STEM the wasteful write-offs - Grattan Institute

STEM the wasteful write-offs

Labor plans to write off the HELP debts of STEM graduates, but they neglect to provide any evidence that these enrolments even require further encouragement. The policy stands to be more wasteful and risky than…

20.05.2015 News

Published by The Australian, Wednesday 20 May

Labor’s plan to write off the HELP debts of science, engineering and technology graduates quickly turned into a debate about its cost. But the more important question is whether enrolments in these fields need encouraging at all. If not, the policy is too expensive at any price.

Labor’s policy statement relies on reports from Chief Scientist Ian Chubb and the Australian Industry Group to justify its promotion of science, technology, engineering and maths courses.

But these reports sidestep the issue of outcomes for STEM graduates we already have. Far from being urgently needed by employers, new science graduates have long had below average rates of full-time employment.

While employment levels improve across time, compared with other graduates a smaller proportion of people with science degrees work in professional or managerial jobs or say their qualification is neces­sary or relevant for their job.

Working under a similar misapprehension about the need for science graduates, when Labor was last in power it cut science student contributions and introduced a more limited HELP debt write-off scheme.

Domestic undergraduate science enrolments went up by 35 per cent between 2008 and 2013. Preliminary 2014 data suggests another big increase, despite student contributions being put back up again in 2013.

Unfortunately, the never-great employment outlook for science graduates is now very bad. They have been hard hit by the downturn in graduate employment. This year, less than half of graduates in the life sci­ences who were looking for full-time work had found it four months after completing their courses. This is 20 percentage points below the graduate population as a whole.

Graduates in information technology and engineering do better than science graduates, although they too are finding jobs are scarcer than a few years ago.

Where there are genuine skills shortages, we have better ways of responding than HELP debt write-offs. For the most part, the demand-driven system of funding bachelor degree ­places achieves this without further action from government. In a report I co-authored on the demand-driven system, we examined how it responded to skills shortages. In most cases, demand for and the supply of places increased in courses related to occupations in shortage, which included engineering disciplines from the STEM fields.

Labor’s HELP write-offs are aimed at specific under-represented groups such as women, and students from indigenous, regional and poorer backgrounds, as well as aggregate demand.

But they offer no evidence that short or medium-term economic incentives are a key factor in course choice.

Students often have several interests, making them open to persuasion from within their list of possible choices. There is a role for government to promote specific fields of education that might otherwise be neglected. But these activities should be based on analysis of likely employment prospects.

As it stands, Labor’s policy is at best wasteful in delivering windfall gains to students who would take STEM degrees anyway.

At worst, it will encourage more students to study science and put their future employment at greater risk.