(This post also appears on the Grattan Institute blog.)
Since the early 1990s, higher education statistics have defined someone as of low socio-economic status if they are from a region classified in the lowest 25 per cent in Australia according to the ABS Index of Education and Occupation.
Universities are rewarded for enrolling students from these areas. A participation fund of about $135 million is distributed between universities according to their share of low SES students. A university’s success in the new performance-funding scheme will depend in part on it enrolling low-SES students.
The low-SES definition has been criticised over the years, usually because it often misclassifies individuals. High-SES people live in low-SES areas, and vice versa. But we need a balance between precision and practicalities. To recruit additional low-SES students, universities need to first identify them. Geographic areas are easier to find than individuals with particular family characteristics.
Although geographic SES measures should be retained, the lowest 25 per cent definition needs reconsidering. As the chart below shows, in 2016 higher education participation rates in the lowest quartile were not clearly distinct from the second quartile. Generally, the weighted average participation/attainment rates at the ABS SA2 geographic level cluster at around 25 per cent for people aged 18-23 across the lowest 50 per cent of areas by the Index of Education and Occupation. An SA2 is roughly the size of a postcode.*