Debate: Are increasing university fees necessary for the economy?

Last week, the Australian Government announced the Job-Ready Graduates program, which shifts national focus away from arts degrees and more into the STEM fields. As a consequence of that, thousands of students feel as if though this is devaluing graduates based on their skillsets. However, it can also be perceived as a hard-line decision that is necessary in order to stabilise the economy.


Although it may seem controversial and inconsiderate on the surface, the Government’s decision to increase the university fees for arts degrees paves the way for increased labour supply in fields which will undoubtedly have skill shortages post COVID-19. Specifically, increasing Labour Supply in these fields has been incentivised through the “slashing” of fees in STEM degrees by almost 3-fold (an example being maths degrees being cut from $28,600 down to $11,400).  According to the “No Free Lunch” Principle, the government cannot simply increase their contributions in one field without decreasing it in another. Hence, the decreased government contributions should alternatively be perceived as a necessary evil to maintain a more functional economy post COVID-19. In this context, the rejigging of the fees is essentially a method of reducing structural unemployment in the economy, which is defined as a mismatch between the skills needed in the economy and the skills provided by university graduates.

Flowing on from the last point, an increase in university fees in certain fields (leading to the deduction in others) will additionally assist in avoiding an entire generation of unemployed graduates. Specifically, by ensuring that jobs will still remain relevant after the heavy unemployment caused by the coronavirus, this new system allows universities to target the expected demand of these STEM degrees. During recessionary periods, one of the major consequences remains the youth unemployment that pervades the economy. During this unprecedented pandemic, youth unemployment more than doubled, increasing to 11.5% from 5.1% according to the Australian Bureau of Statistics. Hence, by rejigging university fees to favour those which are more likely to provide jobs, the government can effectively reduce youth unemployment. It enables young Australians to think more critically about whether or not their field of interest will play a viable role in the economy, effectively skilling them in such a way that if a job is available, they are able to take it.

One major problem for women in the workforce is access into the male dominated STEM field. Data from the ABS highlights just how wide this gap currently is, with 72% of workers in the field being men, and only 28% being women. With the reduction of university fees being the governments way of incentivising increased labour supply in STEM fields, it provides a much more accessible pathway for young women across Australia (by making these fields more financially viable). This comes after a tumultuous period for the fight of more equal gender representation in STEM fields, with Coronavirus disproportionately affecting women unemployment in these fields. COVID-19 has simply compounded a larger issue at hand, with the pre-existing gender disparity only worsening.  Although it can be passed off simply as a reactionary response by the Government, it is still a very viable option to at least balance the scales.


As if a $16 avocado toast isn’t breaking the bank enough for current and future university students. Sigh, a 28% price increase for commerce and law degrees, and a 113% increase for humanities degrees received backlash from current and future university students. This doubling in fees aims to discourage future students to uptake a degree within the comm/law and humanities fields, while fuelling the STEM and teaching industries. 

Financially setting back these individuals may result in an alteration in their consumption in the long term. In the already struggling economy,  altering young people’s consumption doesn’t really seem like the right option. Taking away from their disposable income, in turn will see a reduction in consumption in the long run. As individuals will be more cautious and reluctant to consume, hence pressing down economic growth rates. The price increase also discourage potential students to pursue a tertiary-level education within these fields. Within the OECD, 83% of the population with tertiary education is employed. Thus, decreasing the likelihood of students successfully seeking work in the specified field. With unemployment rates as high as 5.3% currently, and emphasis on youth unemployment at 11.3% it seems like it’s only going to go up.

Reducing the prices for agriculture and maths, teaching, nursing and clinical psychology, and science, health, architecture, IT and engineering degrees will see a positive response, as more individuals will be incentivised to study those respective degrees. If universities keep pumping out STEM graduates at a rate which can’t keep up with job generation, they’re just asking for a spike in structural unemployment in the long run. An excess supply of graduates in those fields will see a rise in unemployment, while lowering the average wage within the industry. Take architecture for example, the demand for graduates however will grow 4% from 2016 to 2026, is slower than the average for all occupations. As a result, graduates will have the tendency to seek better opportunities elsewhere, opening up the possibility of ‘brain drain’. Which is exactly how it sounds, the fresh STEM graduates will take their big brains international, draining  Australia’s productivity levels.

The timing of this change, does not lie in the favour of future 2020 and onwards graduates. It occurs at a time of inconvenience as students are unable to change their senior subjects to account for a degree swap. Many universities require a prerequisite from HSC studies, and this will see a delay in the student’s academic timeline. By using bridging courses and alternative pathways, this will slow down productivity rates and result in an inefficient workforce in the long run.