David Leyonhjelm guest post. Means testing education support

When I proposed that child care subsidies be reduced where household income exceeds $250,000, and eliminated where it exceeds $350,000, the major parties wet their pants.

I had the Government over a barrel so it said nothing, but Labor and the Greens went into conniptions. Labor claimed it “undermines the universal nature of access to early education”. Senator Hanson-Young of the Greens went further, saying “As a mother who has relied my entire parenthood on paid childcare in order to be able to do my job, as many other working mothers around this country do, I find it galling to be told by a middle aged bloke in this place that it is not a legitimate service to offer support for working mums in terms of paying for child care. It is pathetic.”

Thankfully Labor and the Greens gave up the fight over the $350,000 cut-off so it is now law. But all three voted to retain the subsidies for those earning up to that amount.

The next big debate in the Senate will be on government support for school education. Even if the Senate only shows equivalent resolve, taxpayers might save more money.

Under the Gonski formula, Commonwealth funding of non-government schools takes into account the ‘capacity to contribute’ of the parents whose children go to those schools. The benchmark is the Schooling Resource Standard for government schools. Non-government schools receive 10 per cent less than this standard if their parents have incomes that are well below average, 12 per cent less if they have average incomes, and up to 80 per cent less if the parents are assessed to have above average incomes.

There are three big problems with this. First, if parents with children at a particular school have incomes that are well below average, there is no case for cutting funding. Fairly obviously, such parents have negligible capacity to contribute.

Second, the Government’s assessment of parental capacity to contribute is shoddy. All it does is collect the addresses of parents whose children go to a particular school and uses these to rate the school. If those addresses tend to be in poor suburbs, the Government assumes that all the parents of the school have a limited capacity to contribute, while if they are in rich suburbs, it assumes they have a significant capacity to contribute.

This discriminates against poor parents who live in rich suburbs, who may need to be close to their jobs, and favours rich parents who live in the best spots of poorer suburbs or towns.

Third, the Government’s capacity-to-contribute policy does not apply to government schools. If it did, funding for government schools where the parents earn well above average incomes would be reduced, even if the reduction did not approach the 80 per cent reduction imposed on non government schools.

There are thousands of extremely well off parents who send their children to government schools. While that’s fine, it is not fine that these parents receive the same taxpayer-funded support as poor parents who send their kids to government schools, and more support than poor parents who send their kids to non-government schools, such as in the Catholic sector.

My preferred alternative would see individual parents directly receive school vouchers based on their personal income and any special needs of their kids. Schools would be funded via the vouchers of the kids who attended, with the state and federal governments sharing the voucher cost.

While this might be a bit too brave for the current Government, there is still plenty of room to improve its new funding proposal. For example, rather than ask parents for addresses, the Government could just ask parents for their tax file numbers and have the ATO work out their average income, with school funding based on their genuine capacity-to-contribute.

Government schools could do the same, and require contributions from parents with above average incomes. The ATO could assist, and recoup any outstanding contributions come tax time.

The Senate saw the light in the child care debate, at least to some extent. Subsidies and welfare should not be going to those who do not need it. It’s time this logic was applied to the subsequent years of a child’s education. School education is vital, which is why we make it compulsory, but when parents earning more than $350,000 send their kids to school, we don’t need to subsidise them.

David Leyonhjelm is a Senator for the Liberal Democrats

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27 Responses to David Leyonhjelm guest post. Means testing education support

  1. Chris

    Isn’t taxation regressive enough already?

  2. Tim Neilson

    My preferred alternative would see individual parents directly receive school vouchers based on their personal income and any special needs of their kids. Schools would be funded via the vouchers of the kids who attended, with the state and federal governments sharing the voucher cost.

    People on higher incomes already pay vastly more in tax, both in absolute terms and in proportion. Why create such behemoth just to slug them again? Why not give every parent a voucher for every kid every year based on the average cost of a state school place, and let them either cash it in at the state school or top it up out of their own money elsewhere.

    We’d save on bureaucrats doing calculations on everyone’s personal circumstances, we’d avoid the invasion of privacy that’s inherent with the ATO sharing information with yet another government monolith, and we’d take a very small step towards refraining from double punishment of people for daring to work hard.

  3. Goanna

    Vouchers are a good start but no need to tax high income earners.

    Vouchers could be tradeable if extended to health .

  4. .

    Goanna – LDP income tax policy is a 40 k TFT and a flat 20% rate.

  5. Goanna

    Dot.
    Just saying everyone gets the same value voucher.

  6. True Aussie

    David why didn’t you have the balls to call out Sarah’s bullshit? Ask her if as single mum she was making over 350K or just ask her what her child care costs were?

  7. Empire GTHO Phase III

    People on higher incomes already pay vastly more in tax, both in absolute terms and in proportion. Why create such behemoth just to slug them again? Why not give every parent a voucher for every kid every year based on the average cost of a state school place, and let them either cash it in at the state school or top it up out of their own money elsewhere.

    There exists a subset of high income earners with children in govt schools who effectively pay no income tax (public employees). These are the people who proffer that education spending is never adequate and whose policy agitation would always bid up the “average cost of a state school place”.

    Simplicity won’t wash on this due to the existing distortions imposed on the market. The elephant in the room is state education. While governments continue to own schools, employ teachers and operate classrooms, there is no sustainable solution.

    Kudos to DL for having a crack at the problem, albeit within the bounds of the shibboleth of “free” education.

  8. Andrew

    While you’ve been in parliament, tax rates have risen bigly. That’s not your fault, but it is the reality you find yourself in.

    On that basis, arguing for phasing out of universal services is reprehensible and makes you unelectable again. While I pay for everyone else, you believe there is no social compact to pay for my kids to be schooled. Or for me to use a public hospital.

    Here’s a better idea: the more tax we pay, the more we get. No waiting Medicare Gold for anyone paying $60k in the previous tax year. (Or $100k, whatever.). Progressive vouchers for school fees – more tax, more vouchers. Special carriage on the train for me, guaranteed seats.

  9. Hydra

    Dot.
    Just saying everyone gets the same value voucher.

    I believe that would be the LDP policy except that it would never get through the Senate. Gotta be realistic.

  10. Jessie

    How does the envisioned *voucher system (education and health viz Goanna) operate within these areas where lack of personal property rights, customary lore inc forced male circumcision/sub-incision, lack of individual rights and polygamy operate?

    Particularly under the current proposed nation treaties?
    for eg Comment Shy Ted

    * Gonsky model formulated on ? model used in Singapore? Or from where ?

  11. Alex Davidson

    A far better idea would be to separate the state from education, just like we have with religion, and leave it up to parents to decide how they spend their own money on their own children.

    David’s rationale for making education compulsory is straight out of the statist playbook, and the rest of what he writes seems to support Marx’s infamous slogan: “From each according to his ability, to each according to his need”. I thought he was a libertarian…

  12. Anon

    Big fan of David’s and big fan of lower tax and less govt spending. But the problem with David is that while he agitates for less spending, there is no corresponding reduction in taxation.

    As my income is above 200k I receive bugger all (I think actually $0) in terms of direct govt subsidies. Now should I also have indirect benefits (like school funding to schools in wealthy Sydney suburbs that my kids will probably attend) cut?

    Really, all that will happen is that I will pay the same tax and get less. This isn’t how it’s meant to work!

  13. dweezy2176

    Childcare is a choice not a necessity .. dump the hand-outs and see how needed it is!

  14. .

    Agree dweezy. What we also have to say is that to a large extent, “education” is simply child care.

  15. AH

    We also need greater deregulation of schools. So that teachers can run their own schools in their garages. This will provide greater competition.

  16. Felix Kruell

    The problem with phasing out a benefit like child care assistance at $350k is that in effect those who miss out on the child care assistance for earning too much, subsidise those on $200-300k a year (and everyone else too of course). No thanks. Either make it universal, or make it a safety net (no middle class welfare).

  17. mizaris

    S Hanson-Hyphen-Sea Patrol, who hasn’t the wit to be able to discern reality from TV fiction, wants the rest of us to continue to subsidise her lifestyle choices. Some of us are definitely more equal than others in her green fantasy world. Where does she think the money comes from?? We’re already too broke to be able to afford her and everyone else of her ilk.

  18. Tim Neilson

    There exists a subset of high income earners with children in govt schools who effectively pay no income tax (public employees). These are the people who proffer that education spending is never adequate and whose policy agitation would always bid up the “average cost of a state school place”.

    I’ve no doubt that that’s true Empire. It still seems unfair to hit high taxpayers with yet another disproportionate slug. Perhaps for public servants, the voucher should be part of the remuneration package, so that any increase in voucher value – still calculated on an “average cost” basis – came off take home pay. We’d then see a different attitude towards never ending skyrocketing of “education” [i.e. disguised childcare/teen crowd control].

  19. notafan

    My preferred alternative would see individual parents directly receive school vouchers based on their personal income and any special needs of their kids. Schools would be funded via the vouchers of the kids who attended, with the state and federal governments sharing the voucher cost.

    I prefer a flat minimum voucher, regardless of income, because otherwse it will encourage behavioral changes to meet the criteria, which will naturally included changing when income and how income from trusts are distributed, maybe with a little bit extra funding with children with disabilities but then, what is NDIS for?

    Tying it to income also assumes that the marxist goal of equality of outcomes is a valid one.

    Or we could give people the choice of a tax deduction or a voucher.

    I don’t think Milt ever suggested that vouchers be tied to income.

    If we are going to have a free market system then go the whole hog.

  20. According to the Constitution, education is a State matter. The only principled stance DL and the LDP can take on Federal funding of education, is to oppose it entirely. Anything else is merely posturing to a targeted demographic of voters.

  21. Oh come on

    Here’s a better idea: the more tax we pay, the more we get. No waiting Medicare Gold for anyone paying $60k in the previous tax year. (Or $100k, whatever.). Progressive vouchers for school fees – more tax, more vouchers. Special carriage on the train for me, guaranteed seats.

    I think DL would like to get re-elected.

  22. Empire GTHO Phase III

    According to the Constitution, education is a State matter. The only principled stance DL and the LDP can take on Federal funding of education, is to oppose it entirely. Anything else is merely posturing to a targeted demographic of voters.

    True. My starting position on education is shut down the Federal Dept of Education.

    The problem MV is that the states have always endeavoured to monopolise education to the detriment of parental responsibility and choice. Commonwealth direct funding to independent schools was a rational policy response to viciously progressive state education policy.

  23. john constantine

    I wouldn’t mind means testing foreign aid.

    If a bankrupt Australia with vast unfunded liabilities looking forward is donating borrowed money to dictators of hellholes to bribe them for votes for international glory for scum australian politicians, time to make the dictators pay their own way.

    This includes the corrupt clinton crime family.

  24. gbees

    Taxation (incl. levies) has reached theft levels. Includes federal, state and local taxes. Politicians have their fingers in everything. Taxes need significant reduction, although I’m happy to see a rise in GST as it’s mainly a consumption tax. Remove it however from govt charges which are already taxes. Time also to reduce welfare to only: 1. older people, pensioners; 2. disabled people; 3. short term job hunting fee. All other subsidies and welfare should be scrapped. I don’t want to pay for someone’s child care thank you very much!

  25. BoyfromTottenham

    It seems obvious that the intention of the Gonski formulaic approach to school funding (to increase funding to ‘disadvantaged’ schools is being thwarted by the private and Catholic systems simply diverting the received funds in exactly the opposite direction. Why does the Turnbull govt permit this? Or do the state systems do exactly the same, and therefore the whole Gonski thing is a giant charade?

  26. gowest

    What a stupid government control of education your political class is dissing on the next generation. You penalize the people who are the most likely to turn into future taxpayers. Keep rewarding mediocrity and failure you idiots. Just don’t carry on like clown doctors as the money keeps running out.

  27. greg

    Child care should be funded for a maximum of 20 hours per week per child. Might encourage one parent to stay home with their children more often.

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