Why restrict students to government funded university places? Let them pay if they want.
Year 12s have already lodged their university preferences with VTAC. Some may have opted for full-fee courses as a back-up plan if they don’t get into a government supported place.
But these fee-places are criticised by the Australian Labor Party. Indeed, the ALP has promised to abolish fee-places should they be elected to government.
Yet is such an action warranted? And would it improve access to university education?
To find the answer we need to understand how the current system works. The most important feature of the present system is that there are a limited number of government supported places, and universities can only accept the amount of students negotiated with the government. Also, governments—both ALP and Coalition—are unwilling and unable to increase the amount of students that universities can take on board because of financial constraints.
As Andrew Norton, a former advisor to retired federal higher education minister David Kemp, notes:
“You do not need... an ENTER 99, or anything like it, to be able to complete an arts/law degree at Monash University. But you do need an ENTER of 99 to have been ‘clearly in’ for a HECS place in 2005. The reason for this is simple. The number of HECS places in this course, and every other course, is limited. There are various ways we could ration HECS places, but Monash uses what is, in effect, an academic auction in which, instead of bidding with money, you bid with marks. People who did very well in year 12 win in this process.”
Even if governments were to drastically increase expenditure on higher education at the expense of all else, student demand is difficult to predict and having a centralised government doling out money cannot ensure everyone who is competent enough to complete a university course will get past the quota system.
So the high Commonwealth Supported Place entry scores you see are the result of a poorly designed system unable to cope with student demand.
This is where fee-places come in. What fee-places do is alleviate this problem by allowing universities to take in more students who, although intelligent, may have missed out by a few points. If we only had Commonwealth Supported Places to get into university with, there would in all likelihood be far fewer people going to university.
However, having a limited amount of full-fee places is not, in itself, a solution. What if we changed the rules of the game entirely? What if, instead of governments dictating financial arrangements to universities, universities were privatised and allowed to run like businesses—competing for fee-paying students? Experience with competition in other industries suggests fees would lower and quality would improve. With greater university autonomy and a complete removal of ‘red-tape’ in higher education, Australian universities will hone their education product in response to student demand.
We must allow universities to expand supply in response to demand. Students should be able to pay for undertaking a degree -- perhaps through a bank loan -- rather than being dependent on a limited number of government funded places.
Originally published in the 2005 edition of 'The Witherbarian'.
Chris Leithner’s book, The Evil Princes of Martin Place: The Reserve Bank of Australia, the Global Financial Crisis and the Threat to Australians’ Liberty and Prosperity not only has a long title, but is also extremely lengthy in number of pages. At 654 pages, a casual reader interested in understanding the recent financial crisis might wonder whether it’s worth buying Leithner’s hefty work. My answer is a resounding ‘yes’. Every Australian should read this book to understand how the government’s involvement in money and banking has diminished their living standards.
Leithner’s goal is simple: to challenge conventional wisdom in the field of monetary economics. Along the way, he also demolishes a variety of other fallacies surrounding the State and its interventions. Harvard-educated academics – the same people who did not foresee the crisis – have blamed the crisis on capitalism and greed, but Leithner is here to defend the free-market perspective against the Keynesian onslaught.
According to Leithner, government intervention, not market failure, is the underlying cause of recessions and depressions. Government’s interventions are manifested through such measures as fractional reserve banking (FRB), legal tender laws, and central banking. Leithner argues that these forms of meddling in monetary affairs create economic turmoil. Though few people discuss the merits or otherwise of FRB and legal tender laws, central banking is already prominent in mainstream debates.
Central banks are a relatively recent phenomenon. For many years, Australians prospered without a central bank in an environment where private banks issued paper currencies. The pre-1901 era in Australia was a time of free banking, i.e. a situation where government gave no special privileges to banks. ‘Australian banking was relatively free for almost a century from the establishment of the first banks until well into the twentieth,’ explains Kevin Dowd in Laissez Faire Banking, ‘and fully fledged central banking arrived only with the establishment of the Reserve Bank of Australia at the comparatively late date of 1959’.
Nowadays, central bankers are highly praised and government intervention is taken for granted. Leithner questions this naïve faith:
In Australia, economists, investors and journalists babble endlessly about the level at which the Reserve Bank should “set” the “official interest rate”…Alas, almost nobody bothers to ask why it should be set, or whether it actually can be fixed…[F]or reasons rarely discussed and never justified, virtually nobody baulks at the notion that a short-term money market rate of interest must be “set” by a committee of price-fixers and central planners in Martin Place, Sydney.
The media and mainstream academics have done their best to suppress the true causes of the recession. But finally, the truth about the financial crisis is here.
In his latest book, The Evil Princes of Martin Place, investor Chris Leithner puts forward a free-market view of the economic crisis in 2008 as a counter to critics who have blamed capitalism and supported Karl Marx's notion of central banking.
Dr. Leithner's argument is that although the Reserve Bank of Australia masquerades as a "scientific" and independent organization, it is the underlying cause of the financial crisis.
Dr. Leithner is firmly within the Austrian School of Economics, which boasts luminaries such as Nobel laureate F.A. Hayek and respected economist Ludwig von Mises.
The book can be purchased through Amazon.com by clicking here. Download a free chapter. Read my review.
Medical doctor Wendell Rosevear, who works on the front-lines of the War on Drugs, explains the hypocrisy of state-sanctioned strip searches:
When individuals continue to use drugs in prisons, the system feels loss of power and face and with ‘mud on their face’ [and] wants to justify ‘coming down harder’ with strategies such as locking individuals in indefinite solitary confinement after overdoses or drug use and justifying forced internal body cavity searches, strip searches and observed urine tests which make individuals feel degraded and ‘raped’. To deny someone a choice in relation to protecting their body is rape even if you use the power of the state to justify it. The ‘Tough on Drugs’ strategy justifies rape, the very crime our society imprisons individuals for committing. To use the same strategies that cause the problem is to discredit oneself. Strip and Internal Body Cavity searches can happen to ordinary citizens coming through an airport as well as people in prison.
I never thought about invasive searches this way before, but on reflection, it makes a lot of sense. Especially since the courts have always held that rape, in criminal law, does not require penetration of the penis but can also include insertion of any other object into the vagina or anus. In its futile quest to protect people from their own harmful vices, the government is encouraging its agents to do despicable things.
Invasive searches are one way of being raped. Another is to arrest drug users and send them to prison - where prisoners and guards have been known to sexually abuse. Needless to say, this is ineffective in helping addicts. Would we treat alcoholics the same? Would you treat family members the same if they had a drug problem? What a shame that when the government does something, otherwise decent people think it’s acceptable.
Many think that capitalism thrives on conquest, and sincerely believe that capitalism causes wars. This is false.
In purely economic terms, there is no need to go to war for oil (or any other resource).
The reason is simple, and it has to do with the price system. For more, I recommend reading “Do We Need to Go to War for Oil?”, by David Henderson.
In yet another example of the unintended consequences of foreign aid, it was reported that Australia may be paying troops who torture.
According to the Associated Press: "Australia has sent an official to the Indonesian province of Maluku to investigate claims that Indonesia's elite counter-terrorism unit, Detachment 88, which receives millions of dollars from Australia each year, brutalised a group of separatists last month, repeatedly beating them in detention."
Regardless of whether these claims are true, the fact that Australia is sponsoring an organization that actively cracks down on civil liberties is a cause for concern.
Australia's own intelligence agency, ASIO, was the source of controversy a few years ago when it was implicated in the mistreatment of detainee Mamdouh Habib.
We need to stop sending money overseas to organizations that are opposed to the values of ordinary Australians.
It's time to end all foreign aid because much of it is misdirected into illegitimate causes, despite the good intentions of those who send taxpayer dollars abroad.
Australian forces invaded Afghanistan in 2001, and entered Iraq in 2003. Although the Rudd Government has withdrawn troops from Iraq, our involvement in Afghanistan is continuing without end. It has become a perpetual war.
Consider this: Australia’s military involvement in World War I lasted four years and World War II was over and done within seven years. The danger posed by terrorism is miniscule compared to the threat from a Hitler or Mussolini, so why has the war in Afghanistan lasted for a longer period of time?
It is time to re-think our involvement.
First of all, the war is very expensive. Taxpayers have been put on the hook for billions of dollars. Imagine if that money had instead been spent at home. If the money must be spent, I’d rather it be spent helping re-build Queensland after the recent flood damage than bombing villages in Afghanistan.
Second, whatever the initial rationale for invading, the Afghan war can no longer be justified. Australia followed the US into Afghanistan to overthrow the Taliban and hunt down Osama bin Laden, the man we are told is behind the attacks on September 11. But the best intelligence no longer places bin Laden in Afghanistan, and many believe he is harbouring in Pakistan.
Here’s what should happen next time there’s talk of a major war: it should be a legal requirement for the Prime Minister to seek approval from Parliament before -- or very soon after -- deploying troops abroad. There needs to be a formal binding process, with failure to comply declared unlawful by the courts upon review. That’s the only way we’re going to see some semblance of democratic accountability in foreign affairs.
The Greens have introduced proposed legislation aiming to do precisely this. Unfortunately, the major parties have quashed their attempts at reform.
What if we lived in a world where Parliament, and not the government of the day, possessed the power to commit troops overseas? How would things be different?
One difference would be that a secretive group of ministers – the Cabinet – could not decide upon questions shielded from public scrutiny. With Iraq, the Howard Government would have had to justify the case for war to Parliament’s satisfaction. As it so happens, the Senate voted against going into Iraq. Had the Greens been successful in passing their proposed legislation, Australians would have been spared the terrible costs of that conflict.
Several objections have been raised by opponents of reform.
Some suggest that the Greens’ bill doesn't define terms with sufficient precision. Yet this objection is hardly insurmountable, and can be resolved through consultation with stakeholders. If a compromise is struck between defence chiefs, government departments and other interested parties, then it is possible to devise a workable piece of legislation.
Second, it's said that the bill ignores problems associated with the Executive releasing classified information to Parliament. This is a furphy. Most advocates of reform have never called for the release of classified information. The judgement about whether to wage war against a particular country does not require detailed operational information. It is fundamentally a strategic choice made at a high and abstract level of policy.
In the case of Iraq the Australian Government informed the public that Saddam Hussein was a threat to national security and the public was asked to place trust in intelligence reports they had no way to verify the accuracy of. The Greens are not proposing to do away with such secrecy.
Third, it's argued that war powers reform could hamper the military’s ability to quickly deploy combat personnel. But why is speed considered to be an unambiguously good thing? Parliament’s slow deliberation can be viewed not a liability, but as a strength because it leads to more considered decision-making.
Democracy is far from perfect. Even wars that have been approved by Parliament may end up being unjust. Transferring the power to make war from the Executive to the Parliament would not be a cure-all, but it would at least reduce the ability of a secretive group to thrust Australia into its most vital moment. Parliament should declare war, the Executive should fight and win it, and the nation should then exit the conflict as soon as possible.
A longer version of this article appeared in the Autumn 2011 edition of Policy magazine.
Kim Beazley provides ample evidence why he will probably never become prime minister.
What's "fair" to him are the award rates that effectively price low-skilled migrant workers out of the job market.
The unions love minimum wages because they prevent other workers from taking the jobs of their members. It has nothing to do with helping the poor, because the poor can be helped through welfare payments.
If Labor denies the evidence in favour of higher minimum wages causing increased unemployment, then it needs a crash course in basic economics.
Mr Beazley prides himself on standing up to bullies. Why not stand up to the unions for a change?
(Letter to the editor, The Age, 16 September 2006)
The Reserve Bank of Australia has been in the news recently, thanks to a corruption scandal splashed across the front pages of newspapers throughout the country. According to reports, two currency firms overseen by the Reserve Bank funnelled bribes to government officials in Indonesia, Malaysia and Vietnam, to win banknote deals. Securency and Note Printing Australia are partly and wholly owned (respectively) by the RBA, and many prominent political figures sat on the boards of the two companies.
This scandal, however, is just the tip of the iceberg. Other aspects of the RBA are equally shady, but are rarely exposed to public scrutiny. A new book by investor Chris Leithner, The Evil Princes of Martin Place: The Reserve Bank of Australia, the Global Financial Crisis and the Threat to Australians’ Liberty and Prosperity, documents in detail the nefarious schemes of Australia’s central bank.
Leithner is an adherent of the Austrian School of Economics, which argues that central banks are behind the boom-bust cycle that characterises modern economies. They are, in other words, the culprit responsible for recessions and depressions. By controlling the overnight cash rate (the rate at which banks borrow from the central bank), the Reserve Bank is able to control the money supply and thereby influence interest rates. This sets in motion a process that influences the rate of interest on housing loans, deposits and business loans.
When interest rates are kept artificially low, distortions in the structure of production, excessive borrowing and speculation are the result. The central bank’s loose money policies mislead investors into starting projects that appear profitable, but in hindsight are not. The crash comes because investors foolishly think that the boom will last, and leverage themselves too highly, as they were not prudent in their accumulation of debt.
This, in a nutshell, is the Austrian theory of the business cycle. According to this view, economic downturns are the price paid for prior (artificial) credit expansion.
We find evidence of this in the United States, when the Chairman of the Federal Reserve – Alan Greenspan – kept the federal funds rate at an absurdly low 1% from June 2003 till June 2004. Many attribute the resulting housing bubble to Greenspan’s suppression of rates.
In Australia, Leithner shows that the RBA also started an artificial boom. Leithner shows that from 1991-2007, the money supply rose rapidly. By Leithner’s reckoning, inflation (the M1 measure) increased by 404%, at an annualised compound rate of 10.2%. As in the US, much of the credit created by the Reserve Bank was pumped into the housing market, creating an asset price bubble. Stock prices were inflated.
For Leithner, however, the bust has not yet arrived – hence the reason why the Australian recession was not as severe as its American counterpart. Australian house prices remain overvalued and have not dropped to more realistic levels.
The role played by central banks in fostering monetary instability leads Leithner to question whether we need a central bank at all. It’s not a crazy question! For much of Australia’s history, there was no central bank. Private banks issued currencies and there was little government regulation of the banking sector.
In an environment of global financial instability that many argue is caused by central banking, it is worth asking serious questions about these institutions. Most central banks are highly secretive about their activities. For instance, the Reserve Bank did not even publish minutes of board meetings until December 2007.
There is a fundamental democratic principle involved here. Why should central banks, which are staffed by unelected bureaucrats, wield such a high level of discretionary power? Shouldn’t there be more democratic oversight of these money mandarins who have so much influence over our living standards?
We have seen what happens when central banks are left unchecked. In Zimbabwe, for example, hyperinflation has crippled the purchasing power of the currency. Prices in the African country rise at an extremely rapid pace, over 50% per month. Nobody is suggesting that a catastrophe of that nature is likely to befall Australia. But Zimbabwe is a reminder of the awesome power that central bankers wield, and should prompt us to improve accountability and search for less discretionary ways to manage money and banking.
Originally published in Indian Link (September 2011).
Shortly after the US House of Representatives passed its latest iteration of health care reform, President Donald Trump said that Australia has "better health care than we do."
White House spokesperson Sarah Sanders clarified that Trump did not intend to suggest that he favors shifting to an Australian-style system, but was merely complimenting an ally. As Sanders explained, "[w]hat works in Australia may not work in the United States."
The problem is that the Republican health care bill passed by the House, which the president enthusiastically supported, would be a step toward a central-payer health system.
The System Down Under
As Senator Rand Paul pointed out in a recent oped, the new bill would divert subsidies toward already wealthy insurance companies. “Federal subsidies given to insurance companies is crony capitalism at its worst and will inevitably lead to bigger and bigger taxpayer bailouts until government creeps into every nook and cranny of health care,” he wrote.
In these respects, the bill is actually a step toward the Australian ‘universal’ health system, which is a mixture of public and private hospitals, with public hospitals providing “free” or subsidised primary and specialist care, and the private system operating alongside for those able to afford insurance. The Australian government also subsidizes insurance companies to the tune of billions through an individual rebate for health insurance.
Even with a government-controlled system paid for through hefty taxes, however, about 50 percent of Australians feel the need to shell out extra for private hospital insurance, suggesting that the public system has downsides.
In Australia’s government-managed system, for example, you can’t choose your doctor – you have to take the first one allocated to you, even though you may prefer someone else. You can’t choose the time and place of treatment, and there is little flexibility since appointments are generally based on the hospital’s schedule with little regard to your own.
Because governments necessarily have limited resources, not every health need can be funded. For example, some pregnant women are discharged too early after giving birth because the hospital needs to put someone else on their bed.
Consider, also, the plight of those seeking elective surgery. These patients can suffer on waiting lists for months (with two percent of patients waiting for over a year) before they are able to get much-needed medical treatment. The median wait time in 2015 was 37 days, even though many ‘elective’ procedures are pretty important – like gallstone removal, heart bypass surgery, neurosurgery and knee, hip, and shoulder replacements.
Expensive and Insufficient
My own experience is illustrative. In 2013, I was losing weight and discharging blood. Since my illness was categorised by a bureaucrat as not life threatening, I was unable to get an immediate appointment with a public hospital.
I was placed in Category 2, meaning that I would have to wait up to 90 days. If I had carried private health insurance at the time, I would have been scheduled for a colonoscopy within days and could have been diagnosed with ulcerative colitis sooner. Conditions like this one can be serious if they go untreated for several weeks, and situations like mine are common.
Government health care will do just barely enough to keep you alive – it won't help improve general quality of life. If you don’t ration resources through the market system, it ends up being rationed through arbitrary rules set by lawmakers.
Socialized health care in Australia has driven costs up, too. Each year on April 1, the insurance companies increase premiums above the rate of inflation. Some policies can increase by hundreds of dollars without any increase in the level of benefits paid out.
Meanwhile, cost of living pressures for consumers continue to mount – most notably due to a tax increase in the Medicare Levy Surcharge. Barring massive increases in immigration to counteract the effects of an aging population entering retirement and dropping out of the tax revenue pool, there are likely to be further tax increases.
Not that being able to afford private health insurance is a panacea. Health care costs are so high in Australia, that even having relatively comprehensive insurance does not guarantee there won’t be significant out-of-pocket expenses after a stay in the hospital. This is because of the gap between what insurance companies pay, and what some doctors charge.
Wouldn’t it be better if there were lower taxes accompanied by a removal of subsidized health care? It only makes sense for there to be transition measures to aid the poor as we shift away from reliance on government. In the long run, the benefits of holistic care, quicker surgery times, and more patient choice will outweigh the short-term challenges.
This is Not What the US Needs
Australia is not a good model for American health care. While public hospitals do provide almost-entirely-free treatment, this needs to be weighed against the quality of life disadvantages that come with socialized treatment.
Price inflation and a public debt of $400 billion have been the result of socialized medicine in America’s ally down under. What makes Republicans think the outcome will be any different in the US?
[Originally published at Foundation for Economic Education]