catallaxy files

catallaxy in technical exile

Central planning without central planners

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An article by Max Corden in November’s Quadrant dubbed Canberra ‘Moscow on the Molonglo’ for its interventionist higher education policies (see also this blog, ad infinitum). In some respects, however, this is too kind. While there are obvious similarities, such as a disregard for consumer interests, the Soviets differed in at least trying – with very limited success, given the inherent constraints of central planning, but trying nonetheless – to maximise overall economic development. This hasn’t been true of Australian higher education. While the allocation of Commonwealth-subsidised places is more strictly controlled than ever, it is controlled only to minimise financial and political expense. I can find no evidence that the Canberra bureaucracy has any capacity to monitor labour market needs and adjust the number university places accordingly. When I asked a senior Education Department bureaucrat (in a public forum) about what capacity they had for this last May she was unable to give me an answer.

In response to political pressure, the government does sometimes boost particular disciplines (or try to protect numbers by further micro-managing universities). But for the most part, we have the status quo circa 2003 frozen in time. We have central planning without central planners.

The consequences of this are highlighed in new research by Bob Birrell and colleagues, published in People and Place but not online, reported in The Age today. They show a decline in undergraduate commencing students in engineering and related disciplines, despite labour market demand sufficiently high that employers are recruiting staff from overseas. So far as I am aware, there has not been a deliberate government policy of cutting back on engineering numbers. However, it is an unsurprising consequence of government policy. In the period Birrell examines, to the end of 2004, universties were more lightly regulated than now. They received block grants for agreed minimum numbers of places, but were left with some discretion as to how to distribute those places between courses. As they get real cuts in government subsidies each year, universities can maintain their total numbers at lower cost by making up their quota through cheaper courses. In a more limited way, as specific permission is now required to shift places between ‘funding clusters’, this is still happening today – though I am not aware of a specific case involving engineering places.

Birrell’s solution to this problem is more Commonwealth-supported engineering places. If enough political pressure can be created, this would eventually alleviate likely future shortages of engineers. But if prevention is better than cure, what we really need is more far-reaching reform. At minimum, we need better medium-term analysis of the relationship between labour market needs and what universities are doing. Inevitably this will be approximate: there are too many variables to forecast with precision. But the information could guide governments, universities, employers and students. Personally, I would largely hand decisions as to student numbers over to the market, which could adjust supply according to likely demand, rather than adjust supply to arbitrary quotas. But even within the inherent constraints of a centrally controlled system, some planning would be better than what we have now.

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Written by Admin

January 5, 2006 at 10:42 am

Posted in Uncategorized

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