It’s flawed to suggest investing in regional universities is a waste

Regional universities like CQU have improved the skills base in local areas.

The Grattan Institute’s John Daley and Annette Lancy in The Conversation on Wednesday suggested that regional universities are failing to have economic impacts, and that investment in regional universities is largely wasted in efforts to stimulate regional development.

As an economist who has previously written about the economic benefits of regional universities, I read their report with some interest.

I also have some “skin in the game” because I have spent all my life in central Queensland, much of it as a cattle producer, and have worked for Central Queensland University for more than 20 years.

There are many parts of Daley and Lancy’s analysis that I agree with, as I suspect most others do.

Who doesn’t think that governments waste money, or that many regional development initiatives are really pork barrelling exercises disguised in glitzy economic wrapping paper?

Who doesn’t agree there are more returns to be generated by investing in rapidly growing regions rather than the slowing ones?

Where their analysis is most surprising, and most flawed, is in relation to their arguments that regional universities don’t make economic contributions.

There are at least three major issues that can be identified with the analysis they present.

The first problem is that they appear to confound regional universities with inland universities.

They make the point very nicely that the highest annual rates of population growth in Australia are in capital city satellites (2.4%) and coastal cities (2.0%), outstripping capital cities (2.0%) and inland cities (1.5%).

Yet most regional universities are located in the coastal cities and capital city satellites.

I can only identify two regional universities, Charles Sturt University and The University of New England, which properly can be classified as based in inland cities (Daley and Lancy categorise the universities of Ballarat and Southern Queensland in Toowoomba in capital city satellites).

By deduction, the other regional universities in Australia are servicing those population groups that are growing faster than capital cities.

The second problem is with their comparison of private sector growth rates between cities that have universities based in them, and cities that don’t.

They identify that cities such as the Gold Coast-Tweed (QLD/NSW), Sunshine Coast (QLD) and Mandurah (WA) don’t have universities based in them but have much higher growth rates than ‘university’ cities such as Canberra, Wollongong, Toowoomba, Ballarat and Rockhampton.

Let me just identify two issues with this analysis.

First, regional economies are complex and driven by a range of factors and sectors, so confounding effects overwhelm the very small numbers of comparisons that are given.

For each of the example cities that are nominated, a range of non-education sector drivers can be identified to explain why growth rates are higher or lower than other cities.

Second, the professional workforce in Australia is very mobile, particularly between big cities and close centres like the Gold Coast and Sunshine Coast.

At least two million people change jobs every year in Australia, and a part of the employment churn involves relocations between areas.

Just because some capital city satellites have higher growth rates does not mean they are not drawing on highly educated professionals.

The third problem is with their assertions that graduate retention rates are no higher in university cities compared to non-university cities.

However their analysis has been conducted at the statistical sub-division level, akin to expecting that university graduates will not move away from the suburb where they have completed their degree.

Regional universities focus on educating people for professional vocations in areas such as accounting, engineering, health and education, and those graduates then disperse across regional areas in their careers.

Educating people to be mobile and fill skilled positions across regional areas is actually a measure of success for regional universities, not a failure.

It is worth pausing for a moment to consider the counterfactual argument. The real question of interest is whether the proportion of graduates in regional areas would be lower if we did not have regional universities.

Regional areas already have lower rates of graduates in employment, and apart from the capital city satellites, find it very difficult to attract skilled workforce out of the big cities, a problem that industry is discovering in some of the resource-intensive regions.

Regional universities have been very successful in improving the skills base in regions, with graduate retention rates across regional areas of more than 65%.

At Central Queensland University, about 90% and 70% of our graduates in education and health move into jobs in regional areas.

Without these graduates governments would find it much more difficult and expensive to provide core services such as education and health outside of capital cities and to support the rapid growth in our resource-intensive regions.

In summary, it is worth making two key points. The first is that regional universities have an essential role to provide education and professional training in some of the fastest growing regions of Australia, recognising that the economic contribution is to underpin and enable the public and private sectors to operate.

The second is that while scrutiny and justification of public expenditure is always worthwhile, a focus on regional universities is relatively small beer compared to the Building Education Revolution and the National Broadband Network.

Good luck in finding any real net benefits in those ‘regional development’ programs.