Productivity Commission finds while demand-driven system was costly, it ushered in more students from low socioeconomic backgrounds

This article is more than 1 year old

This article is more than 1 year old

The move to fund university places for all young Australians who wanted to study did offer many more opportunities but had mixed success.

The Productivity Commission has examined the demand-driven funding of universities and found that while it did let more students give tertiary education a try, best knowing their own abilities and aspirations, it also risked encouraging people to attend who ultimately would not benefit.

The Labor government uncapped the number of university places it would fund in 2010 but the Coalition, in search of a surplus, has frozen funding at 2017 levels, effectively ending the demand-driven system.

Over that time, the number of young Australians studying bachelor degrees increased by a third.

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“The chance of a university education has been transformative for many, setting them on a path to better economic prospects,” the Productivity Commission chair, Michael Brennan, said. “But it is also costly – to students as well as taxpayers.”

One of Labor’s aims was to attract more students from disadvantaged backgrounds.

The commission’s report, released on Monday, found there was a significant increase in students from low socioeconomic backgrounds and those who were the first in their family to attend university, but little improvement in participation by people from regional and remote areas, or Indigenous Australians.

Overall, the proportion of young Australians at university grew from 53% to 60%.

But the commission said the “additional” students (those who wouldn’t have enrolled had it not been for the uncapped system) tended to enter university more unprepared and struggled academically.

They had poorer literacy and numeracy skills and dropped out of study at almost double the rate of the others.

About half graduated by the age of 23 and, overall, 68% of additional students finished their degree, compared with 80% of other students.

While they had a slightly bumpier entry into the workforce, for those who did succeed academically, a university education remained a good investment.

Despite the mixed report card, the commission said a capped system was not necessarily better, pointing out that it could be too restrictive, discourage innovation and opportunity, and some students would still fail.

It said in the long term there would be pressures on government to again increase the number of university places since the shift towards jobs requiring complex cognitive skills was unlikely to abate.

“Our school system needs to prepare larger numbers of young people for university, and many university students need greater academic support to succeed,” Brennan said.

“The university sector needs to be motivated by informed choice much more than enrolling large numbers of students, bringing a stronger focus on student outcomes, quality teaching and support.”