Month: March 2015

The graduate numbers behind gender equality for government appointments

Andrew Norton1 Comment

At the weekend, Victorian Premier Daniel Andrews pledged equal male-female representation for state government public board and legal appointments. The Liberal Party similarly announced that it would increase female representation among its MPs.

The task of more equal representation in senior jobs has become easier over time as women’s educational levels first matched and then exceeded men’s. Women have made up a majority of university students since 1987, and in the census it is now only in the 60+ age group that men outnumber women as graduates.

Despite this educational success, full-time labour force participation rates differ significantly between men and women, something we have given a lot of attention due to its implications for HELP debt repayment. The chart below shows how female full-time workforce participation declines as women enter their thirties. It goes up again in their forties, but never to their previous levels or men’s rate of full-time work.

male female FT
Source: Census 2011

People can have successful careers working part-time. But prolonged periods of part-time work inevitably mean significantly less experience. Any many senior jobs just cannot be done on a part-time basis, and indeed cannot be routinely done within ‘normal’ working hours.

This has obvious implications as to how many people with the relevant level of experience are in the pool of potential applicants for senior positions. However, the differences are not quite as dramatic as the slide above might suggest, because more women had the appropriate initial educational qualifications in the first place. The chart below shows absolute numbers of graduates by gender working in full-time managerial or professional positions. Women are around 40% of the pool in the aged 40+ group most likely to get the top jobs.

man prof
Source: Census 2011

For judicial appointments, only about a third of full-time legal professionals in their 40s are women, and the share is less than 30 per cent for people over 50 (chart below). Perhaps the very long hours typical in the law make it harder to maintain a pool of highly experienced female lawyers.

legal prof
Source: Census 2011

In absolute terms, there are enough women to fill the relatively small number of board and judicial appointments. But with an open recruitment approach, there will be many more male than female contenders with the qualifications and experience for senior positions.

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Note: The absolute numbers in the census will be too low. It has a problem with people not answering all the questions. Males are less likely than females to respond to other surveys, so there may be an undercount of men.

OECD comparisons are a poor guide to higher education funding policy

Andrew Norton2 Comments

Rodney Tiffen’s Inside Story article on university funding reflects conventional wisdom: that there should be more public funding of higher education. But as is common in these pieces, it only alludes to possible arguments, rather than spelling them out and exploring their implications.

We start with the familiar claim that Australian spending on higher education is relatively low, as a share of GDP, compared to other OECD countries. There are problems with the data used as it does not include the significant subsidies via the HELP loan scheme, but the basic point is right: on a per place basis Australian students pay more than is common in the European countries that make up most of the nations in the analysis.

Tiffen describes Australia’s low position as a low rank, when in reality the information on public spending is just a list. A rank only makes sense if higher numbers are inherently good and low numbers are inherently bad. But even relying purely on OECD numbers the available evidence counts against this conclusion. Consider higher education attainment rates compared to fees. As the chart below shows, low attainment is mostly found in low fee countries.

I have described this before as the paradox of public funding: that high subsidies can lead to low attainment. A low fee policy is usually aimed at demand-side considerations. But in higher education the problem is usually the supply of student places rather than demand for them. When public funding is limited, it is better to give smaller amounts to a larger number of people (eg Australia) than larger amounts to a smaller number of people (eg many European countries).

fees and attainment 2
Note: 2003-04 fees data used to approximate fees likely to be have been paid by the cohort in the attainment data.

This is a paradox, not a political science law. As the Scandinavian countries show, it is possible to have no fees and high attainment. But this typically occurs as part of a much broader political and economic system. High taxing countries have high public spending on social services, low taxing countries have high private spending on social services. Again OECD data can show the pattern as it applies to higher education.

fees and tax

For graduates, the difference between paying high taxes generally and paying extra ‘tax’ via HELP repayments is likely to be subtle. It is possible that the free-on-delivery mode of education shifts education expenses to a later period in life, when high annual tax bills are more manageable. That could be a benefit of the Scandinavian system, but I have not seen any research that demonstrates the point. But there are mostly likely to be significant issues when there are high taxes and high fees, as seems to be the case in England.

OECD comparisons are heuristics rather than arguments. If Australia differs markedly from other countries it is worth asking if this matters. In Australia’s case, I’d say the answer is no. Fees that are high compared to other countries, but modest compared to private benefits, have helped us deliver higher education to the masses on a tax take that is less than many other OECD countries.

IT, engineering and economics students least satisfied with teaching quality

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Yesterday I reported data from the 2014 University Experience Survey suggested that students at non-university higher education providers were, on most indicators, more satisfied with their education than students at universities.

There are also significant differences between disciplines on satisfaction with teaching quality, as seen in the chart below. I have taken out disciplines with fewer than 1,000 respondents in the UES, as well as most ‘other’ disciplinary categories as too vague. This took out both the discipline with the highest satisfaction (language and literature, 89%) and with the lowest (mechanical engineering, 72%).

satisfaction by discipline

Most of the relatively low-satisfaction disciplines are popular with males and international students, who report lower overall satisfaction than females and domestic students. But I can’t tell on the available data which way the causation might be running – whether students in engineering, IT and commerce faculties are less satisfied at least partly because they tend to be male and/or from overseas, or because males and international students are less satisfied because they are enrolled in engineering, IT and commerce faculties.

Non-uni higher education provider students more satisfied than uni students

Andrew Norton2 Comments

The 2014 University Experience Survey results have been released in the last few days, and this time they included students from non-university higher education providers (NUHEPs). A total of 1,444 students from 15 NUHEPs completed a survey. Given that there are about 130 NUHEPs the results aren’t conclusive, but they are interesting.

As can be seen in the chart below, NUHEP students were generally more satisfied with their educational experience than university students. Each of the categories includes multiple related questions that are combined to produce an overall satisfaction rate. For example, the teaching quality scale contains questions on whether teachers explained things clearly, gave helpful comments on work, whether assessment tasks challenged students to learn, and other similar topics.

NUHEP satisfy

The area where university students are more satisfied than NUHEP students is ‘learning resources’ which includes questions about the quality of teaching spaces, library facilities, online learning materials, the quality of student spaces and common areas, and related topics. Possibly the big university campuses with their economies of scale are better on these things.

The positive responses on ‘learner engagement’ are noticeably lower for both groups. For example, only 53 per cent of students said they had a sense of belonging to their university. The recent first year experience survey picked up a negative trend in this area.

Although there is room for improvement in some areas, for most questions responses were more positive in 2014 than 2013. That supports the conclusion of the end-of-degree course experience questionnaire (trend data at p.76 of Mapping Australian higher education) that teaching quality in Australian universities is slowly but steadily improving.

Should higher education providers be responsible for HELP doubtful debt risk?

Andrew Norton2 Comments

I’m glad that Liberal Democrat Senator David Leyonhjelm is pushing the government to look at HELP doubtful debt. But I’m not convinced that the policy response discussed in a letter from Christopher Pyne to Senator Leyonhjelm is the right one.

Like several similar suggestions in the last year, the latest proposal aims to make universities partly responsible for student debt. Universities are encouraging students to take HELP loans, while transferring all the risk to students and taxpayers. It seems only fair that universities take some of the risk themselves.

As reported by Fairfax Media,

Mr Pyne proposes “a mechanism to make a proportion of each higher education provider’s direct grant funding contingent on its performance against a key set of indicators” – including the debt not expected to be repaid (DNER) by their graduates.

There are several kinds of risk factors related to student debt. As Grattan’s doubtful debt report showed, projected repayment rates differ by course. Someone with a medical degree earns more than someone with an arts degree, for instance. Other risk factors relate to personal characteristics. Men, for example, are more likely to repay than women because they spend more years in the full-time labour force, on average. Higher-ATAR students are more likely to finish their degrees and probably get higher paying jobs. There are macroeconomic risks, where recessions or periods of slow growth mean that repayment rates decline (as is happening now). Then there are risks associated with particular providers, in how well they prepare their students for work and how much they do to help them find jobs.

It only makes sense to penalise higher education providers for repayment issues they can reasonably foresee and do something about. There probably are things they can do to make their graduates more employable, although nobody knows what long-term impact these have. In Mapping 2014-15 we did not find major differences between types of university for employment levels, although we did find salary differences. But I expect it is going to be fairly difficult to identify a unique provider effect at the required level of confidence, amidst all the many factors affecting employment outcomes.

Providers could offer fewer places in non-vocational degrees, or degrees leading to occupations that appear over-supplied in the labour market. But in a fee deregulated market its not clear why providers wouldn’t factor the doubtful debt cost into the fees charged, knowing that this is an expense they share with their competitors.

Targeting personal characteristics is complicated, because some risk factors such as being female are protected under anti-discrimination law. Plus the government is saying that they would take account of equity factors such as gender. Charging lower fees that women have a better chance of repaying before they leave full-time work is a non-discriminatory way of targeting this doubtful debt risk. However, as with course-related risks it is not clear why providers would not charge high fees, knowing that some of the profits need to be set aside to later fund a doubtful debt levy. This is especially the case because they won’t want to charge males lower fees just because females have a higher doubtful debt risk.

Low ATAR or other forms of academic disadvantage aren’t protected by anti-discrimination law, and of course this is the most common form of discrimination in the higher education system. But with low SES students being over-represented among those with low ATARs, a policy that encouraged general discrimination against low ATAR students would run contrary to equity goals and policies. We are far better off tackling the low-ATAR problem directly, rather than encouraging action via doubtful debt penalties.

Repayments are affected by macroeconomic conditions, but we should not penalise providers for circumstances they probably can’t predict and certainly can’t avert.

If we are going to move to assessing students for their risk of doubtful debt – a major conceptual change to HELP – we should not do it via providers. They are never going to have as much information about lending risk as the government itself. The government can access huge amounts of information to assess likely repayment prospects. Pyne’s letter to Leyonhjelm also proposes linking ATO and Education Department data, something that should have been done long ago, and which will allow a far more nuanced understanding of who is likely to repay. Adding in social security and immigration data would help too.

The government also has much better incentives than the providers. After all, if a HELP debtor doesn’t pay back all the money left outstanding is the government’s loss. The higher education provider is only putting a share of their money at risk, and as noted above there will still be incentives to take on high-risk students.

I don’t think we should rule out a more individualised approach to HELP lending. Arguably, in VET FEE-HELP and parts of the higher education market the government is currently an irresponsible lender, letting people take on debts that aren’t in their interests. But if we are worried about HELP doubtful debt, as we should be, there are things we can do that are easier, faster and will save much more money. Regular readers you have heard it all before, but:

* Lower the first threshold (in the defeated bill);
* Index all the thresholds for repayment by CPI instead of AWE. This would speed up repayment, which is important due to women departing full-time work in their thirties.
* Remove the write-off of debt on death. Our report on this last year concluded that much of the debt written off will be held by women in higher-income households, who will have estates that can easily repay.
* Require repayment from overseas debtors (although this is probably small for doubtful debt).
* Introduce loan fees (like those currently applying for some students) to encourage upfront payment. Money that is never lent cannot turn into doubtful debt.

For some reason, complex ideas that only indirectly tackle problems seem to be winning favour at the moment over simple ideas that directly tackle problems. Making higher education providers responsible for HELP doubtful debt risk is another of these.

A three bills strategy could break the higher education impasse

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The government’s higher education reform package faces its second defeat in the Senate this week. Over the last week controversy has focused on the government’s threat to not renew $150 million in funding to the National Collaborative Research Infrastructure Strategy (NCRIS). This is being denounced today as reckless and bullying.

While threatening not to fund NCRIS looks like a tactic to pressure the Senate to pass fee deregulation, it also reflects the narrowing of options to achieve another important goal of the Pyne package, which is to control total spending on higher education. This has increased rapidly in recent times, with the main teaching subsidy program up 40 per cent in just five years. The previous government tried to introduce cuts, the current government is trying, and the next government will try. With big Budget deficits forecast, higher education cannot escape attention.

In my view the issue is not whether higher education will be cut, but how to do it in ways that cause least harm to public policy objectives in teaching and research. The situation we are in now is that programs are going to be cut according to whether or not the measures need parliamentary approval, not whether the affected programs are low priority or could be funded in other ways.

NCRIS is vulnerable because unlike most other university programs it is funded via the annual Budget appropriations bill. All the government has to do is not include its funding in the bill and the money is saved. The Parliament will not get to consider a bill on NCRIS. I think the demand driven system is also vulnerable in the medium term. From 2017 funding agreements between the government and universities could be used to freeze funding (which is all the government is trying to do; the 20 per cent cut proposed to per student funding is what is needed to control spending while student numbers grow). The Parliament has no power over funding agreements, so they are an obvious way to save money.

The minister doesn’t want to pursue either of these options. He has made much of securing conditional support for NCRIS, which Labor had left out of the forward estimates. He likes the demand driven system so much that he wants to extend it. But with internal government requirements to deliver savings, these programs are among the few feasible options if the Parliament won’t co-operate.

The multi-purpose bill higher education bill currently before the Parliament – with Budget measures, the demand driven reforms and fee deregulation – is complicating efforts to get a good outcome. If Senators are opposed to any of it, they will vote against all of it. Fee deregulation faces the strongest opposition, so leaving it in the bill is an obstacle to achieving the bill’s other two objectives.

In a couple of Senate inquiry submissions I have explained the different sources of the Pyne package and suggested proceeding with them separately.

I think we need three bills: Budget measures, demand driven reform, and student funding rates. One of my submissions suggests reforms to HELP that are not in the current bill but which would save money, lessening the need for big cuts to per student subsidies. While it would still be difficult to get a higher education savings bill through the Senate, it would have a better chance than one that includes fee deregulation. It would also give the government a better political position on NCRIS – indeed, it could include a special appropriation for NCRIS so that it is clear that this is just a Budget issue, and not a tactic around fee deregulation.

So far as I know, none of the cross-bench Senators opposes the demand driven reforms. If there were offsetting savings in the Budget legislation, the government could bring a separate demand driven bill forward and expect it to pass the Senate.

Fee deregulation as it stands will almost certainly fail to pass the Senate. As there is no consensus on alternatives, we need more time to work through the issues. The universities want the extra revenue deregulation would bring, but I don’t think this is urgent for 2016. While the government has invested a lot of political capital in fee deregulation as the big idea of the reform package, a sequenced legislative strategy would maximise their chances of achieving something in higher education in this parliamentary term.