Mini-demand driven systems support increasing enrolments from a target population, or potentially in a target course, without risking (from a government perspective) a major cost escalation under a full demand driven system.
Although I support a return to full demand driven funding I doubt that mini-demand driven systems are a good idea.
The risks of restricted-use funds
From a government perspective the attraction of mini-demand driven systems is their apparent pursuit of some desirable outcome at low cost. Only funding for the estimated additional student places is likely to be ‘new’ money.
If so, in the transition to a new mini-demand driven system each university would lose from its overall maximum block grant amount estimated funding for current students meeting the mini-demand driven criteria – in the UA/IRU case, probably the Commonwealth contribution value of their existing student load of Indigenous students living in metropolitan areas.
As a result, ‘old’ money that could once be used flexibly for any domestic student could after the clawback only be used for about four per cent of the population.
If in practice the university attracts fewer Indigenous students than expected, or these students enrol in subjects valued at less in Commonwealth contribution terms than forecast, then the university is left with stranded resources. It has student funding that is theoretically available but in practice cannot be used.
This post describes the available information on student place allocation, highlighting the policy and legal flaws in distributing funding this way. The policy’s problems are exacerbated by the Job-ready Graduates Commonwealth contribution changes.
Allocations by funding cluster
When universities received their allocations many were surprised by student places they had not requested. These were in funding cluster 1, the law, commerce and most humanities cluster. Just over 30 per cent (3,026) of the 9,851 places allocated in this round are in cluster 1.
The Department of Education’s manoeuvre can be seen in the funding agreements, an example below, which are prescriptive about the use of cluster 2 and 3 places, following information in funding applications, but not cluster 1. Instead, another clause says ‘these [cluster 1] places are to be delivered in line with a separate agreement between the Provider and the Department.’ To stay consistent with the original guidelines the cluster 1 courses need to be in skills shortage fields. Accounting and auditing are on the skills shortage list, although universities could also find other ‘relevant industry needs or shortages’.
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.
Some 2021 Census is now available on the ABS TableBuilder site, allowing additional analysis of the social and personal characteristics of higher education students. This posts looks at migration status and language spoken at home, previous strong predictors of higher education participation rates.
Year of arrival
In 2021 migrants who had taken out citizenship were significantly more likely than people born in Australia to be enrolled in university in the post-school 18 to 20 years old age bracket. The participation gap was 19 percentage points for migrants in the decade prior to the 2021 census, 54 per cent participation compared to 35 per cent for young adults who were born in Australia. Migrants who arrived as younger children have a higher participation rate again, at 59 per cent.
Last week the government’s announced the details of how it will meet its election promise of 20,000 additional student places. Many of these details create legal and bureaucratic problems for the government and universities.
Section 30-10 of HESA 2003, as cut-and-pasted below, does not give the minister the power to allocate student places to Table A institutions except in the case of designation. Only medicine is currently designated. For higher education courses, covering every course except medicine, the unit of allocation is dollars rather than student places.
Overall domestic student trends were positive for both undergraduates, up 2 per cent after a decline between 2018 and 2019, and postgraduate coursework, up 14 per cent after six years of stagnation or low growth. Postgraduate research was an exception, down by 577 enrolments or 1.3 per cent. Including enabling and non-award students total domestic enrolments were 1,133,519, 4.4 per cent up on 2019.*
Student ‘load’ – full-time equivalent enrolments – was up by less, 2.6 per cent. The headcount share of part-time students, defined as less than 75 per cent of a full-time equivalent study load, is only up by .7 of a percentage point, suggesting more part-time students with light study loads and/or more full-time students not at a 100 per cent study load.
On top of this, under Job-ready Graduates the government introduced significant changes to student contributions, so that some courses cost 2021 commencing students much more than those who commenced in previous years, while other courses cost less.
The trend in total domestic application numbers is complicated by a change to the Queensland school starting age in 2007, which produced a dip in Year 12 numbers in 2019 with negative consequences for university applications for 2020 and a rebound in 2021. DESE has produced trend lines with and without QTAC figures to account for this issue, with the non-QTAC figures producing an increase of 2.3 per cent between 2020 and 2021 (4.4 per cent with QTAC). It’s not super-fast growth, but the 2.3 per cent is the highest since 2015.
Australian higher education equity policy and analysis tends towards cultural explanations of differences in higher education participation rates. The official definition of low socio-economic status is based on the ABS Index of Education and Occupation, not direct financial factors. Parental education and occupation provides a role model for their children and shapes the expectations parents have for their children. University-educated parents can also more easily help their children navigate the path to university.
The relationship between parental education and child outcomes has occasionally led to suggestions that ‘first in family’ – the children of parents who have not been to university – should be an official equity group. There was another such call in an article in The Conversation last week, based on a recent academic journal article by Sally Patfield, Jenny Gore, and Natasha Weaver.
Is first in family at university unusual?
Although the data is rarely released, parental education has been in the official enrolment data collection since 2010. In some figures I have from 2015, of the students who reported parental education first in family were just in the majority, at 50.1 per cent. But the true number was probably significantly higher, with don’t knows or missing data from about 15 per cent of enrolments. At minimum these students had parents who did not regale them with ‘when I was at uni’ anecdotes, blocking one path of influence on educational choices.
If we think back on the history of higher education first in family could never have been unusual. With each generation experiencing much higher participation rates than the one before it, large numbers of students must have had parents who didn’t go to university. According to figures in Anderson and Vervoon’s Access to Privilege, at Melbourne University in the 1960s and 1970s around a quarter of the fathers and 10 per cent of mothers of students had a university qualification – high for the era, but still leaving a big majority of students as ‘first in family’.
The annual cohort completions statistics published by the Department of Education show that low SES students complete courses as lower rates than medium or high SES students. On the most recent figures 67 per cent of low SES commencing students had completed a degree by nine years after commencement. The equivalent figures were 72 per cent for medium SES students and 78 per cent for high SES students.
Their analysis suggests, as seen in the chart below, that receipt of Youth Allowance or Austudy is associated with increases in completion at the six-year point for students in all but the most advantaged areas, with the largest effects for students living in areas with the greatest levels of economic disadvantage.*
The analysis of the results is quite brief, making it hard to fully understand the effects of student income support. If I understand them correctly, they have controlled for full- or part-time study status. However, I would see getting students to study full-time as a major benefit of student income support. In the Grattan Institute dropping out analysis, studying part-time is the single biggest completion risk, and this is supported by the Department’s analysis, which includes additional variables Grattan did not have.
As the policy name ‘Job-ready Graduates’ suggests, the main stated reason for changes to student contributions is to promote graduate employment outcomes. Or as the JRG discussion paper puts it ‘incentives in the current funding system could encourage sub-optimal choices for students and institutions, leading to poorer labour market outcomes and returns on investment in higher education.’ The assumption is that if arts becomes more expensive students will instead choose a course with lower student contributions and better employment prospects.
Employment outcomes can be measured in many ways, but every method shows that graduates in fields typically taught in Arts faculties are at an elevated risk of disappointing outcomes.