Exploring jurisdictional drivers of price variation

Clearly there is substantial variation in pricing across Australia, even for the same qualification. To investigate whether the variation is influenced by underlying differences in cost structures between jurisdictions, we compare the cost of a basket of high volume qualifications (using the distribution of 2019 government funded enrolments as weights) using average prices for each jurisdiction. Because jurisdictions currently determine which qualifications they will subsidise, we are restricted in how many qualifications we can include in the basket.

The variation in a cost of a basket of 15 high volume qualifications in each jurisdiction is shown in Chart 5. Each bar represents the same distribution of enrolments in each qualification (weighted using the 2019 national enrolments) but uses the jurisdictional average price, fee and subsidy information. We have removed the jurisdiction labels to focus on common patterns. These 15 high volume qualifications comprised 20 per cent of total government funded enrolments in 2019.

Actual subsidies and fees paid by governments and students will be influenced by qualification selection, completion rates, concession fee arrangements and student and regional based loadings. This chart does not take into account other payments jurisdictions may make that sit outside the qualification pricing framework (e.g. community service obligations, thin market funding and public provider supplements).

Chart 5 still shows noticeable variation in average price, subsidy and fee per enrolment. Six jurisdictions have an average price between $7,000 and $10,000, whereas two jurisdictions have much higher averages (above $14,000). This substantial difference may reflect differences in underlying cost structures or it may reflect different price and subsidy setting principles. For example, the two more expensive jurisdictions may incorporate into their pricing elements such as higher prices for delivery to regional and remote areas, thin markets, or for qualifications delivered by the public provider which elsewhere are addressed through loadings or programmatic funding.

Note: The average subsidy and average price shown in the above chart represent the average subsidy and average price where qualifications are weighted by national enrolment.

To remove these influences, we filtered the prices to include only prices paid for metropolitan delivery and removed any prices that applied only to public providers. Doing so reduced the number of jurisdictions with a usable number of qualification observations. However, it also increased the number of qualifications that we could observe, to 40.

Chart 6 shows the cost of a basket of 40 high volume qualifications selected and weighted by national enrolment, on a per enrolment basis across four jurisdictions. Qualifications included in this basket accounted for 40 per cent of total government funded enrolments in 2019.

Note: The average subsidy and average price shown in the above chart represent the average subsidy and average price where qualifications are weighted by national enrolment.

The average price for the top 40 qualifications falls within a smaller band (approximately $7,000 to $9,000), with three of the four jurisdictions much closer to $9,000. What Chart 6 shows more clearly is that differences in the standard fee-subsidy split may account for more of the difference in subsidies paid between jurisdictions than underlying differences in the cost of delivery. It should be noted that the chart does not necessarily indicate that total fees actually paid by students are substantially different between jurisdictions. The fee data captured in the database typically reflect standard fees. Jurisdictional arrangements regarding fee concessions and fee waivers may reduce the total amount paid by students in fees. This should not change the ability to make comparisons on total price, however, as jurisdictions typically have arrangements to reimburse or top up providers for fee income lost through concessions or waivers.