The economic benefits of Australian theological education

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Abstract

Religious and theological education is an important, though often neglected part of Australia’s higher education system. There are 24 universities and colleges (or 58 if we count colleges within theological consortia) teaching the equivalent of 6200 full time students from undergraduate to PhD levels. Research output is significant.Theological education contributes to the government budget through additional taxation revenue from graduate earnings, for a much smaller government contribution than any other area of study. This net contribution is estimated at $37 million, representing a 7.2% rate of return on government contributions. The economic benefits to Australia of theological education are much larger through additional income for graduates, giving, volunteering,better health, and lower crime. These benefits accrue through the well-documented direct spillovers from graduates and through theology graduates generating further spillover benefits in the churches they lead. The total of these net benefits is estimated to be $300 million, representing a rate of return to society on its investment of 12.7%.Besides estimating the value of religious and theological education it is important to understand that this value can change if policy changes:• Abolishing the 25% loan surcharge currently levied on students at private colleges would increase net benefits to society by $11 million to $311 million, and the corresponding rate of return to society by 0.8% to 13.5%.About half these additional benefits would accrue to theology graduates from the loan repayment savings, and about half are additional spillover benefits to others in society. Abolishing the loan surcharge would be approximately revenue neutral for the government as the lost surcharge revenue would be compensated by Commonwealth Supported Places (CSP) savings as students move out of public universities to private providers, and tax revenue rises with more theology graduates.• Removing eligibility for FEE-HELP loans from theology students is projected to reduce student numbers by 20%, which would reduce net benefits of theology graduates by 9.3 million, damage the budget balance by 10.3 million mostly due to lost taxation revenue, and reduce spillover benefits, with a net cost to society of $60 million. Such a policy change would be a costly ideological indulgence for the government and wider society.• Extending CSP eligibility to all theology undergraduates is projected to reallocate students from public universities to private providers with a net increase in theology enrolments of about 10%. Students would gain$6.5 million; government expenditure would rise by $19 million and society would gain slightly overall.• Extending access to Research Training Program (RTP) places for all theology postgraduate research students would level the playing field between public universities and private providers accredited to offer PhD students.Students are projected to move to private providers with no net increase in PhD enrolments. These results are based on an economic model of theological education including graduate earnings, taxation,fees repaid through student loans, loan default, direct spillover benefits from graduates, and indirect spillover benefits generated by churches that theology graduates lead. The model is calibrated with QILT, Department of Education and ATO data, with conservative parameter estimates.The scope of the project is limited and data imperfect, and further research is needed on issues such as demand responses to price changes, the degree of substitutability between theological and other degrees,the effect of student loans on demand, social capital and other spillover benefits of religion (including religious schools and social service NFPs in Australia), and the functioning of religious labour and product markets.
Original languageEnglish
Pages (from-to)1-37
Number of pages37
JournalColloquium
Publication statusPublished - 2020

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