In an earlier post I looked at how Job-ready Graduates could produce fewer total student places than originally forecast. This post examines the geographic distribution of those places. Both posts draw on my first submission to the Universities Accord review.

Job-ready Graduates ‘growth’ funding is based on campus location (‘growth’ in quotation marks because it is off a reduced base). Regional campuses get 3.5 per cent annual funding growth, with 2.5 per cent for metropolitan campuses in high growth areas, and 1 per cent for other campuses. Higher growth rates for regional campuses reflect concern about lower university participation rates for people from regional areas.

Growth funding is for coming increases in the school leaver population, which will translate into increased demand for higher education. My submission uses 2021 Census data to see where the school leavers of the mid-2020s to 2030 are located, and how this aligns with higher education policy.

City/rest of state growth rates

Full regional classifications are not yet included in the publicly available 2021 Census data, so the chart below uses a greater capital city/rest of state classification. The age groups cover the young people who will finish Year 12 and seek university entry from mid-decade through to 2030. It compares their numbers to those of people the same age at the 2016 Census, who reached/will reach university age in the first half of the 2020s.

Overall the population of 9 to 16 year olds was in 2021 13.5 per cent higher than in 2016 in the greater capital city areas and 7.8 per cent higher in rest of state areas. Population growth is significant in both categories, but larger in the cities that will get a smaller funding increment.

The chart also shows variations by specific year of age, with growth rates most aligned in the 11-to-14-years age groups.

Growth by SA4 areas

Narrowing the analysis down to labour market areas, the ABS SA4 category which covers areas with populations between 100,000 and 500,000, predictably shows similar patterns. As the chart below shows, the largest absolute growth areas are mostly major city outer suburban areas. Some inner regional areas also show significant increases. Melbourne looks set for a substantial expansion in its school leaver population, yet its universities will get the same funding increments as cities in other states and less than universities in regional areas. As many residents of the regions move to major cities to study, this analysis understates the likely increase in school leaver demand for campuses in major metropolitan areas.

Can people just move to study?

Urban students could do what their regional contemporaries do, and move to study. With less population growth and more funding growth, regional universities won’t see entry requirements increase as much as high-demand metropolitan universities. However living with family members, usually parents or a parent, is an important cost-saving part of the economics of higher education in Australia. The chart below mostly uses 2016 Census data as the 2021 data was distorted by students moving home rather than living near closed campuses during COVID-19 shutdowns. But either way about eight in ten late teenage students live with relatives. Living with relatives remains the majority arrangement for university students until their mid-twenties.

Accommodation shortages and high rental prices make moving out to study more financially difficult now than in earlier years. The people least likely to be able to afford the cost are urban low SES students, a priority group for the Accord. Their higher education participation rates will decline on current policies.

Conclusion

The Australian higher education model is to bring higher education to students, rather than expecting students to move for higher education. Getting the geographic allocation of student places right in Australia is more important than in the UK or USA, where moving to study is common. Job-ready Graduates puts growth funding in the wrong places for the Australian system.

If the Accord panel recommends a funding system based on central allocation of funding to universities, which is probable given government nervousness about demand driven funding, it needs a better way of deciding where to put the money. My charts above give a quick geographic guide, but more sophisticated analysis is needed that looks at university catchment areas rather than campus locations, and takes account of factors such as historical participation rates, SES, and migrant background in estimating higher education demand. The analysis also needs to take account of permanent resident and NZ citizen numbers, as they are entitled to CSPs although in many cases without HELP loans.