This year marks the 40th anniversary of Gough Whitlam’s free higher education policy. It continues to be the subject of considerable nostalgia. But did the policy increase higher education attainment? The answer to this question is quite complex.

The figure below is from the 2011 census. It shows lifetime higher education attainment rates by the year in which each one year age cohort turned 18. Contrary to some expectations, from 1974 a period of growth comes to an end and attainment plateaus for a decade, before growth resumes again in the mid-1980s.

Note: Citizens only

The 2010-11 ABS Learning and Work survey shows the same pattern. With this survey I can restrict the analysis to Australian qualifications only, which helps explain why attainment levels for the free education generation are a little lower than in the census.

The reason for this is not that the number of higher education places went down. There was an increase during the Whitlam years. But higher education attainment is affected by both the number of places and the overall population. In the 1970s the 1950s baby boom was reaching higher education age (slide below), which meant that many more people were trying to get into higher education.

In this context, free education may have been counter-productive. It is focused on demand for higher education, but the supply of higher education has nearly always been a much more significant policy problem than demand. This can lead to the paradox of public funding: attempts to increase demand for higher education through cutting its cost can lead to lower higher education attainment. With finite public resources, the more governments spend per student the fewer the students they can support overall.

This was a key insight behind the creation of the HECS system in 1989, and as the first two slides above show spreading government support over more students contributed to a long period of growing higher education attainment.