Opinion & Commentary
A buyer's market
Though few realise it, today's secondary school students will be the most influential university students in Australia's history. For the first time, it's likely that there will be more university places than students and this buyer's market should make universities much more focused on student preferences than they have been in the past.
What's driving this change is the abolition, from 2012, of restrictions on how many domestic undergraduate students public universities can take. The consequences of this reform have already been more dramatic than anyone predicted when the government announced the change in 2009. Nearly half of all public universities are enrolling many more students than the government will pay them for this year or the next. The race for market share didn't even wait for the starter's gun.
Not everyone is happy. In Higher Age last week, Melbourne University academic Leesa Wheelahan voiced a common concern about letting markets guide education. She observed that students don't always have the information they need to make good course choices. And she doubted whether a system guided by these under-informed decision-makers could produce all the skills Australia needed.
Fortunately, the historical evidence suggests that though some university applicants make poor decisions, collectively there is some "wisdom of the crowd". For example, in the 1990s, medical student places were reduced. Applications for medical schools, however, remained in excess of available places, and the applicants were right — the government's decision led to a serious under-supply of doctors.
University applications show a persistent pattern of demand that moves with the labour market. When the mining boom took hold, applications for engineering courses went up. When the IT boom crashed, so too did applications for IT courses. Talk of shortages as teachers retire are reflected in increased applications for education courses. Niche courses such as dentistry and veterinary science never get many applications, but there are always more than enough high-quality candidates to fill the courses.
Those worried about courses without clear career paths can also take comfort from past application data. Science and arts have fairly stable shares of total applications over time, with most demand fluctuation occurring in the more vocational degrees. The creative arts are enduringly popular despite their chronically poor employment outcomes.
But what happens if too few people want to do a particular course the government, or others, think is important?
A more centrally directed system cannot necessarily fix this easily. Governments can steer education in schools, where students have little choice but to remain until the second half of their teens. But this option is not realistic for higher education. While we can cap numbers in popular courses and hope that students will take lower-preference degrees, this is not the way to produce graduates with a long-term commitment to their discipline and occupation. Conscripts are too likely to drop out of their course or career.
We have to use persuasion instead. The favoured method of federal government persuasion in higher education has been cutting costs for students, and this may recently have had an impact for science courses. But this is a very expensive method.
Advertising can draw attention to courses and careers that prospective students may have overlooked. State governments have funded advertising campaigns to attract more people to nursing and teaching, there have also been major TV campaigns promoting jobs in acccountancy.
Students know more about their own aspirations and motivations than government planners ever can, and collectively applications show sensible responses to labour market needs.
On average, the shift from a supply-controlled to a demand-driven higher education system will produce better outcomes for students and society. A strong desire to do a course is more likely to lead to a pass than a desire to save a few thousand dollars in tuition costs.
Andrew Norton is a research fellow with The Centre for Independent Studies.
