Job-ready Graduates: My Senate inquiry submission

My submission to the Job-ready Graduates Senate inquiry is now on the Education and Employment Committee website, but the published version has an error in Table 5, so use this version instead if interested (update 16/9: correct version now on the Senate website).*

The submission does not have a lot in it that people who have read this blog since June will not have seen before. But the submission overview summarises what I see as the three key policy errors that make Job-ready Graduates not well designed to achieve its own objectives. I have copied it in below.

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Correction post – true average costs, whether average costs are true, and that chart

In a post last week, I suggested that a chart on average teaching costs compared to funding rates in the Tehan reform discussion paper, which was causing concern and confusion, and was later amended by the Department of Education, might make things look worse than was the case.

This turned on what kind of ‘average’ we were looking at. There are multiple versions of average 2018 estimated costs by field of education floating around – an average of averages (all institution average costs by field added up/number of institutions), a median of averages (institutional average cost in the middle of the range for each field), and a true average (total costs for field/EFTSL in field). I thought the chart might use an average of averages, which would over-weight low-EFTSL, high-average cost institutions.

But, having realised that I had the true average numbers when I thought I did not (in a file with a name that did not reveal this aspect of its contents), I now think the Department’s chart is based on true average figures.

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Reality testing teaching and research cost results

My recent blog post on the cost of the teaching-research academic employment model prompted various Twitter comments on its analytical assumptions.

Friday’s post and the comments made on them also link back to other recent posts that try to understand how universities finance themselves. The posts have consistently acknowledged data issues, and that precise dollar figures cannot be attached to most of the conclusions. At best, we can get to a credible range.

The most important criticism is that my analysis assumes that the two main sources of university expenditure data, the Deloitte Access Economics study for teaching, and the ABS for research, can adequately distinguish between and separately cost scholarship and research.

According to the ABS, which uses international definitions, research is ‘creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture and society – and to devise new applications of available knowledge’. Scholarship, by contrast, I take as activity leading to or maintaining in-depth understanding of existing knowledge.

It is hard to have research without scholarship. How can academics claim to have increased knowledge if they are unaware of the current state of their topic or field? The literature reviews that appear in many ‘research’ articles in academic journals are scholarship.

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Loan fees and the expert panel

As I expected, there has been comment (here, here, or here) about my release of a report on HELP student loan fees at the same time as I am on a government higher education policy advisory panel.

Due to the panel consuming my time for the last couple of months, the loan fee report has appeared later than originally intended. But other than that the report’s release follows a plan developed a year ago to complete reports on two weaknesses in HELP’s finances, the thresholds for repayment and interest costs. They are companion reports for our report on doubtful debt and recovery of HELP debt from deceased estates in 2014.

Loan fees are not new, and nor is my support for them something I suddenly arrived at after being appointed to the panel. I said in response to the proposed Pyne reforms that rather than abolishing loan fees we should extend them. What this week’s report does is work through in more depth whether interest subsidies are necessary to income contingent loan schemes (no); the relative merits of real interest, hybrid real interest and CPI indexation, and loan fees (loan fees better); and arrive at a method for setting a loan fee rate (likely interest costs over the life of HELP loans). It’s the detail that is appearing now, not the broad recommendation to use loan fees.

When the government asked me to be on the advisory panel I said I could only do it if I could also meet my existing Grattan commitments. They agreed to this. The panel is providing private advice to the minister and the department. It is a different situation from a review with a final report I need to agree with my panel colleagues and which the government will publicly accept or reject. So while the timing is not ideal, the loan fee report does not pre-empt other people’s decisions.

Bachelor degrees the science employment risk

The Higher Education Supplement this morning ran an op-ed version of my critique of Ian Chubb’s promotion of science courses. About 60 words were cut from the original. Editors often have to shrink articles to the available space, but in this case an important source was omitted. The employment outcomes in the last few paragraphs are from the 2006 census, not the Beyond Graduation survey as the op-ed appears to say. An amended version of the op-ed is under the fold.

Those paragraphs were the only part of the article that I had not reported before. In the past, I have said that science graduates as a whole have about average rates of graduate employment in professional and managerial jobs. However, closer analysis tells a more interesting story. People with postgraduate science qualifications have above rates of professional and managerial employment. But people with bachelor-level qualifications have lower rates of such employment – males 5 percentage points below the male average, and women a massive 13 percentage points below the female average. That’s a pretty bad outcome, and one worth further investigation when the 2011 census is released later this year.

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Department of Corrections

For those who downloaded my Grattan report, Mapping Australian higher education, there was an error in table 8 on page 50 which lists funding rates for Commonwealth-supported places. The maths and science rates did not include $3,499 in transitional funding paid for students enrolled in 2009 or later, who paid a student contribution amount reduced by that amount. The correct numbers are in a revised version of the report.

Further complicating matters, these student contributions will be put back up next year, so assuming that the required legislation is passed future calculations should take this into account. Other than via indexation the total won’t be affected, but the student contribution will go up, and the Commonwealth contribution will go down.