• Politicians and academics argue that we need more people graduating from university to meet strong labour market demand for the managerial and professional jobs to which graduates usually aspire.
• In a number of occupations, including many health-related professions, there are chronic shortages of workers, in part reflecting too few graduates.
• However, there are also half a million graduates in occupations that do not normally require university qualifications or who are unemployed.
• This reflects a mismatch between the graduates Australian universities produce and labour market demand.
• It is impossible to match precisely supply and demand for graduates; there are too many variables that cannot be predicted with precision.
• However, Australia’s centrally-controlled system of allocating university places has failed to adjust to either student or labour market demand.
• A market system, in which universities set the number of places and student fees, would do a better job of supplying Australia’s workforce.

Andrew Norton is a Research Fellow at The Centre for Independent Studies and author of The Unchained University (CIS, 2002).