When Gough Whitlam’s Labor government abolished university fees in January 1974, student enrolments had already been increasing at double the population growth for two decades.
In 1985, three years before Bob Hawke’s Labor government abolished free tertiary education and brought in the Higher Education Contribution Scheme (HECS), it had decided to develop the full-fee international marketing of education as an export industry.
In the three decades since, the number of international students across all education sectors went from fewer than 100,000 to just under 600,000. During this time, education became one of Australia’s leading export industries, behind only iron ore, coal and gold.
The two principal arguments in favour of the introduction of tertiary education fees were that public funding of higher education was a regressive tax-spending transfer from non-student taxpayers to non-paying students, and that the abolition of fees had not changed the social composition of higher education participants.
But these arguments, unsupported by evidence, served only to mask the move to the “user pays” principle of neoliberal economic theory that the Hawke Labor government of the time had adopted.
In more recent times, Tony Abbott’s education minister, Christopher Pyne, has put the justification for fees more simply — that because it is individuals, not the public, who benefit economically from the credential of a degree, the individuals in receipt of this benefit should pay their way.
This claim is also false. According to the Organization for Economic Cooperation and Development (OECD), the public rate of return from tertiary education in Australia is twice the rate of return for individuals. Tertiary students in Australia also contribute much more to their education costs than students in other OECD countries —55% compared with 30%.
Moreover, as recent data from the 2014 Graduate Careers Australia survey shows, the transformation of tertiary education from a public good to a tradeable good in the marketplace isn’t showing a great return on investment for students in a stagnant economy.
Before the global financial crisis began in late 2008, about 85% of bachelor graduates were in full-time employment within four months of finishing their degree course. In 2013, this had fallen to 71.3%, and last year it dropped to 68%, the lowest figure since the 1980s. Full-time starting salaries were also stagnant, averaging $52,500.
The comprehensive survey of 113,000 new graduates found that nearly 12% of those looking for full-time work had no work of any description, while a further 20% were employed on a part-time or casual basis.
Although employment results differed across disciplines, the strongest employment results for graduates in areas such as medicine, dentistry and engineering showed that only about 75% of graduates were in full-time work within four months, and even then not necessarily in their chosen fields. In the weakest area, performing and visual arts, only 45% were in full-time work.
The further bad news for graduates is that some higher education labour market economists say the present situation is not simply a cyclical one related to the overall economy.
To use their parlance, it is also “structural”, which is to say that graduates in the marketplace are subject to the same norms as any other tradeable goods, such as motor vehicles for example, where demand must reach an equilibrium with supply.
In their assessment, there is an oversupply of graduates, which is the result of a federal government decision in 2010 that removed the caps on the number of government-funded places in universities.
The official youth employment rate (covering all 15-24 year olds looking for work) is now above 13%, and underemployment is endemic. But the difference with unemployed and underemployed graduates is that more than 2 million students have racked up HECS debts amounting to just over $40 billion last year, a figure projected to increase to more than $70 billion in 2017.
That’s a lot of people spending a lot of time, and accumulating a lot of debt, for the privilege of being unemployed.
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