An investigation into the equity and efficiency of Australia's higher education system

This thesis examines the impact of changes in higher education policy in Australia on equity for students and efficiency in resource allocation. This involves measuring the impact of the 2005 budgetary changes in the Higher Education Contribution Scheme (HECS) on the Private Rate of Return (PRR) and Social Rate of Return (SRR) to higher education for both males and females across different occupations and for different qualifications. This thesis examines the proposition that the movement of Australia's higher education system towards a user pays model with price flexibility will deliver greater efficiency. It also considers the argument that students should pay a greater proportion of the cost of higher education as they are the direct beneficiaries. This thesis shows that the increase in HECS fees has coincided with a fall in the quality of university graduates and the demand for a university education by higher achieving and low income students. In addition, this study also found that not only is the SRR positive but is greater than both the real rate of return on Commonwealth Government bonds and Government Trading Enterprises. These findings suggest that there is an inefficient allocation of resources and a need for the Government to allocate relatively more funding to the discipline areas with high Social Rates of Return and graduate skills shortages. This thesis suggests ways to improve the equity and efficiency of Australia's higher education system. These policy recommendations aim to increase the quality of and opportunity for higher education in Australia.