Let’s stop subsidising education! (Andrew Norton, Grattan Institute)

This article was published in the Australian, Australia’s national (and conservatively inclined) newspaper. This is the lead quote:

“Tuition subsidies merely redistribute income to students and graduates. The general public, particularly those who do not go to university, are worse off. They forgo other government benefits or pay higher taxes while receiving nothing additional in return,” Andrew Norton.

This quote comes from a report from the Grattan Institute, written by Andrew Norton, entitled “Graduate Winners”. His thesis is that, counter-intuitively, subsidising education doesn’t level the playing field, rather it robs non-University educated Australians of their fair share.

Basically, Australia runs a deferred payment scheme that is also government subsidised. Norton’s point is, effectively, that having put everything into a loan scheme, the amount doesn’t matter and it therefore wouldn’t disadvantage people to pay more. We’ve seen this before, of course, where people remove subsidies and let the market fix a price: as the article says, in New Zealand this led to a tripling and Britain is in the middle of major hikes. We’ve also seen the US where students never get out from under their debt load.

Here, in Australia, people do actually clear their debt. Not quickly, admittedly, but it’s possible. You can get out and clear of your debt under the current scheme. It’s relatively embarrassing for Norton that he wasn’t (apparently) present at HERDSA when speakers talked about the socially disadvantaged being more acutely debt averse than other sectors – and increasing the debt is not going to help that problem.

I must be honest, I always have a suspicion of schemes that, from whatever basis of argument, seem to end up with ‘the rich kids get places’, but this is a personal bias. Perhaps this report contains the convincing argument that will sway me, finally? (To be honest, the whole document has this weird aroma of capitalism wrapped up in a central planning framework, running on the sniff of the invisible hand.)

What I find fascinating is that, in the middle of an Australian federal sector that is increasingly focussing on the wealth creators, there appears to be no connection between the Universities and their contribution to a society, the report is focused on personal salaries and assumes that everyone goes out to maximise their income. The section of the report that discussed public benefits talks about increased tax benefit, tolerance and things like that – but what seems to be missing (I did read it at speed so that might be fault) is a discussion of the benefit of having well-trained professionals in your society.

It’s as if the students of Universities have never turned into the professionals that have done small things like design our roads, keep our air fleets running, stop disease from killing the population – you know, little things. Is it seriously contended that the people who have graduated from University have never done anything at all except take extra salary at the expense of other people?

I won’t say any more on this as I need to digest it in more detail but I thought you might be interested in a completely different view on how to handle a public educational system.

4 Comments on “Let’s stop subsidising education! (Andrew Norton, Grattan Institute)”

  1. Troy Porter says:

    The whole tone of the discussion is fairly painful: it has bean-counter speak throughout. Why do the people that profited already from a system seek to make it difficult for subsequent participants?


  2. Dalmeny says:

    A similar article in The Age had me shaking my head, wondering where to start with the fallacies. We educate people because it benefits the entire nation (and beyond). It’s a venal caricature.


    • nickfalkner says:

      I was highly disappointed in the underlying report which is from a (theoretically) unaligned think tank. I realise that determining public benefit is hard but I don’t think that this (implicitly elitist overpricing) is the solution.


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