Fact Check: is tertiary education of private benefit?

Tertiary education is of both private and significant public benefit. AAP Image/Julian Smith

I’ve always argued that tertiary education is a private benefit, I’m happy for taxpayer funding of primary and secondary education but tertiary education results in a higher salary. - Senator David Leyonhjelm, Liberal Democratic Party, RN Breakfast, 28 January, 2015.

Senator Leyonhjelm’s statement reflects an oft-repeated argument that the benefits of tertiary education predominantly flow to individuals, but does not present the whole picture.

The Senator has previously said, for example, that:

When you receive a benefit in the form of a higher salary throughout your career, then it’s a private benefit and it should be paid for in a private capacity.

That higher education results in private benefit is a fact widely supported by research. For example in 2012, the Grattan Institute calculated that “the median male bachelor-degree graduate is more than A$600,000 better off compared to the median year 12 completer who does no post-school study.” For women, the figure was A$800,000.

While other studies proffer different figures, the consensus is that higher education results in particular benefits to individuals.

Significant public benefit

However, it is equally true that higher education results in significant public benefit. In economic terms, university graduates earn, on average, higher salaries and therefore pay more tax over their lifetime. The same Grattan Institute report found that, “using the 2006 Census, the median female graduate is estimated to pay around A$240,000 more in tax. The median male graduate pays about A$360,000 more in tax over his lifetime.”

Furthermore, higher employment rates mean that university graduates rely less on public welfare. There is also a positive relationship between education and health.

The most recent OECD figures estimate that in Australia, the private net present value (a figure that represents how worthwhile an investment is) for attaining tertiary education is $152,892 for a man and $105,374 for a woman. At the same time, the public net present value is $103,866 and $70,921 respectively. These values are compared with someone who has attained an upper secondary or post-secondary non-tertiary education. Amounts are in equivalent US dollars, adjusted for purchasing power parity.

A spokesman for the Senator told The Conversation that Mr Leyonhjelm “accepts that tertiary education can, at times, generate a public benefit. These benefits can be identified and publicly funded based on their particular merits. He also accepts that primary and secondary education has a public benefit and therefore agrees there is a legitimate argument for public funding to ensure no children miss out.”

When asked to provide data to support the Senator’s position, the spokesman directed The Conversation to “this useful tool.”

Verdict

Senator Leyonhjelm’s statement is open to challenge because of its potential to be interpreted as meaning that tertiary education only results in private benefit. It would be more accurate to state that tertiary education results in both public and private benefit.


Review

The conclusion of this fact check correctly identifies that Senator Leyonhjehlm’s statement is open to challenge, even if it is not intended as misleading.

There is a significant body of evidence showing the strong benefits that are associated with having a bachelor degree or other higher education qualification, as the fact check points out, in strong employment outcomes and higher lifetime earnings.

But there is also clear evidence of public benefit arising from higher education – most obviously that many jobs rely on universities or other higher education institutions to provide training. The age of apprenticeship based barber-surgeons is long over.

While there is clear evidence for higher education’s public and private benefits, the jury is still out on their full range and value, and whether they are a result of actually doing a university degree or simply correlated with it. It might just be that many successful people who make a public contribution also like going to university, but would have been successful and made a public contribution if they had not.

Working out what we think the public and private benefits are is important, because it goes to the heart of the current debate over who should pay for higher education. - Gwilym Croucher

Have you ever seen a “fact” that doesn’t look quite right? The Conversation’s FactCheck asks academic experts to test claims and see how true they really are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.