Even the hardest-nosed economic rationalist would not begrudge state funding for primary and high schools. Take Adam Smith in 1776: “The expenses of the institutions for education are, no doubt, beneficial to the whole society, and may, therefore, without injustice, be defrayed by the general contribution of the whole society.”
Arts degrees might have become taxpayer-funded book parties, but even free-market economist Milton Friedman said public schooling imparted the “minimum degree of literacy and knowledge” required for the functioning of “stable and democratic society”.
Cost is another matter. Just as gilding lighthouses might be considered excessive use of public funds, it is possible to overspend on education. While the marginal public benefit of extra public spending falls, the cost of raising extra tax rises.
Such basic economics was absent from the Review of Funding for Schooling, overseen by David Gonski, which argued schools ‘urgently’ need an extra $5 billion a year to ensure “poor education outcomes [do not] become an ever greater drag on Australia’s social and economic development in the future”.
But the link between extra spending and better outcomes is very tenuous. Spending less and using existing resources better would be more likely to improve educational outcomes.
State and federal spending on public and private schools has grown to around $32 billion and $10 billion a year, respectively. Federal spending is growing four times as fast as student enrollments.
Despite the snowballing sums spent, Andrew Leigh, a former economics professor and now Labor MP for Fraser, studied expenditures and outcomes at Australian schools between 1964 and 2003 and found “no evidence that the test scores of Australian pupils have risen over the past four decades, and some evidence that scores have fallen”.
Between 2000 and 2009 Australian students dropped around ten places in international league tables.
Christopher Pyne, the federal Opposition’s spokesman for education, points out Catholic schools have had about 85 per cent of the resources of public schools between 1995 and 2008 yet have produced consistently better academic results.
Paul Miller, an economics professor at Curtin University, says international evidence shows extra funding does not result in better literacy or numeracy outcomes, adding “we should be looking at successful schools and asking why they do well not what their funding levels are” he adds.
The Review recommends minimum annual spending of $8,000 for primary and $10,500 for high school students in 2009 dollars, each boosted by loadings for students with perceived disadvantages.
An Aboriginal secondary school student in a remote, poor area from a non-English speaking background would attract annual public funding of $39,400, for example.
The Review asserts “clear benefits to the federal government being more involved in the funding of government schools”, calling for “greater national consistency” and “rebalancing” so the Commonwealth spends relatively more on government schools and the states on private schools.
“The benefits of greater federal involvement are not articulated or even outlined in the Review”, Scott Prasser, a professor of public policy at Australian Catholic University says, adding that COAG “is a tangled and growing web of inefficient bureaucratic committees that undermine states’ incentive to come up with their own polices”.
Peter Dawkins, vice-chancellor of Victoria University and former secretary of the Victorian education department, says the Review was “right to argue that existing funding arrangements are ridiculously complex and need to be made more transparent and coherent”, but suggests “rather than have one national funding model it would be better to have agreed principles nationally and allow for coherent models within each state.”
He also says teacher quality perhaps bears the strongest positive relationship with outcomes.
Teachers’ unions are still the biggest impediments to improving teacher quality. In 1958 Kim Beazley Senior, a future minister of education in the Whitlam government, observed: “the publications that we receive every month from the teachers, especially that of the New South Wales Teachers Federation, are nothing but propaganda about money; there is never anything in them that would improve a teacher’s technique”.
Little has changed. Unions’ continual advocacy of smaller class sizes – which fell 40 per cent across Australia between 1964 and 2003 – has dramatically undermined productivity and sapped teaching quality.
While the rest of Australian workers embraced enterprise bargaining and deregulation since the 1980s, Leigh finds Australian schools were 78 per cent less productive in 2003 than they were in 1964 in terms of measurable student results per dollar spent.
“Class-size reduction has been a costly policy that has not translated into a commensurate improvement in overall student outcomes” the Productivity Commission concluded in a report proposing ways to improving teacher quality, released in May.
The Commission makes the obvious point that “to reduce class sizes more teachers need to be recruited”, which undermines the average quality of teaching. Over 20 years to 2003 the literacy and numeracy scores of teachers have dropped eight points across Australia.
Reversing the trend to ever smaller class sizes by sacking underperforming teachers would free up funds to pay more to better teachers or teachers with tougher teaching assignments, which would also attract better quality candidates to the profession. Salaries at the top of teachers’ pay scales have barely grown in real terms since 1995.
“Centralised industrial relations arrangements ... can be a source of inflexibility that impedes a range of beneficial reforms”, the Commission noted. Pay scales for teachers barely differentiate according to teachers’ skills, performance or the difficulty of their teaching assignment.
Teachers’ pay typically creeps to the top salary scale after about 10 years of service. Its insulation from market forces has created chronic shortages of mathematics and science teachers, who can earn significantly more outside of teaching, and a glut of primary teachers, who typically cannot.
In 2010 around 8 per cent of high schools were unable to fill vacancies for mathematics teachers, and a survey from the same year suggested more than half of secondary school maths teachers did not have a tertiary qualification in the subject.
Reform will be difficult. Proposing what is routine for most workers, pay based on merit, is likely to provoke “significant systemic tension” between the status quo and “policy approaches that offer the prospect of material improvement in schooling outcomes for students”, the Commission anticipated.
State governments hold the keys to lifting standards. New South Wales announced in March it will give principals more control over their school budgets – including power to make purchases up to $5,000 – and an ‘increased say’ over which teachers the school employees.
But a high school principal will still not be able to, for example, dismiss a poorly performing teacher and adjust class sizes to hire a good mathematics teacher instead.
For all Adam Smith’s wisdom, he was wrong about one aspect of education. Schooled at public cost, he argued “[people] are less liable to the delusions of enthusiasm and superstition, which among ignorant nations, frequently occasion the most dreadful disorders…”
Yet the growing torrent of public money spent on primary and secondary schooling over many decades appears only to have fanned the delusion that ever greater government spending is the solution to every problem.
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