Opinion & Commentary
Relax, unis aren't short of students
Without overseas students, Australia 's universities would have shrunk last year. The total number of Australians at university fell slightly, with a larger drop in commencing student numbers.
Conflicting explanations were on offer yesterday. According to Labor and student groups, the federal Government is pricing prospective students out of university.
According to the Government, affordability is not the issue. Young people now realise that university is not always the best choice. Vocational education can be a surer route to work. Acting Education Minister Gary Hardgrave pointed out that a record number of young people had taken up apprenticeships in traditional trades, where there are many jobs available.
Both these factors could affect demand, but they don't explain the drop in student numbers. They assume that total student enrolment measures student demand. It does not. Australian undergraduate higher education is driven largely by supply, not demand. The number of student places filled reflects the number offered by universities, not the number of students who want to take them.
Universities are not like schools. They don't have to take any student who meets minimum qualifications and wants to study. Rather, the Government sets the total number of student places it is prepared to fund. This quota has been below demand for as long as reliable demand figures have been recorded.
Last year, when students were supposedly being priced out of university education, the Australian Vice-Chancellors Committee estimated that at least 19,000, and up 24,300, academically qualified prospective students applied for university but did not get in because there were not enough places. They were prepared to pay, but nobody would take their money.
Unmet demand, as this excess of potential students is called, has been alleviated by universities taking more students than their official quota, for which they received a small per student payment from the Government.
Education Minister Brendan Nelson signalled early in his term that he was unhappy with the level of "over-enrolment". Several universities took at least 15per cent more students than their quota required. It was assumed -- though no evidence was provided -- that educational quality suffered as a result.
In 2003, the policy solution was announced. Under Nelson's new system, universities had to stay within 5per cent of their quota. If they went above that, instead of the commonwealth paying universities for over-quota students, the universities would have to pay the commonwealth.
Obviously, no university wanted to do that. So they set about cutting back on enrolments. Their only real flexibility was with commencing students, since existing students cannot be thrown out. And so we see first-year student numbers declining.
Should we worry about this trend? Prospective university students who miss out are, naturally, disappointed. There's not much evidence, however, that it is a long-term problem for them or for Australia .
We need to look first at who misses out. Among the top 20 per cent of school leavers, more than 95 per cent are offered university places. Among the next 10 per cent, nearly 90 per cent are offered places. In the next 10 per cent down, offers still run at about 70 per cent.
Generally, the prospective university students who don't get in are academically weak. In research I did last year, I found that in all states except Queensland and Victoria , only a small proportion of unsuccessful applicants were in the top 40 per cent of school leavers.
Academically weak students often struggle at university. Although Year12 scores do not set academic destiny - people who do poorly at school sometimes do well at university, and vice versa - on average the lower your school marks, the higher the chance you won't finish. For some, rejection saves them from an expensive mistake. What looked like bad news at the time is for the best in the long run.
We should look also at the labour market for graduates. People with university degrees in jobs that require a degree are, on average, doing well. Their incomes are considerably above those of people without degrees. Not all graduates have such jobs, however. A significant number of people with degrees are in occupations that do not usually require a university degree.
The percentage of graduates in this category has not changed dramatically over time. It is consistently around the 20 per cent mark. But because the number of graduates has increased enormously, absolute numbers are double what they were in the early 1990s. In 2003, about 360,000 graduates were in occupations that did not obviously need their qualifications.
Other labour-market data shows that only a few graduate occupations have worker shortages, mostly in medical fields. Putting these statistics together leads to the conclusion that although universities do not always produce the right graduates, they produce more than enough overall.
Australia 's university system has many problems, among them not allocating places efficiently between disciplines or between states. Drops in first-year student numbers, however, are not much cause for concern. Recent declines are unlikely to reduce graduate numbers by much, and won't cause shortages of graduates in the workforce.
Andrew Norton is a research fellow at The Centre for Independent Studies.
