An uncertain labour-market means it’s time to make Australian higher education free again

Photo by Logan Isbell on Unsplash

The world of work has been transformed. At one time, there was secure employment for all and you trained for an occupation. Whether you had good credentials, or were an unqualified or experienced worker, you still have avenues to secure employment.

Because of today’s much more fluid labour market, workers need to consider changing careers more often.  Therefore, in an environment where neither policymakers, commentators, students nor academics have a crystal ball, we need a system that enables rapid career change.

A few factors has shaped the changed employment landscape:

· Automation

· The downsizing of the public and private sectors

· Outsourcing under free trade agreements

· The large-scale disappearance of graduate and entry-level jobs

In this environment, it’s little wonder that newly qualified graduates struggle.

Around 30 years ago, it took most graduates about a year to find employment. Fast-forward three decades and many graduates, school leavers and vocational graduates take 4.7 years to find full-time work, according to Holly Ransom.

It’s important to note that Ransom’s claim stacks up.  The ABC has verified her figure.  The figure originally came from research performed by National Centre for Vocation Education Research (NCVER). NCVER conducted research for the Foundation for Young Australians.  They based their statistical data on ABS figures.

Many students, like these, have to juggle competing responsibilities to secure employment. Many take unpaid internships which are possibly illegal by Fair Work Australia guidelines in order to achieve their objective. 

The struggle of graduates seem to be backed up by a drop in full-time employment to within four months of graduation from 85.9% in 2008 to 72.9%.  It’s important to note that many in work were in some form of employment, other than the area for which they were trained.

In addition, the graduates surveyed didn’t come from the entire graduate population for a year; rather, for instance, the 2017 survey only included under 45 % of people who graduated, according to Charis Chang. While this may seem of little concern, the higher the participation rate, the more statistically accurate the survey. In addition, the survey has a self-selection bias because it’s up to the sample population to respond.

 In addition, behind this overall figure lies thousands of stories. Some of them are joyful stories of graduates embracing the challenge of university and reaping the rewards. Others lament that they ever attended university, particularly those who qualified in a saturated market. Further, overall figures offer no insight into individual graduate experiences. Some graduate from courses where many can’t secure employment because of a long-standing oversupply of graduates and a lacklustre labour-market.

While a university degree no doubt improves a graduates chance of employment, a degree is no longer the iron-clad guarantee it once was.Further, because of the sheer numbers of students graduating, many are settling for part-time employment.

Let’s stop and put this into context. Australia is a country where politicians love to boast about 27 years of economic growth. Clearly, the benefits of this growth have not flowed to everyone.

Hence, [continuing with a system that allows students to rack up sizeable debts ignores the burden of private debt and the uncertainty of employment prospects.

Instead of taking off their blindfolds, policymakers conveniently assume that a degree equals employment. Sure, some people get good jobs upon graduation.  Many though, take time to secure suited work, some don’t succeed at all and struggle to get low-paid roles as we deemed them over-qualified.

While we can’t guarantee every graduate a job in their desired field, we can do better than we are at the moment. Currently, graduates are spilling out of universities when there’s little demand for some of them in the workplace. Even a rudimentary check made by policymakers would confirm this.

Yet, the Commonwealth government hasn’t investigated graduate destinations thoroughly. A standard survey is emailed to graduates within four months of them finishing university. However, there’s no long-term follow-up, say five years after graduation.

If the government is really interested in training people for the future, then why has no attempt been made to investigate graduates’ career trajectories?

Anyone familiar with the rapid changes seen in the workplace should know of why it’s necessary. It’s because even the most farsighted of public servants, university administrators, academics, labour-market experts or students simply can’t predict the future. It doesn’t matter how switched on or strategic they are. The only certainty in the job market of the future is uncertainty.

That’s why locking people into expensive degree programs may not be worthwhile for some students. Some students complete courses and find out that they don’t want to work in that field; others try out fields and see that the market is uninterested in graduates; many find that there isn’t enough work.

Therefore, people need to make swift career changes. However, for some people, fees are a barrier to retraining. That’s why Victorian Labor and the NSW Labor opposition have proposed free technical and further education (TAFE).

The costs to society and employers of debt

Many will think: Well, people can retrain, can’t they? Not everyone can retrain. Sometimes, personal circumstances stop people retraining.

Also, student debt can keep students locked into pursuing a particular career path – one that they loathe. It’s also well-known that any form of private debt is control.

Mortgages, personal loans, student debt and payday loans all limit spending. They can also determine people’s future family size options, affecting whether they can afford to rent or, eventually, afford a mortgage.

Also, we need to consider that today’s students need a free education more than some of their predecessors.  There is uncertainty of employment in a rapidly changing environment (mentioned earlier). Further, due to oversupply in the relevant labour marketplaces, wage rises and job permanence guarantees for today’s graduates and workers seem very difficult to come by. The lower wage rises and impermance affects the entire community, with reduced spending and a formidable barrier preventing entry to a still overpriced property market, currently undergoing a major correction. Considering these factors, it’s hard to justify high student fees, even for those who secure employment.

Debts can cause costs for both employers and workers: employers may end up with workers who are underperforming at their jobs; workers effectively become well-qualified wage slaves.

Other arguments in favour of university fees

Another less common argument against free education is that financing free tertiary education would bankrupt the government. I’m afraid that’s not right. Currency issuing governments, like Australia, can’t go broke. Why? Because our currency is no longer based on the gold standard.

Another argument to support fees is the increase in graduate jobs. This argument is hard to support. Sure, there’s robust demand for healthcare graduates and professionals with several years of experience. But for many graduates, it’s a different story.

An uncommon argument in support of fees, made by the architect of HECS, is that Karl Marx opposed free education. Okay, so maybe he (Marx) did, but what’s the significance of that ad hominem argument?

Okay, so we need to fund a better system, but don’t use my taxpayer dollars

Many people hear the word free and think: Not on my tax dollar thank you—there’s no such thing as free. Some do this unthinkingly, merely reciting what they’ve heard said by a friend or a commentator over the years. Others genuinely believe that tax dollars finance all government spending. In fact, bond issuance and proceeds from the future fund also provide a significant revenue source for the government, according to Peter Whiteford, Professor at the ANU Crawford School of Public Policy.

Historically, many governments have used government borrowing (bond issuance) to finance free or lower-cost university education. For example, the Menzies government used this approach to fund low-cost higher education for many under the Menzies Government Commonwealth Scholarships scheme, which covered student tuition fees. Eligible students from lower income backgrounds received a means-tested allowance. The Menzies scheme covered up to 80% of students.

Similarly, Gough Whitlam also provided higher education at a much lower cost, albeit for free.Neither approach loaded future generations with the heavy burden of debt. Beneficiaries of both schemes were and are grateful, and Australian society benefited.

The actual finance, at least with Menzies scheme, came from investors. Taxpayers played their role, paying back money to investors. Students had bright prospects. They weren’t burdened by private debt and society flourished.

This may seem unimportant, but spending is vital in any form of consumer transaction. We predicate capitalist economies on spending, and if there aren’t enough buyers out there, then that spells trouble.

So, while some people clearly fret about paying for others’ debts, the fact is that if others are weighed down by debt, this impacts on their ability to spend in the broader economy. Hence, what goes around comes around.

What programs can be financed?

In this changed employment environment, policymakers need to look at feasible alternatives to lengthy degrees. They could devise degrees, so that students spend some semesters doing a paid internship in their field. These internships should be with government departments, agencies, or small/medium-sized firms. Other semesters they could undertake coursework. This would increase the engagement level of students, otherwise distracted by high costs and fees.

In other instances, a better pathway could be short courses or on-the-job training, rather than four-year degrees. Also, many courses now have a shorter shelf-life, according to Kelly Fawcett, Research and Policy Manager at the Foundation for Young Australian’s.

They (the government) also needs to consider financing a similar program for graduates. Either program would help with equity.

The financial advantage of this approach is obvious: students would pay more tax and more GST, and other taxes would flow back to the government.

For each person who secures a graduate position, another 14 people get work, according to Universities Australia. Far from being a burden, university graduates are a brilliant investment!

The future of higher education funding

Commentators, economists, students and some graduates now recognise that existing higher-education funding models are outdated. Recently, some commentators called for a review and a new funding model for courses.

Yet, our policymakers remain stuck in the past. They are reluctant to engage with the idea that education should be free, which is perhaps unsurprising given that policymakers turned the sector into an industry in the ‘80s.

However, there are many benefits to re-embracing free higher education. One is the benefit to the public, according to Professor Bill Mitchell. Another tremendous benefit is that, in the future’s workforce, students need the capacity to adapt and change at short notice. On this basis, the current system of training and education may not be fit for purpose, according to the Foundation for Young People.

It’s time to put the needs of students first. It’s time to consider the actual needs of employers. It’s time for the government to consider how to reshape education policy to meet the needs of the 21st century.

---