Government, Human Capital Formation and Higher Education

Abstract

AUSTRALIA'S 520 000 university students will each be charged in nominal terms about $300 more a year in tuition fees under changes to the Higher Education Contribut ion Scheme (HECS) announced by the Federal Government in the 1991/92 Budget. The government introduced HECS on Janu ary 1,1989, and its essence follows the recommendations of the Report of the Committee on Higher Education Funding (the Wran Committee Report), made public on May 5, 1988. Its terms of reference were drawn up in November 1987 by the Minister for Employment, Edu cation and Training, the Hon. J.S. Dawkins, and emphasised the desir ability of finding funding resources from the direct beneficiaries of higher education, in ways that gave due consideration to the social and educational consequences. With this background it seems timely to reassess the history of gov ernment intervention in higher education. Our purpose in this paper is to consider this intervention in the context of the historical process by which governments have sought to extend capital investment, both human and physical, for the purposes of Australia's economic and social development. Governments have long intervened in the economy to promote eco nomic activity and growth. The next section of this paper (see next page) examines the nature of this public investment and the historical course of its two facets, physical and hu man capital formation, with education being the principal component of the lat ter. This is not to say that the reason for state-funded education has been eco nomic growth alone. In the early 1970s, for instance, education was promoted by the government as an instrument for equality. However, the view that educa tion raises individual, and with it national, productivity has long been voiced, more Bruce Chapman is Director of the Centre for Economic Policy, Research School of Social Science, ANU. David Pope is a professor in the Division of Economics and Politics, Research School of Social Sciences, ANU.