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.
Andrew Norton 
Hi Andrew,
Maybe I am just being picky, but when you say “attempts to increase demand for higher education through cutting its cost”, you mean cutting the “price” to the individual, not the cost of the eduction. If we could reduce the cost of higher ed, we could achieve higher attainment and lower price to the individual.
If we accept govt has a finite budget for HE, then shifting the source to a fully public (no tuition fee) model would mean fewer places and hence lower overall attainment. But I think the real issue is whether or not the public budget is finite. On the balance, I don’t think it is or should be strictly finite.
Firstly, government’s can spend more on HE by going into deficit. Secondly, govt’s can reallocate budget to HE from other areas. Thirdly, if we accept that graduates are “winners” by earning more money, then we also must accept that govt wins through more taxation revenue, with the long-run taxation benefit justifying additional public funding for HE.
It goes beyond my immediate area of expertise, but there is probably a positive relationship between the supply of skilled workers and the demand for skilled workers. Countries with high HE attainment tend to have a high number of jobs for skilled workers. It is similar to the argument why skilled migrants do not just take the jobs from locals, they often create jobs for locals as well by helping establish and expand skilled industries. I am not saying that increasing supply of HE will always increase demand for skilled workers, just that supply and demand are linked (somehow) and neglecting supply of HE risks neglecting long-run demand for HE graduates.
Just some thoughts 🙂
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Peter – Yes, I do mean ‘price’ in this context, which is an important point as cutting total per student costs was a feature of both the Menzies and Dawkins era expansions.
And I also agree that there is no *inherent* link between the level of public funding and attainment. It depends on public tolerance for taxation and the political status of HE. But given that few countries have Scandinavian tolerance for super-high taxes, there is a (negative) *association* between keeping fees low through subsidies and overall HE attainment.
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