAFEs, already being hit by the federal and some state governments in other policy areas, from further competition from universities.

In The Australian this morning, I gave this move qualified support.

The problem is that the TAFEs and other non-public university higher education providers have been excluded from the demand-driven system. This puts them at a competitive disadvantage. The danger in my mind is that universities could seek to use this period to wipe out some of their non-university competitors, leaving us with an even less diverse system than we have today.

The danger remains for TAFE bachelor degree programs, though they have always known that they were taking on the universities and so have niche products. But not many unis have large associate degree or diploma programs, so the TAFEs had a wider market for these.

It would be better if the same rules applied to all, and there was no need for anti-competitive rules. And this should have been announced earlier – sudden rule changes undermine the confidence needed for future planning. But in our world of second and third-best policy, this policy seems better than its most likely alternative.

Federalism gaining in popularity

Andrew Norton1 Comment

The recent ANU poll shows some turnaround in views on federalism:


Question: Some people think that in order to deal with Australia’s problems the state governments should
hand over some of their powers to the federal government in Canberra. Others think that the federal
government has enough power already. What is your own feeling on this? Do you think the state
governments should give some powers to the federal government, or do you think it has enough
powers already? If you have no opinion, just say so.

However I doubt there is any philosophical shift behind this opinion change. Rather, the apparent shambles in Canberra has undermined the federal alternative. The implicit lesson is unlikely to leave a permanent mark on public opinion.

What drives tax and spend opinion?

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The latest ANU Poll finds, like all such polls in recent years, that given a choice between reduced taxes and increased spending on services, most people would go for the latter. Report author Professor Ian McAllister observes:

Public opinion on government spending tends to be both secular – in that it is largely unrelated to
partisan debates and changes in government – and cyclical – in that it is responsive to broader
economic conditions. For example, on the latter point, it has often been observed that national
electorates are more likely to favour spending on social services and welfare when economic conditions
are benign, and to favour reduced taxes when economic conditions become harsh.

I agree, having argued for this interpretation in a 2004 paper. But a few years ago Professor McAllister thought that other factors were at work. In a newspaper report on the 2007 version of the tax and spend question, he was reported as saying that:Read More »

Battle of the think tanks (or some of them, anyway)

Andrew Norton2 Comments

I’m not sure what my current employer will think of being left out a contest of Australia’s most influential think-tanks, but Thought Broker’s end of year event should be good if you happen to be in Sydney on 12 November:

THE BATTLE OF THE THINK TANKS

Australia’s most prolific and influential think tanks will duke it out over whose ideology and vision for the future should prevail.

Pitting speakers from social democrat and progressive think tanks against their conservative and libertarian counterparts, Thought Broker will once again present incendiary debate to a well-lubricated audience.

In the blue corner we have Tim Wilson of the Institute of Public Affairs and Dr Oliver Hartwich from the Centre for Independent Studies. And, in the red corner Dr David Hetherington, Per Capita and Miriam Lyons, Centre for Policy Development.

At a time when ideological purity has hit the skids and political debate and policy implementation are mired in spin and short-termism, this event will explore the importance of long term thinking in Australia’s public debate.

Event DetailsRead More »

Are Australians reluctant to move?

Andrew Norton4 Comments

Last week, Conrad said:

Australians seem to move about very little in general (excluding retirement), and many people want to live close to their families for one reason or another.

I was a little surprised to read this, as the more common view is that Australians are becoming more mobile. Yet neither view seems to be correct.

In the figure below from the OECD (the Australian data was from HILDA), Australian residental mobility was the second highest of the countries examined over a 2 year period.


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