Question

​​​​​​   The Australian Economy

1. Discuss the arguments FOR government spending on higher education (ie why it is appropriate that taxpayer funds should be spent on higher education for individuals).
2. Discuss the arguments AGAINST government spending on higher education (ie why spending on higher education should be private spending)

Answer 1

The government spending on education includes the expenditure on all educational levels, such as pre-primary, primary, secondary, college, university and technological and further education (TAFE). It excludes the spending on courses provided by non-educational institutions, such as the programs on vocational training of private businesses. Australian Government is committed to their system of a world-class higher education and planning to invest $17.7 billion in 2019 in the university sector.

The arguments in the favour of funding higher education are that raising the level of education will reduced future demands on social support programs and decrease the incarceration cost in future. The spill over benefits of higher education can be social (, enhanced political and social awareness, improved social cohesion and reduction in rates of crime), fiscal (increased tax revenue and reduced welfare spending) or capture wider indirect impacts on innovation, organisational learning and technology diffusion. Also the higher education creates more net benefits for the public budget. Thus the majority of people recognise that certain government regulation and funding is justified, especially given the significance of the sector for future prosperity in Australia. Without Government‑supported spending, it would result to equity and efficiency concerns, as the university sector would be difficult to access for poorer students who are unable to pay upfront

Government expenditure on higher education is like spending it on defence. Taxpayers suspect half of funds are wasted. The arguments against the funding of higher education are that the higher education is not like a standard product; and the universities would not always produce efficient outcomes for students. The balancing of graduates and demand in labor market is also important. Majority of the taxpayers do not go to university, thus excessive reliance on government funds can be considered as regressive