Posted: November 10, 2006

University funding and more!

Two items caught my (economic) eyes today. First, it seems that the Australian higher education sector is being increasingly funded by prostitution and related activities. Second, Australia's largest economy continues to flag despite the Labour Force figures yesterday showing that official unemployment is at 4.8 per cent.

University funding: a report from a University of Melbourne academic has found that some students are relying on income received as sex workers to fund their way through university study. In part this is a visa restriction problem for international students who cannot work more than 20 hours a week. Given the fees that they have to pay it is little wonder they choose higher return income earning activities. The move into prostitution is however not restricted to overseas students. Increasingly the Federal government reduces its proportion of total university funding and the residual has to come from universities selling education to domestic and overseas students. The fees for degrees have steepled in the last few years and forced hardship onto students. This trend was also acknowledged in a Senate Committee report last year.

NSW economy: Today's state accounts figures from the ABS reveal that NSW is lagging behind the rest of the country, which itself has stalled in terms of GDP growth. NSW Gross State Product grew by 1.4 per cent in the last 12 month, only slightly up on the 0.8 per cent the year before. This is in juxtaposition with the mining states of WA and Queensland who grew at close to 5 per cent in the year just gone. The poor output growth figures confirm the two-speed economy thesis (see our recent working paper on this). Households in NSW are in for a tough time with unemployment certain to rise and mortgage costs rising.

It is lucky that the Government has chosen a low productivity growth path! With labour productivity growth so low (and recently negative), the low GDP growth can more easily match labour force growth and keep unemployment from rising much faster than it is in NSW. But what a parlous situation to be in.

Blog entry posted by bill