Miserly Australian HE funding ‘a folklore’

‘Cherry-picked’ OECD data creates unjustified picture of underfunded sector, analyst says

June 17, 2020

Australian higher education spending is often “misread” as miserly by global standards, and the pandemic could trigger more unjustified criticism in the future unless the tenor of analysis improves, according to one expert.

Geoff Sharrock, honorary senior fellow at the University of Melbourne's Centre for Vocational and Educational Policy, said the “folklore” that Australian universities are routinely short-changed by governments was based on “simple-minded scans of poorly-probed data”.

The Organisation for Economic Cooperation and Development (OECD) predicts that Australia will navigate the pandemic with a relatively modest hit to its gross domestic product (GDP). Australia’s economy is set to contract by between 5 and 6.3 per cent this year compared with estimates of up to 7.25 per cent in Japan, 8 per cent in the US, 8.8 per cent in Germany and 14 per cent in the UK and Italy.

But this means that on one measure – tertiary education spending as a share of GDP – Australia will appear less well-funded than OECD peers “with sharper GDP declines”.

This will replicate the effect earlier this century, when Australia’s stellar economic performance after the 2008 financial crisis fuelled GDP growth of 53 per cent since 2001 – compared with 31 per cent in the US, 28 per cent in the UK, 19 per cent in Germany, 13 per cent in Japan and minus 1 per cent in Italy.

Dr Sharrock said that increases in Australia’s spending on tertiary education, including public funding, had consistently exceeded the OECD average. But this was hidden when international comparisons were based on education funding as a proportion of GDP, rather than real spending per student or changes in spending over time.

“Local reliance on share of GDP metrics has often placed Australia near the bottom of this kind of OECD league table, below Spain and Portugal let alone Finland and Sweden,” he said.

Dr Sharrock, a former senior higher education adviser at Monash University, said that Australia’s apparently poor international showing reflected the OECD’s self-acknowledged inability to capture the complexity of income-contingent student loan systems.

Australia’s government pays tuition fees up-front to institutions and recoups them – years or decades later, and sometimes not at all – through the tax system. This means that the government effectively pays roughly 16 to 21 per cent of Australian student contributions, in a hybrid public-private funding arrangement.

While some OECD datasets present loans as public funding, others portray them as private spending, either understating or overstating the level of public investment in the process, he said.

Writing in his blog, “Big little thought crimes”, Dr Sharrock says that Australian public spending usually appeared “adrift in the wake of its high-rolling OECD peers”, when in fact the country “finances tertiary study at higher levels than most, in ways less visible than most”.

“Australia’s ‘bottom-end’ narrative should be seen for what it is: the curious, crowd-sourced love-child of an odd pair of Antipodean anomalies.”

Dr Sharrock told Times Higher Education that OECD data simply was not capable of capturing the nuances of Australia’s higher education system for benchmarking purposes. As the country confronted the economic carnage caused by the pandemic, arguments for reform should be based on current and projected domestic data rather than unreliable international comparisons.

Nevertheless, “funding advocates” continued to read OECD data selectively, he said. “Life is short and OECD reports are long,” he blogged. “Their plethora of metrics is a cherry-picker’s picnic – ripe for weaponisation in funding disputes.”

Universities Australia (UA) said that OECD indicators were the “go-to numbers” for analysts. “Like everyone else, UA uses the OECD indicators as published to make important comparisons between nations,” said chief executive Catriona Jackson. “We also use a range of local data.”

Ms Jackson conceded that OECD data did not capture the complexity of Australia’s loans system, but said that funding comparisons based on share of GDP were appropriate.

“A country whose GDP has grown significantly has greater capacity to increase investment in higher education and skills, not only in absolute terms but also relative to GDP,” she said. “Nations that maintain investment in higher education and skills despite serious recessions are making a commendable investment in human capital.”

Dr Sharrock said that such arguments may be relevant in periods of economic stability when most countries experienced fairly consistent growth. “But once you have a global financial crisis or pandemic, that sort of comparison is often meaningless,” he added.

“There are other OECD datasets, such as the [figures the] Bradley Review used, which give a clearer picture anyway.”

He said the latest OECD figures showed that the area of Australian tertiary education that appeared genuinely underfunded was vocational education. But this was rarely highlighted by university sector lobbyists, he added.


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