Comment

John Hewson
In the era of the tradie, university education is being undervalued

In recent years we have seen the emergence of the era of the tradie. As the importance of university education has drifted, tradies have experienced a significant increase in their economic, social and political importance. This has resulted from a combination of attitudinal and policy shifts. Specifically, tradies have seized the opportunity to give less significance to their union membership and to become small businesses. They have been able to access a host of tax benefits, including tax minimisation via income splitting and asset write-offs, apprenticeship assistance and most recently free training, all at a time of mounting skill shortages that have delivered huge salary increases.

Recent articles in The Australian Financial Review have documented some of the more conspicuous incomes of electricians, train drivers and so on, recognising incomes vary significantly depending on the sector and location where people work. Travelling on the New South Wales coast over the holidays, I don’t believe I have ever seen so many pristine utes, many advertising their services, towing top-of-the-line caravans, boats, trail bikes, jet skis and the like. By comparison, I haven’t seen any evidence of conspicuous salaries for university graduates being quoted across the media.

University enrolments have flattened in recent years and the dropout rate of university students has reached record levels. Although nearly half of all 25-year-olds hold a bachelor’s degree, recent surveys suggest they are less likely to be in full-time employment, have lower annual earnings and are less fulfilled than their peers who did a trade apprenticeship or went on to do a higher degree. There is also evidence high-school graduates are delaying their university enrolment, preferring to work before going on to university.

An important concern in attitudes towards university has been debt, especially HECS-HELP. This is not only in terms of the build-up of debt itself but also its impact in constraining a person’s total borrowing capacity, especially when planning to enter the housing market. Recent evidence suggests a rough rule that borrowing capacity will be reduced by about 10 times the annual HECS-HELP repayment.

The concept of HECS, as an income-dependent loan, could not really be faulted in the circumstances when it was introduced in the 1980s. It certainly meant many students would have an opportunity to attend university when they otherwise wouldn’t. However, it does raise the issue of university funding more generally, and of the cuts that had created something of a crisis, leaving universities with a strong bias to attracting international students from whom they could charge full fees. While not wanting to ignore the national significance of having developed higher education as a very successful new export sector, many have become concerned about the dependence of universities on international students, fearing this may be to the exclusion of some Australian students.

Taking all these factors into account, it should not be surprising that many students leaving high school are finding it difficult to contemplate a university education, especially in the context of cost-of-living concerns spreading into the future. They must consider whether they are doing the right thing to ensure they get an attractive and sustainable job that will provide them with the accommodation and lifestyle they desire, as well as whether they will be able to handle their debt. The numbers on these choices are concerning. According to the latest figures from the tax office, there is about $74.4 billion of HECS-HELP debt owed by three million young Australians, at an average debt of $24,700.

I can report an awkward personal experience with the choice between a trade and a university education. Throughout my early teenage years this choice was a constant issue between my father and myself. My father was insistent I leave high school at the Intermediate Certificate, aged 15, to get a trade qualification. Dad was a qualified and experienced fitter and turner, who worked for the same manufacturer all his employed life, having been able to transition from the factory floor to head the service department. His only break was for war service, both army and navy – a role he hadn’t needed to serve as he worked in a “protected industry”, and it cost him relative to those who chose not to serve in the forces, falling behind in the company’s pecking order.

Dad couldn’t afford to pay for me to attend university – if I wanted to go, it would have to be on a scholarship and by working to pay board at home and otherwise support myself with transport, clothing and so on. I would be the first in our extended family – which included many tradies, a grandfather who was a cobbler, uncles who were auto mechanics and panelbeaters – to attend university. Our life was very much low-income working class.

As things have turned out, I would have to admit that, in financial terms at least, Dad was right. Many tradies today are significantly better paid than academics, most government employees and, to the surprise of many, even bankers. Four university degrees over nine years certainly didn’t guarantee me a well-paid working life, although I did give up a lifetime tenured professorship to enter parliament, as required of those who hold “an office of profit under the Crown” (section 44 of our Constitution).

In all this I am concerned we have lost sight of the real purpose of education, and specifically university education. It has been an increasing weakness that a university degree is mostly looked at as an alternative in the spectrum of vocational training. It is much more. University training provides a framework for disciplined thinking – developing a capacity to think through an issue, to initiate, marshal and research evidence to move towards and even challenge the frontiers of the fields of knowledge. I remember vividly my response to my doctoral thesis adviser, a world-class economist, asking me how I felt having completed the requirements for the doctorate. I declared I now knew what I didn’t know in this field, with a passion to contribute more. This kind of education is all about pursuing your interests and passions in particular fields. From there, the opportunities will flow to make a contribution, to make a difference, which so many young people are keen to do.

Clearly the issue of university funding emerges as a major challenge to our governments and certainly should be one of the areas contested at the next election. What are the views of the parties and candidates about the value of university education? How fundamental is it to their visions of the future of our society over, say, the next decade or so?

In this it should be recognised that the funding issue is not just about the universities themselves, nor affordable access for the students. It also requires consideration of research funding. It has been an unfortunate aspect of the push to budget repair by governments of both persuasions that research funding has been seen along with some others, such as expenditure on foreign aid, as an “easy” cut with little to concern politicians in terms of impacts on particular seats or even outrage by the affected constituencies.

In the broader public, one often hears the call for free university education. Others call for the cancelling of HECS-HELP debts, with little consideration of the potential criticisms in terms of this being seen as a “pay-off to the elites” and one that could increase inequality. All these proposals are very expensive and would certainly force considerations of spending priorities. For example, would it be better in terms of our national interests to get university funding right than to deliver the stage three tax cuts, in the form announced, at an annual cost reported in the billions? Or to spend billions more on defence contracts, or the NDIS or aged care?

These are tough choices, but we elect governments to make complex decisions. Surely, we must recognise that an important consequence of the downplaying of a university education is the risk of losing creative thinkers, brilliant ideas and groundbreaking research that could benefit all Australians. Without a strong university sector these people will continue to be snapped up by more adventurous countries with the future in mind.

This article was first published in the print edition of The Saturday Paper on January 20, 2024 as "The era of the tradie".

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