Update 9/4/20: Since this post was written there was, briefly, some expectation that the revenue loss required for universities would be lower for 15 per cent. That is not happening.
Update 24/4/20: This story keeps evolving. Due to a loophole in the legislative instrument, which sets the revenue base at GST turnover rather than total income, some universities look like they have a basis for receiving JobKeeper.
Update 25/4/20: Cancel yesterday’s update, the government is moving to block that one. But there may still be other ways that universities can get JobKeeper. A new post updates the story.
Last night there was some Twitter discussion about whether university casuals would receive the new JobKeeper payment of $1,500 a fortnight. It is to be paid via employers, but casual staff are not eligible unless they have been employed on a regular basis for the last 12 months. Given the on-gain, off-again nature of casual teaching many probably would not be eligible.
But the first issue is whether universities are eligible employers. To qualify, they need to have suffered a significant loss of revenue:
Employers (including not-for-profits) will be eligible for the subsidy if:
• their business has a turnover of less than $1 billion and their turnover will be reduced by more than 30 per cent relative to a comparable period a year ago (of at least a month); or
• their business has a turnover of $1 billion or more and their turnover will be reduced by more than 50 per cent relative to a comparable period a year ago (of at least a month). (emphasis added)
In 2018 eleven universities had annual revenues exceeding $1 billion. They therefore have the higher 50 per cent drop in revenue requirement, rather than the 30 per cent drop for smaller universities. Read More »
This post looks at the history of economic downturns and graduate employment since the early 1980s – specifically the early 1980s recession, the early 1990s recession and the end of the mining boom in 2013 – to draw out potential implications for the COVID-19 recession.
Historically, each downturn peaks at worse graduate employment outcomes than the previous one. The COVID-19 recession is likely to fit this pattern and deliver record high graduate unemployment. Not only is it likely to be the most severe recession in living memory, but it has already caused massive job losses in industries that are significant graduate employers.
Thanks to old graduate destination survey reports being put online (scroll down here), the employment effects of past recessions are easier to examine. The early 1980s recession triggered a four percentage point increase, on the best recent outcome in 1980, in university graduates still looking for full-time work four months after completion. But the negative effects were short-lived. By the mid-1980s employment outcomes were better than they had been in the late 1970s (chart below). Graduates of Colleges of Advanced Education had higher proportions looking for full-time work, but this appears to be mostly due to trends that started before the recession. Their results also recovered quickly.
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In previous posts, I looked at whether demand for undergraduate education would increase during the COVID-19 recession. In this post, I examine potential demand for postgraduate education.
As with initial undergraduate qualifications, theory suggests that a recession is a good time for postgraduate study. The opportunity cost of time spent out of the workforce is lower or non-existent. Studying is a relatively productive and interesting way of sitting out a recession.
In examining what happened in previous recessions I have been helped by a project that has put all the old graduate destination surveys online (scroll down to the bottom of the page here). Recessions aside, the trends are interesting.Read More »
In two recent posts, I argued that although higher education demand increased during the early 1990s recession, this may not happen on the same scale during the COVID-19 recession. We start this time from a much higher base of educational participation and attainment. The pool of people interested in higher education, but who have not yet enrolled or acquired a degree, is smaller than it was 30 years ago.
However, to predict that total applications may not increase very much is not the same as saying that total short-term demand will not increase substantially. Applications will be a weaker proxy than usual for how many people will want to be enrolled.Read More »
In an earlier post, I looked at how the COVID-19 recession might affect school-leaver applications for undergraduate education. I concluded that although the lack of job opportunities would favour continued education over unemployment, the scope for applications growth was lower now than during the early 1990s recession.
School retention is much higher now than 30 years ago, and a much larger proportion of the cohort with a potential interest in university already attends. With the age cohort’s size not changing much in the short term there is less room to move.
Interpreting historical application numbers from older university applicants is complicated. It includes relatively young people, did not until the last decade count direct applications to universities (which are mostly from older applicants), and does not distinguish between applicants who are already students but hoping to change courses and those seeking to enter higher education.
With these caveats, the chart below shows a large increase in applications from non-school leavers in the early 1990s. In percentage terms it is larger than the school leaver increase. It is consistent with the recessions drive up higher education demand hypothesis. The scope for growth is high because it is not constrained by the size of recent Year 12 classes.Read More »
Last week I published a blog post on the financial dangers posed by the COVID-19 crisis starting prior to the census date for each subject. It is a critical date for universities. They get no Commonwealth or student contributions for subjects dropped prior to the census date.
As Stephen Matchett reported in Campus Morning Mail yesterday, social media talk about dropping subjects is still at high levels. One of the reasons, that unemployment income support benefits would be more generous than student benefits, seems to have been fixed in Parliament yesterday. Although I think students are better off finishing their course on schedule if they can, we should expect higher drop-outs than usual prior to the census date.
I am also hearing reports of international students heading home before the census date because of family pressure. They might also leave because they can no longer support themselves due to the collapse of the student labour market. Due to an extraordinary new power to widen social security eligibility some international students might temporarily receive benefits, but I think entitlements are too unclear to change short-term behaviour.
If these drop-outs are happening at any scale then, except for the universities on trimesters that are already past their first census date, then serious higher education financial problems are very close, as universities will have to scale back their expected Commonwealth-supported student revenue and international student fee income for the year.Read More »
Due to COVID-19 Australia faces the worst recession in living memory. This post is the first of a series looking at how this might influence demand for higher education. But to pre-empt future posts, applications are just one of several factors affecting how many students end up enrolled. Acceptance rates, deferrals, and attrition rates could all change, affecting student numbers.
I will start with the school leaver market. As I have noted previously, in recent years higher education applicant numbers have softened. For school leavers, demography will continue to cap numbers. But within the constraints of age cohort size, could the recession affect applicant numbers?
Recessions change the economics of choosing between higher education and work. If there are no jobs a university student does not forgo pay and work experience. Higher education’s opportunity cost falls. Further study might be the second-best option, but it is better than unemployment.Read More »
Denise Bradley, one of the big influences on Australian higher education over the last 40 years, has passed away after a long illness.
She was a university leader, including as vice-chancellor of the University of South Australia from 1997 to 2007. Prior to that she was an important figure in forming the University during the Dawkins era of amalgamations, principally from the previous South Australian Institute of Technology and South Australian College of Advanced Education. For a brief statement of her University of South Australia role see the citation for her honorary doctorate from the University, and in more detail this history of the University in the Dawkins period.
Through this time she was active in broader public policy. She served on the Commonwealth Tertiary Education Commission in the 1980s, a body which used to advise the government on funding and other things. There was depth and detail in that era that we have lost – CTEC used to regularly produce hundreds of pages of detailed analysis. After CTEC was abolished, she served on other government advisory councils, boards and committees.
Professor Bradley was best known in more recent times for chairing the Julia Gillard-commissioned Review of Australian Higher Education, better known as the Bradley review leading in 2008 to the Bradley report.Read More »
On Facebook I have seen undergraduate petitions calling for university classes to be suspended. One person claimed that their institution was stalling until after the census date. This is the day when students became liable to pay their student contributions and the university becomes entitled to receive Commonwealth contributions, their government tuition subsidy.
In the Grattan report on dropping out I co-wrote a couple of years ago, we argued that the census date is an interesting and unusual feature of Australia’s higher education system. Effectively, it gives students a free try-before-you-buy option for every subject they take.
By law this period is at least 20 per cent of the semester, but on our analysis the median period before the census date was a quarter of the semester. Four weeks is common, with a census date at the end of March for first semester (earlier for universities with trimester systems).
In the other English-speaking countries we looked at students usually only have one to two weeks to change their minds without financial cost.
The late Australian date for dropping subjects or courses without cost transfers some enrolment risk from students to universities, who end up teaching students who never generate any revenue. Overall I think that is a good thing, as it creates pro-student incentives that would otherwise be lacking.Read More »
According to ABS statistics, about 60 per cent of students in full-time tertiary education have jobs (this includes vocational and higher education). Their major occupations put them at elevated risk of catching infectious diseases and of losing hours or jobs due to the COVID-19 recession.
Exposure to disease
Because the census has detailed occupational information I am using it as my data source for jobs, even though it is now nearly four years old. The chart below shows the top 20 jobs for higher education students aged 30 or less who work part-time. The top 20 includes just over two-thirds of all employed students in this group.
As expected, student employment has a strong skew to occupations with large amounts of routine interaction with other people. Sales assistants are by far the largest single group. Waiters, bar attendants and baristas make up the next two largest groups. People in these occupations are all relatively likely to interact with someone with COVID-19, although if self-quarantine works not while that person is showing symptoms.
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