Why does the base funding review panel think lawyers should pay less for their education, and teachers and nurses more?

The most contentious aspect of the base funding review report, released today, is likely to be its proposal to change the basis of public subsidy for higher education.

At the moment, the public subsidy is not explicitly based on public benefits. Effectively, it’s just what’s left after student contributions are deducted from total per student funding by discipline. Total funding is loosely derived from a study of higher education expenditure 20 years ago, while student contributions are loosely based on differential HECS introduced in 1997. Differential HECS was in turn based roughly on average private earnings of graduates in particular disciplines. So law and medical students paid the most because lawyers and doctors earn a lot. Education and nursing students pay lower amounts, because teachers and nurses have modest salaries.

According to the base funding review, public subsidy should be based on the government paying for public benefits. They say the public benefits are equivalent to between 40% and 60% of total annual expenditure per student. These public benefits are defined as miscellaneous non-pecuniary benefits to society, plus the ‘direct fiscal dividend’ from the additional taxes graduates pay due to their increased earnings.

Leaving aside whether these numbers are robust (I doubt it, but assume they are for the sake of argument), what is the justification for using public benefit as the basis for public subsidy? The base funding review offers two possibilities.

One possibility is that without subsidy ‘private benefits might not be enough to motivate a student to pay full fees’. So the logic would be that through subsidies the private benefits are increased to a point where it is financially attractive for students to enrol in higher education, and then go on to the produce the claimed public benefits. Read More »

Any student readers who would like to be a higher education intern at the Grattan Institute?

I’m looking for a an intern to work on the higher education program at the Grattan Institute in Melbourne. It isn’t paid, but you would get experience working in a think-tank and credit for your work in published reports.

It would suit a student on the their summer break. While we are flexible on hours, internships work best if the intern can spend a reasonable amount of time per week over at least a month. Any disciplinary background should be ok, but the work itself will include data collection and using a spreadsheet.

The intern would work closely with me, and with two Grattan research associates.

If you are interested, email me with a CV at andrew.norton@grattan.edu.au