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18 November 2008

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Future demand for a higher education


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d is unable to make any warranties in relation to the information contained herein. Access Economics Pty Limited, its employees and agents di

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Future demand for higher education

TABLE OF CONTENTS

Executive summary...................................................................................................................

1. Introduction......................................................................................................................

1.1 Outline of the task............................................................

1.2 Key definitions and data sources.......................................

2. Trends in higher education demand.................................................................................

2.1 Recent trends in higher education participation.................

2.2 Applications, offers and acceptances.................................

2.3 Trends by field of education..............................................

2.4 Diplomas and advanced diplomas......................................

2.5 Age-based participation rates...........................................

3. Factors affecting student demand....................................................................................

3.1 Characteristics of those who undertake higher education...

3.2 Participation of recent migrants........................................

3.3 Fee structures..................................................................

3.4 State of the labour market................................................

3.5 Sectoral composition of the labour market.........................

3.6 Pathways to skill development..........................................

4. Demographic projections.................................................................................................

4.1 Outlook for Australias population.....................................

4.2 Population trends for those aged 18-22.............................

4.3 Demographic projections by region...................................

5. Projecting student demand..............................................................................................

5.1 The forecast equation.......................................................

5.2 Projected age-based participation rates............................

5.3 Projections for non-demographic variables........................

5.4 Overall student demand for higher education....................

5.5 Demand for higher education by region.............................

6. Labour market demand for higher education skills...........................................................

6.1 Employment growth by industry/occupation.......................

6.2 Skill shortages by industry/occupation..............................

6.3 New migrants role in meeting skill needs..........................

6.4 Skill qualification implications of labour market demand....


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Future demand for highereducation

7. Projected labour force replacement rates.........................................................................

7.1 Projected employment growth cycle..................................

7.2 Projected labour force participation..................................

7.3 Projected net employment growth by industry andoccupation.......................................................................

7.4 Projected replacement demand.........................................

8. Projected labour market demand for higher education.....................................................

8.1 Projected qualification profile...........................................

8.2 Projected demand to cover for net employment growth......

8.3 Projected demand to cover for retirements........................

9. Integrating student demand and labour market demand..................................................

9.1 Assessing relative demand...............................................

9.2 Factors which will assist to align demand..........................10. Sensitivity analysis alternate scenarios.........................................................................

10.1Student demand driven solely by demographic trends........

10.2Labour market demand with no upskilling over time..........

10.3Labour market demand with a targeted skills profile..........

10.4Labour market demand with a constant labour forceparticipation rate.............................................................

10.5Student demand modified for changes in completion rates.

References................................................................................................................................

Appendix A Details on demographic projections....................................................................Appendix B Net employment growth methodology and detail..............................................

Appendix C Gross replacement rates methodology and detail............................................

Appendix D Detailed projections for labour market demand by qualification..........................

CHARTS

Chart 1: Projected student demand (supply) less projected implied labour marketdemand (demand)

Chart 2: Higher education participation rates by gender, domestic students

Chart 3: Female students as a share of total domestic students, 1988 - 2007

Chart 4: Domestic students by age, 2002 and 2007


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Chart 5: Domestic students by level of qualification, 1988 - 2007

Chart 6: Domestic undergraduate students by age, 2002 and 2007

Chart 7: Domestic postgraduate students by age, 2002 and 2007

Chart 8: Overseas share of higher education students in Australia, 1988 - 2007

Chart 9: Total undergraduate applicants, 2001 - 2008Chart 10: Eligible applicants and eligible applicants receiving an offer, 2001 -

2008

Chart 11: Offer rate by age group, 2001 - 2008

Chart 12: Eligible applicants, offers and acceptances, 2001 - 2008

Chart 13: Acceptance rate by age group, 2001 - 2008

Chart 14: Domestic students by field of education, 2002 and 2007

Chart 15: Share of eligible undergraduate applicants by field, 2001 and 2008

Chart 16: Offer rate by field of education, 2001 and 2008

Chart 17: Acceptance rate by field of education, 2001 and 2008

Chart 18: Average contact hours by gender, 2002 - 2007

Chart 19: Total diploma and advanced diploma contact hours by gender, 2002 -2007

Chart 20: Diploma and advanced diploma contact hours, 2002 - 2007

Chart 21: Share of diploma and advanced diploma students by field, 2002 and2007

Chart 22: Share of diploma and advanced diploma students by State, 2002 and2007

Chart 23: Share of diploma and advanced diploma students by age, 2002 and2007

Chart 24: Actual and implied higher education students based on 2002participation

Chart 25: Real incomes over time for Australias poorest households

Chart 26: Age profile of migrant intake and Australian population, 2006-07

Chart 27: Employment growth and labour force participation, 1988 - 2008

Chart 28: Employment growth by occupation type, 1988 - 2008

Chart 29: Apprenticeship commencements vs higher education applications,total, 2001 - 2007

Chart 30: Apprenticeship commencements (traditional trades) vs highereducation applications, total

Chart 31: Apprenticeship commencements (traditional trades) vs highereducation applications, males

Chart 32: Wage growth by occupation type, 1988 - 2008

Chart 33: Forecast Australian population by age group older

Chart 34: Forecast Australian population by age group - younger

Chart 35: Population pyramid for Australia


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Chart 36: Annual growth in 18-22 year olds

Chart 37: 18-22 year olds as a share of national population

Chart 38: State trends in 18-22 year old population (2008 - 2038)

Chart 39: Demographic projections by capital city, 2008 2018Chart 40: Projected number of students, 2008 and 2018

Chart 41: Employment growth rates by occupation

Chart 42: Employment growth rates by industry

Chart 43: Skilled vacancies for trades and professionals

Chart 44: Occupational profile of recent migrants

Chart 45: Occupational profile of migrants and Australian population, 2006-07

Chart 46: Projected employment growth, Australia

Chart 47: Age-specific participation rates males

Chart 48: Age-specific participation rates females

Chart 49: Projected labour force participation rate, Australia

Chart 50: Projected five-year average growth rate by occupation

Chart 51: Projected five-year average growth rate by industry

Chart 52: Projected additional number of qualifications held per annum basedon labour market demand

TABLES

Table 1: Higher education participation rates by State, domestic students

Table 2: Growth in total applicants by State, change on year earlier, 2002 - 2008

Table 3: Offer rate by State

Table 4: Acceptance rate by State

Table 5: Age-based higher education participation rates

Table 6: Age-based diploma and advanced diploma participation rates

Table 7: Age-based participation rates in higher education anddiploma/advanced diploma

Table 8: Pathways taken by those who completed Year 12 in 2001, LSAY

Table 9: Activities of Victorians in year following their final school yearTable 10: Activities of Victorians finishing school in 2003 over time

Table 11: Demographic projections by labour force dissemination region,2008 - 2038

Table 12: Age-based participation rates by qualification, Australia

Table 13: Projected Year 12 completion rates


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Table 14: Projected unemployment rates by State

Table 15: Student demand projections for postgraduate courses, 2008 - 2018

Table 16: Student demand projections for undergraduate courses, 2008 - 2018

Table 17: Student demand projections for advanced diploma courses, 2008 -

2018Table 18: Student demand projections for diploma courses, 2008 - 2018

Table 19: Student demand by labour force dissemination region, 2008 - 2018

Table 20: Contribution to ten-year average growth by occupation

Table 21: Contribution to ten-year average growth by industry

Table 22: Postgraduate qualification share of employment by industry andoccupation, estimate for 2008

Table 23: Undergraduate qualification share of employment by industry andoccupation, estimate for 2008

Table 24: Diploma/advanced diploma qualification share of employment by

industry and occupation, estimate for 2008Table 25: Employment by occupation growth rates, 2008 - 2018

Table 26: Employment by industry growth rates, 2008 - 2018

Table 27: Retirement rates by occupation, 2008 - 2018

Table 28: Turnover by occupation, 2008 - 2018

Table 29: Gross replacement rates by occupation, 2008 - 2018

Table 30: Postgraduate qualification share of employment by industry andoccupation, projection for 2018

Table 31: Undergraduate qualification share of employment by industry andoccupation, estimate for 2018

Table 32: Labour market demand for postgraduate qualifications by occupationTable 33: Persons employed with postgraduate qualifications by field of

education

Table 34: Labour market demand for undergraduate qualifications by occupation

Table 35: Persons employed with undergraduate qualifications by field ofeducation

Table 36: Labour market demand for diploma qualifications by occupation

Table 37: Persons employed with diploma qualifications by field of education

Table 38: Retirees with postgraduate qualifications by occupation

Table 39: Retirees with undergraduate qualifications by occupation

Table 40: Retirees with diploma qualifications by occupationTable 41: Total retirees with a qualification by occupation

Table 42: Projected student demand and implied labour market demand forqualifications

Table 43: Projected supply-demand balance with supply driven solely bydemographic trends


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Table 44: Projected supply-demand balance with demand driven solely byemployment trends

Table 45: Postgraduate qualification share of employment by industry and

occupation, projection for 2018, targeted skills scenarioTable 46: Undergraduate qualification share of employment by industry andoccupation, estimate for 2018, targeted skills scenario

Table 47: Projected supply-demand balance with demand based on targetedskills profile

Table 48: Projected supply-demand balance with demand regulated by aconstant labour force participation rate

Table 49: Projected supply-demand balance with supply modified by targetcompletion rates

Table 50: Employment by detailed industry growth rates, 2008 - 2018

Table 51: Employment by detailed occupation growth rates, 2008 - 2018

Table 52: Retirement rates by detailed occupation, 2008 - 2018

Table 53: Turnover by detailed occupation, 2008 - 2018

Table 54: Gross replacement rates by detailed occupation, 2008 - 2018

Table 55: Persons employed with postgraduate qualifications by occupation,2008 - 2018

Table 56: Persons employed with postgraduate qualifications by industry,2008 - 2018

Table 57: Persons employed with undergraduate qualifications by occupation,2008 - 2018

Table 58: Persons employed with undergraduate qualifications by industry,

2008 - 2018Table 59: Persons employed with diploma qualifications by occupation, 2008 -

2018

Table 60: Persons employed with diploma qualifications by industry, 2008 - 2018


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GLOSSARY OF ACRONYMS

ABS Australian Bureau of Statistics

AEM Access Economics Macro (model)

ANZSCO Australian and New Zealand Standard Classification of Occupations

ANZSIC Australian and New Zealand Standard Industrial Classification

ASCO Australian Standard Classification of Occupations

CURF Confidentialised Unit Record File

DEEWR Department of Education, Employment and Workplace Relations

HECS Higher Education Contribution Scheme

IT Information technology

LSAY Longitudinal Survey of Australian Youth

NCVER National Centre for Vocational Education Research

NESB Non English-speaking background

TES Tertiary Entrance ScoreVET Vocational education and training


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EXECUTIVE SUMMARY

The Review of Australian Higher Education is examining the future direction of the

higher education sector, its fitness for purpose in meeting the needs of the Australiancommunity and economy, and options for ongoing reform. In this report, AccessEconomics assesses the expected quantum and nature of demand for highereducation over the next decade by prospective students and industry.

Trends in higher education demand

In 2007, there were nearly 757,000 domestic students undertaking higher education inAustralia. Of these, more than 75% were at the undergraduate level and almost 60%were women (up from less than 52% in 1988). Students studying a course classifiedunder the society and culture field (including law, arts and social science) comprisedthe largest share.

While student numbers have grown over recent years, the rate of growth has becomemore modest over time. The higher education system overall saw an average annualincrease in domestic students of 1.7% between 2002 and 2007, compared to averageannual growth of 3.7% through the 1990s. Demand for undergraduate universityplaces has been moderating, with the number of eligible applicants falling steadily(particularly in Western Australia) after a peak in 2003. The supply of universityplaces has increased in recent years as demand has fallen away, resulting in a notableincrease in the offer rate to applicants.

Since 2002, domestic student numbers have been lower than would otherwise beimplied by population growth. The difference between actual and implied studentnumbers suggests that, had higher education age-based participation rates remainedat their 2002 levels, an additional 13,500 students (or an additional 2% of students)would have been attending a higher education institution in 2007.

The number of diploma and advanced diploma students across Australia has beendeclining steadily over recent years. Although offset to some extent by an increase inaverage student contact hours, in terms of total student contact hours the delivery ofdiploma education has remained relatively constant over the past six years while thedelivery of advanced diploma education has contracted. Both of these forms ofeducation have lagged behind population growth, with males in particular showing atrend to move away from such courses.

Factors affecting student demand

While demographics are clearly important in analysing demand for higher education, arange of other factors also play a role. A number of Australian studies have shownthat students from lower socio-economic backgrounds tend to have lowerparticipation rates. When considered as a group, those from non-English speakingbackgrounds have a higher propensity to participate in higher education, and theyounger age profile of recent migrants should help to push up student numbers overthe next decade.

The strength of the labour market over recent years appears to have tempted some

potential students away from undertaking higher education. Employment growth hasaveraged 2.5% per annum over the past five years, compared with 1.9% per annumover the prior decade. There has also been an improvement in wages growth, which

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improves the return to working rather than studying. The strong jobs growth inoccupations linked to trades and related skills has seen a strong lift in apprenticeshipcommencements at the same time as declining interest in higher education frommales.

An analysis of data from the Longitudinal Survey of Australian Youth and the VictorianOn Trackdata shows a variety of pathways are undertaken towards higher education.The most common for Year 12 completers is the traditional post-school universitypathway, with nearly 45% commencing university immediately post-school (althoughone-third of that group only studied at university for one or two years at that time). Bylocality, a much higher share of those from a non-metropolitan location directly enterthe labour force after completing school.

Demographic trends

The sharp decline in the number of children born in Australia in the 1970s has flowedthrough to significantly slower growth in student aged population relative to the totalpopulation. The rate of population growth for the 18-22 year old age cohort, animportant age group for higher education, has slowed since the start of the decade.Over the next five years, population growth for this age cohort is expected to bearound the national average for all age groups. However, beyond that period,population growth trends are likely to differ notably. Indeed, this cohort may seevirtually no increase in population between around 2015 and 2022.

While population growth is expected to be seen across almost all regions (at thelabour force dissemination regional level) over the next decade, 23 regional areas areexpected to record a decline in their 15-24 year old population. Many of the regionsoutside capital cities show a decline, but there is also a decline expected in several

areas within capital cities, including for Hobart and Canberra as a whole. Thesedemographic trends are likely to be an important factor over time in the level ofapplications received by particular institutions.

Projections of student demand

Our forecasts of student demand are driven by projections of the number of people ineach relevant age cohort, a set of higher education participation rates (based on ratesobserved in 2007), and a set of non-demographic variables. While demographictrends are at the heart of the projections, overall student demand is expected to growat a faster rate over the next decade than demographic movements would otherwisesuggest. This reflects an expected increase in Year 12 retention rates over time

(representing the trend move towards a higher skill economy), a related increase inreal wages over time, and a continuing margin in wages growth favouring highereducation intensive occupations.

The number of postgraduate students is projected to increase by an average of 1.4%per annum over the next decade, compared with 1.1% per annum for undergraduatestudents, and 1.2% per annum for advanced diploma students and diploma students.

Labour market trends

Over time, employment growth by broad occupational group has traditionally favouredthe higher skill groups (occupations classified as managers and administrators,

professionals, and associate professionals). Employment growth in theseoccupations has also tended to be less cyclical, and these workforces have the

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highest propensity to hold university-level qualifications (both undergraduate andpostgraduate).

However, recent years have seen shifts in the composition of labour demand, with asurge in demand for trades and related skills. This has had an influence on student

demand for higher education, tempting people into the job market immediately post-school where higher education qualifications are not required. That movement hashelped to reduce the skill shortage in trades-related areas, while the significant lift inAustralias migration program (particularly in the skilled stream) has been important instemming skill shortages in higher skill occupations.

Labour market projections

Looking forward, overall employment growth over the next decade (an average of1.6% per annum) will be weaker that it has been over recent years. In the short termthis will reflect significant fallout from the current global financial crisis which will seelabour demand slow notably. However, we do expect labour demand growth to pickup again from 2010 and continue to be influenced by a business cycle over time.

Also important will be a decline in the overall labour force participation rate over thesecond half of the next decade. The huge shift of people into higher age bracketsmeans that population-wide labour force participation will fall. The 60-year olds of thefuture may be more likely to work than 60-year olds of the past, but they will not bemore likely to work at 60 than they were at 20-50.

The moderation in employment growth is expected to be felt across mostoccupations, with managers and administrators expected to show the fastest rate ofemployment growth of the broad occupational groups (though still well down onrecent growth rates for this group). By industry, mining is expected to show thestrongest jobs growth over the next five years, while health and community servicesand property and business services are expected to deliver a significant proportion ofthe new jobs created over time.

Implied labour market demand for qualifications

The labour market demand for people with qualifications is expected to be strongerthan overall employment growth over the next decade. Projected growth for peoplewith postgraduate qualifications as their highest attainment is an average of 3.6% perannum, for undergraduates the average is 2.9% per annum, and for diplomaqualifications 1.8% per annum. That compares with an average for overall

employment growth of 1.6% per annum.

This result is driven in part by the current qualification profile and expected growth byindustry and occupation. Those occupations where a higher share of the workforcehas qualifications tend to be the faster growing occupations notably managers andadministrators and professionals.

The result is also driven by a continuation of the trend towards skill deepening overtime. In order to deliver productivity gains over time, the share of the workforce withqualifications is expected to continue rising over time, consistent with the experienceover recent years. The projections allow for an increase in the share of the workforcewith postgraduate qualifications as their highest qualification from 6.8% in 2008 to

8.3% in 2018, and an increase in the share of the workforce with undergraduatequalifications as their highest qualification from 17.2% in 2008 to 19.6% in 2018.

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By 2018, there are expected to be 1,056,000 people employed with a postgraduatequalification as their highest attainment, 2,476,000 with an undergraduatequalification, and 1,191,000 with a diploma qualification.

Cumulatively over the next decade (and noting that an additional postgraduate

qualification also implies an additional undergraduate qualification), the projectionsimply an additional 933,000 undergraduate qualifications by 2018, an additional313,000 postgraduate qualifications, and an additional 190,000 diploma qualifications.

In addition, there is a need to replace those in the workforce with a qualification whoare retiring. By 2018, that will amount to a further 22,000 postgraduate qualifications,51,000 undergraduate qualifications and 25,000 diploma qualifications per annum.

By field of education, management and commerce is expected to remain the dominantarea of study, though the health field is expected to see the fastest growth over thedecade.

Supply-demand balance

Chart 52 provides a summary of the student demand and labour market demandprojections for qualifications as estimated for this report. For supply, the datarepresents an average years cohort of student completions (applying recent data onthe rate of student completions relative to student numbers). For demand, the datarepresents the number of completions required in order to meet demand generated bynet employment growth and retirements.

CHART52: PROJECTEDSTUDENTDEMAND (SUPPLY) LESSPROJECTEDIMPLIEDLABOURMARKETDEMAND (DEMAND)

[Image of graphical data removed]

The bottom line results for 2008 for higher education qualifications in total are fordemand for students to exceed supply. The difference is some 22,000 students. Thenotable slowing of employment growth expected in the short term sees that bottomline reversed in 2009. That swing into surplus in 2009 is short lived, with demand thenexceeding supply in 2010 and for most of the rest of the forecast period. This isdriven very much by excess demand for undergraduate qualifications (withprojections for postgraduate qualifications and diplomas/advanced diplomas closer tobalance).

That excess demand does diminish over time as an expected drop in the labour force

participation rate during the next decade causes overall employment growth to stepback. At the same time the supply of students is expected to continue to grow at asolid pace, in part driven by the longer term trend towards higher skill attainment.

What does a mis-match between supply and demand mean?

Ultimately, it is a theoretical concept which wont actually be observed becausesupply and demand are two sides of the same coin. Imbalances will however createincentives for other actions to occur. These other actions could include a change inrelative wages, different demographics and pathways for higher education, changes tointernational and interstate migration levels, demand side changes which may seekbetter technology, changes in the concordance between occupations and

qualifications, and a different profile to overall economic growth and employmentgrowth than is projected here.

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Scenario analysis

Scenario analysis in this report highlights:

Student demand is mainly driven by demographic trends. Even though student

demographics are slowing, they are still contributing to solid growth in studentnumbers over time, even before allowing for other trend and wage variables.

Upskilling over time to allow for productivity growth is a major contributor tolabour market demand. In the absence of upskilling for productivity growth,labour market demand for qualifications required is projected to generallydecline (other than for cyclical influences). In this scenario the likely supply ofstudents to higher education should be more than adequate to cater for expectedemployment growth.

A more ambitious targeted skills profile would create much stronger labourmarket demand for qualifications, such that the supply-demand balance in 2018moves from what is nearly balance in the baseline scenario, to significant excess

demand in this scenario. Encouraging an adequate supply of students wouldclearly be a major hurdle in achieving such a targeted skills profile over the nextdecade.

The labour force participation rate has a significant influence over labour marketdemand. A rising labour force participation rate has been supporting stronggrowth in labour market demand for qualifications. When this rate plateaus ordeclines, it will have a notable effect on the demand for qualifications linked togrowth in the workforce.

If average completion ratios (number of student completions relative to numberof student participants) were to rise over time for undergraduates this couldreduce excess demand without the need for more education resources. Thatcould be achieved by shorter courses, though shorter courses may of coursehave quality implications. There would still also be a need to encourage morestudents into the higher education system.

Access Economics

18 November 2008

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1. INTRODUCTION

On 13 March 2008, the Deputy Prime Minister announced the Review of Australian

Higher Education to examine the future direction of the higher education sector, itsfitness for purpose in meeting the needs of the Australian community and economy,and options for ongoing reform. The Review will inform the preparation of theGovernment's policy agenda for higher education through 2009 and 2010, and help todevelop a long term vision for higher education into the next decade and beyond.

In order to address the Reviews Terms of Reference relating to productivity andparticipation, Access Economics was commissioned by the Department of Education,Employment and Workplace Relations (DEEWR) to prepare this report examining thelikely future demand for higher education.

1.1 OUTLINE OF THE TASK

The key objectives of the project are to assess the likely quantum and nature ofdemand for higher education over the next decade by prospective students andindustry, including an assessment by geographic area.

For each area of analysis (student demand and industry demand) there are threemajor components:

a literature review on the factors affecting prospective demand for highereducation (from a student perspective and from the perspective of industrysdemand for skills);

a detailed analysis of factors influencing prospective student and labourmarket demand for higher education; and

development of a model to provide projections of prospective demand,including with State/Territory and regional variation.

This report contains that analysis as well as the projections from the student demandand industry demand models developed for this project. The models themselves areto be provided to DEEWR in conjunction with the final report to undertake scenarioanalysis as well as to allow for the review of projections over time.

1.2 KEY DEFINITIONS AND DATA SOURCES

The areas of study covered by this report are undergraduate and postgraduatequalifications undertaken at Australian higher education institutions (what istraditionally termed higher education). In addition, diplomas and advanced diplomasdelivered through registered vocational education and training (VET) providers arealso included within the coverage for this report.

The primary interest for this report is education delivered to Australian citizens, notthat provided in Australia to overseas citizens.

A range of data sources were used to develop a profile of higher educationstudents over time. These include the following.

Students: Higher Education Statistics Series. This data is collected andmaintained by DEEWR. It contains a range of statistics relating to students

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enrolled in higher education at each Australian higher education provider.

Undergraduate Applications, Offers and Acceptances. The inaugural 2008publication of this series was used to examine data on the number of total (andeligible) applicants as well as the number of offers and acceptances by State,

age and field of education. Students and courses. VET data from the National Centre for Vocational

Education Research (NCVER) was used to examine trends in students studyingtowards a diploma or advanced diploma.

Population projections which are shown in this report are based on AustralianBureau of Statistics (ABS), Population Projections, Australia, 2006 to 2101, CatalogueNumber 3222.0, released in September 2008. Projected population growth for detailedlabour force dissemination regions are calculated based on the ABS projections at thenational and State level.

For the labour market demand analysis, the key data source in developing aqualification profile of the workforce is detailed data from ABS, Survey ofEducation and Work, Catalogue Number 6227.0 from 2007. This data allowed for thedevelopment of a matrix showing employment by occupation, by industry, by thehighest level qualification held and the field of education of that qualification.

A key data source forprojections of employment by industry and employment byoccupation were estimates provided by the Labour Supply and Skills Branch ofDEEWR based on DEEWRs modelling and labour market research. These were usedin combination with Access Economics labour market forecasts for the projectionsshown in this report.

The reporting of employment by occupation in this report is in terms of theAustralian Standard Classification of Occupations (ASCO) rather than the more recentAustralian and New Zealand Standard Classification of Occupations (ANZSCO).

The reporting of employment by industry in this report is in terms of the 1993Australian and New Zealand Standard Industrial Classification (ANZSIC) rather thanthe more recent 2006 ANZSIC.

In both cases the classification is used is by necessity given the reporting of historicdata.

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2. TRENDS IN HIGHER EDUCATION DEMAND

There were nearly 757,000 Australian students undertaking highereducation in 2007. While student numbers have grown over recent years,the rate of growth has become more modest over time. Australias highereducation system overall saw an average annual increase in domesticstudents of 1.7% between 2002 and 2007, compared to average annualgrowth of 3.7% through the 1990s.

The share of female students has increased steadily over the past twodecades. In 2007, almost 60% of domestic higher education students werefemale, up from less than 52% in 1988.

Over time, there has been a marginal shift towards a higher share of

students being aged in their early 20s. The data also suggests a notabledrop in the share of students aged between 30 and 50 over recent years.

Student numbers at university have continued to rise at a modest pace,though there is evidence that demand for university places has beenmoderating. The number of eligible applicants has fallen steadily after apeak in 2003, particularly in Western Australia. As demand has fallen away,the supply of undergraduate higher education places has increased inrecent years, resulting in a notable increase in the offer rate to applicants.

By field of education, over the past five years there has been an increase inthe share of students studying courses classified under society and

culture, health, education, creative arts and architecture. There has been alarge decrease in the share of students studying information technology(IT), as well as in students studying management and commerce,engineering and agriculture.

Examining higher education participation rates by age, student numbersare lower than would be implied by population growth. There was a notableshortfall in 2005, with some improvement in student numbers relative topopulation over 2006 and 2007. The difference between actual and impliedstudent numbers in 2007 suggests that, had higher education participationrates remained constant since 2002, an additional 13,500 students (or anadditional 2% of students) would have been attending a higher education

institution in 2007.

While growth in university participation has been modest, the number ofdiploma and advanced diploma students across Australia has beendeclining steadily over recent years. To some extent this has been offsetby a notable increase in average student contact hours (with a trendtowards longer courses or more modules). However, even in terms of totalstudent contact hours delivered, the delivery of diploma education hasremained relatively constant over the past six years, while the delivery ofadvanced diploma education has notably contracted. Both of these formsof education have lagged behind population growth, with males inparticular showing a trend to move away from such courses.

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This chapter provides a profile of higher education students by examining a range ofcharacteristics over time. These characteristics include age, gender, State, field ofeducation and level of qualification.

The data in this chapter is focused on domestic (non-overseas) students. These

students are the primary focus of the analysis in this report, though some examinationof overseas students is also undertaken.

Many of the charts and tables used for comparison of student characteristics overtime in this chapter do not include data from before 2002 due to a change in datadefinition for the Students: Higher Education Statistics Series at that time.Specifically, prior to 2002 this data source only included students as at 31 March(omitting any students commencing on a subsequent date in that year). From 2002, allstudents attending higher education in the year were included. Some 2001 data hasbeen made available using the revised definition and is presented in this report asnoted.

2.1 RECENT TRENDS IN HIGHER EDUCATION PARTICIPATION

The total number of Australian students undertaking higher educationamounted to nearly 757,000 students in 2007.

In recent years, growth in the number of domestic higher education studentshas been relatively modest. Australias higher education system overall saw anaverage annual increase in domestic students of 1.7% between 2002 and 2007,compared to average annual growth of 3.7% through the 1990s. As a result, highereducation participation rates (students as a share of a relevant age or genderpopulation cohort) have flattened, and have even declined in some instances.

2.1.1 STUDENTSBYGENDER

Chart 52 shows higher education participation rates for domestic students over time. Thisrate has been calculated as the total number of domestic higher education students inAustralia as a share of the civilian population aged between 15 and 64.

The chart shows that the higher education participation rate increased steadilythrough to the mid 1990s, before declining. While a change in the way the studentdata was collected makes the series difficult to compare over time, it appears that theparticipation rate declined further after 2002 before lifting marginally in 2006 and 2007.

Notably, the chart shows that the female higher education participation rate hasbeen higher than the male participation rate for the past two decades, with thegap between the two series widening considerably over time.

CHART52: HIGHEREDUCATIONPARTICIPATIONRATESBYGENDER, DOMESTICSTUDENTS


Much of the growth in domestic student numbers that has occurred in recent yearscan be attributed to a rise in female students. Between 2001 and 2007, there werean additional 2.75 new female domestic students for every one new maledomestic student in the Australian higher education system.

Chart 52 clearly shows the increasing share of females in Australias domestic higher

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education population. The share of female students has increased steadily over thepast two decades. In 2007, almost 60% of domestic higher education students werefemale, up from less than 52% in 1988.

CHART52: FEMALESTUDENTSASASHAREOFTOTALDOMESTICSTUDENTS, 1988 - 2007


2.1.2 STUDENTSBY STATE

Table 60 details higher education participation rates by State. The table shows that theoverall rate has been relatively constant for each of the States (and nationally) over the pastfive years.

The Australian Capital Territory currently has the highest participation rate, with some7.7% of the entire civilian population aged between 15 and 64 attending a higher

education institution in some capacity in 2007. This is significantly higher than any ofthe other States, with New South Wales recording the second highest rate of 4.5% in2007.

TABLE60: HIGHEREDUCATIONPARTICIPATIONRATESBYSTATE, DOMESTICSTUDENTS

2002 2003 2004 2005 20062007

NSW 4.4% 4.4% 4.3% 4.3% 4.3% 4.5%

VIC 4.5% 4.5% 4.4% 4.3% 4.3% 4.3%

QLD 4.7% 4.6% 4.5% 4.3% 4.4% 4.4%

SA 3.9% 3.9% 3.9% 3.9% 4.0% 4.1%

WA 4.5% 4.5% 4.4% 4.4% 4.4% 4.4%

TAS 3.8% 3.8% 3.9% 3.6% 3.7% 3.8%

NT 4.3% 4.2% 4.0% 3.9% 3.9% 4.1%

ACT 7.4% 7.7% 8.0% 7.8% 7.6% 7.7%

Australia 4.6% 4.5% 4.4% 4.4% 4.4% 4.5%

Source: DEEWR Students: Higher Education Statistics Series, ABS 6202.0.

Tasmania consistently records the lowest higher education participation rate, whilethe South Australian and Northern Territory rates are also well below average.

2.1.3 STUDENTSBYAGE

An examination of student data by age shows that Australian domestic highereducation students are spread quite broadly across age groups. Chart 52 shows theshare of students by age group in 2002 and 2007.

The large proportion of undergraduate students in the Australian higher educationsystem means that the age distribution shown in Chart 52 is skewed towards youngerpeople. For single age groups, 19 year olds comprise the largest share of students, closelyfollowed by 18 and 20 year olds.

Examining the data over time shows that the share of students aged 20 and

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under has been decreasing slightly, while the share of students aged between21 and 24 has been increasing. This could be the result of a number of potentialfactors such as the decision by some students to defer study in order to work or travel(either before or partway through higher education studies), or an increase in therelative number of postgraduate students in the Australian higher education system.

The data also suggests a notable drop in the share of students aged between30 and 50 over recent years, with this potentially related to the strong performanceof the labour market having a greater influence over mature aged students.

CHART52: DOMESTICSTUDENTSBYAGE, 2002 AND 2007


2.1.4 LEVELOFQUALIFICATION

The analysis of the level of qualification in this section is limited to the distinction

between undergraduate and postgraduate study at the university level. A separatesection examining students undertaking diploma and advanced diploma studies at theVET level can be found in Section 2.4.

Chart 52shows the share of undergraduate and postgraduate domestic students between1988 and 2007. The chart shows a gradual increase in the share of postgraduatestudents over that time, though undergraduates still comprised more than 75%of all students in 2007.

CHART52: DOMESTICSTUDENTSBYLEVELOFQUALIFICATION, 1988 - 2007


Chart 52 shows the age distribution of domestic higher education students studying at theundergraduate level. Unsurprisingly, the majority of students are aged between 18 and 22years old, though a broad distribution of students exists. Between 2002 and 2007, therewas a relative increase in the number of students aged between 18 and 25, resulting inrelatively fewer mature aged students at the undergraduate level in 2007.

CHART52: DOMESTICUNDERGRADUATESTUDENTSBYAGE, 2002 AND 2007


Chart 52 shows the accompanying distribution of domestic higher education studentsstudying at the postgraduate level. The chart shows that domestic postgraduate

students are spread quite broadly across age groups, with most students agedbetween 22 and 29 years old. The chart shows there has been little change in theshare of students in each age group between 2002 and 2007, with a slight increase instudents aged between 22 and 29 and a decrease in the share of older studentsoccurring.

CHART52: DOMESTICPOSTGRADUATESTUDENTSBYAGE, 2002 AND2007


2.1.5 OVERSEASSTUDENTS

While this report focuses on domestic higher education students, overseas studentsare increasingly attending Australian institutions and are having an important impacton many aspects of the higher education system, particularly university funding. For

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this reason, it is important to briefly examine the increase in overseas studentnumbers in recent years. Also, many overseas students later become Australiancitizens and may go on to postgraduate study as Australian citizens.

Chart 52 shows the dramatic rise in overseas students as a share of the total higher

education student population in Australia since the late 1980s. In 1988, fewer than 5% ofall students attending an Australian higher education institution were from overseas,compared to almost 30% in 2007.

CHART52: OVERSEASSHAREOFHIGHEREDUCATIONSTUDENTSINAUSTRALIA, 1988 - 2007


The increase in overseas student numbers has helped the education sector to developinto an important export market for Australia, and has provided Australian highereducation institutions with an important source of revenue.

2.2 APPLICATIONS, OFFERS AND ACCEPTANCESIn addition to examining actual student numbers, data on university applications,offers and acceptances can be useful in identifying trends in the types of individualsapplying for university places, and the rate at which offers are accepted (or deferred infavour of alternative work or study paths).

This section discusses trends in applications, offers and acceptances over recentyears using data drawn from a recent DEEWR publication: UndergraduateApplications, Offers and Acceptances 2008. This was the inaugural issue of thepublication and contains data since 2001.

2.2.1 UNDERGRADUATEAPPLICATIONS

While a significant proportion of applicants for undergraduate university places arecurrent Year 12 students, many other applicants are older people who have spent timein the workforce or undertaken other forms of study such as VET. In 2008, Year 12students accounted for approximately 46% of total undergraduate applicants.

Chart 52 shows the total number of undergraduate applicants and the number of eligibleapplicants from 2001 to 2008. The calculation of eligible applicants in this reportexcludes any school leavers with a Tertiary Entrance Score (TES) below a minimumbenchmark, where this benchmark is the lowest TES with which an applicant couldreasonably expect to gain entry into university. This definition is consistent with the

DEEWR report mentioned above and with methodology adopted by UniversityAustralia, and does not necessarily mean that those applicants considered ineligiblewill not receive an offer of a university place.

CHART52: TOTALUNDERGRADUATEAPPLICANTS, 2001 - 2008


Chart 52 shows that the total number of applicants for undergraduate universityplaces increased notably in 2007, reversing the downward trend of theprevious few years. However, the number of eligible applicants continues tofall after a peak in 2003.

The continued decline in the number of eligible applicants comes despite a lift in the

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number of students achieving a TES of 80 or above in 2007 and 2008. Studentsachieving a TES in this band are considerably more likely to apply and accept offers touniversity than other students.

Table 60 shows the growth in total applicants by State since 2002. Of note, the numberof undergraduate applicants in Western Australia has fallen consistently overthe past four years. This may be influenced by the resources boom providing stronglabour market conditions and good wages, encouraging school leavers away fromfurther study.

TABLE60: GROWTHINTOTALAPPLICANTSBYSTATE, CHANGEONYEAREARLIER, 2002 - 2008

2002 2003 2004 2005 2006 20072008

NSW/ACT 7.5% 2.0% 1.4% -2.9% -0.8% 2.4% 1.8%

VIC 12.5% -0.8% -1.3% -2.9% -2.9% 5.8% -1.7%

QLD 4.1% 1.1% -1.0% -4.9% 3.4% -0.5% 0.1%

SA/NT 3.5% 17.2% 4.3% -3.9% -8.2% 5.9% -1.2%

WA 6.8% 13.5% 4.6% -8.9% -7.9% -3.3% -2.7%

TAS 0.2% 10.8% 2.6% -10.0% 1.8% 21.0% 11.7%

Australia 7.5% 3.5% 0.8% -4.2% -1.8% 3.1% 0.2%

Source: DEEWR Undergraduate applications, offers and acceptances 2008.

2.2.2 OFFERS

Not all university applicants will receive an offer of a university place. Some

applicants will not have met the required entry criteria for a particular course, whileother courses may have been too popular, resulting in some excess demand forplaces.

Table 60 shows the offer rate by State. The offer rate has been calculated as the number ofapplicants receiving an offer as a share of the total number of eligible applicants.

The table shows that, after declining through to 2004, the offer rate picked up notablyin 2005 across all States. Interestingly, the pick up in offers in 2005 coincided with adecrease in the number of eligible applicants across Australia, implying that the supplyof undergraduate higher education places has increased in recent years as demand hasfallen away.

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TABLE60: OFFERRATEBYSTATE

2001 2002 2003 2004 2005 2006 20072008

NSW/ACT 84.2% 78.1% 75.3% 72.2% 83.4% 85.9% 87.4% 87.5%

VIC 71.9% 63.8% 61.8% 62.9% 70.4% 79.8% 78.5% 79.7%

QLD 81.0% 78.1% 73.3% 75.7% 86.0% 86.4% 88.7% 87.4%

SA/NT 88.9% 87.4% 81.9% 81.4% 83.6% 84.3% 84.4% 84.0%

WA 86.2% 85.8% 82.0% 79.5% 83.9% 87.1% 88.6% 88.0%

TAS 86.1% 87.4% 85.4% 86.1% 88.7% 90.0% 83.4% 73.1%

Australia 80.7% 75.8% 72.5% 72.3% 80.7% 84.6% 85.1% 84.7%


Chart 52 shows the recent trend in eligible applicants and the number of applicants receivingan offer. The chart clearly shows that despite a downward trend in the number of eligibleapplicants, the number of offers has increased sharply since 2004. Indeed, 2007 sawthe largest number of offers to undergraduate applicants so far this decade. In 2008,the number of offers dipped back as the number of eligible applicants fell further.

CHART52: ELIGIBLEAPPLICANTSANDELIGIBLEAPPLICANTSRECEIVINGANOFFER, 2001 - 2008


Chart 52 shows the offer rate by broad age group. Since 2001, the offer rate for applicantsaged 20 and under has been consistently higher than for applicants aged 21 and over.This margin has widened in recent years. In 2008, some 88.1% of eligible applicantsfor an undergraduate university place aged 20 and under received an offer, compared

to 77.5% of applicants aged 21 and over.

CHART52: OFFERRATEBYAGEGROUP, 2001 - 2008


2.2.3 ACCEPTANCES

Table 60 shows the acceptance rate by State. The acceptance rate represents thenumber of applicants who accepted an offer of a place at university as a share of thenumber of applicants who were offered a place.

The table shows that the acceptance rate has declined since peaks in 2003 and2004 across most States. For many States, 2008 saw the lowest acceptancerate on record. In New South Wales and the Australian Capital Territory, 2008 sawless than 55% of the offers for an undergraduate university place accepted, a resultwhich was well down on the 81% acceptance rate seen in 2003.

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TABLE60: ACCEPTANCERATEBYSTATE

2001 2002 2003 2004 2005 2006 20072008

NSW/ACT 64.1% 66.3% 81.0% 79.3% 79.3% 64.0% 67.8% 54.6%

VIC 73.6% 72.1% 71.9% 72.0% 59.4% 77.0% 80.5% 83.0%

QLD 81.5% 81.9% 81.1% 81.2% 87.1% 88.0% 87.7% 88.9%

SA/NT 94.8% 97.4% 96.8% 96.6% 72.8% 72.7% 71.9% 71.3%

WA 78.9% 79.6% 76.7% 77.7% 76.4% 73.9% 71.5% 70.3%

TAS 48.4% 75.0% 75.8% 75.4% 80.7% 76.3% 77.0% 73.1%

Australia 73.9% 75.5% 79.6% 79.1% 75.7% 74.8% 76.2% 72.4%


Chart 52 shows the number of eligible applicants along with the number of offers andacceptances from 2001 until 2008. The chart shows that despite a lift in the number ofeligible applicants receiving an offer from 2004, the number of acceptances hasincreased only modestly over that time, and actually declined in 2008.

CHART52: ELIGIBLEAPPLICANTS, OFFERSANDACCEPTANCES, 2001 - 2008


As a result, the national acceptance rate has been on a downward trend since 2003.Only 72.4% of offers were accepted in 2008, down from 79.6% in 2003.

Chart 52 shows that the traditional gap in acceptance rates for applicants aged 20 and undercompared to those aged 21 and over has been eroded in recent years. From 2001 to 2004,

applicants aged 21 and over were significantly more likely to accept an offer relative tothose aged 20 and under. This may be due to the fact that older applicants have hadmore time to consider their future and may have already participated in the workforceor other study before deciding to pursue higher education, while younger applicantsmay apply for university while in Year 12 but decide to pursue an alternative path ortake a gap year after graduating. Since 2004, there has been a marked drop in theacceptance rate for those aged 21 and over.

CHART52: ACCEPTANCERATEBYAGEGROUP, 2001 - 2008


2.3 TRENDS BY FIELD OF EDUCATION

Trends in the number of students studying across different fields of education canprovide important insights. The popularity of different courses can change over timeand is driven by a number of factors including the availability of places, course fees,expected labour market outcomes and broader macroeconomic influences.

The broad classifications of field of education discussed below have applied since2001, and replaced the previous field of study classifications.

2.3.1 STUDENTS

Chart 52 shows the share of domestic higher education students by field of educationin 2002 and 2007.

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In 2007, students studying a course classified under the society and culture fieldcomprised the largest share of domestic students. These students predominantlystudy courses in law, arts and social science. Management and commerce studentsaccount for the next largest group of students by field, followed by students studyinghealth, education, and natural and physical science.

Over the past five years, there has been an increase in the share of studentsstudying courses classified under society and culture, health, education,creative arts and architecture. There has been a large decrease in the share ofstudents studying IT, as well as in students studying management andcommerce, engineering and agriculture.

The decrease in the share of IT students is understandable given that the relativeboom in IT which occurred earlier this decade has now subsided. The increase instudents studying health and education is no doubt linked to the increased supply ofuniversity places in nursing and teaching.

CHART52: DOMESTICSTUDENTSBYFIELDOFEDUCATION, 2002 AND 2007


2.3.2 ELIGIBLEAPPLICANTS

Chart 52 shows the share of eligible undergraduate applicants by field of education in 2001and 2008. In general, the share of applicants across fields has not changed substantiallysince 2001, though there are some important exceptions.

Arts, health and commerce remain the most popular fields of education in 2008,though a notable increase in the proportion of applicants for health-related courses(such as medicine, dentistry, nursing and veterinary) almost made that field the mostpopular in 2008.

CHART52: SHAREOFELIGIBLEUNDERGRADUATEAPPLICANTSBYFIELD, 2001 AND 2008


Commerce and IT were the only two fields to lose a substantial proportion of overalleligible undergraduate applications between 2001 and 2008. For IT, this trend is likelyto be the product of the conclusion of the IT boom after 2001.

2.3.3 OFFERRATE

Chart 52 shows the offer rate by field of education in 2001 and 2008. The chart shows thatall fields except natural and physical sciences saw an increase in offer rates between 2001and 2008. This is especially true for fields which have become relatively less popular overtime (as evidenced by a declining share of applications), which have seen an increasein offer rates. For example, in 2001 just 72.1% of eligible IT applicants received anoffer, compared to 98.9% of eligible IT applicants in 2008.

CHART52: OFFERRATEBYFIELDOFEDUCATION, 2001 AND 2008


Some applicants may receive more than one university offer if they, for example, apply

for a university place at more than one institution. As a result, some fields ofeducation show offer rates in excess of 100%.

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2.3.4 ACCEPTANCERATE

Chart 52 shows the acceptance rate by field of education in 2001 and 2008. The chartshows that acceptance rates have not changed significantly across fields over the lastseven years, though acceptance rates have generally moved in the opposite directionto offer rates. That is, fields of education which experienced an increase in the offerrate between 2001 and 2008 also tended to experience a decrease in the acceptancerate over the same period.

CHART52: ACCEPTANCERATEBYFIELDOFEDUCATION, 2001 AND 2008


2.4 DIPLOMAS AND ADVANCED DIPLOMAS

The preceding section covered students enrolled at higher education institutions.Technical and vocational education institutions compete with higher education

institutions for students, particularly across more advanced vocational courses suchas diplomas and advanced diplomas. Data from the NCVER can be used to examinethe characteristics of Australian diploma and advanced diploma students over thepast few years.

The analysis for higher education institutions is conducted in terms of studentnumbers. An analysis of the number of students undertaking diplomas and advanceddiplomas shows a very marked decline over recent years, with

the number of students undertaking diplomas falling by 13.5% between 2002 and2007 (from 154,783 to 133,930); and

the number of students undertaking advanced diplomas falling by 33% between2002 and 2007 (from 49,760 to 33,141).

Across both diplomas and advanced diplomas the trend by gender has been:

a significant decline in the number of male students by 25.5% (from 101,017 in2002 to 75,258 in 2007); and

a more moderate decline in the number of female students by 11.3% (from103,526 in 2002 to 91,813 in 2007).

In this case however student numbers do not tell the complete story as there has alsobeen a notable increase in the average length of courses. Average contact hours per

student have risen from 332 per annum in 2002 to 387 per annum in 2007, with thistrend seen across both male and female students (see Chart 52).

CHART52: AVERAGECONTACTHOURSBYGENDER, 2002 - 2007


The result is that there are not as many students undertaking diplomas and advanceddiplomas, but the courses they are doing are more substantial (longer courses orstudents on average are undertaking more modules). The overall demand foreducation resources (and the overall benefit to the community from those resources)is perhaps best measured by trends in total student contact hours as shown in thefollowing charts.

Chart 52 shows that the total number of contact hours for female diploma and advanced

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diploma students has increased slightly over the past six years (by 3.3%), despite asubstantial fall in the total number of students over that time. The number of annualcontact hours for males has fallen (by 13.5% between 2002 and 2007), though by farless than the 25% drop in male student numbers over the same period.

CHART52: TOTALDIPLOMAANDADVANCEDDIPLOMACONTACTHOURSBYGENDER, 2002 - 2007[Image of graphical data removed]

The number of contact hours by qualification type is shown in Chart 52. While thenumber of students undertaking a diploma fell between 2002 and 2007, the chart belowshows that the number of annual contact hours for diploma students has remainedrelatively constant (increasing by 1.8% between 2002 and 2007). The number ofannual contact hours for advanced diploma students has however fallen notably, by23% between 2002 and 2007.

CHART52: DIPLOMAANDADVANCEDDIPLOMACONTACTHOURS, 2002 - 2007


All up the delivery of diploma education has remained relatively constant overthe past six years, while the delivery of advanced diploma education hasnotably contracted. Both of these forms of education have lagged behindpopulation growth, with males in particular showing a trend to move away fromsuch courses.

The majority of diploma and advanced diploma students study courses related tobusiness information and administration, science, engineering and design, health andwelfare and management. As many courses in these areas can be studied at theuniversity level, there may be more students able and choosing to go the direct higher

education route of late. Other factors are also likely to be contributing, including thestrength of the labour market and the availability of places.

Chart 52 shows the share of diploma and advanced diploma students by field in 2002and 2007. Over that time, there has been a decrease in the share of management andcommerce, engineering and IT students and an increase in society and culture,architecture and health students. Similar trends can be seen at the university level,particularly in the area of IT.

CHART52: SHAREOFDIPLOMAANDADVANCEDDIPLOMASTUDENTSBYFIELD, 2002 AND 2007


Chart 52 shows the share of diploma and advanced diploma students by State. Victoriaclearly has the largest share of students, with around one-third of total diploma andadvanced diploma students around Australia, which is perhaps linked to itsengineering and manufacturing base. Unsurprisingly, New South Wales andQueensland also have significant shares of diploma and advanced diploma students.

Notably, Queensland, Western Australia and the Northern Territory were the three jurisdictions to see a reduction in their share of diploma and advanced diplomastudents between 2002 and 2007. These three jurisdictions are currently enjoyingrapid rates of economic growth and very strong labour market conditions, potentiallyencouraging school leavers away from studying diplomas and advanced diplomas

and towards a more traditional trade or directly into the workforce.

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CHART52: SHAREOFDIPLOMAANDADVANCEDDIPLOMASTUDENTSBYSTATE, 2002 AND 2007


Chart 52 shows the share of Australian diploma and advanced diploma students by age.The age profile for these types of qualifications is similar to that for higher education,with recent school leavers aged between 18 and 20 making up the largest proportionof students.

Between 2002 and 2007 there was slight shift in the age profile of diploma andadvanced diploma students. A decrease in the share of 17 and 18 year olds and in 25 29 year olds saw a larger share of students aged between 19 and 24.

CHART52: SHAREOFDIPLOMAANDADVANCEDDIPLOMASTUDENTSBYAGE, 2002 AND 2007


2.5 AGE-BASED PARTICIPATION RATES

Higher education participation rates by age are important in developing forecasts oflikely student demand for higher education going forward. These rates have beencalculated as the total number of domestic students (including undergraduate andpostgraduate) as a share of the total Australian population for each age group. Age-based participation rates for students studying toward a diploma and advanceddiploma have also been calculated.

Across the key higher education age groups (ages 17-24), higher educationparticipation rates have risen marginally since 2004 and are now approaching thelevels seen in 2002. This suggests that slower growth in higher educationparticipation over recent years has been against a backdrop of only modest

growth in the most relevant age demographic.

Chart 52 compares the actual number of domestic higher education students (undergraduateand postgraduate) with the implied number of students using 2002 participation rates. (Thatis, the latter is the number of higher education students there would have been hadhigher education participation rates remained at their 2002 levels.) The chart showsthat since 2002, student numbers have been lower than would be implied bypopulation growth. The shortfall was at its highest in 2005, with some improvement instudent numbers relative to population over 2006 and 2007. That said, a gap betweenthe two series remains.

The difference between actual and implied student numbers in 2007 suggeststhat, had higher education participation rates remained constant since 2002, anadditional 13,500 students (or an additional 2% of students) would have beenattending a higher education institution in 2007.

CHART52: ACTUALANDIMPLIEDHIGHEREDUCATIONSTUDENTSBASEDON 2002 PARTICIPATION


While there has been a reduction in the number of eligible applicants for highereducation, the increased number of offers and acceptances since 2004 helps toexplain the lift in participation rates, and suggests that growth in the acceptance rateby age cohort has been faster than population growth in recent years.

Data examined earlier in this chapter showed that the number of acceptances for an

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undergraduate university place declined noticeably in 2008. While data on the numberof total students in 2008 has not yet been released, it is likely to show a decrease inthe number of younger students (and hence a reversal of the recent rise inparticipation rates) due to the drop in acceptances.

Table 60shows age-based higher education participation rates across a broad range of agegroups. The table shows that participation rates in 2007 were similar to those in 2002 formost persons, including those aged between 17 and 24 years the core age group forhigher education.

TABLE60: AGE-BASEDHIGHEREDUCATIONPARTICIPATIONRATES

2002 2003 2004 2005 20062007

16 ear olds 0.4% 0.4% 0.4% 0.4% 0.5% 0.6%

17 year olds 13.7% 12.7% 12.3% 12.5% 13.0% 13.0%

18 year olds 27.3% 25.5% 24.9% 25.3% 26.2% 27.4%

19 year olds 28.1% 28.2% 27.0% 26.9% 27.6% 28.4%

20 year olds 26.7% 26.4% 26.4% 26.0% 25.9% 26.7%

21 year olds 20.9% 21.6% 21.3% 21.4% 21.4% 21.8%

22 year olds 15.2% 15.4% 15.9% 15.7% 15.9% 16.2%

23 year olds 11.5% 11.6% 11.5% 11.8% 11.7% 12.1%

24 year olds 9.4% 9.5% 9.4% 9.1% 9.4% 9.5%

25 year olds 8.2% 8.2% 8.1% 7.9% 7.8% 8.0%

26 year olds 7.2% 7.4% 7.3% 7.0% 6.9% 7.0%

27 year olds 6.7% 6.6% 6.6% 6.4% 6.2% 6.2%

28 year olds 5.8% 6.2% 6.1% 5.9% 5.8% 5.7%

29 year olds 5.5% 5.5% 5.6% 5.4% 5.4% 5.3%

30 39 year olds 3.8% 3.9% 3.8% 3.7% 3.7% 3.7%

40 49 year olds 2.3% 2.3% 2.2% 2.2% 2.1% 2.1%

Source: DEEWR Students: Higher Education Statistics Series, ABS 6202.0.

Error: Reference source not found shows age-based participation rates for the study ofdiplomas and advanced diplomas. The data shows that participation rates for

diplomas and advanced diplomas have been declining over recent years,consistent with the falls in the actual number of enrolled students.

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TABLE60: AGE-BASEDDIPLOMAANDADVANCEDDIPLOMAPARTICIPATIONRATES

2002 2003 2004 2005 20062007

16 ear olds 0.3% 0.2% 0.2% 0.2% 0.2% 0.2%

17 year olds 1.4% 1.4% 1.2% 1.1% 1.0% 0.8%

18 year olds 6.4% 6.2% 5.8% 5.6% 5.0% 4.4%

19 year olds 7.2% 7.2% 7.1% 6.9% 6.5% 5.8%

20 year olds 5.7% 5.4% 5.2% 5.0% 4.8% 4.4%

21 year olds 4.1% 4.0% 3.7% 3.6% 3.3% 3.1%

22 year olds 3.3% 3.1% 2.9% 2.7% 2.6% 2.4%

23 year olds 2.8% 2.6% 2.3% 2.2% 2.0% 2.0%

24 year olds 2.5% 2.3% 2.1% 1.9% 1.8% 1.7%

25 year olds 10.5% 9.5% 8.2% 7.7% 7.2% 6.7%

26 year olds 2.1% 2.0% 1.7% 1.6% 1.6% 1.4%

27 year olds 2.0% 1.8% 1.6% 1.5% 1.5% 1.4%

28 year olds 1.9% 1.7% 1.6% 1.4% 1.3% 1.3%

29 year olds 1.7% 1.6% 1.4% 1.4% 1.3% 1.2%

30 39 year olds 1.4% 1.3% 1.2% 1.1% 1.1% 1.1%

40 49 year olds 1.0% 0.9% 0.9% 0.9% 0.9% 0.9%

Source: NCVER Students and courses series, ABS 6202.0.

Error: Reference source not found combines data on higher education students anddiploma and advanced diploma students to create a measure of participation towards the keynon-school education qualifications covered in this report.

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TABLE60: AGE-BASEDPARTICIPATIONRATESINHIGHEREDUCATIONANDDIPLOMA/ADVANCEDDIPLOMA

2002 2003 2004 2005 20062007

16 year olds0.7% 0.6% 0.6% 0.6% 0.7% 0.7%

17 year olds 15.1% 14.1% 13.6% 13.6% 14.0% 13.9%

18 year olds 33.6% 31.7% 30.7% 30.8% 31.2% 31.8%

19 year olds 35.3% 35.4% 34.1% 33.9% 34.2% 34.2%

20 year olds 32.4% 31.7% 31.6% 31.0% 30.7% 31.1%

21 year olds 25.0% 25.7% 25.0% 25.0% 24.7% 24.9%

22 year olds 18.5% 18.6% 18.8% 18.3% 18.5% 18.6%

23 year olds 14.3% 14.3% 13.9% 14.0% 13.8% 14.1%

24 year olds 11.8% 11.8% 11.5% 11.0% 11.2% 11.2%

25 year olds 18.7% 17.8% 16.3% 15.6% 15.0% 14.8%

26 year olds 9.3% 9.3% 9.0% 8.6% 8.5% 8.4%

27 year olds 8.7% 8.5% 8.2% 7.9% 7.7% 7.6%

28 year olds 7.7% 7.9% 7.6% 7.3% 7.2% 7.0%

29 year olds 7.3% 7.1% 7.1% 6.8% 6.7% 6.5%

30 39 year olds 5.3% 5.2% 5.0% 4.9% 4.8% 4.8%

40 49 year olds 3.3% 3.2% 3.1% 3.0% 3.0% 3.0%

Source: NCVER Students and courses series, DEEWR Students: Higher Education Statistics Series, ABS

6202.0.

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although this is a relatively small proportion. Those who do notcomplete university were more likely not to be participating in anystudy.

The previous chapter noted trends in participation and student demand for highereducation over recent years, including information on age-based participation rates.

This chapter examines some of the non-demographic factors which might affectstudent demand, and in particular those influential factors which may have changedover recent years such as the state of the labour market.

3.1 CHARACTERISTICS OF THOSE WHO UNDERTAKE HIGHEREDUCATION

We know that the propensity to undertake higher education is much higher for those

aged 18 to 22 (immediately upon completion of school). But within a given agedemographic, what factors influence whether individuals will seek to undertake highereducation or not?

Australian research has identified a range of characteristics that influence studentparticipation in higher education. Citing research by Carpenter and Western, James(2000) explains that student choice and opportunities for access to tertiary educationare influenced by a complex range of inter-related factors, including:

social origins (gender, parental occupation, geographic location, perceivedfamily income, area wealth);

schooling (type of school, interest in school);

influence of significant others (perception of parental influence, perception ofteacher influence, friends plans);

academic self-assessment (opinion of academic ability, perceived utility ofeducation for later life);

educational aspirations (plans for education beyond Year 12); and

academic achievement (final school academic results).

3.1.1 SOCIO-ECONOMICSTATUS

A number of studies have shown that socio-economic status is a major source ofeducational inequality. Long et al (1999) found that parents occupation, parentseducation and family wealth (used as proxies for socio-economic status) all had apositive effect on participation. They concluded that young people from highersocio-economic backgrounds were more likely to participate in highereducation than those from lower socio-economic backgrounds.

Birrell et al (2000) found that there is a positive link between the level of family incomeand participation by 18-19 year olds living at home: the higher the family income, thegreater the higher education participation rate. They concluded that cultural and otherrelated factors also influence entrance to university, with participation strongest in the

middle income range where parental occupations are classified as professional andlowest where families have similar incomes but parental occupations are classified as

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clerical or blue collar. They noted the effect appears to be stronger for young malesfrom working class backgrounds than females.

Socio-economic status is the dominant factor in the variation in student perspectiveson the value and attainability of higher education. James (2002) found that, overall,

students from lower socio-economic backgrounds:

have a weaker interest in the subjects they could study at university (62%,compared with 78% of students from higher socio-economic backgrounds), anda stronger belief that a TAFE course would be more useful than a universitydegree (30% compared with 14%);

have a weaker belief their parents want them to do a university course (44%compared with 68%);

have a stronger interest in earning an income as soon as they leave school (35%compared with 20%); and

are more likely to report concerns about costs: they are more likely to believethe cost of university fees may stop them attending (39% compared with 24%)and that their families probably could not afford the costs of supporting them atuniversity (41% compared with 23%).

The influence of socio-economic status on higher education participation is examinedfurther in Section Error: Reference source not found.

ABS data on household income distribution over time suggests that at a macro level,Australias safety net has strengthened over time. Movements in real householdincome levels for lower earning Australian households (those with the lowest 30% ofincomes) have been in line with income gains for the community as a whole over the

past decade. Chart 52 shows growth in real income over time for these groups.

CHART52: REALINCOMESOVERTIMEFOR AUSTRALIASPOORESTHOUSEHOLDS


The forces at work in lifting income adequacy include not merely a surge in jobs whichhas brought many more Australians into the workforce, but also changes to thetax/transfer system.

With steady improvements in living standards across all income levels overrecent years, those classed as lower socio-economic status today are perhapsless disadvantaged than in previous decades. There will always be a group at thebottom of spectrum who have a lower socio-economic status relative to the average atthe time. However, evidence suggests that living standards for this group have beenimproving over time so their level of disadvantage has been falling over time. Thatmay make it less of a stretch for those of lower socio-economic status to attenduniversity than in years gone by.

This would suggest the negative influence of low socio-economic status onparticipation in higher education should become less important over time (which,other things equal, should raise demand for higher education). This may well be thecase, but the trends over recent years suggest this positive influence is beingswamped by other factors.

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3.1.2 LANGUAGEBACKGROUND

Research has shown that, when considered as group, students from NESBs aremore likely to participate in higher education than students from

English-speaking backgrounds. Long et al (1999) and Marks et al (2000) analyseduniversity participation among NESB persons, and found that students whose fatherswere born in primarily non-English speaking countries had higher participation ratesthan those whose fathers were born in either Australia or in other English-speakingcountries. The rates were substantially higher in a number of instances, including forthe Asia group which had a participation rate of 60% compared to the overall rate ofaround 30%. The differences in rates were significant even after controlling for otherfactors such as fathers occupation and educational backgrounds. While universityparticipation is favoured, it may mean that VET participation is lower for the NESBgroup. James (2000) suggests the high NESB participation rates reflect the valueattached to university education by many migrant groups and the expectations ofmany families that their children will attend university and enter professional careers.

Dobson, Birrell and Rapson (1996) also showed that NESB persons had higherparticipation rates than English-language speakers. They noted, however, that thereare wide variations in participation between the various NESB language categories.Students from Chinese, Vietnamese, Korean and Eastern European languagebackgrounds have participation rates twice as high as English-language speakers,and four times higher than Arabic, Italian, Khmer and Turkish speakers.

Thanks to the significant increase in Australias migration program over recent years,the share of the prime tertiary education age cohort who are of a NESB has beengradually increasing. The 2006 Census reported that of the 15-24 age cohort, 17.9%spoke a language other than English at home. In 2001 the equivalent share was

17.1%. The trend towards a higher NESB share should be a positive one forhigher education participation over time.

3.1.3 OTHERINFLUENCES

Several other factors have been found to influence student participation.

Gender females are more likely to participate in higher education thanmales. Marks et al (2000) found that the odds of participation/non-participationfor young women are around two times greater than for young men. This gap iswidening as shown earlier in Chart 52.

School type Long et al (1999) and Marks et al (2000) found that students fromindependent and Catholic schools have a higher likelihood ofparticipating than those from government schools.

Geographical location students from non-metropolitan areas or areas withlow population densities are less likely to participate in higher education .James (2000) found that rural students are concerned about the financial cost ofstudying at university, particularly the additional costs of accommodation andliving in a city. `

Indigenous background the participation rate of Indigenous students issignificantly lower than for non-Indigenous students. Financial factors are

highly significant in the access and retention of these students.

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3.2 PARTICIPATION OF RECENT MIGRANTS

The number of migrants settling in Australia under Australias migration program haslifted substantially in recent years, which also has some implications for studentdemand for higher education given the migrant age structure.

(Note that foreign students are not counted within the higher education participationnoted here. However, many do apply for citizenship following their undergraduatestudy, and some may then appear as Australian citizens when they go on topostgraduate study.)

Chart 52shows the age profile of the 2006-07 permanent migrant intake by broad agecohort compared to that of the Australian population. The age structures are quitedifferent, with the migrant intake heavily weighted towards the younger age cohorts(73.8% of migrants are in the under 35 age cohorts compared to 47.0% of theAustralian population). Migrants have a greater share of the school and

university aged cohort than the general population (38.6% of those aged 5-24compared to 33.0%).

CHART52: AGEPROFILEOFMIGRANTINTAKEAND AUSTRALIANPOPULATION, 2006-07


The proportion of the permanent migrant intake born in non-English speakingcountries has also increased over the past two decades. With research showing thatnon-English speakers have a higher propensity to participate in higher education(Section 3.1.2), the younger age profile of migrants should be a factor which helps to pushup student numbers in higher education over the next decade.

3.3 FEE STRUCTURES

A number of studies have examined the impact of the Higher Education Contributionscheme (HECS) on student participation in higher education, and have generally foundthat the introduction of HECS and subsequent changes in the level of chargeshave had minimal impact, both in terms of overall applications and onenrolments by students from lower socio-economic status backgrounds.Studies that have asked people about the factors that shaped their decisions havefound that HECS has not been a dominant factor influencing individualdecision-making, either in aggregate or for low socio-economic status groups.Chapman and Ryan (2003) suggest the following conclusions can be drawn from the

research.

The relatively disadvantaged were less likely to attend university even whenthere were no student fees.

The introduction of HECS in 1989 was associated with aggregate increases inhigher education enrolments.

HECS did not result in decreases in the participation of prospective studentsfrom low socio-economic status groups, although the absolute increases werehigher for relatively advantaged students, especially in the middle of the wealthdistribution.

There was a small decrease in the aggregate number of applicants after theHECS changes in 1997, but no apparent decreases in commencements ofmembers of low socio-economic groups, except perhaps for a small number of

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males with respect to courses with the highest charges.

Aungles et al (2002) found the HECS changes had a more significant impact onmature aged persons, with applications declining by around 17,000 students peryear (compared to 9,000 students per year for school leavers). These potentialstudents are more likely to already be earning above the repayment threshold, suchthat HECS changes have a more immediate potential effect.

So the evidence suggests that the fee structures in place are not creating adisincentive to higher education participation, but overall financial returns to studyare important. Wage trends over time are discussed in the following sections.

3.4 STATE OF THE LABOUR MARKET

Periods of strong employment growth do not see additional people join the workforcesolely from the ranks of the unemployed the strong job prospects tempt many

people into the labour market when they were previously classed as not in the labourforce (not employed and not actively looking for work). Similarly, periods of weakeremployment growth often coincide with a fall in the labour force participation rate poor job prospects result in fewer people actively looking for work. This is known as

the encouraged/discouraged worker effect.

Chart 52 shows the relationship between employment growth and labour force participationover time.

CHART52: EMPLOYMENTGROWTHANDLABOURFORCEPARTICIPATION, 1988 - 2008


Over recent years, average labour force participation has increased as the rate ofemployment growth has been consistently strong. On the other hand, periods ofweaker employment growth, such as the early 1990s and late 1990s, saw the averagelabour force participation rate fall.

One of the areas that people are drawn from/to during periods of strong/weak jobgrowth is full-time study, and that includes higher education.

The Review of Australian Higher Education Discussion Paper (2008) notes that thestrong labour market appears to have led to a de

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