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Time for a debate on Higher Education

Posted on February 07, 2014 by Tom Healy

Tom Healy, Director NERI
Tom Healy, Director NERI

Investment – or the lack of it – has been a frequent theme in the debate about how economic recovery could be assisted through targeted, timely and beneficial interventions. Typically, mention of investment invokes images of men and women with yellow hats, cranes in the horizon and engineers surveying property. But, investment also includes the time, money and effort put into educating young people, caring for children, training workers as well as restoring people to health (the economists who coined the term ‘human capital’ also understood it as referring to health and not just education and skills). Economists refer to ‘human capital investment’ as a real form of investment with economic, social and personal benefit. This applies not only to education and training but also health where timely investment in health knowledge, healthy living and public healthcare services contribute to economic well-being and productivity.

Higher education is just one level of a large formal education sector. There is an extensive literature on the economic returns to investment in higher education which show significant benefits that flow to individuals and societies. The gains are not just in higher wages over the course of a lifetime but higher income tax flows and lower social transfers. The benefits are not just confined to individuals who are higher education graduates: societies benefit through greater levels of productivity, social cohesion and civic engagement.

In most OECD countries higher education absorbs between 1 and 2% of Gross Domestic Product (including the contribution of households and corporations). Four of the Scandinavian countries – Sweden, Finland, Norway and Denmark – have total expenditures in the 1.7-1.9% of GDP range. At 1.6% in 2010, Ireland is slightly above the EU average but well short of the leven in the USA (2.8%). The USA is seen as a world leader among others in higher education research and teaching. Refer to Education at a Glance

Recent data released by the Central Statistics Office show a very significant fall in the amount of public expenditure per student in higher education from 2006 up to 2012 (when inflation is factored in). By 2012, for the first time, public spending per student at third level was less than at second level. It is certainly welcome that primary and second level have been spared some of the worst ravages of fiscal austerity especially as teacher numbers have risen to meet additional pupil numbers (but not enough to prevent a modest increase in the pupil-teacher ratio or class size).  Not so at Third level where year-after-year cuts in spending on both the pay and non-pay side have accompanied an ever increasing number of students. 

Total Current Public Spending per Student by Level of Education (adjusted for inflation)

Education spending in Ireland

Source: Central Statistics office, Measuring Ireland's Progress, 2012

The Department of Education expects an increase of close to 20% from 168,000 full-time students in 2012 to around 200,000 in 2025 based on a ‘no policy change’ scenario in regards to entry from school, mature students and outside the state [ Projections of Demand for Full-Time Third Level Education

In the absence of additional funding for higher education it is difficult to see how it can meet future additional demand as well as compete effectively in international markets for students, staff and research (in that order!).

Now is the time for an open and honest debate on the following types of questions:

  • The future of higher education as Ireland seeks to position itself as a high-human capital economy at the cross-roads of an English speaking world and the European Union.
  • What level of national resources need to be devoted to higher education over the next two decades?;
  • How education, including higher education, is going to be funded from public / private sources; households / corporations / State; general taxation / social insurance / private contributions and fees ?
  • How higher education institutions need to be adapted to ‘get ahead of the curve’ in terms of teaching, learning and research excellence.

Change education and then you have changed everything else!

 

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