Dream turns into degree-factory nightmare

A week of wandering through the freak shows and distractions of sideshow alley can warp political judgment.

“The worst week experienced by any government in almost 50 years,” was how one commentator — who has been around long enough to know better — summed up the week that was on these pages yesterday.

There’s nothing like a shot of hyperbole to enliven a Monday morning, but really?

Worse than the week Kevin Rudd and Stephen Conroy decided they could install a fibre connection to every home and business more effectively than Telstra? Worse than the week in which a Labor government, beset by ­hubris, mandated a 20 per cent target for renewable energy, claiming — wait for it — that it would make electricity cheaper?

Worse than the time they locked in a half-cooked disability insurance scheme, promised schools money they never had, promised roof insulation in every home or issued an open invitation to the world’s dispossessed to take a boat trip to Christmas Island?

Political errors are quick and easy to judge; policy blunders can take much longer to assess. Even now, the full damage of Labor’s ill-conceived interventions in the economy and the national balance sheet have only started to be counted.

The Rudd and Gillard governments’ habit of meddling in places it had no right to be was driven not so much by socialism as solutionism; the impulse to solve problems yet to be defined. It accelerated the expansion of what the Productivity Commission delicately refers to as the non-market sector in its landmark review of national economic ­efficiency released last week.

The non-market sector — health, welfare and education for the most part — accounts for more than 20 per cent of economic activity and is powered by government investment.

Unlike the traditional economy, productivity is hard to measure. There can be little doubt, however, that it is not pulling its weight in lifting the performance of the economy as a whole.

Take higher education, for example, a sector that has expanded rapidly thanks to Labor’s promise of a university education on ­demand.

Are our degree factories delivering value for money? One suspects not, in the light of the commission’s recommendation that higher education providers should be included in consumer law, giving unhappy students the right to seek compensation if the service they received was “not fit for purpose” or was “supplied without due care and skill”.

The commission charts the extra­ordinary growth of universities in which more than a million Australians are enrolled today, twice as many as there were when the century began.

The federal government’s direct contribution increased from $19 billion in 2007 to $31bn last year, not counting the amount it lends to students, a substantial slice of which it will never recoup. Outstanding government loans to students have tripled across the same period from $16bn to $49bn.

Those who received the most benefit, if benefit it is, are the millennials, a generation that may well become known as the education boomers, the most well-credentialed generation in history. Four out of 10 women aged between 25 and 35 have a bachelor degree, or higher qualification, as do three out of 10 men in the same cohort.

Ten years ago the figures were 24 and 22 per cent respectively.

For those who regard human beings as inputs that increase production, this investment in education should be an unqualified good. Yet human beings, it turns out, are not machines, and the demand for the services of graduates has its limits. Full-time employment for graduates has fallen from 85 per cent in 2008 to 71 per cent last year.

More than a quarter of graduates work in jobs unrelated to their studies, to which their degree may add little value. In fields such as the humanities, languages, arts and social sciences, the figure could be as high as half. Graduate wages as a proportion of the average minimum wage have been falling since 2008.

Students’ return on investment is shrinking, and they know it.

A survey last year found high levels of dissatisfaction: almost half thought they had received inadequate services.

The higher education revolution engineered by Julia Gillard as education minister and then prime minister has been a force for destruction, as revolutions usually are. The ideal of excellence has been usurped by the dogma of inclusion. A place at a university is a right, and in some circles is seen as a requirement, a four-year transition from youth to adulthood without which no life is complete.

The average Australian Tertiary Admission Rank of univer­sity entrants, a proxy measure for academic preparedness, fell from 79.9 per cent in 2010 before the glorious Gillard revolution to 76.4 per cent last year.

Meanwhile, the proportion of students abandoning university courses rose, from 12.5 per cent in 2009 to 15.2 per cent in 2014. More than a quarter of students are failing to complete their degrees in nine years. In the commission’s view, this represents a waste of the student’s time and money, and squandered taxpayer funding.

Gillard’s changes to higher education are one more example of the costly but avoidable public policy mistakes about which the commission expresses concern.

In part, the blame falls on the public service for its failure to conduct standard due diligence and its excessive aversion to risk which makes it slow to acknowledge mistakes and quick to centralise decision-making.

The commission is understandably muted, however, in its references to the poor performance of elected governments. The rushed delivery of rash promises, bypassing of normal cabinet process, reliance on verbal rather than written advice, failure to stress-test proposals and reckless disregard for future costs were highlighted two years ago in an important report by Peter Shergold that, disconcertingly, appears to have been little read.

One suspects the author foresaw as much and so cunningly decided to include the guts of it in the title. Learning from Failure: Why Large Government Policy Initiatives Have Gone So Badly Wrong in the Past and How the Chances of Success in the Future Can be Improved, together with a well-thumbed copy of last week’s magnum opus from the Productivity Commission, should be placed in a prominent position on every would-be revolutionary’s bookcase.

Nick Cater is executive director of the Menzies Research Centre.