Opinion & Commentary
Rudd pins his faith on remissions
Labor is promising an "education revolution" but its higher education policy so far looks more like a counter-revolution.
The ALP's major announcement to date is to cut the price of maths and science units by more than 40 per cent, making them equal cheapest with nursing and education. This would take charges in those disciplines close to the standard rate that applied to all students before the Coalition introduced "differential HECS" in 1997.
The 1997 HECS changes were a price change policy experiment. Science courses nearly doubled in cost, while arts went up by a third. According to the theory behind Labor's policy of differing prices between disciplines, cheaper disciplines should have gained market share lost from expensive disciplines.
In fact, this did not happen. Contrary to the theory, arts, with a new price advantage, received a slightly lower percentage of all applications, while science, with a new price disadvantage, slightly increased its percentage of all applications. The changes were small, however, and probably just the minor fluctuations we see from year to year.
The theory failed because course applications are primarily driven by the interests of prospective students, not by prices. Several studies of school students' further study aspirations back this conclusion, which is also supported by the stable distribution of course preferences evident in applications data. On a moment's reflection, it makes perfect sense: who wants to commit themselves to several years of study boredom followed by an unenjoyable career to save a few thousand dollars? No matter how cheap accounting becomes, somebody who wants to be an actor is not going to enrol.
Prices, therefore, have only limited scope to influence which disciplines university applicants aspire to enter. Cost could perhaps sway people with multiple interests, such as those who now enrol in double degrees, or between courses that draw on similar sets of interests. But to the extent that is true, do we really want to divert applications from the health sciences or engineering? After all, there are widespread labour shortages in these fields while -- as Gavin Moodie pointed out in the HES last week ("Grumbling requires scientific discipline") -- there is no overall under-supply of science graduates, except in secondary schools.
Even if the science and maths discount did affect applications, however, it still would not help science or maths. This is because in Australia's centrally controlled higher education system demand has little relationship to supply. Year after year, there are some disciplines (including science) where supply exceeds demand, and others where demand exceeds supply, sometimes by huge numbers. But the system, buried in bureaucracy, cannot or will not respond.
If Labor is worried about maths and science, it would be better off looking at the price signals received by universities -- not by students.
As Jenny Macklin, Labor's previous shadow education minister, pointed out, the dollars universities receive for each student do not reflect current costs. Universities survive through economies of scale in large classes and cross-subsidies from fee-paying students but these are less available to maths and science, which need higher domestic fees and/or subsidies. Labor offers neither.
Alongside this HECS cuts policy bungle, Labor is also offering an interesting policy experiment aimed at people who have already completed their degrees. They propose 50 per cent HECS remissions for graduates who enter maths or science teaching and for 10,000 early childhood graduates working in rural, indigenous or low socio-economic status areas. So for up to five years after course completion, graduates would pay half of their normal HECS obligations, with the commonwealth writing off the other half.
Though the graduate's weekly financial gain is modest -- about $20 a week on Labor's estimates for initial early childhood workers -- HECS remissions appeal to the short-term nature of most people's financial thinking. General cuts to HECS confer benefits that generally won't be received for 10 years or more, in the form of shortened debt repayment times. This is so remote for a 17- or 18-year-old that its impact on current choices is very diluted.
But HECS remissions provide gains that will be realised shortly after a decision is made, strengthening their impact on graduate choices.
Further, HECS remissions do not require anyone to alter their interests or general career aspirations, just where they work for up to five years. This is a much smaller ask than a course and career change into maths or science, and is therefore more likely to receive a positive response.
It remains to be seen whether HECS remissions will alter behaviour. But the idea is worth a try -- unlike discredited proposals to use prices to alter course choices.
Andrew Norton is a research fellow at the Centre for Independent Studies.
