The higher education contribution scheme a hecs on the family?

Journal of Population Research, Sept, 2002 by Natalie Jackson

It is generally well accepted amongst the demographic community that policy does not have to be even remotely concerned with population for it to have important demographic outcomes. This paper argues that the Higher Education Contribution Scheme (HECS), which has potentially strong antinatal elements, may be one such policy. Because of a lack of data, the purpose of the paper is to establish the hypothesis, rather than to test it.

As Australia greets the Millennium, debate about whether or not to have a population policy continues as it has for most of the country's European history (Cocks 1996). Regrettably, there is less debate about what actually constitutes such a policy. One thing is certain. Little, if any, understanding exists amongst the policy-making community that a policy does not have to be even remotely concerned with population for it to have demographic outcomes. This paper argues that the Higher Education Contribution Scheme (HECS) introduced by the federal government in 1989 may be one such policy. It would seem to contain strong antinatal inducements, and thus to have the potential to exacerbate structural ageing. Unfortunately, no data as yet exist with which to test this hypothesis. Hence, the present task is to establish 'the case', with a view to pursuing funding to more thoroughly investigate not only the demographic, but also the social and economic implications of the HECS.

**********

Establishing the case that the HECS has antinatal elements, and through them the potential to exacerbate structural ageing, rests on the supposition that the cost of repaying HECS debts causes tertiary-educated women and men to delay their childbearing and/or to have fewer children than they otherwise would. In an effort to substantiate (as distinct from test) this hypothesis a number of steps are taken. First, the theoretical basis of the argument is briefly outlined. Second, the correlation between education and fertility is examined. Third, trends in tertiary education and attainment are reviewed. Fourth, the HECS and its characteristics are described. Finally, because so little is as yet known about the social, economic and demographic effects of the 1-JECS, New Zealand's similar Student Loan Scheme (SLS) and the findings of two small investigations into its impact are also outlined.

Theoretical assumptions

With few exceptions, studies of fertility and family change report a strong correlation between fertility and education; the higher the education, the lower the fertility. In most developed countries, explanations of this situation invoke a range of 'opportunity costs' and 'role incompatibility' arguments; the forgone earnings, promotional, and retirement-savings opportunities associated with childbearing and rearing, and disproportionately experienced by women (Lesthaeghe and van de Kaa 1986; Chesnais 1996; Esping-Anderson 1996; van de Kaa 1998; McDonald 2000). Increasingly these arguments are being subsumed under the claim that there is an 'incoherence' between the levels of gender equity applying in different social institutions, such as those of 'the family' and 'the workplace'. As McDonald (2000:1) explains, when women have the same educational opportunities as men, but converting them into success in the labour force is severely hampered by having children, then women will simply restrict the number of children they have. Theoretically this relationship will be stronger for those who have invested more heavily in their education.

Closely associated with these arguments is the relative income hypothesis of Richard Easterlin (1968, 1987), which holds that individuals and couples develop 'fertility strategies' that attempt to hold their material wellbeing constant, relative to expectations and aspirations built up during their childhood and teenage years. A perceived inability to transform those expectations and aspirations into consumer behaviour is argued to cause people to delay having children and / or to have fewer children than they may otherwise have desired. Although the relationship between fertility behaviour and indebtedness does not appear to have been explicitly examined in this context, it takes little imagination to appreciate the potential for a link.

Drawing both sets of premises together, this paper argues for a 'two-sex' demography. The combined HECS debt of a tertiary educated couple is, by simple arithmetic, double that of an individual.

Education and fertility

As noted above, the higher the level of education, the lower the level of fertility. Figure 1 shows that this relationship holds true at all ages. This consistency across age groups is very important, because there is some belief that higher qualifications (and occupational status) merely correlate with a later timing of births, not lower fertility per se (ABS 1998a:35).

The erroneous nature of this belief becomes clear when the childbearing experience of women aged 45-49 in 1996 is examined in more detail (Figure 2). By the end of their childbearing period, women with a bachelor degree or higher degree remained almost twice as likely as women with other or no qualifications to have no children, slightly more likely to have only one child, and somewhat less likely to have every other number of children. Their average family size was around 1.9 children, compared with 2.3 for all other women. While apparently small, such differences (0.4 children), if experienced by all women, can have a marked effect on population ageing. Kippen (1999:Figure 6), for example, indicates that under a situation of zero net migration, a fertility reduction of 0.4 children per woman over 50 years would increase the proportion of the population aged 65+ years by approximately four percentage points. The effect of a growing proportion of women acquiring bachelor degree or higher qualifications would, of course, be more modest, as not all women would be affected (note below that the proportion so educated is now approaching 20 per cent). But it must also be noted that the main childbearing experience of women aged 45-49 years in 1996 predated implementation of the HECS. Thus it is possible that the above disparity could be greater for the later-born.